NAO issues warning on software deals

The National Audit Office (NAO) says that government-wide software deals are not being adopted as much as expected due to a lack of awareness among departments.

Whitehall buying arm the Office of Government Commerce (OGC) negotiated discounted software purchasing agreements with suppliers such as Microsoft, Sun Microsystems and Oracle during the last 12 months.

The OGC estimated the expected savings would reach £40m to £60m per year, by agreeing preferential rates with suppliers. The deal with Microsoft alone was aimed at saving £100m over three years.

But the NAO says in its Purchasing and Managing Software Licences report this week that the savings reached by January 2003 amounted to £31m.

The 'disappointing' response is partly down to a time lag, where departments are waiting for existing deals to expire, says the report.

But lack of awareness has also hampered uptake.

'Our discussions with departments indicated that not all were aware of the agreements with suppliers,' said the report.

Many departments were also underestimating the costs of moving to new versions of their software. According to the report, fewer than half considered the total cost of ownership before upgrading software.

By signing up to the agreement reached between Microsoft and the OGC, departments would be entitled to upgrade to Microsoft's latest desktop operating system, Windows XP. But the software requires a PC with at least a 300MHz Pentium II processor and 128Mb of memory, which could mean buying new desktops to go with the upgrade.

There is a 'risk that the full cost of investment in IT may be underestimated' warns the NAO.