Feature

Is Microsoft deal best medicine for NHS?

The Government claims Microsoft's licensing deal will save the NHS millions, but some within the service remain concerned.

The National Health Service's decision to sign a PC software subscription deal with Microsoft has alarmed some of its users, despite government claims that the service will save £50m over the next three years.

Last week, Labour peer and health minister Philip Hunt announced the NHS Enterprise Agreement, which is designed to provide a single annual software subscription to replace about 35,000 separate software orders. It covers products including Office Professional XP, Access 2002 and Word 2002.

Officials claim the agreement, which covers all NHS organisations in England, provides a better price for products than was previously available, although they cannot confirm how much the health service spends on Microsoft products.

The NHS was already one of Microsoft's biggest UK customers prior to the deal, the value of which has not been revealed.

Despite the potential benefits, the NHS Enterprise Agreement has caused unease among a number of NHS IT managers. Some have warned that the deal could tie organisations to Microsoft, affect the financial autonomy of NHS trusts or even present logistical difficulties when the licence expires, if trusts want to move to a new supplier.

Indeed, the question of what happens at the end of the three-year licensing agreement is causing some consternation among users worried that a supplier could push them into a corner.

There is also unease over the fact that the NHS will not own the software at the end of the three years. As one NHS IT professional said last week, "At the end of the deal we will effectively have nothing."

Another health service IT specialist said, "At the end of three years the NHS trusts will go back to square one."

These are valid concerns, although the NHS argues that it has a number of options open to it at the end of the deal. These include renewing the agreement or converting to perpetual licences on payment of a one-off fee.

The most controversial, and somewhat unlikely, option would be to stop using the software and remove it from PCs.

If the NHS, which is the largest single organisation in the Western world, suddenly decided to move to another PC software supplier at the end of three years then the effects could cause a massive technical headache for users. In reality, this means that the NHS is tied much more closely to Microsoft. Moreover, the fact that the deal is a licensing arrangement places a lot of pressure on the NHS to negotiate another contract which will protect users' interests.

However, the NHS Purchasing and Supply Agency (Pasa), which is working closely with Microsoft on the deal, argues that the NHS has plenty of room to manoeuvre. Andrew Rudd, purchasing executive at NHS Pasa, said, "It is within our control to do whatever we want at the end of the three years." The deal is a rationalisation of current agreements, not a standardisation on Microsoft products."

Other health service IT users have called into question the Government's ongoing relationship with Microsoft. One said, "It is ridiculous that the Government is laying out all this money to a large organisation like Microsoft for unmeasured benefits." The deal represents profligate spending of health service money, he added.

Although it has been up-front about the savings that are likely to be accrued from the deal, the Government must still tread a fine line to avoid alienating users. This is especially pertinent given that Whitehall sources have suggested that a similar deal for central and local government could be imminent.

But what other options are open to the NHS when it comes to desktop software?

One health service IT specialist believes that open source software could provide the answer. "The Government could do worse than put money into Unix systems such as Linux and build that up," he said. This would prove a less expensive option, he added.

Then there are the funding issues. NHS Pasa officials have confirmed that the first year of the deal will be funded by central capital money, but years two and three will be "top-sliced" from computer budgets.

Under the previous system, NHS organisations paid for the software licences themselves, but under the Microsoft deal all funding, including maintenance costs, will come from central government. There are no details about how much will be taken from managers' budgets in future years, but officials said it would be less than they currently spend on Microsoft licences.

Rudd is adamant that users will not be out of pocket. "One thing that will not happen is trusts being asked to find extra money at the end of the three-year deal to fund extra software," he said.

Some NHS IT managers, however, feel that the financial benefits of the funding procedure are offset by a loss of autonomy in the trusts themselves. One manager in a Midlands NHS trust said, "This will take some autonomy away from the trusts but it does help provide a more standardised NHS and simplifies payment." On the one hand, the central financing of the deal reduces trusts' control over their own IT budgets, but on the plus side it has the potential to save a lot of money, he added.

Experts have also warned that the diverse nature of the NHS could pose a real challenge when ensuring that the contract with Microsoft is flexible enough to meet the needs of NHS staff.

Robert Bond, head of innovation and technology law at corporate law firm Hobson Audley, explained, "My one concern is that the NHS should ensure that it has negotiated sufficient flexibility into the contract to ensure that all consultants, staff and NHS trusts have the ability to make use of the products."

Bond believes there are also questions about how the deal could affect any IT departments that are outsourced in the future, although Microsoft has denied this. Ellen Pirie, the software giant's UK healthcare business manager, said, "There is a mechanism so that any company doing outsourcing for the NHS can manage the existing contract at no extra cost."

One NHS IT manager said, "In principle, this is a good idea. Central purchasing to get the best deals will potentially save money."

These sentiments are echoed by Michael Meakin of the North and Mid Hampshire Health Authority, who has noticed significant demand for Microsoft products over the last few years. "What the NHS has done is to respond to this demand by reducing the bureaucracy and administration and thus providing better value for money," he said.

Bond also believes this type of deal is the way forward for the NHS. "This is a positive move from the health service's point of view," he said. The deal means easier management of the running of Microsoft products and less risk of different departments going to negotiate their own deals, he added.

A recent statement from the Department of Health said the NHS Information Authority will monitor deployment across the NHS and will work with NHS Pasa and Microsoft on contract monitoring.

There can be little doubt that central purchasing makes sense for an organisation the size of the NHS. Last week Hunt confirmed that the NHS Enterprise Agree-ment is likely to be followed by similar deals with other suppliers to cover the full range of software packages used by the health service. There can be no question that the political will is there, but the NHS must now deliver the benefits to users.

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This was first published in October 2001

 

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