Written evidence submitted by Oracle
Opening context: Oracle is a provider of software, hardware and more recently cloud services. Historically Oracle has not taken a prime contractor role on large Government contracts but has instead been a supplier to systems integrators who deliver projects using Oracle products. Oracle has a Memorandum of Understanding (MOU) with the Crown Commercial Services because of the large usage of Oracle products across the public sector. Now in the cloud era we are becoming a service provider to Government and have more direct contracts with Government.
Oracle products underpin everything from electricity and gas networks to railway operations, banking systems, airline ticketing systems, defence systems, patient records systems, immigration systems, benefits systems, tax systems, housing systems and much more. Essentially the national infrastructure of the UK runs on Oracle. However, that infrastructure has been created and is maintained in a very inefficient way and Oracle views its responsibility as being to help UK Government modernise that infrastructure and run it in a much more cost effective way.
As a strategic supplier Oracle would welcome the opportunity and indeed would expect, to have more of a dialogue with Government around the value Oracle could bring in this regard when in reality most of Government’s interaction with Oracle is on a cost/discount level basis. As a consequence Oracle believes Government could make better use of Oracle as a strategic supplier and use the relationship to realise considerable benefits for the UK.
The Committee asks that, in providing written evidence, Strategic Suppliers consider the following issues:
Your view on the Crown Representative approach to engagement, whether it is better or worse than the previous arrangements, and what information flows between your company and your Crown Representative about individual contract performance and your company’s business overall.
Prior to the Crown Commercial Representative (CCR) role being formalised, this role was effectively performed by the assigned representative of Government’s Efficiency & Reform Group (ERG). The ERG was formed as part of the Comprehensive Spending Review 2010 (CSR10). Before the CSR10, Oracle’s core relationships were direct with Government Departments and there was more departmental autonomy at that time. Oracle recognises that improved governance has been brought in (e.g. spend control) since Cabinet Office has taken a more prominent role.
The assigned representative of ERG became Oracle’s interim Crown Commercial Representative (CCR) in 2011 when the role was introduced. This individual was then replaced by the first official CCR in May 2011.
The CCR role was introduced to Oracle at the time as an operative of ERG whose mandate was to drive cost savings and efficiency across the Public Sector and it has subsumed both OGC/Buying Solutions and the Government CIO organizations. ERG was empowered to make procurement decisions and to negotiate on behalf of the ‘Crown’ – i.e. for all of Central Government, and in this they appeared to have authority over individual Departments, including veto power over any deals. Early measures put in place by ERG included a moratorium on ICT spending.
ERG appointed several CCRs in 2011 who managed the commercial relationship with leading ICT and other suppliers to Government. The initial interim CCR for Oracle was Mark Pedlingham, a career Civil Servant and Commercial Director. In March 2011 a new CCR, Stephen Kelly, was appointed to manage commercial aspects of various Government initiatives, including the relationships with Oracle, Microsoft and SAP.
A timeline of CCR engagements aligned to Oracle is provided below:
Our experience of the CCRs assigned to Oracle has been varied through differing personalities but common themes worthy of comment include:
The CCR appears to be empowered to delay spend approval while further clarification is supplied. Oracle believes this may introduce additional oversight on Oracle compared to other suppliers and could cause delay in transacting business.
All of the CCRs that we have met have worked part time. This has resulted in a fairly limited engagement with vendors, involved at only a high level covering multiple vendors. As a result the impact, influence and gravitas of the role could be improved. The part-time nature of the CCR role does also appear to have had an impact on the departmental view of the role. Departments continue to develop their own relationships with Oracle and typically only contact the CCR when they are unhappy with Oracle rather than using the relationship as a means of engaging strategically.
The governance has become more formalised not purely as a result of the CCR role but also the Memorandum of Understanding, multiple iterations of which have been in place between Oracle and UK Government since 2003. The Governance structure currently in place via MOU includes escalation routes, from an Operations Board, through executive steering board to annual exec summit.
The CCR provided with Management Information on sales and associated ‘savings’ via CCS covering both Licence and Support transactions.
How your relationship with your Crown Representative differs from your relationship with individual departments, and your assessment of the commercial sills in individual departments with which you work and the in the Cabinet Office.
The relationship characterised firstly by central governance with the Crown Representative wanting to know what’s going on from us as various departments don’t always tell Crown Representative anything/everything. Secondly, the relationship is focused on controlling spend via the MOU.
Relationships with departments continue as those groups are Oracle’s customers. Oracle representatives spend as much time as possible working at a departmental level. It is essential that we continue to work at in this manner as our competitor suppliers also work at this level. Oracle adds value to customers through direct interaction and by offering guidance on the Cabinet Office spend approval process.
Oracle has found that opportunities to drive efficiency changes within Government is a conversation that is more likely to gain traction though departmental conversations than via the CCR.
The information provided to Crown Representatives about the performance of your business a) in relation to Government contracts; and b) overall.
Information is provided to CCS rather than directly to the Crown Rep. The information relates to spend on our products across Government on a quarterly basis and is concerned with the ‘savings’ which CCS can claim as being a result of their governance of Oracle (via the MOU). Information provided is only about our UK Public Sector business, not Oracle’s overall business.
The extent to which you are made aware of the Government’s view of your aggregate performance across contracts and the extent to which you are aware of the Cabinet Office’s risk assessments of your company.
We actively participate in the Annual Supplier Review programme started in 2017. Through this mechanism we provide a wide range of data from which Cabinet Office perform a risk assessment of Oracle as a supplier. The information we provide relates to all of Oracle’s operations across UK Government. The review provides a suitable forum for the Cabinet Office to raise any perceived risks posed by Oracle as a supplier.
We have recently been asked by our Crown Rep to start submitting a consolidated ‘One View’ report of our major activities in Government. This will include sections on Business Change Programmes enabled by Oracle software or cloud, Contractual and Commercial discussions, Innovation Initiatives and Spend Analysis (a simple record of how much is being spent by Government on Oracle products).
Your views on publishing more data on performance against individual contracts. The impact of greater transparency on your relationship with Government and impact on future contract negotiation. What performance information would you be content to see published?
The One View report mentioned above is something Oracle is comfortable submitting to our Crown Representative but as it will contain commercially sensitive information (such as pricing information and ongoing contractual negotiations with customers) Oracle would wish this report to remain confidential and be subject to clause 17 (Confidentiality) of the MOU.
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The benefits or disadvantages of Strategic Supplier status and the proportion of your business involving public sector contracts. How your approach to public sector procurements differs from private sector procurements?
Oracle believes its Strategic Supplier Status means more oversight may be placed on Oracle than other suppliers without a corresponding increase in Oracle’s business with Government. As a Strategic Supplier Oracle hasn’t to date gained enough access to senior representatives of UK Government. The access it has gained is not widespread enough to build the impression that Oracle is truly strategic to UK Government.
Oracle would welcome the opportunity to have wider relationships with senior decision makers in Government. This would afford Government the opportunity to understand the value Oracle could bring to Government (for example how autonomous technology could be applied to modernise the national infrastructure of the UK, such as immigration benefits, banking, utilities, patient records, and payroll systems), most of which runs on Oracle products. Despite being classed as a strategic supplier to Government Oracle’s perception is that most engagements with Government focus on cost rather than value, causing the true potential of Oracle’s contribution to the UK Government to remain untapped.
Oracle does not split out revenues by industry in its annual results but it is fair to say that public sector business accounts for a much smaller proportion of Oracle’s UK business than five years ago.
Oracle is a supplier of cloud products and services, including associated support and consequently does not compete for many Government projects as a prime supplier. The approach taken by Oracle to public sector procurements is therefore similar to private sector procurements. Any business contracted for directly with Government entities is governed by the terms of the Oracle MOU, but most Government entities seek to negotiate additional terms and pricing.
Your assessment of the Government’s understanding of what it wants from contracts, and whether any particular department or area of Government is better or worse.
This is an area where Government procurement has improved in recent years with buyers being more informed and aware of the terms and pricing achieved from Oracle by other Government departments. The approach taken though, is still to buy on price rather than value and consequently Oracle often finds itself in a price comparison exercise against smaller vendors who perhaps do not have as functionally rich an offering as Oracle. Often the savings for Government from implementing a piece of software or a cloud service are realised when a business change is involved. Therefore Government departments need to look at the total cost of ownership of an IT system over several years rather than focusing on the initial buy price of a piece of software or a cloud service.
Departments are generally accepting of Oracle terms and conditions at the time of purchasing licences and services or renewal of support, however challenges do occur and CCRs have had limited influence towards resolution in this area.
The Government procurement frameworks are not always in line with the solutions that are required. For instance many of the terms and conditions in frameworks such as RM1042, GCloud and even the new terms published - https://www.gov.uk/government/collections/the-public-sector-contract - do not address commercial off the shelf software or (more topically) current Public Cloud solutions. Many of the terms contained within these procurement mechanisms are untenable however suppliers feel obliged to try to sign up or risk the loss of Government as a customer. More could be done to consult with the software industry itself for its advice.