Paying Over the Odds

Readers of this blog are certainly no stranger to stories of profligacy, inefficiency and incompetence at the Ministry of Justice, so there's no great surprises in this from The Channel and recently flagged up by Russell Webster:-

MoJ sprays cash everywhere after punting MILLIONS of Oracle licences to Steria

The Ministry of Justice has failed to make any cash savings from moving its 2.3 million Oracle software licences to the Cabinet Office's shared service centre, The Register can reveal.

The licence breakdown of 53 separate Oracle products includes 961,000 “internet expense” licences, 250,000 for three separate for human resources licences, and 100,000 payroll licences, according to a Freedom of Information response.

The FOI request was directed to the MoJ's headquarters, which has around 3,000 staff. But even if those licences included every single member of staff employed by the MoJ and its agencies, that would still total 33 licences per head across its 70,000 staff. That suggests the department could be paying for more licences than it needs. The MoJ refused to disclose how much in total it was splashing on Oracle – citing "commercial confidentiality."

However, it is not the only department to have an apparent glut of licences. The department for the Environment, Food and Rural Affairs also has 2,000,000 Oracle licences. As a smaller department, that works out at 200 per head.

The MoJ transferred its people, services and IT to the Cabinet Office-run shared services centre in November last year, following its own botched attempt to build an ERP shared services centre for £56m. However, an FOI response sent to The Register revealed there had been no licensing cost savings yet to be associated with the move.

The licences themselves are held in perpetuity so never actually expire themselves, said the MoJ. However, it said its Technology Oracle Support and Maintenance Shared Services Oracle Support contracts will expire in April 2016. The MoJ said it hopes to save £100m over the lifetime of the shared services centre contract. But it is unclear if the centre has, so far, made any significant savings for the government. 

Earlier this month The Register revealed that the Department for Business, Innovation and Skills had a change of heart about moving to the Steria centre, embarrassingly citing the costs and risks of the project as "no longer viable".

One government insider remarked that Oracle is known to be "extreme in its defence of existing licensing agreements and in stopping any flexibility."

The article triggered a number of comments, including:-

Weird as it might be for a comparison, the comments about "commercial confidentiality" kind of remind me of a Watchdog episode involving people getting gas delivered because their town wasn't on the grid. All of them had been told they were being a discount, but that to get that discount they had to keep it confidential, and when the Watchdog guy went about asking everyone it turned out that all of them were paying more than they had to and some were paying about twice what the cheapest ones were. They just hadn't realised it because all of them were told they had to keep quiet about what they were being charged

It's larger scale, sure, but I can't help but wonder whether MoJ has been told they're getting a fantastic price for what it is and actually are being charged significantly more than other departments, they just don't know because all the departments have been told not to discuss it

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Precisely - government departments should have to publish details of every deal they do so we know who is getting backhanders from who. If the vendor doesn't like their prices being published then so be it - find someone who is not too embarrassed to share their price in public. It's *OUR* money they are spending, and we (should) have a right to see where it is going.

The background to this particular bit of MoJ profligacy is this from the Channel:-

UK.gov issues internal 'ditch Oracle NOW' edict to end pricey addiction

Exclusive. Whitehall bean counters have ordered government departments to find fresh ways to end their reliance on Oracle. The Cabinet Office is understood to have formally contacted central agencies within the last month and asked them to look for ways to “get rid of Oracle".

No10 is believed to be concerned about the amount civil servants are spending on the database giant’s applications and software. A Cabinet office spokesperson told The Register: "As part of our continuing digital transformation and efficiency programmes, we regularly review technical requirements within a department to see how they may have changed."

The chief problem is the sheer number of Oracle licenses in the UK government, not just their price, although the public sector spent £290m on Oracle in 2013, according to TechMarketView. Individual IT chiefs will have their own relationship with Oracle and pay for licenses rather than re-use licenses of those within their own department.

In January The Reg reported that the Department for Environment, Food and Rural Affairs (DEFRA), which has around 10,000 staff, was forking out for two million Oracle licenses at £155 per employee, for an annual cost of £1.3m per year. (That worked out at 200 licences per civil servant in the department.) That’s contrary to the Cabinet Office’s own guidelines of £93 on licenses, with a view to reducing that down further to £52.

Meanwhile, the mighty Home Office has tried to slash its Oracle budget by moving an ERP contract to a shared-services platform run by Steria. A Register source told us: “Nobody has a holistic view or how Oracle is used across the whole government or looking at economies of scale.”

The source described the the central communication as an “edict” that has been interpreted as an order to move away from Oracle. The trigger for the anti-Oracle edict was the end of extended support for Microsoft’s Windows XP back in 2014. The Cabinet Office negotiated a government-wide custom support agreement with Microsoft to continue building security fixes for government users.

No10 haggled Microsoft down to a price of £5.584m for tens of thousands of PCs. Microsoft’s official price was $200 per desktop for the first year, $400 for the second and $800 for year three. At the time, the Cabinet Office told The Reg this would lead to “projected savings in excess” of £20m. When it comes to Oracle, exacerbating the cost and complexity is the fact that there are so many different versions of its software that it continues to support.

It’s not clear how far this latest push to sever links will go, given the fact that past attempts to cut the dependency on Oracle and the amount of taxpayer money lavished on the giant have been foiled. When the Home Office attempted its Steria switch the bulk of its mega contract, $330m, was to remain in place until 2017.

--oo00oo--

An Oracle Unlimited License Agreement (ULA) is an arrangement in which an enterprise pays a single up-front fee to get as many licenses as they want for a specified set of Oracle products over a fixed time frame.

The most common ULA term is three years. At the end of that period, the enterprise must provide Oracle with documentation detailing the deployment of all Oracle products used. Oracle processes this information to determine the number of regular licenses to grant. For enterprises that grow during the prescribed time frame, the ULA can offer considerable cost savings compared with purchasing individual licenses up front. However, if the organization downsizes during the ULA term, it may end up overpaying for the licenses that it actually purchases in the end.

The issue of whether or not an Oracle ULA actually provides any overall benefit has given rise to controversy. The advantages of the ULA are cost savings, convenience, and simplicity. The agreements work best for companies that expect growth through normal business operations rather than through mergers and acquisitions. Oracle shops can get an array of Oracle products bundled together under one agreement and one bill, rather than a mishmash of complex licensing agreements for each product.

The drawbacks are "putting all eggs in one basket" and the need to negotiate intelligently and aggressively for favorable terms. Depending on the language in the contract, the ULA might not apply in certain situations that a careless enterprise fails to foresee, in which case the ULA does not in fact turn out to be truly unlimited in the long term.