I see no reason why open source office applications should not suffice for the vast majority of users. However, I suspect many of the departments may have more invested - VBA macros, interfaces to other systems, etc. which could make this "cost-cutting" exercise have a number of hidden costs. I can just imagine the thought process. "Oh, there's a free alternative. We'll use that."
"If you don't fail at least 90 percent of the time, you're not aiming high enough." Alan Kay.