☛ Want the latest procurement and supply chain news delivered straight to your inbox? Sign up for the Supply Management Daily
25 June 2012 | Adam Leach
Central government departments, local authorities and the NHS are to reap the benefits of bigger discounts on software licenses and maintenance fees following deals with Microsoft and SAP, the Cabinet Office announced today.
The majority of the savings, which were calculated by applying the new rates to the projected spending with contractors up to the end of 2013, will come through the deal with Microsoft, which is expected to deliver £65 million savings. Another £3 million are anticipated to come from SAP this year and a further £2 million will have come through by the end of 2015.
Crucially, while Microsoft will shortly be increasing its software license price as a result of the economic troubles in the Eurozone, the government has locked in its negotiated rates to cover the remainder of the parliament. “Local government, central government and the crown will not be participating in that price rise,” said government crown representative Stephen Kelly. “Effectively we’ve agreed that through the rest of this parliament, the prices as we sit here now will be transferred.”
In terms of the savings from SAP, they will come through a discount that reflects the volume of SAP users, of which there are 125,000 in central government. The deal will also include a 22 per cent reduction in year-on-year software maintenance charges, with SAP delivering a reduced level of service as a result.
Announcing the deals today, Cabinet Office minister, Francis Maude, said: “The old days of signing huge, inflexible IT contracts are gone forever. We have skilled negotiators within government and we are building up this expertise, taking a strategic view and acting as the taxpayer’s champion.”
Both deals will benefit the broader public sector with police forces, NHS trusts and local authorities buying the goods and services at the new rate. Jos Creese, chief information officer at Hampshire County Council, said: “SAP is widely used across larger local authorities, many of whom increasingly need to be able to work together. Having access to a single and flexible framework that makes this possible and reduces costs is therefore very welcome.”
David Mills, head of public sector UK and Ireland, SAP, said: “The agreement allows for the sharing of SAP resources across the whole of the public sector, therefore creating more flexibility and reducing overall costs.”