The move is one of the strongest endorsements of cloud computing seen so far in New Zealand outside of the education sector where some universities have also adopted Google Apps.

However, most of the cost savings aren't from the cost of software licences, says the Postal Services Group's (PSG) general manager of business capability, Tracy Voice. Infrastructure savings are the major factor.

PSG has signed a three-year agreement with Google partner Fronde which will see Google Apps rolled out to 2100 staff, the entire workforce including management.

Voice says issues such as security and corporate governance have been addressed as part of a proof-of-concept project that has been going on for up to 10 weeks. Applications to be used include Gmail, instant messaging, video chat, Google Docs and ISite, Google's intranet-like service.

These will replace Microsoft's Outlook, Exchange and probably SharePoint, Voice says.