Microsoft has said it will set up a "co-investment program" with the Australian Department of Defence, as part of the AU$495 million (US$324.71m) deal announced last week.

As reported by iTNews, the program will see the defense department receiving financial support for unspecified "cloud adoption and digital transformation" activities.

Falling under Microsoft's "End Customer Investment Funds" program, Microsoft is able to "set-aside funding in fiscal budgets to pay for services to end-customers in support of Microsoft products and solutions."

A Defence spokesperson told iTNews: "The investment supports Defence's digital transformation objectives in line with the Defence digital strategy and roadmap. It will also support Defence’s broader secure cloud strategy and investments."

The spokesperson confirmed that it would encompass pilots and cloud migration, but declined to share specific funding arrangements.

With funding coming directly from Microsoft, it could be used to encourage Defence to try emerging or new Azure services, and can also be used for one-to-one training on Azure cloud services.

The recent AU$495 million contract will commence on September 1, 2025. Under the contract, Microsoft Azure will underpin the defense department's ERP platform, which covers logistics, maintenance, finance, and procurement.

The Australian Department of Defence also has an ongoing relationship with Amazon Web Services (AWS). In July 2024, reports emerged that AWS was building a data center campus for Australia's government to handle top-secret information. The data center and cloud system will be developed as a partnership between AWS and the Australian government, and the latter will invest AU$2 billion (US$1.3bn) in the new system over the next ten years.