Microsoft secures €10m local authority deal

SOFTWARE: Microsoft has signed a three-year contract to supply 33 local authorities with a range of desktop and server products, in the software giant's biggest annuity deal signed in the Republic to date.

The deal, which is worth up to €10 million over three years, was agreed with the Local Government Computer Services Board, a public sector organisation which helps local authorities meet their information technology needs.

The agreement will provide 12,500 local authority users with products such as Microsoft Office, Windows 2000, Exchange and more specialist products including tools for developers utilising the latest .NET technologies.

The deal is one of the first big examples of a large Government body signing an annuity deal with Microsoft, which enables the firm to lease its software to customers for a period rather than selling it outright in a single licensing deal.

Over the three-year period of the agreement, 12,500 users will be fully licensed for the most up-to-date version of Microsoft product available. The board will use the software purchased to support an intranet-based delivery of portal solutions for the authorities. It has already implemented the first phase of new financial systems across 33 authorities, using the server product SQL Server.

Ms Brid Carter, director of the Local Government Computer Services Board, said the deal represented excellent value and had delivered at least 25 per cent savings for the local authorities due to the sheer size of the contract.

She said the new type of licensing arrangement with Microsoft also removed the worry about licensing compliance and removed the need for frequent checks on everyone's computer.

However, Ms Carter admitted it was a new way of doing business that had caused some concerns."You don't have too much choice when Microsoft change strategy. We would certainly have blinked more than once at the approach, but if you spread the costs over time it is not more expensive."

Meath, Fingal and Dún Laoghaire were the only local authorities who chose to stay out of the new deal as they considered their software was already up to date and would not need changing for three years, said Ms Carter.

Mr Harry Largey, enterprise sales manager for Microsoft Ireland, confirmed it was a multimillion euro deal which involved a fixed payment per year. He said this was the firm's largest enterprise agreement in Ireland to date and was an indication of a trend towards simpler licensing structures for larger customers.

But these new type of deals have proved more controversial among some smaller customers as the July 31st deadline which will erase Microsoft's more traditional licensing upgrades approaches.

Mr Largey said views were mixed on the new leasing approach and Microsoft was engaging with customers.

The Local Government Computer Services Board is also in the process of tendering for a major hardware contract to supply laptop and desktop equipment to the authorities. It is understood contracts for this supply deal are currently being finalised.