Every year, Ontario publishes a ledger. Buried in the Public Accounts, the Detailed Schedules of Payments list every supplier paid more than $50,000 by any provincial ministry — road builders, law firms, software vendors — and the exact total each received. Almost nobody reads it, even though it answers a question every taxpayer should ask: who, exactly, are we paying?
In technology, one company leads by a wide margin. For two years running, Ontario’s single largest technology vendor has been Microsoft Canada, collecting at least $106 million in 2023–24 and roughly $125 million in 2024–25 — up from about $29 million paid by the central ministry in 2018–19. IBM follows at roughly $59 million, then Oracle at $34 million. Across all ministries, Ontario paid at least $200 million directly to major US tech vendors in 2023–24. A year later, with Salesforce and Google joining the roster, that direct total climbed to roughly $275 million.
Floors, all the way down
Every one of those numbers is a floor — a provable minimum, with the true spend sitting much higher. The schedules only capture payments above $50,000, and any money routed through a reseller is logged under the reseller’s name. Because Ontario buys much of its Microsoft licensing through CDW and its cloud infrastructure through other intermediaries, a company like Amazon Web Services barely appears in the ledger at all; its cloud bill is tucked inside reseller totals, invisible in the vendor column. (A few methodological notes: the schedules are unaudited, figures include sales tax, and the vendor totals above are my own tallies of the individual ministry line items.)
Zoom out and the floors keep stacking. The two budget lines Ontario dedicates to central IT carry an operating budget of roughly $857 million for 2025–26 — a figure that excludes capital spending, IT embedded inside other ministries, and the entire broader public sector: the hospitals, school boards, and municipalities that buy off the same provincial contracts and for which no consolidated ledger exists. The largest of the eight ministry IT clusters, at $171.8 million, is Health. And that is just one province. Federally, the US Department of Commerce’s guide for American exporters describes the Government of Canada as the country’s single largest buyer of ICT goods and services, spending roughly $5 billion a year.
What the dollar buys
So far, this is just procurement at scale: big governments buy big software. The more revealing question is where each dollar actually goes. Because these vendors are publicly traded, their economics are on the record. Across the major US software suppliers, roughly 18 to 36 cents of every revenue dollar leaves the building as pure net profit. Microsoft — both Ontario’s and Ottawa’s largest software supplier — sits at the very top of that range at 36 per cent. And the specific product lines governments buy most heavily — cloud infrastructure, per-seat office suites, creative tools — carry gross margins between 63 and 95 per cent.
Those margins are a byproduct of how software works. Once a platform is built, issuing one more licence costs the vendor next to nothing. Prices don’t reflect the cost of delivery; they reflect the buyer’s leverage. When a vendor prices a licence far above marginal cost, they are telling you what they think your alternatives are worth. For a government that standardized on a vendor a decade ago — embedding it into every file format, workflow, integration, and training manual — the honest answer is: almost nothing.
Now put that math beside the budgets paying the bill. The same fiscal plan that allocates $171.8 million to the Health IT cluster governs a healthcare system measured in nursing hours, emergency wait times, and hallway beds. In January 2026, the Ontario Hospital Association told the province’s pre-budget consultations (opens in new tab) that hospital operating costs are rising at roughly 6 per cent a year while funding grows at 4 per cent — leaving a structural deficit of nearly $1 billion and forcing hospitals to weigh consolidating programs or closing inpatient services.
To be fair, the software Ontario buys mostly works, and cancelling a software licence doesn’t automatically fund an operating room. Nor do Microsoft’s global margins tell us the exact profit on Ontario’s contracts. Even so, the province’s largest technology cheques are going to the most profitable tier of an already high-margin industry, at a moment when the next dollar saved in healthcare comes out of patient care. That contrast warrants a simple question: is this really the only way to buy the capability?
Where this argument is weakest
Coming from someone who builds custom software for a living, this argument is conveniently self-serving — which means it deserves a stress test. Here is the counter-case, put as fairly as I can:
The margins are global. Microsoft’s 36 per cent net margin spans everything it sells worldwide; Ontario is a rounding error inside that total. And gross margin isn’t pure profit — it funds R&D, data centres, and support before net income is ever tallied. The fair takeaway is narrower: the category of software governments rent is among the highest-margin products they buy from anyone.
Renting is often the right call. Nobody should build a government word processor out of principle. Anyone who has watched a bespoke public-sector IT project implode knows that licensing a proven off-the-shelf tool is often the safest path. Custom software brings its own maintenance burden and delivery risk.
The deeper problem is governance, not just price. When Ontario’s Auditor General audited the province’s central IT office in 2022, she found 140 external vendors running systems essential to government continuity. The province held third-party security assurance reports for none of them, and actively tracked licence usage for only three: Microsoft, Oracle, and IBM. A 2024 follow-up found the remediation still unfinished. In effect, the province was paying the rent without reading the meter.
Rent, or own
Strip away the line items and the ledger shows a web of standing leases: a province-wide Microsoft agreement — mandatory for ministries and agencies, and open to hospitals, schools, municipalities, and universities — alongside enterprise contracts for Oracle, Adobe, and Citrix, all coming up for renewal.
For anyone stewarding public money, the question is straightforward: when budgets are tight, is perpetual rent at 30-plus per cent net margins the only way to get working technology? For commodity tools like email, spreadsheets, and raw cloud compute, renting makes sense. But for the domain-specific systems that govern how a province delivers healthcare, justice, and public services, there is a second option: owning what the public pays to build — the source code, the data, and the freedom to walk away. That option rarely wins in procurement, mostly because it rarely makes it onto the scorecard.
In an earlier note, I compared cloud hosting to renting an apartment where you can still hold the keys to your own safe. The same logic applies one layer up. A software licence is a lease. Ontario’s Microsoft agreement expires this September, and its replacement is already out to tender. The payment will show up in next year’s ledger either way. Let’s hope someone prices out what it would mean to own before signing the lease.