The Federal Government has struck a whole-of-government deal with SAP.

The “strategic arrangement” with SAP is effective immediately for all existing and new SAP contracts. 

That means that any agencies looking to purchase SAP products or services will have to do so through the new arrangement.

The deal is designed to “maximise the value of government’s spend on commonly used IT by leveraging demand across agencies to achieve price reductions”, digital transformation minister Angus Taylor said in a statement.

The deal is similar to a Microsoft volume sourcing arrangement that has been in place since 2008, which Mr Taylor says has generated savings of more than $200 million.

SAP’s technology is as the heart of many of the Federal Government’s critical systems, including a new billion-dollar welfare payments systems replacement at the Department of Human Services.

The new SAP arrangement has been in the works since the 2015-16 budget.

The efforts should save $13.7 million between 2015-16 and 2019-20.