back to article Microsoft crows about 149k-seat Office 365 deal that costs it MILLIONS

The Australian State of Queensland does not observe daylight saving and an old joke about the state says that air travellers entering the region have in the past been advised to “turn your watch back one hour and 50 years.” How then, to consider the State's decision to head for the cloud with a 149,000-seat deal for Microsoft' …

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  1. Anonymous Coward
    Anonymous Coward

    But it is also a recurring annual cost. Before they might buy 149k of licenses and then keep them for a number of years. There could be some departments that could be using a 7 year old office suite. Now Microsoft is getting 149k worth of cloud based licenses every year. They don't pay; no more office suite.

    If they went with the $20 version, that is $240 a year or $720 over three years. Care to guess what a perpetual copy of office would run them?

    1. John Tserkezis

      "If they went with the $20 version, that is $240 a year or $720 over three years. Care to guess what a perpetual copy of office would run them?"

      It doesn't matter any more. Allow me to explain: A one-off charge of that magnitude means a capex. You have to explain to higher management why you're doing it, and then, why you're doing it every several years again and again.

      A subscription maintenance update cost is much less, perhaps below their capex cutoff, so they don't have to explain that or have it signed off. It's stupid because it does indeed cost more, but in large corporate circles, if you can get away with your manager screaming at you less (even if it costs more) that's a "good" thing. Meanwhile, since everyone is doing it, they slowly but surely run the company into the ground.

      As they close the doors, the CEO stands up and blames the "economy". There, problem solved.

      1. DaLo

        But you can always finance the spend over x years and then you also get to keep the goods at the end. As long as you amortise the capital properly and budget in advance for future upgrades you can be the hero with management for saving the company gazillions and not tying yourself into a long term contract with no asset.

        When the idea starts spreading that "well Microsoft bring out a new version every three years so we'll need to keep buying more anyway". Just remind them that Window XP is over 12 years old and the Office 2003 you are using is over ten years old - big software upgrade projects often don't happen on the manufacturers schedule.

    2. localzuk

      Those prices?

      Highly unlikely they are paying those prices for the service. Large customers get a better deal.

      1. Tim99 Silver badge
        Windows

        Re: Those prices?

        "Large customers get a better deal."

        A very long time ago when a DOS based WP programme cost nearly £400 retail, we paid £500,000 up front and then £7 for each user for a keyboard template - It worked out at ~£20 per user. The only ongoing costs were for manuals and installation media, and upgrades at a similar price.

        A few years later we went with MS Office. The cost on a VWA was discounted by less than 30%, so MS have always been good at negotiating...

    3. Anonymous Coward
      Anonymous Coward

      They are paying for software that they could just go online and download for nothing. Cost is probably not a primary concern.

  2. Lusty

    I'm curious how much they are also losing for the home licences for all those employees. With Office365 giving 5 desktop/laptop and 5 mobile/tablets per licence I can't see many people splurging on home licensing in the future.

    1. frank ly

      I'd be surprised if that 5+5 was applicable to the deal that Microsoft struck with the Queensland government. For such a large sale to a specific customer, the terms are easily negotiable. If it is, then they would probably make sure that five employees and their mobile devices were covered by each 'allowance'.

      1. Nick Ryan Silver badge

        The 5+5 is a home deal and the licensing is explicit in that the software may only be used for personal purposes.

        In many ways the rental of the cloud software is another backwards step, because where previously multiple users could use the same system with the same licenced software on it, now the users themselves are licenced. I many organisations this won't be practically different from before but in some it will be.

        1. Lusty

          Our corporate 365 sub has this so it's certainly not home only!

  3. big_D Silver badge

    With the perpetual licensing, with Software Assurance, you could also get free copies of Office for your employees' home PCs, so not necessarily losing anything there.

    1. Anonymous Coward
      Anonymous Coward

      HMRC will be interested

      That's a benefit in kind.

      1. Anonymous Coward
        Anonymous Coward

        Re: HMRC will be interested

        apparently so... after deliberating for years they decided their own staff couldn't take advantage of the offer because it wouldn't be appropriate but didn't elaborate to them further...

      2. gerdesj Silver badge

        Re: HMRC will be interested

        HMRC might be in the UK.

        However this is in Australia and they have the <Google/> ATO and probably state tax gatherers.

        Cheers

        Jon

  4. Anonymous Coward
    Anonymous Coward

    Staffing? Infrastructure?

    I might have missed it, but the article just refers to a saving over several years. Given that Microsoft are now taking on the hosting and maintenance of most of the AD and Exchange backend, does this not just sound like the usual 'savings' that would be trumpeted about any cloud deployment? The tone of the article seems to be that the licences are the only costs affected.

    Obviously in the real world most of those savings will never materialise anyway, but that's never stopped a large organisation crowing about them ahead of time. "But I thought we could just let the IT department go - isn't it all in the cloud now? Oh."

  5. Hans 1
    Windows

    MS Office should be called anti-productivity suite, coz, that is what it is - especially with ribbon, now office 365 ... have fun uploading those images and the like and, no command line access ... how could you be productive with that ? hm ...

    As for the Accenture fail, lmao, when I see those numpties with their tie, I always have a joke ready.

    1. Anonymous Coward
      Anonymous Coward

      I agree, because the millions of ordinary users using are using cmd line,.

  6. Anonymous Coward
    Anonymous Coward

    Once again, Queensland does a mega-MSFT deal

    Those with a longer mamory may recall this is the same department that in 2009/10 vowed to move all 250,000 employees to Exchange 2010 to minimalise costs that were never fully realised.

    The reason for the next round of likely epic fail here is because 3/4ths of Queensland is very rural and NBN ain't out in the sticks. Many places only have dial-up so the previous project failed and one could hypothesize that this will succeed.

    Unlikely!

    1. southpacificpom
      Holmes

      Re: Once again, Queensland does a mega-MSFT deal

      "Those with a longer mamory may recall ...."

      So you have to be a big tit to remember?

  7. Gordon 11

    All employees will have access to the same capabilities and tools,

    Pen and paper allowed that.

    What tying in to a proprietary product rather than a set of (open) document standards does is limit your capabilities to those that your selected vendor deigns to provide, and when (not if) your vendor's business plan means that it changes what it supplies, then you will suffer.

    1. southpacificpom
      Boffin

      Well said sir

      Why is it that some idiot makes a decision that costs a shit load of cash when a $5 pocket diary and notepad would suffice in a lot of cases?

      Anyway, have an upvote from me.

  8. Gis Bun

    I would assume that some of those not getting a license are support staff like janitors, maintenance staff, etc.

  9. Anonymous Coward
    Anonymous Coward

    worth it to have them work at home

    They never get anything done between 9 and 4 anyway. Let them work 365x24!

  10. batfastad

    amaze. wow. much users. a bit scare

    That's a decent number of users suddenly having access to 50GB mailboxes. But if Microsoft can't handle Exchange/AD then no one can. No pressure then!

  11. DownUndaRob

    Bandwidth

    Have to wonder if they have budgeted in the extra costs to bandwidth and traffic costs into the equation, plus the sites that have small thin pipes to them at present.

  12. BikePics

    Education Dept was not included

    It's worth noting that the Department of Education was not included in the deal, since they have to license software for the students classroom use along with staff. This then brings the number off full time staff in departments covered by the deal much closer to the number licensed.

    1. Anonymous Coward
      Anonymous Coward

      Re: Education Dept was not included

      Then take into account the Government Owned Corporations - they probably get included in the employee count in certain stats but likely wouldn't be part of any deal as they are run arms-length from the Treasury.

  13. Anonymous Coward
    Anonymous Coward

    What are they using for email?

    I can't speak for QLD, but my experience with NSW's Department of Education was that despite being issued an email address, many staff just used their personal email accounts. The DET system was too crappy. Ironically, students had GMail with 1GB of space and I'm pretty sure POP3 and IMAP could be enabled (no such luck for staff - it was OWA or nothing).

    Note: I left DET about 3 years ago, so it may have changed. I have my doubts though.

  14. Anonymous Coward
    Anonymous Coward

    Value

    Queensland has had a "whole of government" Microsoft deal for some years now, so they have been paying software assurance on Windows + CALs + Office - this means that there were already ongoing costs. Of course, most departments don't take advantage of this and are still running Windows XP, Office 2003, etc.

    The IDES project to get users onto a dedicated hosted email infrastructure was a huge failure. The main stumbling block for 365 is that it is not supported on Windows XP, which as I mentioned is still running in many sections of the government. Hopefully this solution will work out better - there is certainly a great deal of commitment from the highest level to get this solution in place.

    To address some of the other points above:

    @frank ly: Yes, the staff do get the personal rights for 365. They used to be able to get home media for $15 anyway, so not that different.

    @many: Pipes aren't that thick in QLD, but the government departments seem to do okay. Anyway, those sites down a bit of wet string would still need to get their email from somewhere, wouldn't they?

    (Anonymous because I'm involved in some of this.)

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