'Tougher deals' to save £70m as government plays hard ball with Microsoft and SAP

By Peter Gothard
25 Jun 2012 View Comments
Microsoft TwC Jonathon Ness

Hot on the heels of earlier deals this year with Oracle and Capgemini, the government has announced that new deals with Microsoft and SAP should save taxpayers as much as £70m by 2015.

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The negotiations will save, says the Cabinet Office, £65m on Microsoft software licences alone, and £3-5m on SAP software.

The savings, explained the Cabinet Office's executive director for commercial relationships, Bill Crothers, at a press conference this morning, are due mostly to imitating the way the private sector negotiates contracts.

"Previously, each [government] department would do business with the supplier as a client in its own right," said Crothers, "but in the private sector you'd add together all the business that each subsidiary does with the supplier and you'd take that single figure."

Former CEO of Micro Focus and "government crown representative" Stephen Kelly added that the IT supply deals with Microsoft and SAP had allowed the administration to "move away from complete dependency on legacy software, improve competition, and use it for leverage in terms of aggregation."

Kelly talked of how the government is now keen to use this added flexibility to start moving its technology outlook forward.

"We're keen on open source, a level playing field, cloud computing and moving to a variable cost structure, rapid project delivery and agile methodologies," said Kelly, before adding that the new contracts allowed "enough flexibility to be able to move licences as the whole structure of the Civil Service is set to change."

Kelly revealed that many of Microsoft's agreements in negotations with the government were "driven by discussions and relationships with NHS trusts."

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