Kiwis give Microsoft the finger

One of the money milking machines in Microsoft's stable has just gone dry. It's a little teat but significant in that it shows the way for other, bigger teats to be pulled out of the Redmond suction pump.

New Zealand's government-wide deal to purchase Microsoft products has fallen apart. The fact that the country has won awards for its work towards adopting open standards and open source means that it has the resources to look at other options for its software.

Instead of the three-year deals that Microsoft had concluded in the past, New Zealand has now retained the option to obtain "recommended retail price certainty for agencies as a basis for their individual negotiations.

The New Zealand State Services Commission says it will support agencies "to explore how they can maximise their ICT investment and achieve greater value for money."

That phrase should be enough to bring Steve Ballmer to the boil. The kool-aid that Microsoft has been selling to governments worldwide has been that it provides the best value for money.

A small country of four million has now chosen to contradict that fallacy and it's one that has the expertise to show that it can prove that statement.

In a media release, the SSC said: "It became apparent during discussions that a formal agreement with Microsoft is no longer appropriate.

"Microsoft have agreed to provide recommended retail price certainty for agencies as a basis for their individual negotiations, and the State Services Commission will be supporting agencies to explore how they can maximise their ICT investment and achieve greater value for money."

"Since 2000 the government has negotiated a series of three-year agreements with Microsoft, enabling public sector agencies to purchase Microsoft products on an opt-in basis."

"In late 2008 the State Services Commission commenced leading the re-negotiation of the G2006 Microsoft agreement on behalf of government agencies, and established an advisory steering committee comprised of senior executives from the largest IT purchasers in the public sector."

Reaction from the country's IT sector has been, predictably, upbeat.

Don Christie, president of the New Zealand Open Source Society, said in a radio interview, that even though the idea of a whole of government deal was to obtain big discounts, the bulk discount for the 2006 deal had probably amounted to about $NZ3 million a year, small change in the context of the total amount, which probably ran to hundreds of millions.

He said the deal was commercial-in-confidence and that exact figures could not be known.

Christie said the government had had no option but to back out from a deal this time because it was offered the same recommended, retail price as any other customer, despite the volume of licences it would buy.

He said replacements would now have to be sought and it would be a long, hard haul as the Government had got used to the Microsoft applications.

"Essentially, Microsoft software is like a virus; once it's in your system it's very difficult to get rid of it," Christie said.

David Lane, director of egressive, a company dealing in open source, said: "I'm excited about the possibility that free/open source solutions are no longer excluded from government procurement... That and the increasing grassroots understanding of FOSS within business and government is causing a subtle but profound shift in the mindset throughout NZ. Microsoft is now seen as the frivolously expensive 'closed' choice, which it is.

"Now it's just up to the FOSS vendors in NZ to seize the opportunity and rise to the challenge of filling the gaps as they form. Rest assured that we will!"

He said it would not be long before the NZ Ministry of Education tie-in with Microsoft received similar scrutiny. "The latest agreement is being negotiated now, with results announced in a month - that agreement reportedly covers twice as many licenses as the G2009 agreement would have had."

"When we demonstrate the ability for Kiwi FOSS vendors to make the grade, I don't think Microsoft will have much of a future in pan-industry/government agreements here in NZ (or anywhere else, given NZ's bellwether status for this sort of thing). The first domino has fallen."

Andrew McMillan, one of the founders of New Zealand's biggest open source IT firm, Catalyst, from which he retired last year, said: "I think that this result is really a reflection of the times, as the incoming government looks for ways to reduce bureaucracy and pare back the government spending which has grown somewhat during Labour's period in the hot seat... (and also due to) current economic conditions.

"My guess is that not signing the deal means that these software costs will now become more significant and more frequent operational decisions in the day to day of each individual government department.

"Obviously it's good news for the alternatives, and I expect that Microsoft will ramp up their sales and marketing in the government sector, but in reality the effects will be subtle in the short term.

"One likely effect is that this will increase Microsoft's profits for at least the coming year, while they reap benefits of fee increases, but in the longer term it certainly levels the playing field, giving greater attention to the alternatives."

McMillan, who is also a senior Debian developer, added: "I do think that the non-deal certainly does indicate a thorough awareness within the State Services Commission, and within the government sector in general, that there are now realistic alternatives available."

Zane Gilmore, development and web infrastructure team leader for the New Zealand Institute for Plant and Food Research, said his understanding of the affair was that the SSC (State Services Commission) tried to get their usual agreement and was knocked back by  Microsoft.

"Microsoft claims that that was their plan all along so that they can form relationships with the bureaucrats. SSC claims that they were just trying to do more of the same," said the pony-tailed Gilmore.

"With some luck we can use this as leverage to get more open source software into government but I can't see Microsoft allowing that for long. The agreement allowed for cheap or free use of Microsoft software for government organisations. It made it very difficult for OSS vendors to have any look-in as they could use Microsoft Office etc free.

Gimore said the schools used MS Office free and as a result school children gained familiarity with only Microsoft software. Teachers could just say, 'we get MS Office free so why should we use Open Office?'

"I can't imagine that Microsoft will allow schools to start using anything else for long but we may get a temporary toe in the door," he added. "Hopefully it will make CIOs (or their equivalents) think before they just automatically use Microsoft software but I'm not holding my breath."

The New Zealand government move comes a few weeks after a leading British academic questioned the way in which the Gates Foundation allocates money to various causes.

Dr David McCoy who is with the Centre for International Health and Development at University College London, rasied several questions about the fund's level of accountability and transparency.

by Sam Varghese Wednesday, 27 May 2009
From: itwire.com