National Health Services (NHS) is about to witness more complex and expensive software licensing for its operations. The department has decided to end its Enterprise Wide Agreement with Microsoft.

It all started in 2004

In 2004 the office of Government Commerce negotiated a huge deal with software giant-Microsoft, to supply all desktop software in National Health Services department. Insiders believe that Microsoft was about to lose this massive deal. To avoid this, both Bill Gates and Steve Ballmer adopted to a lot of lobbying within the government. Subsequently, Microsoft grabbed the deal.

Terms of the now, erstwhile deal

Richard Granger made a very smart move before signing the deal with Microsoft. He disclosed publicly that the health services were interested in Sun’s Java desktop software. This rang alarm bells in Microsoft and so Microsoft offered the NHS a very profitable deal, which they could not deny. Eventually Richard Granger signed the nine years deal in 2004. This deal was worth 500 million Sterling Pounds with breaks every three years. Health services were the major beneficiary of the deal with significant savings of 300 million Sterling Pounds over the period of nine years. Microsoft assured “a health specific user interface for clinical systems” to the department. They also committed to spending 40 million Sterling Pounds for Research and Development activities.

The NHS provides employment to over a million people. There are around 151 PCT’s in England, of which Wales andScotland operate independently. There are also mental health trusts, care trusts, GP surgeries and others. A source at a PCT revealed that documents showed an added cost for medium sized trust in the range of 100,000 Sterling Pounds and 150,000 Sterling Pounds, for software licensing itself.

The deal has ended now

NHS has decided to end its enterprise agreement with Microsoft. A related page on Microsoft’s website states“We are currently updating these pages to reflect new licensing information as of May 2010. Please check back shortly.” This decision will not only affect Microsoft but relatively will hurt the NHS more. Microsoft gave the health services a very profitable deal but now NHS will have to bear huge licensing costs along with management problems. Without a renewed agreement every organization of the National Health Services will have to bear pricey hardware audits for all the offices, laboratories and surgeries. The health services are planning to migrate to open source software. But this will bring a lot of problems from staffs that are not willing to shift to less known systems.

Microsoft’s statement

A spokesperson for the company stated that Microsoft and NHS tried hard to negotiate terms of the deal, in order to continue this 12 years old relationship. Unfortunately the negotiations were not able to resolve issues and thus NHS Enterprise Wide Agreement has been called off. This agreement will not be renewed further. The reality is that NHS conveniently uses Microsoft software worth 270 million Sterling Pounds and pays less than £65m every year. Microsoft wants this cost to rise to £85m for the coming three years, because NHS has been installing more technology while the National Programme is on.

NHS statement

A spokesperson for the NHS stated that the department has already invested much in the NHS trusts to have it approach latest version of Microsoft’s desktop software. And any further investment decisions will be taken at a local level.