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Newham council: how Microsoft fought back against the Linux onslaught

Just one battle among many.

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At the end of last year, arguably the most IT-savvy government organisation in the UK, Newham Borough Council, stunned observers by dropping out of a government-sponsored open source project and announcing its decision to partner with Microsoft for all its IT needs. Was the tide turning against Linux after several months of advance? It was certainly a sensational coup for Microsoft and helped stopped the momentum that had been building since May 2003, when Munich Council decided to install Linux on all its computers, cocking-a-snoop at Windows NT and Microsoft CEO Steve Ballmer personally. The shockwaves from Munich had been felt in the UK. Particularly, as the Office of Government Commerce (OGC) had decided to run nine “proof of concept” open-source trials with IBM. While the Linux community celebrated, Microsoft executives went straight into a war cabinet. The nine organisations chosen were four central government departments - Office of the deputy prime minister; work and pensions; culture, media and sport; and e-envoy - the Central Scotland Police Authority, Office of Water Service and three councils - Powys, Newham and Orkney. Microsoft was desperate to “get a win” and the councils were clearly going to be easier to approach due to their comparatively smaller size, greater independence and the existence of single heads of IT who were able to make the decision, one way or another. Whether Microsoft chose Newham on its past record (it has, in many senses, acted as the UK government’s independent testing facilities) or whether Richard Steel, ICT head at Newham, recognised the opportunity afforded to him and contacted Microsoft himself, we do not know. What we do know is that just five days later it was announced Microsoft had hired Cap Gemini Ernst & Young to provide Newham Council with free consultancy about how it could save costs by using Microsoft products. Matt Lambert, Microsoft's director of government affairs in Europe, was candid: "Newham is seen as a technology leader. It is an important account for us and we are trying to prove that we have the best offering." He declined however to say how much the software giant was paying Cap Gemini, or whether such consultancy would be provided to other councils in the future. Richard Steel said that he intended to make decisions in December and, true to his word, he announced just before Xmas that he was proposing to the council that it go almost entirely with Microsoft following a new agreement struck with the company. Unsurprisingly, this was immediately latched on to as an example of Microsoft buying itself a supporter, or alternatively, of Newham selling out. Among Linux advocates/fanatics it was seen as a huge conspiracy of some kind. It certainly didn’t help that both Newham and Microsoft refused to disclose any terms or agreements they had reached. Or that Microsoft batted away questions about whether it had a new licensing policy that would apply to all public-sector organisations. Newham, the thinking went, had used its unique position to cut itself a good deal at the expense of the rest of the public sector and open source projects as a whole. This was denied by Richard Steel and his colleague Gary Sussex, who proceeded to give a wide variety of reasons as to why they had chosen to go with Microsoft. Some were persuaded, many were not. But what is under no doubt is that the decision will have wide repercussions throughout the public sector. Once the dust settled though, we decided to give the relevant parties a call to discover what had really happened and try to figure out what this may all mean. Richard Steel’s IT expertise is under no doubt. He has been ICT head at Newham for three years, having been there since 1989. He started at a merchant bank, rising to become assistant director of Morgan Grenfell. He has an MBA, and is extremely successful at meeting government targets - often years before everyone else. Not under doubt either, though, is his political acumen. You do not remain as the head of a council’s IT department for years, and persuade it to take risks with technology, unless you are a gifted politician. He is the chair of the London branch of the Society of IT Management. He is even a safe enough bet for top politicians, including the deputy prime minister, to quote Newham in their occasional meanderings into IT topics. The big question though is whether the decision to go with Microsoft was made for technological reasons or political reasons, or a combination of the two. You don’t get anywhere if you don’t ask
To speak to, Richard Steel is surprisingly, and refreshingly, honest. Ask him a question and he will answer it, even if that answer is an explanation as to why he can’t. “When we started we went in with an open mind,” he assures us. “We would have been prepared to implement a Linux strategy if that had been the most cost-effective infrastructure and delivered the best value.” But it wasn’t to be. “Linux is going to have increasing market share in the next few years but it is still immature and for us it was not an acceptable migration.” The audit of Newham’s systems revealed what Steel already suspected: “It has been a very piecemeal investment, project-based developments and not planned investments, so we have loads of different versions of software and we want to move to a position where it can be sustained, a known situation with a revenue commitment and regular technology refresh.” The budget for new IT systems had come in small chunks over a long period of time and it was beginning to get expensive to run. Before the OGC came up with its pilots, Newham was already looking at open source as a way of reducing costs, Steel says. The pilot scheme however gave a valuable opportunity to stand back and review the entire infrastructure. “We found out we were already running 16 open source systems,” he explains, “but our core infrastructure was e-mail and desktops.” If Newham decided to go completely open source, it would have to upgrade its existing infrastructure and that would prove too expensive. This point, when explained to one journalist, appeared in print as the main reason why Newham had decided to go with Microsoft. “Newham Borough Council has shelved its Linux desktop trials and will remain with Microsoft, citing the cost of upgrading its Microsoft Exchange Server software as a primary cause,” read the first paragraph. But Steel claims his colleague was misquoted and that the reasons were far more complex. “Open source was there, okay, software like OpenOffice is very similar but when it comes to bringing macros forward, you can’t, you have to redevelop it. Plus, we have lots of programs that are integrated with other products and with suppliers. If we change, in many cases they will have to change their products - that can make things very tricky.” And there remains the classic case of “look and feel”. “People are quite sensitive to small changes,” says Steel, foreseeing months of phone calls from council workers trying to familiarise themselves with the basics of a new operating system. There also remain some areas that open source simply hasn’t provided the software for yet. When you add all these things together, he says, open source starts to look less promising. “In the past, we have done the trailblazing, now maybe it’s time to let someone else take the risks.” At the same time as a cold, hard look at the open source option, though, Richard Steel had Microsoft desperate to persuade him that its products were the best way forward. “Microsoft responded well,” he says. “In some ways, it is to be applauded. One thing I have seen is that it is very much more interested in how we think.” There is no doubt that Microsoft has been shaken out of its complacency by the threat of open source and Steel says that the giant was willing to change its previous practices in order to move with the market. “It was far more flexible with its proposals around licensing.” He also gives some details of the deal that was struck: “We’ll be the first public-sector user to have a per-seat licensing cost which goes up and down as our inventory changes - something that is more important with people getting into home working. And we can use the software products in any combination - we don’t have to tie the software to a certain station.” In short, the proposal (it still has to be officially approved by the council) reduces costs and introduces more flexible licensing. And by “building mainly around Microsoft [XP] for the immediate future”, Newham also gets the homogeneity it has been longing for. All very well, but what does Steel think about leaving others in the lurch for his own benefit? He says the opposite is true. “We are leading on others’ behalf. We are leading on a new OGC agreement [with Microsoft].” Councils are starting to work and order together, he explains. “It’s not always been the case, councils getting together to influence the market more. There’s been a lot of redesigning of wheels. But the e-government agenda to some extent has forced us to work together. Now we can look at sharing procurement, share contracts maybe.” As Steel points out, he knows the terms of the deal he’s got with Microsoft. With him heading various IT organisations for councils and public-sector organisations, the software giant can hardly try to bluff him. Of course, it may also have occurred to him that this makes him a fairly indispensable person to have around. Now that is good political manoeuvring. What does everyone else think about the Newham deal? Well, you can easily guess Microsoft’s feelings. The response from IBM - who are running the OGC’s open-source projects - is fairly easy to gauge too, although, officially, they said “No comment”. What of the OGC? Its spokesman was upbeat about it all. “Newham felt it wasn’t the right time to go forward with the OGC pilot, but all the other trials are going forward. Newham just made the decision that was right for them.” As for the other trials, we can expect their outcomes to be made known at the beginning to middle of February. So was the Newham decision right? Was it a technological or political decision? Yes, it was right: for Newham. Steel is keen to explain that for a less advanced set-up than the one being run by Newham, open source remains an excellent option. He also tells us that he knew not going with open source would cause problems. “From the time we started looking at Linux, we got all this positive press. We knew straight away then that we had set ourselves up for a fall.” And when they did decide to go with Microsoft, the backlash from the press and open-source advocates was fierce. Nevertheless, he says, Newham continues to be a leader in ICT, it will continue to look at how open source develops and will use open source components where they fit best (Apache is given as one example). “We made what we believe to be the best decision, the most pragmatic.” No matter which way you look at it, it is hard to disagree with that statement, no matter how the Linux conspiracy theorists would like to.


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