The Australian Department of Defence has entered into a new five-year agreement to consume $495 million worth of Microsoft Azure services, commencing September 1.

This major cloud deal appears to succeed a previous three-year contract, valued at $107 million, which ended on June 30.

As with the earlier agreement, the new deal was facilitated through Microsoft’s exclusive government reseller, Data#3, via the federal Software and ERP Marketplace Panel.

While Defence has already committed more than $2 billion to Amazon Web Services (AWS) for a classified cloud environment supporting the Australian Signals Directorate (ASD), the latest agreement underscores its intent to continue running key enterprise systems on Microsoft Azure.

The Azure services will largely support Defence’s rollout of a new SAP-based Enterprise Resource Planning (ERP) system, which recently went live with capabilities across logistics, maintenance, finance, and procurement.

In tandem, Defence is also expanding its Microsoft 365 environment, known internally as Vera, further cementing Microsoft’s central role in the department’s digital transformation and collaboration capabilities.

Defence CIO Chris Crozier shared his vision late last year to move towards increased use of cloud-based productivity, unified communications, and collaboration tools within the Microsoft 365 ecosystem.

Meanwhile, Defence signed several new major technology contracts in the past week, including a $59 million three-year agreement for Citrix services and an $11 million one-year deal with Oracle.