UK government inks fresh deal with Oracle

It's expected to deliver savings, but how that will happen remains unclear

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Exactly two weeks after reports surfaced that the U.K. government is working to end its reliance on Oracle, the Crown Commercial Service revealed that it has just signed a new, three-year deal with the software vendor.

Announced Wednesday, the new memorandum of understanding builds on a previous agreement signed back in 2012 and extends the scope to include additional public sector bodies, including the National Health Service, and more products and services.

It's also expected to bring new savings, though what form they might take was not explained.

Government officials did not immediately respond to a request for comment. Oracle declined to comment for this story.

It was primarily the disproportionately large number of Oracle licenses held in the U.K. government that reportedly prompted the recent mandate by the U.K. Cabinet Office to cut back on the use of the vendor's software.

One department alone has paid £1.3 million (US$2 million) per year for some 2 million Oracle licenses, or about 200 licenses per staff member, The Register found in an investigation earlier this year.

In all, the U.K.’s public sector reportedly spent £290 million on Oracle in 2013.

While the new licensing deal may seem at odds with that mandate, the Crown Commercial Service is "very separate" from the Cabinet Office, said Duncan Jones, a vice president with Forrester Research.

The Cabinet Office was apparently advocating cheaper alternatives to Oracle, but "the CCS MoU appears to recognize that that isn't always the right thing to do," Jones said.

Instead, it seeks to streamline the Oracle procurement process while also securing a better deal, he said.

At the same time, the reality is such that even while a framework agreement such as what the MoU appears to be "could easily halve the price that a single government department or local government body might pay for its Oracle software," that price could still be three to four times what a private sector enterprise might pay for a similar amount of software, Jones pointed out.

"That's not because of the negotiators' competence or diligence," he added. Rather, it's because enterprises can forge strategic relationships that public sector organizations are "unable, unwilling or legally not allowed to create."