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Cabinet Office: We've cut taxpayers' SAP and Microsoft bills

Tearful giants face starvation on < £300m this year

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The Cabinet Office estimates it will squeeze out £65m in savings this fiscal year through a public-sector-wide deal it recently cut with Microsoft.

As revealed by The Channel, the Public Sector Agreement 2012 replaces the last iteration (PSA09) from 1 July – with licences locked for three years at 1 per cent above previous levels.

The Cabinet Office said the savings are calculated by plotting the new discount structure prices against the projected spending plans for central government until March next year.

Exact savings will depend on the specific purchases made by various departments across the public sector, the Cabinet Office admitted.

At the same time, the Cabinet office has cut a deal with SAP that is expected to yield savings of more than £3m this financial year and up to at least £5m by 2015 – depending on licence volumes procured.

Housed in this agreement with SAP is a new tiered discount structure for licences based on spend and a 22 per cent cut in year-on-year maintenance charges.

A spokeswoman confirmed to The Channel that the entire public sector spend with Microsoft and SAP was north of £300m and £50m respectively from April 2010 to March 2011.

She confirmed Cabinet Minister Francis Maude and his Efficiency Reform Group are to meet 22 "strategic suppliers" this week – including HP, Capita and IBM – to ascertain whether the government can eke out savings with them.

Maude said: "The old days of signing huge, inflexible IT contracts are gone forever ... These new deals will provide better IT at cheaper prices for police, NHS and council workers across the country". ®

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