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The Office of Government Commerce has done well to negotiate software licensing agreements with IT suppliers that has secured savings for the taxpayer, Sir John Bourn, the Head of the National Audit Office, reported today. However, it needs to publicise the benefits of the agreement more widely.

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Software is vital for delivering services to the public. Last year departments spent £610 million on software of which £100 million was spent on over one million software licences.

Almost all departments (95%) have purchased Microsoft software licences. There are different ways of purchasing licences and departments need to consider the costs of different options available to them.

Departments have been slower to take up the terms of the OGCs new agreements than it expected. Of the 66 departments which we surveyed, 10 departments estimated that they would save some £5.4 million by using the agreements. Others are waiting for their existing agreements to come to an end before they sign up. OGC should monitor take up and, if departments are not using their agreements, find out why and work out how to overcome any obstacles.

Sir John also recommends that individual departments maintain reliable information on their licences and regularly check that no unlicenced software is being used. Departments should also consider the total cost of ownership when purchasing major upgrades or new systems; such costs involve installing the system, retesting, resolving problems and training users.

"Whatever a department does, whether it is processing benefit payments or protecting the public from crime, it uses computer software. Delivering good quality public services now depends on having the right IT. This report shows that many departments are being intelligent customers when it comes to software licensing. But it remains important that they have all the information that they need to make the right decisions."

Sir John Bourn

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