Govt saves $9m with Microsoft licensing scheme

The percentage of government spending this represents remains uncertain

Government agencies have achieved an estimated $9 million saving over the next three years with the signing of a new triennial licensing agreement with Microsoft, known as G2006.

But neither government nor Microsoft sources are prepared to say, even approximately, what percentage saving this represents, for fear of giving away the total government spend on Microsoft software.

The G2006 deal was concluded last week, after about a year of negotiations, and follows a similar agreement signed in 2003.

A notable feature of the past few years has been a move to open source in some government circles, with particularly strong leanings in that direction by some district health boards.

The growing profile of open source software was clearly an element in the negotiations, says Microsoft public sector director Chris Brice. But, it was “not raised explicitly as a factor” in reaching agreement.

The country’s district health boards were also angling for a stronger representation on the steering committee negotiating G2006.

“They got the representation that they requested,” says Paul de Wijze, ICT manager of all-of-government operations in the SSC. He, too, plays down any role for open source software popularity in the negotiations, saying only that “a number of influences” came into play.

The deal applies to state service agencies (including core government departments), Crown entities, local authorities and State Owned Enterprises, but not schools or tertiary educational institutions. It provides a “framework” within which individual agencies arrange Microsoft purchases, says de Wijze.

There are basically two scales of pricing: the enterprise agreement, where the agency agrees to run Microsoft software on all its workstations, and the select agreement, where there is no such organisation-wide commitment. An agency may also purchase Microsoft software through an open licence agreement, outside the G2006 framework.

As part of the 2006 arrangement, Microsoft is setting aside 5% of the revenue it makes from software sales to the government to help those agencies already using Microsoft products to deploy them more effectively.

This incentive, known as the service provision fund, is used in two ways, says Brice. First, it’s deployed as a general help to more effective implementation and, second, it’s used to encourage innovative projects among some agencies to meet a particular “business challenge”. This builds on the model evolved in Microsoft’s innovation centres, he says.

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