Conclusions and recommendations
For Departments
1. OGC was able to negotiate a succession
of discounts from dominant software suppliers because it secured
close and sustained co-operation across the public sector.
The OGC is now embarked on discussions with Microsoft to determine
whether better prices can be achieved through an improved Memorandum
and it will be important that bodies in the public sector are
ready to act in concert again, so that the OGC can negotiate from
a position of strength.
2. Open Source software, already in widespread
use for server applications, may in future provide departments
with a viable alternative to existing software suppliers for a
broader range of functions including desktop applications, opening
up the marketplace to wider competition and potential improvements
in value for money. The
present OGC trials with IBM have recently been supplemented by
a second deal with Sun Microsystems. This deal offers a useful
second front to explore the viability of this potential new source
of software. If the results show that open source software is
practical, particularly in respect of integration with existing
systems, departments should be ready to apply the lessons learnt
to their future purchasing decisions.
3. Departments should benchmark prices against
those available through the Memoranda when considering options
for purchasing software.
If a decision is taken not to use the Memoranda, then there needs
to be clear evidence that the alternative procurement route will
deliver better value for money.
4. Where departments plan to make use of the
specialist skills and purchasing power of contractors to procure
software, they should make sure that the contractor is aware of
the Memoranda, and that
any benefits arising from the use of such discounts are factored
into the overall deal secured between contractor and department.
For OGC
5. Initial take-up of the Memoranda has been
less than OGC anticipated, with some departments lacking awareness
about the deals in place.
OGC is focusing its publicity and awareness campaigns on those
who are not procuring software through the Memoranda. OGC should
track the progress of these campaigns and take further action
if awareness and take-up of the deal remain lower than expected.
6. 10% of departments do not maintain reliable
market information on IT suppliers, their software products or
the longer term developments in the IT sector.
OGC should identify and work with these departments, for example
by encouraging them to attend OGC's information and support events,
so that they can deal with suppliers on a more even and professional
footing.
7. The Memoranda negotiated by OGC have, to
date, saved £49 million in direct price reductions. OGC
does not, however, hold information on the extra savings that
might have been achieved if those departments who have not used
the Memoranda had done so. OGC should determine how the savings
achieved compare with what might have been secured with levels
of higher take-up.
8. OGC estimated £36 million direct price
savings over three years from March 2002, but £49 million
savings had already been achieved by September 2003.
In the light of their increased knowledge of the marketplace,
their greater experience gained from successive deals, and the
opening of discussions with Microsoft, OGC should see whether
an improved Memorandum offering further savings is possible.
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