However, he said increasing moves toward local Clouds from telcos as well as international providers would help to alleviate the regulatory concerns held by some.

Cloud and outsourcing arrangements pose increasingly attractive propositions for a cash-strapped South Australian Government, which has imposed increasingly tight restrictions on spending for the current financial year. Mills' office is currently tasked with finding savings of $4.217 million according to the 2010/2011 budget, while the 4000 job cuts mandated by the government across the board are likely to affect ICT staff in some agencies.

The government is already heavily outsourced to HP's Enterprise Services (formerly EDS) for its mainframe requirements and currently runs both a whole-of-government messaging service and payroll software across two thirds of public servants in a private Cloud environment.

Mills said there were likely greater cost benefits to be achieved through further migration to the Cloud, but that any implementations would be driven by business needs rather than through technology.

"We'll need to reform and look very seriously at the balance of what we buy and how we buy it and what we do with ourselves," he said.