He says the increased mailbox capacity will free employees from having to constantly manage email back-ups.

"Google Apps simplifies document sharing within a secure environment, either internally or to people working remotely. This will increase our ability to work collaboratively," Fenton says.

The agreement means Postal Services Group moves to a variable cost model so that IT costs can be more closely linked to business activity. Moving to web-based tools also means people can work securely from anywhere at anytime, Fenton says.

Microsoft New Zealand managing director Kevin Ackhurst says, while he acknowledges NZ Post operates in a challenging sector and continues to seek ways to effectively manage its costs and profitability, "we do not comment on what the organisation may or may not be doing with other vendors".