By its standards, 2003 was a bad year for Microsoft in the government sector. Concern about vendor lock-in and ill-feeling generated by inflated licence and maintenance fees led IT buyers at scores of public sector administrations to start trialling free (or nearly free) alternatives to Windows and Office. The Israeli civil service, the State of Massachusetts and the City of Munich were just three that started looking at the open source options of the Linux operating system and the OpenOffice desktop applications suite.
Happily for Microsoft, 2004 has started better. First came the admission by those involved in the Munich project – widely seen as a proving ground for desktop Linux – that they were encountering unforeseen technical difficulties.
Then came a further boost to Microsoft’s fortunes, this time from the UK. Newham Borough Council in East London – one of the most influential and innovative local authorities in the UK (at least from an IT point of view) – withdrew from a high-profile, government-initiated trial of open source technologies, and in doing so illuminated the politics and commercial warfare surrounding open source adoption.
After a short feasibility study, Newham insiders concluded that open source technologies lacked the necessary sophistication they needed. Most notably, open source software could not easily support the many groupware applications that connect different departments of the council. At the same time, it was clear that the council’s IT department would struggle to spare the necessary resources for a full trial.
However, simply announcing the trials had had the kind of result the government may have been seeking. By early February, a framework agreement with Microsoft had been reached that appeared to offer Newham and other local authorities in the UK the chance to upgrade their Windows desktops and Exchange groupware servers at a knock-down price. Sources close to the council claimed Microsoft was prepared to offer “massive” discounts on its software and fund “several hundred thousand pounds” worth of consultancy and support services from Cap Gemini Ernst &Young.
Although it might have wished it did not have to offer such attractive terms, the agreement with Newham nevertheless seemed to represent a real victory for Microsoft. Three months earlier, the UK’s Office of Government Commerce (OGC) – the divison of the Treasury that sets public sector procurement guidelines – announced plans for an IBM-backed trial of open source software at Newham and Powys borough councils and within several Whitehall offices. The reason for the trials seemed clear: to establish a business case for open source technologies that would lead to a large-scale exodus from Windows technology.
But the trials got off to a bad start. The OGC, in its haste to build momentum behind the initiative, appeared to fail to properly consult with all of the participants. The first that Richard Steel, Newham’s head of ICT (information and communications technology), says he knew of the trial was when he heard the OGC’s public announcement on 9 October 2003. Steel says the gaffe did not cause any particular friction between Newham and Whitehall. But it seems reasonable to assume that it did not go down especially well within the council chambers, either.
What happened next says much about Microsoft’s new-found determination to fight off the threat of open source. A team of Microsoft executives, led by the company’s UK public sector chief, Terry Smith, descended on Newham. They listened to the council’s concerns, say those close to the talks, and discussed how any previous areas of contention could be overcome. The Microsoft executives were said to be in uncharacteristically conciliatory mood and were determined to establish a more consultative relationship with the council.
Another departure was the fact that Microsoft was prepared to negotiate directly with the council. Previously, it tended to talk only to central government bodies (such as the OGC) that represented the broad interests of the local government sector. Now, a range of attractive concessions – including lower licence fees, more flexible payment methods and new security procedures – were on the table to individual councils.
What was less clear was what the withdrawal of Newham meant for the OGC’s trials. The OGC says that they will still go ahead, only without Newham. But the non-participation of such an influential council raised doubts about the credibility of the project.
In Munich, the self-styled ‘technology capital’ of Germany, open source initiatives were also wavering. For the best part of a year, many IT executives have been watching the city council’s controversial plan to migrate 14,000 desktops from Windows to an open source infrastructure. What they have been seeing will certainly not inspire confidence in rapid defection from Windows.
Although there are conflicting reports about the precise nature of the difficulties, there appears to be mixed support among the council’s software suppliers for Linux. Some are enthusiastic about the opportunity to support Linux and OpenOffice, while many others say that porting to the open source technologies might prove prohibitively expensive or, indeed, technically impossible.
In a recent interview with German IT magazine Computerwoche, Wilhelm Hoegner, the head of the council’s project team, was reported as saying that “around 50%” of the council’s many small application suppliers had no plans at that time to move their technology in the direction of open source. Some sources close to the council suggested that Germany’s biggest software supplier, SAP, might be forced to step in and underwrite some of the costs.
Is that situation enough to undermine the project? Pressed by Information Age to clarify the status of the scheme, one of the project team, Peter Hofmann, conceded that the council’s original decision to migrate off Windows could be overturned. “It was a political decision and it can always be reversed,” he said.
A meeting of the council, scheduled for early March, will take a fresh look at the project before deciding to release the necessary funds, he added. That position was underscored by a statement from Nuremberg-based SuSE, the Linux specialist that co-led the bid: “The decision [by Munich in May 2003] merely represents a strategic positioning. The award of contracts has not yet been finalised.”
But back in May, the decision had seemed final. A vote to switch from Windows to Linux was passed overwhelmingly by council members, and open source advocates rejoiced.
More sober observers were bewildered, however. It soon became clear that the council had not chosen the cheapest bid, despite the promise of lower costs being one of Linux’s unique selling points. Reliable sources close to the council revealed that the Linux proposal would cost around EU30 million to implement. But the Microsoft bid – involving an upgrade from Windows NT 4.0 desktop operating system to Windows XP – was understood to have come in at several million euros under that amount.
“It would have cost EU27 million to upgrade Windows, [even] before some reportedly very steep discounts from Microsoft,” says Michael Silver, an analyst at IT industry consultancy Gartner.
Another surprise was that Microsoft – a past master at lobbying efforts – had allowed itself to be outflanked by SuSE and IBM. Even Microsoft’s CEO, Steve Ballmer, became involved in the bid, memorably cutting short an Alpine skiing holiday to meet Munich’s mayor during a last-ditch attempt to change the city council’s mind. But IBM had plenty of lobbying muscle, too. A local workforce of around 1,700 people and a calendar of regular events for customers, partners and employees in Munich made the technology giant a friend of the city. (SuSE’s German origins could not have hurt its case, either.)
Such manoeuvring around Linux is providing plenty of fuel for conspiracy theorists. Some suggest that organisations are flirting with Linux simply as a ploy to extract lower fees from Microsoft.
In the case of Newham, there was no such agenda, stresses the council IT head Steel. “I am simply keen to get the best results for ourselves and for the public sector as a whole,” he says. But that does not stop Microsoft mobilising its forces every time it sees Linux on the tender list. The software giant will clearly go to considerable lengths to make sure that 2004 is the year when Linux fails to get beyond the beachhead.