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Microsoft crows about 149k-seat Office 365 deal that costs it MILLIONS

Queensland banks savings, decides one in three workers can do without Office

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The Australian State of Queensland does not observe daylight saving and an old joke about the state says that air travellers entering the region have in the past been advised to “turn your watch back one hour and 50 years.”

How then, to consider the State's decision to head for the cloud with a 149,000-seat deal for Microsoft's Office 365?

Queensland has of late gone on a cost-cutting binge and is also backing away from failed shared services initiatives. On the IT front it is very risk-averse thanks to the debacle of the IBM-led payroll project that went a billion bucks over budget and still didn't work. A move to the cloud for productivity tools that will save a reported of $AUD13.7m over three years is therefore a good thing for the state and a sign it is going with the times. And a slightly scary thing for Microsoft if this becomes a trend: if all Office users of this scale can strip similar sums from their budgets each year Satya Nadella has a lot to worry about.

Perhaps there's a silver lining here for Microsoft. As of December 2013, according to the December 2013 Queensland Public Service Quarterly Workforce Profile (PDF), the State employed 227,836 people in the equivalent of 191,196.52 full-time jobs. Lots of government workers do their thing in the field and may not need Office 365. Others may job-share. It is conceivable the State figured out it only needed 149,000 licences instead of a previous higher number, which means the savings come from rightsizing. Microsoft can grumble, but can't complain, about that!

Except for one inconvenient fact: Queensland's public education sector employs 66,000 people and the Education Department has its own Microsoft deal. That leaves 12,000 workers without office and Microsoft's claims that this is a whole-of-government deal looking shabby.

What are those 12,000 workers using for email? Might there be pockets of resistance? That possibility is important because Microsoft's canned blog postsays acquiring Office 365 “... will also provide a foundation for standardisation and simplification: All employees will have access to the same capabilities and tools, which means information can be exchanged more easily.” If pockets of resistance exist, that homogeneity isn't going to happen.

Let's also note another small piece of Microsoft naughtiness: the assertion in the canned blog post that Queensland is “the second-largest state in Australia”. As indeed it is … by area. But it is Australia's third-largest in terms of population, which makes the deal just a little less significant.

To be fair, Microsoft does point out that Queensland is more decentralised than most Australian states. Microsoft's statements to the effect that government workers will be able to collaborate more easily now that all have the same tools therefore hold water.

Which is not to diminish the scope of this sale. 149,000 seats of anything is a globally-significant deal. Microsoft must be chuffed. But also sobered, because whatever happened in Queensland cut Redmond's revenue even as it advanced its cloudy cause. Microsoft, as antiquity's King Pyrrhus once remarked, cannot afford many such victories. ®

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