The government said it expects to save millions of dollars over the next three years, with the deal worth $13.7 million less over the three year period than the government's previous Microsoft deal.
Office 365 is a subscription-based version of the popular Microsoft Office program and was launched back in 2011, with an iPad version released just last month.
Microsoft Australia's Queensland state director Sharon Schoenborn announced the deal in a blog post, and said that the new deal represented a major step in the state's Information and Communications Technologies (ICT) Strategy 2013-2017 to transform its digital services.
"Queensland’s “ICT Strategy 2013-2017” is a blueprint designed to improve services for Queenslanders by better use and analysis of government data, and by using modern, cost efficient technology," Schoenborn wrote in the post.
"Queensland’s use of Office 365 for messaging and email, and the enterprise social network Yammer, will help achieve that in the hands of government employees to make communication and collaboration seamless."
Schoenborn also said it allowed the Queensland Government to take a positive step towards the standardisation and simplification of ICT across government and enable "new forms of knowledge sharing, collaboration and interconnectivity".
"This new partnership with the Queensland Government has the potential to transform the State’s digital ecosystem through local industry participation and enable the Government to become a leader in the innovation space."
IT Minister Ian Walker said the new deal would allow the government to "move between computer and cloud-based software".
"This is the first whole-of-government contract in Australia to provide the flexibility to move between computer and cloud-based software, making the Queensland Government leaders in this area," said Walker.
"This new contract means that for the first time all government departments will have access to the same technologies, allowing for greater sharing and collaboration," he said. "Not only are we saving the taxpayers of Queensland millions of dollars, it's another positive step towards simplifying IT services across government."
Walker told reporters processes had been put in place to ensure there's no repeat of Queensland Health's payroll disaster, which is expected to cost the state $1.2 billion over eight years.
"All of our major projects from now go through the Director's General Counsel, where all the directors-general have vision of the project so that nobody can move out of step without knowing what other departments are doing," he said.
"Any project of consequence now needs sign off not only from the sponsoring minister but also from me as IT minister. Thirdly, there is a system of gateways in place that are monitored by the Director's General Counsel to make sure things are on track. Fourthly, we now have an IT dashboard published online which shows the current status of IT projects."
The Queensland Government last year announced plans to outsource its IT services to cut costs, and the Microsoft deal seems to be a key component of this.