The UK government says that it will cut its bill for Oracle software by more than £75m by 2015 by buying software at the same discount rate across all departments.
The deal is part of a wider drive to end the legacy of departments within Whitehall buying IT software and services at vastly different prices and purchasing the same systems many times over.
A report by Sir Philip Green in 2010 identified major disparities in what different departments pay for IT, with Green estimating that about £700m could be saved from the government’s £2bn telecoms bill alone.
Central government spends more than £200m each year with Oracle. Under the deal with Oracle software licences can also be re-used across government departments.
The Cabinet Office is pushing all of its IT suppliers to treat Whitehall as a single customer, and to offer all government departments the same preferential rates and bulk discounts, to drive down the £17.9bn government spends each year on IT.
Cabinet Office minister Francis Maude signalled that he expected other IT vendors to follow Oracle’s single customer approach soon: “This deal ensures better IT for government and savings for the taxpayer.
“The days of the Government paying different prices for the same goods or services are over – we will no longer sign inflexible contracts that tie the taxpayer into unfavourable terms.
“We are pleased to have made these savings with Oracle and expect more deals with other suppliers to follow.”
The deal appears to commit government to a longstanding relationship with Oracle, as the software vendor will establish a centre of excellence that will provide expert advice to government on how to get the most from its Oracle systems.
The savings are the latest to be announced as part of ongoing negotiation between government and its suppliers. Last year government contract renegotiations delivered £800 million of savings across suppliers and a further £140 million will be delivered in total this year.
Earlier this year the government announced that it will save more than £200m by 2017 by renegotiating the terms of its IT contract between supplier Capgemini and HM Revenue and Customs.