Government announces MOUs with key suppliers - but where are the savings?

Led by heavyweight Francis Maude, paymaster general and minister for the Cabinet office, the Efficiency and Reform Group(ERG) has been in the ring with its largest 17 IT suppliers including Oracle, HP, IBM, Atos Origin, BT, and Microsoft and...

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Led by heavyweight Francis Maude, paymaster general and minister for the Cabinet office, the Efficiency and Reform Group(ERG) has been in the ring with its largest 17 IT suppliers including Oracle, HP, IBM, Atos Origin, BT, and Microsoft and came out triumphantly clutching a set of new MOU’s.

Great news for the deficit as the ERG has a target of £6.2bn in savings, much of which is currently spent with these IT giants. Frustrated by vendors historically insisting on treating each public sector body in isolation the ERG has demanded that these privileged suppliers treat public sector entities as a “single client” thus deserving discounts at least as worthy as the largest of commercial clients .

So where are the savings?

Well so far Maude has been tight lipped about the detail of the new MOU’s and the vendors appear to be following an agreed script by saying pretty much nothing.

Oracle software and now Sun hardware underpins huge swathes of the public sector including the DWP, HMRC and Scottish Government. Oracle made its MOU announcement last week and David Callaghan SVP for Oracle UK said “Under this agreement Oracle will continue to work to deliver innovative products and services that can drive the efficiencies that the government is committed to achieve. “

Facing anything up to 30% cuts in budgets public sector, IT directors and CIOs are desperately looking for clues as to how these MOUs will help them reduce cost.

Maybe there are no savings?

It could just be that for all the Whitehall chest beating, when caught between the chancellor’s spending review objectives and the brute force of the IT vendors, the ERG have succumbed to the inevitable old IT chestnut of “spend more to save more”.

The HM Government CIO John Suffolk also hinted at this direction at a SIIA conference this month when he boldly suggested that investment in G-Cloud could reduce the current 8,200 central government data centres down to between 9 and 12, saving £500m per annum. He didn’t state the cost to achieve this or which vendors might benefit.

Westminster City Council is another advocate for cloud consolidation; its CIO David Wilde this month stated the intention to save money by investing in the alignment of corporate IT systems, Project Athena. “Why have 10 instances of Oracle when you can have one which will be used by a lot of others” Wilde said.

What is really needed in the MOUs?

Competitive pricing of course, but no one imagines that the ERG will really throw its weight effectively and use open-source as a threat against the entrenched enterprise software suppliers such as Oracle.

In areas such as enterprise software the key focus should be transportability. If a government body has surplus license grants after staff cuts and another entity is expanding its needs, it should be possible to transfer the asset. Not so at present. But the devil is in the detail and the ERG dream to be treated as a “single client” could become a nightmare in future unless it can manage the huge pool of assets effectively.

This task should not be underestimated with legacy and current Oracle license grants scattered across over 80% of public sector bodies both directly with the entities and through a plethora of SI’s.

We will discuss more as actual MOU details are released.