The Danish government could save around 125 million Danish krone (£11.3 million) over the next five years if it adopts the productivity software instead of upgrading to Microsoft's Office 2007 suite.

Doing nothing could save it even more, according to a study by consultancy Rambøll Management.

Rambøll compared the cost of different ways of implementing the Danish Parliament's 2 June decision that government institutions exchanging information digitally with citizens or companies must do so in file formats based on open standards from 1 January 2008. The Danish Open Source Business Association commissioned the report, which was published in Danish in August. An English version of the report was linked to from the website last week.

Adam Lebech, head of office at the Danish National IT and Telecom Agency, welcomed the debate the report had started, but warned that the numbers did not tell the whole story.

"It's very difficult to make these calculations because you have to make a lot of assumptions," he said on Wednesday.

"The report doesn't look at savings from open standards, it only looks at costs. It's not a business case," he said.

The report examined the cost of switching the exchange of documentation to two possible open standard document formats: Office Open XML and OpenDocument Format (ODF).

Microsoft developed the Office Open XML file format for its Office 2007 software suite, and proposed it to European standards body ECMA International for standardisation. In late August, an ECMA technical committee chaired by Microsoft was still discussing draft version 1.4 of the specification, whereas the International Organization for Standardization (ISO) approved the rival ODF standard in May. ODF is the format used by open source software suite, and also by proprietary software including Sun Microsystems' StarOffice and IBM's WorkPlace.

Rambøll estimated the cost of two ways the government could switch its document exchange to Office Open XML: by using free file translation tools Microsoft has said it will provide for existing versions of its Office software, or by upgrading to Office 2007 when it becomes available. For ODF, Rambøll compared the cost of migrating to software, or of using file translators, still in development, to open and save ODF documents from within Microsoft Office.

It concluded that if the government continued its policy of progressively upgrading to newer versions of Microsoft Office, the cost of licensing and installing the upgrades, and switching document exchange to the Office Open XML format, would cost around 380 million krone. The cost of continuing to upgrade Microsoft Office while switching to ODF would be slightly more, because of greater file conversion and support costs.

Migrating from Microsoft Office to, while switching to ODF, would cost around 255 million krone, Rambøll said.

The cheapest route, at 105 million krone, would be to adopt Office Open XML - but to stick with the versions of Microsoft Office already in use, primarily Office XP and 2003, Rambøll said. Sticking with current versions of the software and switching to ODF would cost marginally more.

The report, Estimating the Costs of Implementing Office OpenXML and ODF in the Central Government, is available in English here. (PDF file).