The federal Attorney General's Department has slashed software spending by 18 percent a year following a widespread review of existing contracts.

The department's CIO, Graham Fry, said the goal was to avoid being "bogged down by existing contracts and infrastructure".

Since being appointed to the role three years ago, Fry has been seeking greater agility in the area of procurement.

"We did a few things, like negotiate a change from CPU-based [licensing] to head count so we weren't paying for licences that weren't being used," Fry said. "We put competitive pressure on licensing across the board."

With savings around 18 percent, which, on the department's previous annual spend of $700,000, is more than $120,000 a year - it is an ongoing saving.

Fry said licensing is reviewed regularly through a special group established to tackle this task, adding that the process is tightly managed.

It can be a bit time consuming, but it pays for itself," Fry said.

"If you're only going to buy a dozen licences then you'll never get an ROI, but if you buy in volume then you're better off shopping around."

Asked about using open source software to further reduce cost, Fry said that while he is not "closed to open source" he is "very conscious" of the cost of migrating.

"I'm cautiously open to it and we do use open source software in three different spots in the organization [but] it's just another set of software to be evaluated," he said.

The department's existing use of open source is not in "big ticket items", but it is used on backend systems for data transfer.

"The software procurement [project] was just part of a general strategic model for sourcing," Fry said. "Software is part of the bigger picture where we work with the contract instead of just picking things off the shelf."

Fry said agility is important because the department needs to maintain a quick response time. For example, it is the department's responsibility to manage secure communications for Commonwealth Heads of Government Meetings.

The department has just completed a server consolidation project which has since seen virtualization become an integral part of its infrastructure.

"We had a lot of servers for our size so I sat down with operations and worked out the servers and their functions," Fry said. "We used VMware so we could fit more apps per server."

So far, the department's server count has reduced from 100 to 50, and although the exact numbers are not known, Fry said cost reduction was "reasonable", but the big saving was in staff time.