The UK government has reached a new agreement with IT supplier Oracle that will allow central government departments, the NHS and the police emergency services to procure products and services as a single, direct customer.
According to the Cabinet Office, the new agreement will save £75 million over the next three years, through improved discount and the ability to reuse Oracle licenses accross government departments. That saving does not include any potential benefit from buying Oracle systems directly, rather than through systems integrators.
Cabinet Office minister Francis Maude and Oracle president Safra Katz were personally involved in negotiating the deal, it said, which had never happened before.
As part of the deal, the government will set up an "Oracle Centre of Excellence" that will train Oracle experts whose skills can be applied across government. This means the government has committed to using Oracle software in the long term.
John Collington, the government’s chief procurement officer, said the deal followed "strenuous negotiation over a number of months." and that the plan is for the government to buy all Oracle products directly as a single customer, rather than through system integrators.
According to its director of ICT Futures Liam Maxwell, the government currently spends "north of £200 million a year" with Oracle. He said that bypassing system integrators when buying Oracle products will mean that it will have to use
less customised versions of the software.
"Right at the beginning of the negotiation, Safra Katz asked why we can’t be more vanilla, and we told her we wanted to be," Maxwell said. "Government can think itself too big [a customer] sometimes. But we are quite large and these changes take some time."
In a prepared statement, Katz said that its relationship UK government "has always been very special to Oracle. We are honoured to support its initiatives and to stand together in meeting the changing IT needs of the 21st Century."
Collington said that the government would be looking to take the single customer, direct engagement approach with other IT suppliers.
Earlier this year, HM Revenues and Customs negotiated a new deal with IT services supplier Capgemini that allowed it strike direct contracts with subcontractors.
Capgemini’s CEO Paul Hermelin warned investors that this would have a significant impact on the company’s revenues in the coming. But he also said that it would improve the company’s profit margins as ‘pass-though’ revenue, which it collects from customers and passes on subcontractors, is unprofitable.