Government seeks savings through licence shuffle

Government seeks savings through licence shuffle

Summary: Against a background of massive cuts to public spending, Value Licensing believes it has spotted an opportunity to broker Microsoft licences between public-sector organisations

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...the legality of the proposed scheme.

Microsoft has not pursued the matter of legality with Value Licensing. Microsoft declined to comment on the legality of the scheme to ZDNet UK, and declined an interview about licensing.

Long-term prospects for licence brokering

The Cabinet Office oversees the implementation of the government's ICT strategy, and declined to comment on the legality of any company seeking to transfer licences.

"The re-use of licences within the UK public sector is a key part of our ICT strategy, although the re-sale of licences is not permitted," a Cabinet Office spokesman told ZDNet UK. "Any legal issues regarding brokering the reallocation of public-sector licences will depend on the exact details of the transfer."

As part of licence re-use efforts, the Cabinet Office is in the process of setting up a database called the Assets and Services Knowledgebase (ASK ICT) (PDF), for central government to track licence use. The database may cut down opportunities for central government licence brokering.

"The Assets and Services Knowledgebase which we are developing will record all products and services used in central government – including their use," said the spokesman. "The government also encourages contracts to be written suitable for re-use. This will allow for re-use of any product which is not being used for its original purpose."

The first phase of ASK ICT was delivered in October. The database was introduced to address "a lack of management information to support achievement of key efficiency aims for government ICT", according to a government procurement document.

The database will cover central government licences, and quangos, but not regional public-sector bodies.

Scale of Microsoft licensing spend

The UK government is a major customer of Microsoft products, spending millions of pounds with the company, but does not always know where potential for reallocation exists.

The re-use of licences within the UK public sector is a key part of our ICT strategy, although the re-sale of licences is not permitted.

– Cabinet Office

The Department of Health (DoH) is one major user of Microsoft software licences within government bodies. Connecting for Health (CfH), the DoH informatics arm, owns the perpetual licences from an enterprise-wide agreement (EWA) in 2009 with Microsoft for volume licensing.

The NHS centrally owns millions of Microsoft perpetual licences, but does not audit its assets to find redundant licences, CfH told ZDNet UK.

CfH said that as the NHS server estate is upgraded, older versions of licences become redundant. CfH holds more than a million Microsoft licences that are, or are becoming, redundant.

A blessing in disguise

Although proprietary software companies depend on licensing for their revenue and can use their clients' existing investment as a tool to set restrictive rules and higher fees, this only works for so long.

Open standards, and open software, make it easier for organisations to contemplate changing suppliers altogether: the more Draconian the deal struck by an existing supplier, the more interesting the alternatives become.

When Microsoft could set the rules for the industry, it was in its interests to lay down the law and discourage transferable licences: now, what looks like a threat — a third-party encouraging licence re-use — may be one way to preserve market share and user base.


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Topics: Government UK, Tech Industry

Tom Espiner

About Tom Espiner

Tom is a technology reporter for ZDNet.com. He covers the security beat, writing about everything from hacking and cybercrime to threats and mitigation. He also focuses on open source and emerging technologies, all the while trying to cut through greenwash.

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2 comments
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  • A company called ‘Discount-Licensing.com’, who set up the secondary volume software licence market, has been active within the Public sector market for years – have a read Page 39 of Government Technology magazine (November 2010 edition V9.7): http://issuu.com/karlosullivan/docs/gt97magazine.
    noelu1
  • To add to the above point, I would note that unlike the broker mentioned in the above article, Discount-Licensing.com's website (see FAQs) also claims that it does not profit from secondary licence transfers made internally between Public sector bodies. Its website states clearly that the tax payer should not have to pay a fee of any kind to farm licences between organisations that the tax payer already owns. It claims to be "happy to work free of charge on Government licence shuffle projects".
    NathanC-aa091