Oracle and SAP worst for government ERP cost differences

Oracle and SAP have been singled out as having the most inconsistent prices for ERP systems across government departments.

Oracle and SAP have been singled out by the Cabinet Office as having the most inconsistent prices for ERP licence and maintenance support across central government departments.

Exclusive Computer Weekly research has revealed that some Whitehall departments are paying up to three times more than others in ERP licence costs.

The Cabinet Office said it also recently carried out a review of its ERP [enterprise resource planning] systems across large central government departments as part of its Next Generation Shared Services strategy for government. 

“This has revealed an inconsistency in pricing for both licence and support costs around ERP, mainly with Oracle and SAP,” said a spokesman.

Of eight government departments which named their ERP providers in response to Computer Weekly’s freedom of information requests, Oracle was found to be the biggest supplier, with five departments naming it as their main suppliers, followed by SAP.

The Cabinet Office found the main reason for the inconsistency in pricing was due to differing departmental requirements and customised systems and processes. Departments historically negotiated with ERP vendors as a single buyer or through systems integrators, as opposed to centrally through the Crown, said the Cabinet Office.

To address the issue of price inconsistency the Next Generation Shared Services strategy will consolidate departments onto single systems and processes.

The Cabinet Office Efficiency and Reform Group is beginning to aggregate demand for services across departments and will negotiate as a single customer, said the Cabinet Office.

“The government CIO and CPO (chief procurement officer) will lead these negotiations, with the aim to improve transparency on pricing and drive consistency and best value on contract terms. Government is also actively pursuing the use of Tier 2 ERP suppliers and ERP-as-a-service will be a component of the new government G-Cloud framework currently being procured."

Oracle responded to the Cabinet Office in a statement to Computer Weekly: “The UK government is a very important customer for Oracle and we work hard to ensure we deliver value. Some of that value results from the government's ability to buy in volume across our entire range of tailored offerings and licences. As a supplier to government we are very aware of the need to remain fiercely competitive and we work closely with the government to review the value we add at all times and we will continue to do so."

SAP has also been asked to comment on this story, and its response will be published here once provided. 


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It’s good to see the ‘elephant in the room’ is finally being acknowledged, but it’s a pity it has taken so long for alternatives to be more seriously considered. The government has been hostage to too few suppliers for too long and this shows that they’re paying the price.  
The fact that price differences were due to “differing departmental requirements and customised systems and processes” should come as no surprise given that SAP and Oracle solutions are notoriously complex and expensive to make changes to post-implementation. The government sector is one of the most dynamic and has been hampered in its efforts to affect change due to rigid ERP systems. An army of expensive consultants should not be required every time an organisational change dictates a system change. The lesson from this: The cost of ongoing change must be a key consideration during the ERP selection process as it has proven time and time again to dwarf the original license and implementation fees over time.


Opps... but definitely true!