A new deal with software giant Microsoft will save the UK government £65 million in group licence discounts across centrtal government department, the Cabinet Office said today.
The new agreement will allow departments to reuse licences procured for one department in other divisions of government, it said. The savings will delivered over the course of the next three years.
The UK government as whole operates "around 3,000,000" licensed Microsoft desktops, and estimates that it accounts for around 1% of the software giant’s global revenues.
It has also reached a similar agreement with business applications vendor SAP, which will save £3 million by 2015, it saud. Central government has more than 125,000 SAP users, and employs SAP software to process invoices and civil service salaries.
The new deals will also allow smaller public organisations to buy services from Microsoft and SAP through a framework operated by the Government Procurement Service.
Stephen Kelly, Government Crown representative and former CEO of Micro Focus, estimated that if departments beyond central government participate in the new frameworks, savings could be closer to £150 million.
"A prerequisite for us is transferability of licences," Kelly said. "These agreements allow us to deploy licences from HMRC to local government, gives us the capability to support shifting job patterns with licence transfers."
Bill Crothers, the Cabinet Office’s executive director for commercial relationships, said that although the government is one of the largest customers for big IT vendors, it has failed to leverage its buying power in the past.
Jos Creese, Hampshire County Council CIO and chair of the Local Public Services CIO Council, said that the deal "gives bigger companies a chance to do business with smaller organisations which otherwise might be too small scale for them to work with".
"We should be one of their best customers. We always pay on time and we have no credit risk, so we should enjoy benefits with that, but we haven’t been up to now," Crothers said.
The reworked deals come three months after the government announced £75 million in savings through a similar agreement with Oracle.
Cabinet Office minister Francis Maude plans to meet with 22 key government suppliers later this week to discuss cutting costs and charges to government. The suppliers, which book £15bn worth of business from the government every year, include BT, Capita, G4S, IBM, and Logica.
