NSW councils combine to muscle better value from VMware

By Julian Bajkowski

Councils in New South Wales appear to have chalked-up a significant win in their battle to get better value from multinational technology providers after global cloud computing and virtualization provider VMware agreed to deal with 43 local governments as a group in contract renewal negotiations.

The technology vendor said that it has struck a deal through Gosford City Council that it describes as a “multi-council arrangement” but was not, at the time of press, able to provide the either the names of the other councils involved or the overall value of the group renewal.

The initiative from councils to band together and collectively hammer out a deal directly with a major multinational technology vendor is significant because larger companies have typically shunned direct selling into the local government sector, leaving deals to be brokered by resellers who add-in significant extra margins.

The deal indicates that the local government sector, at least in NSW, could be muscling up to big tech providers to move from being a price-taker to a price-maker in the same way that the federal government and large corporations leverage their scale to get bargaining power.

The federal government this year forced a licensing price haircut of $100 million on fading giant Microsoft after it found that the price of its software was around 40 per cent higher here than in comparable developed economies.

Cloud computing is not exactly a revelation for local government. At least 10 councils in Queensland went to the extent of forming their own cloud computing consortium in the wake of massive floods to provide for their own needs and address gaps in the market.

For its part, VMware claims that the collective deal that it has brokered through Gosford could generate as much as $3 million “savings and value” across the state   but couldn’t immediately say over what period the savings would be made or what they would consist of.

A move to cloud computing platforms, which VMware specialises in, represents an opportunity for potentially huge savings on technology bills for local government because it largely negates the cost of local, capitalised infrastructure by replacing it with utility-style services that are charged as a managed service.

The level of those service charges are typically determined by the volume and timing of computing work that customers put through a provider in the same way that energy companies can offer spot prices.

It might not be able to name, let alone talk for other councils, but VMware still had plenty of product detail on what its deal with Gosford consists of   including the ability to see.

“The deal saw Gosford City Council expand its contract to include VMware View for virtual desktops, mobility; and vCentre Operations for cloud and datacentre management. Gosford City Council took the lead on the landmark multi-council deal to help assist Councils in NSW to reduce costs and improve services across the state,” a statement from the company said.

“Gosford City Council drew on its experienced technical and legal teams to broker the multi-council arrangement, which it sees as integral to state-wide goals around government sustainability and service innovation,” VMware said.

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