VENDORiQ: AWS’s Federal Deal Signals Trend in Australian Government ICT Strategy

Why It’s Important

For public sector ICT leaders, this contract represents an emerging trend in Australian government technology strategy, demanding careful consideration across multiple dimensions. The standardised contracting framework introduces unprecedented efficiencies in procurement but also requires agencies to develop new capabilities in contract management and service consumption monitoring.

The shift towards consumption-based computing models presents both opportunities and challenges. Agencies must develop sophisticated FinOps capabilities to manage costs effectively, particularly as transitioning from CAPEX to OPEX models requires new budgeting approaches and financial controls. IBRS recommends exploring new ICT FinOps models based on cooperative benefits analysis, accounting, and continual improvement cycles. This transformation necessitates close collaboration between ICT and finance teams to establish governance frameworks that ensure cost predictability while maintaining service flexibility.

Given rising global political tensions, data sovereignty emerges as a critical consideration, with AWS’s PROTECTED level certification providing a foundation for secure service delivery. However, agencies must still develop comprehensive data classification frameworks and governance models to ensure appropriate data handling across different security levels. And any such efforts still need an accreditation process from the customers’ perspective on how the services are used. This becomes particularly crucial for agencies handling sensitive information or delivering critical services.

The contract’s emphasis on advanced technologies, particularly AI and quantum computing presents significant opportunities for service innovation. However, agencies must carefully balance the adoption of these technologies with the need to maintain sovereign capabilities and control. This requires developing clear technology adoption strategies that align with agency-specific needs and broader government objectives for digital sovereignty.

For state and local government agencies, the contract offers access to enterprise-grade cloud services that might have previously been difficult to procure and adopt. However, these organisations must carefully assess their readiness for these more advanced features, including technical capabilities, security requirements, and operational processes. This is particularly true for AI services and emerging capabilities such as Graph databases. The standardised pricing model provides cost benefits, but smaller agencies must develop new skills and processes to manage and utilise these services effectively.

The Digital Transformation Agency’s strategic review of single-supplier arrangements adds another layer of complexity. Agencies should consider the AWS contract as part of a broader multi-cloud strategy, maintaining flexibility to adapt to potential changes in government procurement approaches. This might include developing vendor-agnostic architectures and maintaining relationships with multiple service providers.

The emphasis on upskilling within the Australian Public Service presents an opportunity to build internal capabilities. Agencies should prioritise developing cloud expertise among their staff, focusing on foundational skills: cloud architecture, security, and cost management. This investment in human capital will be crucial for realising the full benefits of the contract while maintaining operational control and efficiency.

Who’s Impacted

• CIOs: Review current cloud strategies and assess opportunities to leverage the new AWS framework for cost optimisation and service modernisation.
• CFOs: Evaluate the shift from CAPEX to OPEX models and prepare for consumption-based billing across cloud services.
• Security officers: Assess compliance requirements against AWS’s PROTECTED level certification and plan for sovereign data management.
• Procurement officers: Familiarise with the new standardised contracting framework and update procurement processes accordingly.
• Technology architects: Review current systems for potential migration to AWS services, particularly focusing on AI and quantum computing capabilities.
• Local technology providers: Evaluate partnership opportunities with AWS to maintain market relevance under the new arrangement.

What’s Next

• Conduct a thorough assessment of the current ICT infrastructure to identify opportunities for migration to AWS services under the new contract terms (or another cloud provider, such as Microsoft Azure).
• Develop a clear strategy for managing data sovereignty requirements, particularly for sensitive workloads requiring PROTECTED level certification.
• Establish governance frameworks for consumption-based services to ensure cost control and optimal resource utilisation.
• Create upskilling programs to build internal capabilities in AWS (or Azure) technologies, particularly in emerging services such as AI.
• Review and update disaster recovery and business continuity plans to align with the new cloud infrastructure model.