Microsoft and the Queensland Government have inked on an agreement that is about to save the latter and its constituents millions in expenditures when it comes to digital services.

The new three-year contract worth $26.5 million, which aims to move the government to a cloud-based technology, replaces a former three-year contract of $40.2 million implemented in December 2009. The new contract saves the government $13.7 million of expenditures in three years.

"Not only are we saving the taxpayers of Queensland millions of dollars, it's another positive step towards simplifying IT services across government," said Minister for Information Technology Ian Walker in a statement. 

Walker admitted that during the previous government, IT services provided little value for money. He said the new agreement sets a great example of how the government can lower costs by partnering efficiently with the non-government and industry providers.

"Our new partnership with the Queensland Government is a great example of a government body responding to the new world of business and digital innovation by becoming more sophisticated users of modern technology," Microsoft State Director Sharon Schoenborn also said.

The agreement will make way for 149,000 public servants to have access to government information throughout all departments with the use of Office 365 and to bring about greater sharing and collaboration among government personnel. The number of public servants mentioned has been based on the headcount in June 2013, with a slight increase of 5 percent to make way for users out of public service, said a spokesperson of Walker.

The impending rollout has been regarded as the biggest non-education Office 365 deployment in the country, for both public and private sectors.

Walker also noted that the nature of agreement is the very first in the country to deliver such flexibility, thus making the government of Queensland leaders in the said area.

"Access to the most up-to-date IT services and world class innovations will further boost the services Queenslanders receive and help reach our goal of having the best public service in Australia," Walker explained.

To which Schoenborn agreed, saying the new partnership can make the Queensland government become leaders and champions in terms of innovation in the IT space.

Research says Microsoft has been under extreme political pressure at the local and national levels in the country to minimize its rates for the public sector, so the new deal is a serious cut-down for the software company.

Recall that the Department of Finance has revealed previously that Microsoft has charged its federal agencies 50 percent more than countries like the United States and Singapore for software licenses.

However, research says the new agreement will not cover the licenses for operating system, as these will continue to be run per agency. Walker said they have been making arrangements for Microsoft to provide custom support to agencies that still run on Windows XP. He revealed that 40 percent of PCs in his own department is among those agencies still under XP. Both companies refused to divulge the cost for such deals.

The new contract has been extended for one more year for a cost of $8.1 million and has been implemented in December 2012, says a spokesperson for the government of Queensland.

No start date has been made definite yet on the new contract.