Microsoft NZ's secret government deal

How do you make a big media splash about saving the government money by “reducing future costs”? Take the following steps:

1. Announce a massive “volume” price hike for spurious reasons. Anything over 30% is good.

2. Negotiate a complex series of bundled licence “deals”.

3. Settle for a smaller price rise; 5%, for example, worked three years ago.

4. Issue a press release headlined “Savings of up to 55% on Microsoft deal.”

5. Profit.

This has been Microsoft's method for the last 12 years in New Zealand and in other jurisdictions.

The terms of Microsoft's generous all-of-government deals are more secret than US President Barack Obama's missile launch codes.

So while the government and Microsoft can congratulate themselves on their commercial acumen, the rest of the industry is left wondering where the value is in having a vendor monopolise the direction and future of government IT.

We don't officially know what the real cost is–although a price hike on the previous deal is almost certain. We don't really know how we compared to other governments.

But if history is any indicator, we probably will emerge worse off than our Australian neighbours.

We do know that, through differential pricing, New Zealand and New Zealanders fair far worse than most other countries in the world, and certainly worse than customers in the USA, when it comes to paying for proprietary software.

In the end, though, it is not the fact that the government has arrived at another expensive arrangement with Microsoft (at a time of austerity and zero budgeting) that should concern us all.

It is that through a complex web of licence models and bundling the government will fail to use alternative technology that is cheaper, better and more appropriate.

The Microsoft deal covers pretty much the entire technology stack. This isn't simply about everyone using Excel for spreadsheets. It covers operating systems, databases, content management systems, document management and more.

Alternative software products exist at each of these layers, without expensive license fees, that are robust, more functional and used in the enterprise and other governments across the globe.

These alternatives ensure that companies like Google and Amazon are able to run massive and complex systems that, in terms of scale and price, put anything that happens in New Zealand to shame.

The DIA and other government agencies are aware of these issues. Open Source platforms such as Drupal and New Zealand's Silverstripe quite deservedly continue to penetrate that sector and are treated seriously when the future of government IT is being considered.

But the Microsoft deal makes it difficult for organisations to unpick the Microsoft tools they don't want to use. Inevitably, CIOs feel obligated to make full use of the stack and the taxpayer wears the cost, even though it makes no economic or technical sense.

As a result, the a lot of government remains locked into 1990s technology. It is the fact that this lock-in is driving current and future thinking that should be of most concern to tax payers and policy makers alike.

It's a wasteful and stagnant result.

Don Christie is on the council of the NZ Open Source Society and is a director of Catalyst IT.