stclarke examines Mandala’s report on how cloud and AI can transform Australia’s government sector, highlighting big savings, improved cybersecurity, and modernization opportunities.

Cloud and AI: Unlocking Australia’s Public Sector Productivity

Australia has long been recognized for leadership in digital government, but accelerating adoption of cloud infrastructure and AI-enabled platforms is now critical to avoid lagging behind.

A Mandala report, Unlocking the Productivity Dividend of Digital Government, quantifies the enormous productivity potential from retiring legacy systems and embracing modern cloud and AI solutions:

The Opportunity: $1.4 Billion in Annual Savings

Upgrading from legacy IT to cloud could save the Australian Government an average of $1.4 billion each year, with a cumulative $13.5 billion potentially saved over the next decade.
Cost reductions come from infrastructure, software, and labor, allowing agencies to reinvest resources in higher-value work and modern service delivery.

“Accelerating cloud adoption would drive productivity gains that would unlock $1.4 billion every year. These changes would free staff to focus on higher-value work and transform how government delivers services to the public.”
— Tom McMahon, Mandala

Most public sector IT spending remains on legacy, non-cloud systems, which are expensive, difficult to secure, and do not support advanced AI capabilities. Modern cloud solutions enable scalability, cost savings, and support for AI-powered innovation.

The AI Dividend

Cloud is foundational for scaling enterprise-grade AI, unlocking both data value and security.
Mandala estimates up to $5 billion in additional productivity gains from AI tools by 2035.
The 2024 Microsoft 365 Copilot trial showed staff saved time on summarisation and document drafting, leading to improved workflow and re-allocation of time toward higher-value tasks.

Strengthening Cybersecurity and Boosting Resilience

Modern cloud platforms deliver strong security benefits:

Automated threat detection and monitoring
Rapid security patches and updates
Encryption and threat intelligence sharing

Migrating to cloud could prevent 2.9 million hours of downtime and save $82 million in lost productivity, as well as $178 million in data breach costs over a decade. The report also finds a 14% reduction in IT carbon footprint is possible.

Barriers to Cloud and AI Adoption

Significant roadblocks exist:

Procurement and funding systems are built for capital expenditure, not operational subscriptions
A risk-averse culture slows innovation
Skill shortages in digital capabilities
Large agencies with siloed legacy data find migration more challenging

Recommendations: A Roadmap for Action

Modernise Procurement and Funding: Move to operational expenditure, streamline vendor evaluation, and adopt milestone-driven funding.
Strengthen Governance and Leadership: Empower whole-of-government and cross-agency targets, following global models like the UK’s Government Digital Service.
Partner with Industry: Create partnerships for training, knowledge transfer, and joint project funding, citing NSW’s migration partnership with Microsoft as an example.

“Cloud and AI can lift service quality while increasing productivity and cutting red tape. We must act now or be left behind.”
— Bran Black, Business Council of Australia

Conclusion

The Mandala report urges a coordinated approach to digital government, positioning cloud and AI not just as a technical upgrade but as a strategic driver of national productivity, resilience, and sustainability. Embracing these technologies enables better public services, enhances security, and reduces environmental impact.

Read the full report here.

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