Opinion: a pan-government Oracle monopoly will be a bad deal for taxpayers

In our first guest column, Carl Davies of reseller TmaxSoft shares a strong personal opinion about central government IT procurement

Posted 23 November 2016 by

TmaxSoft UK MD Carl DaviesAggressive sales tactics and auditing policy from the software giant will put excessive cost pressures on both local and national institutions, claims reseller TmaxSoft’s UK MD Carl Davies

Within the IT sector, Oracle is somewhat notorious for its frequent audits of customers, and has often been accused of leveraging opaque and underhand licensing agreements for its own financial gain.

It is therefore alarming that the government is likely to be signing a cross-government licensing deal with the swaggering enterprise software giant shortly – a deal that could lead to excessive spending by public bodies on their IT services and, correspondingly, much wastage of taxpayer money.

According to multiple sources, the Cabinet Office is putting in place plans for Oracle Enterprise Resource Planning (ERP) to be put in place across a swath of government bodies and institutions. The Cabinet Office originally signed a three-year deal with Oracle in 2012, and this deal would ramp up Oracle’s hold over government IT to a position of near-monopoly.

Why should taxpayers be concerned about this deal? Oracle has a reputation for ruthlessness when dealing with its customers. Its typical modus operandi is to lock customers into opaque licensing agreements, and subsequently use the murkiness of these agreements as a point of leverage from which to issue ‘breach notices’ to warn customers that they’re overstepping the bounds of their licenses. Left with few alternatives, companies are typically forced into raising their retainer to Oracle without any increase in the quantity or quality of their services.

In effect, the more licenses that Oracle holds with an organisation, the more pressure it can apply to that organisation to comply with its aggressive sales tactics. This deal could easily see taxpayer’s money that should be used for efficiently improving government IT instead going to Oracle.

We conducted a Freedom of Information campaign in 2015 to assess just how much London’s borough councils were spending on Oracle licenses, as well as how many  had been audited by the software company. Over a third (37%) reported that their spending on Oracle had increased by over 20% in the past two years, while four councils (15% of the sample) had experienced an audit conducted against them in the past year alone. This demonstrates the willingness of Oracle to deploy its typical tactics against British government bodies.

This all comes at a time when the public sector is under large amounts of pressure to cut costs where possible and increase efficiency. There are many alternative vendors out there in the IT sector, some of whom have greater greater cost-effectiveness and clearer licenses to avoid crippling audits. The government’s IT services procurement department must examine these options if it wants to save money and increase the effectiveness of government IT in the long-term, and not get bogged down in a short-term mindset of going with Oracle simply because it appears to be the easiest option at this stage. Oracle are not adverse to exploiting customer lock-in to increase revenue.

At TmaxSoft, we take great pride in the fact that we are the world’s first software vendor to attain verification from Campaign for Clear Licensing (CCL). The initiative was established specifically to bring transparency to the licensing market, aiming to protect end users against punitive licensing agreements. Organisations have come to expect clarity when purchasing new software licences, especially so when hard earned taxpayers’ money is footing the bill, and this is something we’re looking to address.

The Cabinet Office needs to be looking to provide increased value to the communities they serve by sourcing the best deals for their IT stacks. A move away from a dependency on Oracle will enable government departments to better control their IT licensing costs, cutting unnecessary expenditure and directly benefiting their taxpaying constituents.