Butte County Board of Supervisors Agenda Transmittal
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1 Butte County Board of Supervisors Agenda Transmittal Clerk of the Board Use Only Agenda Item: 4.05 Subject: Budget Adjustment and Presentation - Microsoft Enterprise Licensing Department: Information Systems Meeting Date Requested: December 10, 2013 Contact: Art Robison Phone: Regular Agenda Consent Agenda Department Summary: (Information provided in this section will be included on the agenda. Attach explanatory memorandum and other background information as necessary). Butte County employees use Microsoft products daily. Each product used requires a license. Historically, licenses have been purchased in small batches by each department from multiple vendors resulting in a mismatch of software versions on user desktops hindering business processes, as well as making it difficult to ensure license compliance, which places places Butte County at substantial risk for monetary fines if the County is using more licenses than it has paid for. Microsoft recognized the issue with license compliance and developed a vehicle for software purchases, know as an Enterprise Licensing Agreement. The agreement allows for immediate use of software while amortizing the cost over three years, provides a business model with predictable cash flow for better fiscal management over multiple years, and allows the County to better manage license compliance, provide a common business platform and provide current software to increase service delivery to the public. In addition, Microsoft will be discontinuing support in Spring 2014 for a number of the versions of software packages currently in use throughout County departments, and this agreement will allow the County to bring all systems up to currently supported versions. The Enterprise Agreement with Microsoft is a non-financial agreement and does not require Board approval. The County budgeted $2,197,463. in the Support Services Equipment Replacement Fund in FY to acquire licensing from a Large Account Reseller (LAR), but after going through a competitive bid process the total amount needed to acquire the licensing is $2,313,309. which requires a budget adjustment for the additional $115,846. Approval of the budget adjustment will allow the Purchasing Agent, pursuant to Butte County Ordinance Section 46-9, to purchase licensing from the LAR selected through bid. Fiscal Impact: Use of an additional $115,846 in fund balance from the Support Service Equipment Replacement Fund over a 3-year period. On-going annual software assurance costs spread out over County departments of approximately $330,000 per year. 5-year depreciation costs for initial purchase spread out over County departments. Personnel Impact: None Action Requested: Approve the Budget Adjustment. Administrative Office Review: Shari McCracken, Deputy Chief Administrative Officer
2 BUTTE COUNTY INFORMATION SYSTEMS 308 NELSON AVENUE OROVILLE, CALIFORNIA Telephone: (530) Fax: (530) ROBERT BARNES Director November 25, 2013 To: Butte County Board of Supervisors From: Art Robison, Assistant Director Re: Microsoft Enterprise Agreement Summary Butte County employees use Microsoft products daily. Each product used requires a license. Historically, licenses have been purchased in small batches by each department from multiple vendors. This practice resulted in a mismatch of software versions on user desktops hindering business processes, as well as making it difficult to ensure license compliance. This places Butte County at substantial risk for monetary fines, if the County is using more licenses than it has paid for. Microsoft recognized that many entities struggle with license compliance and developed a vehicle for software purchases, known as an Enterprise Licensing Agreement. This vehicle allows for immediate use of software while amortizing the cost over three years. This agreement provides a business model with predictable cash flow for better fiscal management over multiple years, and allows the County to better manage license compliance, provide a common business platform and provide current software to increase service delivery to the public. In addition, Microsoft will be discontinuing support in the spring 2014 for a number of the versions of software packages currently in use throughout County departments, and this agreement will allow the County to bring all systems up to currently supported versions. The Enterprise Agreement with Microsoft is a non-financial agreement. The County budgeted $2,197,463 in the Support Services Equipment Replacement Fund in FY to acquire licensing from a Large Account Reseller (LAR), but after going through a competitive bid process the total amount needed to acquire the licensing is $2,313,309, which requires a budget adjustment for the additional $115,846. Approval of the budget adjustment will allow the Purchasing Agent, pursuant to Butte County Ordinance Section 46-9, to purchase licensing from the LAR selected through bid. Background Microsoft products are deeply entrenched in every part of the business processes in the County of Butte. The software applications are used by every staff member in every office. In addition to the products that the typical staff members use, like Microsoft Office, Outlook and Windows 7, there are other products in the background that most people never see. For instance, Microsoft Exchange provides services to the Outlook software on a user s desktop. Microsoft Windows Server provides file and print services to users. Windows Server also provides logon and related security capabilities to all users through Microsoft Active Directory services. 1
3 Another service provided by Microsoft Windows Server is the web content delivery of our County website, Microsoft SQL Server provides database services to every department in the County hosting such applications as the Megabyte Property Tax System, SunGard financial system and the Laserfiche Document Management System to name just a few. License Requirements Each Microsoft application employed requires a license in order to achieve compliance with software licensing laws. Most people are familiar with the license requirements for the desktop operating system (Windows XP, Windows 7 or Windows 8) and the Office suite of products because they have purchased these at a retailer. However, there are a host of additional licenses required in order for these products to connect to the afore mentioned products like Windows Server, Exchange Server, SQL Server and others. These licenses are known as client access licenses, or CALs. The Challenge The current practice for obtaining software applications and client access licenses has been to purchase small lots from as many as eight different vendors. The multivendor approach is in place to ensure that we are in compliance with our County policy of supporting the competitive bid process. These two practices have created significant operational problems. Small Lot Purchases The small lot purchasing has made it very difficult for departments to maintain a common version of software throughout their business units. The problem is exacerbated between departments that share common information. This results in additional workarounds by technical and line staff to account for problems created by software version differences. This reduces business process efficiency as well as service delivery to the public. A common business platform would greatly reduce support issues surrounding software versions. Software License Compliance Microsoft created the Volume License Service Center website as the authoritative source for license tracking. Yet, software license tracking is still a difficult and time consuming process. The difficulty is only compounded by our procurement practices. To accurately account for licenses it is necessary to logon to the website, search through hundreds of products, obtained by hundreds of purchases, made by tens of departments, to eight different suppliers, accomplished over the past decade. This is time consuming, frustrating and error prone. However, failure to comply with licensing will result in significant fines against organizations that are out of compliance. 2
4 Competitive Bid Process Additional products and/or licenses are often required and acquisition costs often exceed the Butte County financial threshold for purchases and thereby require a competitive bid process. Multiple bids must then be solicited to ensure that the lowest bid is obtained before purchase. In small quantities this process takes only a few hours to accomplish, but cumulatively it presents a much larger opportunity cost to the County. Greater efficiencies could be realized if we had a predetermined product price and vendor that is based on a competitive solicitation from the outset. The effort and time required to obtain additional products would be reduced. Discontinued Product Support All Microsoft products are subject to end of support dates, a stale date if you will. When the manufacturer no longer supports the software it should no longer be used for business purposes. There are several products that are reaching their End of Support dates. Two of the most visible examples are Windows XP and Office 2003, scheduled for End of Life in April While many County systems have been updated, there is still widespread use of XP and Office 2003 in the County at this time. This needs to be corrected. The Solution Microsoft created the Enterprise Licensing Agreement to address license procurement difficulties faced by larger corporate and public organizations. This agreement, commonly known as an Enterprise Agreement or EA, provides a number of benefits. Cost Spreading The EA allows eligible entities like Butte County to obtain products and amortize costs over three years. This business model allows entities to budget and manage cash flows more effectively. It greatly reduces or eliminates the financial expenditure spikes attributed to software acquisition. It also provides a more accurate picture of the true cost of software throughout the enterprise. Immediate Use Under the EA organizations may utilize all of the products listed on the agreement as soon as the agreement is signed. There is no need to wait for multiple budget years to pass in order to bring the whole organization up to speed. The only wait is for the logistical issues related to deployment to be addressed and scheduled. This provision allows the County to quickly deploy a consistent business platform to every staff member s desk. Under this agreement Butte County will also be able to refresh nearly all of the back end server technologies like Windows Server, Exchange Server, and SQL Server which support our daily business processes. 3
5 One Vendor / One Price The EA provides for a single vendor, selected through formal bid process, to service the account for the full period of the agreement. All licensing is provided through this vendor. This is possible because the competitive bid process is accomplished once prior to accepting the agreement. There is no need to check with multiple vendors for up to date pricing or account services. Product pricing is established at what Microsoft refers to as Select Level D, minus 7.5%. This is the lowest legitimate pricing available for Microsoft products. Pursuant to the Butte County Purchasing Ordinance Section 46-9, the Purchasing Agent can issue a purchase order for the initial and subsequent software acquisitions. License Management The single vendor model of the EA creates a single point for software asset purchases. It reduces staff time required to manage licenses and reduces the financial risks associated with non-compliance with software license laws. Software Assurance Software assurance allows organizations to apply the latest Microsoft technologies to their business challenges. If a new version of software application becomes available it can be deployed immediately under the software assurance program. This eliminates a common business problem experienced by County departments; out of date noncompliant software. Software assurance also provides technical support and training opportunities. True-Up True Up is the process where additional license payments are made. At a predetermined time of the year a software asset audit is accomplished. The quantity of current assets is compared to what has already been purchased. Any additional products are accounted for and an additional payment is made at that time. However, if additional software assets are needed prior to the true up, they may be immediately and legally installed for use. This creates a more innovative and agile business environment, because new technologies can legally be deployed and verified before the requirement to fund them. The Products Under the EA, Butte County will obtain a comprehensive package of end user software applications, server applications and client access licenses. These products will provide the tools that are needed to move business forward in many ways, namely ease of use, better service delivery and increased capability. Front End User Products Front end user products are the applications, operating systems and access licensing suites that County staff will use on a daily basis. Some of these products are already in 4
6 use, but in older versions. Some existing versions are now incompatible with their newer counterparts or will no longer be supported by Microsoft in the near future. Office Productivity Suite (Office Pro Plus) Office is the product that everyone uses every day. Whether it s Outlook, Word or Excel this is the primary business tool for all. There are a number of additional products in the suite such as PowerPoint, Access or Publisher that are useful to a smaller group of others. In either case this is a powerful group of software applications. Enterprise Client Access License (CAL) Suite The Enterprise CAL suite is a family of related access licenses providing a legal connection to backend server products. A simplified list is provided below. Windows Server CAL o Required in order to continue to use file, print and Active Directory services after upgrading to the newest Microsoft Windows Server product. Exchange CAL o Required in order to continue to use services after upgrading to the newest Microsoft Exchange Server product. Lync CAL o Required in order to take advantage of the upcoming unified communications technologies to be provided by Microsoft Lync Server product. SharePoint CAL o Required in order to take advantage of this collaboration technology provided by Microsoft SharePoint Server product. System Center CAL o Required in order to take advantage of the computer asset management platform provided by the suite of products included in Microsoft System Center. Microsoft Desktop Optimization Pack (MDOP) Suite The Microsoft Desktop Optimization Pack (MDOP) is a suite of technologies available as a subscription for Software Assurance customers. MDOP virtualization technologies help personalize the user experience, simplify application deployment, and improve application compatibility with the Windows operating system. Additionally, MDOP helps you manage and secure your device, enabling monitoring, and deployment of key Windows features. Using MDOP shifts desktop repair from reactive to proactive, saving time and removing 5
7 challenges associated with troubleshooting and repairing system failures. By leveraging this suite Butte County will be able to upgrade user computers running Windows XP Professional to a supported platform of either Windows 7 Enterprise or Windows 8 Enterprise. Back End Server Products For every front end user service there is a back end server product. A simplified list is provided below. Windows Server for file, print and Active Directory services Exchange Server for services SQL Server for database services System Center Server for computer asset management Lync Server for Unified Communications Recommended Action Approve the budget adjustment, increasing appropriations for Microsoft Enterprise Licensing in the Support Services Equipment Replacement Fund by $115,846 for a total appropriation of $2,313,309. 6
8 Admin Office Use Only: Date of Review/Approval: 11/26/2013 Reviewed and approved by: Shari McCracken Board Mtg Date: 12/10/2013 4/5 Vote Required (Increases Overall Appropriations in a Fund or transfers from Contingencies): Yes X_ No BUDGETARY ADJUSTMENT WORKSHEET Description of Budget Action: Additional appropriations in ISF Equip Replacement Fund for Microsoft Enterprise Licensing Agreement. Fund Budget Unit/ Cost Center Project # Account # Account Description Use of Funds Recommended Appropriation Increase/(Decrease) Recommended Revenue Increase/(Decrease) Source of Funds Use of Fund Balance (includes Restricted Cash) Capital Asset 115, Loan Proceeds 77, Use of Fund Balance 38, TOTAL 115, , , Reviewed and approved for Auditor-Controller Journal Date B -
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