Govts can unlock $62bn SaaS dividend

State and federal governments could save tens of billions by replacing legacy technology with cloud-based SaaS services, according to new research.

An economic analysis commissioned by TechnologyOne and conducted by IBRS and Insight Economics estimates that the two tiers of government could collectively unlock a $62 billion digital dividend from the transition.

These economic benefits would be the equivalent of almost a year’s worth of GST revenue for the federal government.

More broadly, adopting SaaS across the government, education, health, aged care and financial service sectors could contribute a digital dividend worth around $224 billion over 10 years — enough to lift the nation’s GDP by 1.3%, the report found.

Across each industry sector, the benefits of moving to SaaS were found to outweigh the costs, it added. For government, the biggest savings would eventuate from the reduced cost of buying and maintaining IT infrastructure, increased labour productivity and reduced financial and audit expenses.

Agencies can expect average total cost of ownership (TCO) savings alone of between 11% and 20% depending on their size and structure by migrating to SaaS from an on-premises approach.

SaaS could also potentially reduce energy costs and lower Australia’s carbon emissions. E3 calculates that an increase in cloud computing from 25% to 40% by 2025 would avoid four million tonnes of CO₂ emissions by 2030.

The report also found the potential for improvements in labour productivity, auditing and reactive maintenance.

TechnologyOne CEO Edward Chung said the opportunities uncovered by the research are too big to ignore.

“This report makes it clear. It is in the interests of taxpayers, staff and the community to continue, and in fact accelerate, the digital transformation underway in governments. Public sector organisations face a number of economic challenges in the next decade, including recovering from and responding to COVID-19. We cannot afford to leave technology savings of this order on the table. We need to move faster now and bring forward the benefits,” he said.

“As a nation, we have a choice. We can continue to sink money into older, on-premise technologies or we can step on the accelerator, put that investment into innovation and bring forward the benefits of SaaS so we can take advantage of the savings today.”

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