Before the first item ¶
00:00:00 Mayor Wilkie: My respects to the elders past, present and emerging and reiterate their invitation for us to join them as joint custodians in respecting and caring for this beautiful place that we all love, respecting and caring for each other. I note we have in attendance here this morning in the chamber we have councillors Tom Wegener, Councillor Amelia Lorentson, Councillor Jessica Phillips and myself and online we have councillors Nicola Wilson, councillors Karen Finzel and Councillor Brian Stockwell. Today's special meeting is to consider contract number CN25210 which is a Microsoft Enterprise Agreement software licence renewal. We have Acting ICT Manager Cameron Douglas here for this report and we also have the Acting Manager of Corporate Services Mark Gatt here as well. So Cameron would you give us a poise of the report please. Speaker 3: We're up for our three year Enterprise Agreement renewal with Microsoft. Microsoft in a sense is possibly our most important software partner.
1 DECLARATION OF OPENING ¶
Nothing was transcribed under this heading — a stretch of the recording with no speech the model could make out.
2 ACKNOWLEDGEMENT OF COUNTRY ¶
Nothing was transcribed under this heading — a stretch of the recording with no speech the model could make out.
3 ATTENDANCE & APOLOGIES ¶
Nothing was transcribed under this heading — a stretch of the recording with no speech the model could make out.
4 SPECIAL MEETING REPORTS ¶
Nothing was transcribed under this heading — a stretch of the recording with no speech the model could make out.
4.1 CONTRACT NUMBER CN25210 - MICROSOFT ENTERPRISE AGREEMENT SOFTWARE LICENSE RENEWAL ¶
00:01:00 We probably understand Microsoft to be Windows 11, our office apps and email. But critically Microsoft provides our access to all our systems. So it's through the identity management of our user accounts and multi-factor authentication that not only grants access to our Microsoft system but all our other systems. So it's a centralised access management point for ICT and it's what secures all our systems. Whether that be the Technology One ERP, our Resolve system, our SharePoint etc. So for us Microsoft is very critical for us to be able to manage our cyber security and our access points. We're in that position where our renewal was on the 31st of July. And recently Microsoft has changed their approach to licensing for local governments and Enterprise.
00:02:00 And we received that at a reasonably late notice. It's coincidental for us that our renewal is this time whereas everyone else's renewal falls all over the place. So for us it was just a very short notice. What Microsoft have introduced is the cloud service provider option for councils. So in the past we would purchase an enterprise agreement with Microsoft. That was a three year agreement that would give us at least price certainty for three years. But it's fairly inflexible. So what that means is that if I sign up for 500 users at the start of the year I'm stuck with those 500 users for the entire year. There's no opportunity to scale up or scale down. So what they've allowed is they've brought in a cloud service provider model
00:03:00 which can work side by side with the enterprise agreement that allows us to transition some of our licenses onto a more scalable flexible model. So that means we can put casuals on monthly arrangements that if a casual then ceases service with council we're not then paying for that license for the remainder of that time. If we need additional planner licenses, project licenses, visio licenses we can buy them on monthly subscriptions, not annual subscriptions. So it gives us a level of flexibility. For Microsoft this would be some form of cut in revenue giving organisations like ours flexibility. So what that also coincided with was a reduction in discounts for local government. So all discounts were off the table and there was a standard enterprise agreement rate and it allowed, but their reasoning was it gave us flexibility through a CSP model.
00:04:00 That put us in a bit of a difficult position because the increases could have been 15 to 20% on our last agreement. And what we've also noticed this year is that our software renewal prices are well above what we expect them to be. Everything that's come in this year is much higher around 8-10% higher than what it was last year. Now a lot of our suppliers are American companies of software and it looks like that they're taking the opportunity to raise their rates where they can in some of these. Data3 has been a really good support partner of Council for a long time. And they do understand the Microsoft licensing model and they do have good connections through to Microsoft. We arranged a meeting, Data3, Data3 with Microsoft
00:05:00 to air our concerns around the increases in the short notice period for us to adjust. And through the work of Data3 we were able to access state government pricing for this agreement. What that means though is from Microsoft's perspective they want this all signed off pretty quickly. And for us it's critical because our licence expires on the 31st of December and we need a contract in place to ensure continuity of service. And so that's the reason for the short turnaround time and the special meeting was to meet these time frames that have been placed on us by Microsoft and try to get the best deal. Councillor Lorentson: I've got a couple. Just had a look at this yesterday.
00:06:00 In terms of the annual payments and probably me just not too clear clearly understanding the report. But on page 2 there's estimated annual payments of $644,844. And then I note at the end of the report it estimated annual costs $699,000 excluding GST. So is it $699,000 or $644,000? So on page 5. Right at the end. I'll just pick this up. And again it could be just me misunderstanding but there's and I had to actually go back because there was a couple. $644,699, $774, but $644,699. What's the annual cost? Speaker 3: I think that needs to be including GST.
00:07:00 Councillor Lorentson: Including GST. So $644, including not excluding GST. Speaker 3: No, it's at $644, xGST. Okay. And then $699,000, $700,000 estimate including GST. Including GST. I think that's a typo there. Councillor Lorentson: Yeah. Okay, terrific. Speaker 3: Apologies. Councillor Lorentson: Okay. Supplies. Why was only one supplier approached and were other vendors under state government arrangement considered? Speaker 3: Turnaround times. For us to run an effective procurement activity is four months. It takes about a month to put our requirements together and advertise. For this value of contract, it would be a month for it to be advertised. Often, you know, depending on the number of responses,
00:08:00 a further month for evaluations and recommendations and then a further month for contracts. So it was unfortunately the condensed timeframes and the price uncertainty from Microsoft. At the time when Microsoft announced the removal of discounts, they didn't actually have their prices set and no prices were published until the beginning of November. Thank you. Councillor Lorentson: Oh, I've got one more question. Yeah. Okay. And last question. And this is just given the recent scam incident. What new controls will ensure that payments, especially monthly invoices, go to... ..are correctly paid? Speaker 4: Through the Chair, I can respond to that. Councillor Lorentson. So this is, for want of a better word, our enterprise-wide platform
00:09:00 that allows us to have all of those various software and access to multi-factor authentication, allows us to have good cyber security, firewalls and a whole lot of other things within the organisation. This particular licence agreement isn't the specific... ..what's the word? Speaker 3: ..isn't the specific solution Speaker 4: to ensure that we're providing... ..sorry, we're paying the right suppliers. It's a completely separate issue. As we've spoken about before, that third-party software that we're currently implementing and will be fully live within the next couple of months, not even that, is a piece of software that then is supported by this Microsoft Enterprise licence agreement. Without me going right into technical details, it's like the umbrella, for want of a better word. Councillor Lorentson: The framework, yes.
00:10:00 So my question is, in terms of paying the 699,000... Oh, sorry. Speaker 4: ..annual costs, Councillor Lorentson: have we got the internal controls to ensure that we're not going to have a similar incident? Sorry, I misunderstood your question. Sorry, through you, Chair. Speaker 3: Look, we... ..as Mark has indicated, we are in the middle of implementing technology to protect supplier payments. And whilst we're still in the middle of rolling out that through our processes and communication, we do have access to file validation. So now even our ABA file is validated on its way out, and so we can monitor those. So those high payments, we can then check for supplier validation. Data3 has been a long-term customer of Council, and we would be... ensuring that no changes to their payment details
00:11:00 will have occurred. And any changes that we receive now are pushed through the software that we're implementing so that we can get those real-time validation at the point. Speaker 4: Through the Chair, and in addition, Councillor Lorentson, we have already implemented second, third and fourth approvers of any... Excellent. ..of any... It's not just substantial payments. It's any change to any vendor master... any bank account details, anything, goes through secondary, third and a fourth approver. And if we have any inquiries from a bank, then it comes to my level for me to question and validate and not just take someone's word for it, but to actually physically see and compare vendor master file data to what's been requested. Mayor Wilkie: Thank you very much. Thank you. I've just been reminded it's a formal meeting and we do need to stand when we speak. Councillor Phillips: Oh, sorry. Of course. I didn't even think of that. Thank you. Speaker 4: Oh. Councillor Phillips: I have a few questions, but it'll be because I don't have a lot of tech savviness
00:12:00 and maybe people watching don't either. So, when it comes to, like, the local governments feeling extra pressures around financial costs, is there an opportunity for advocacy to State and Federal or around things like this? Because we're not the only Council that would be looking at agreements like this. I imagine everyone does this. Does that sit any higher that we can do anything at a local level that would help in three years' time? Speaker 3: Thanks for the question, Councillor. Microsoft's the largest software company in the world and our licences are quite low. Data3 have advocated on our behalf and have allowed us to get what I would consider probably the best prices available to us for this round of agreement.
00:13:00 We would probably like to see more support through State Government and LGAQ in this matter, as Councils are often forced to fend for themselves against large suppliers. But I do believe that our long-term relationship with Data3 and the meeting that they arranged with Microsoft did allow us to get an extremely good deal this time around. Councillor Phillips: Follow-up question then. Could I just maybe ask for, in time, that you assist me or any of the Councillors with motions for the next LGAQ conference because I'd be really interested to see what we can do in this space if we need to push it through then. And then probably my last question then, and this will be because, again, I don't know enough about tax and all that. Do we, are we like a private organisation where these type of expenses for us are claimed as part of our,
00:14:00 like with my home computer or whatever, I can use it through my business or whatever and claim it? Does that make sense? Speaker 4: Yeah. Through the Chair, because we are local government, we have special provisions with the ATO in terms of being GST exempt. If you ask me to give you the specific technicalities of how that actually works, it's when we submit our return, either quarterly or six-monthly or yearly, that that treatment of that money is managed that way. So I don't know if that answers it. Yeah, it does. Councillor Phillips: I just didn't know and I thought this was the time to be able to ask it. Sure. And I've got one more question. Just in relation to like I get a, I just go back to my home computer, it'll say software update or training or whatever through this three year, is that, does that come through this process or when you get the, when we agree to this, is that three years locked in or do they, how does that work at a level like this?
00:15:00 Speaker 3: Yeah, for our enterprise agreement, they're locked in for three years and we get every 12 months we can look at our numbers. Yeah. So, you know, through the work that we did with our managers, we have made significant savings in altering our licence model between the two, between the enterprise agreement and the cloud service provider. So this is for three years. Staff do have the benefit of using software at home as part of the organisation, the Microsoft licensing agreement. So staff members are able to download a copy of Microsoft for use at home over the three years Speaker 4: You were asking about training, is that right, Councillor Phillips? Councillor Phillips: That's interesting to me. Speaker 3: So users have access to training through VivaLearn, which is part of the Microsoft product, and also through our libraries, we have access to LinkedIn Learning.
00:16:00 So with your library membership, you can gain access to LinkedIn Learning, which has quite a comprehensive suite of Microsoft Learning products, and other things too, whether it be around change management, project management, governance, et cetera. LinkedIn Learning is quite comprehensive in its offering. It's not through this agreement, but it is through our agreement with LinkedIn Learning and the libraries. Councillor Phillips: Thanks, Stephanie. Councillor Lorentson: Councillor Morrison. So in terms of actively managing the monthly licences, do we have the internal capacity to do that? Through the Chair? Yes, we do. Steve? Speaker 3: Yeah, changes to user accounts come through our service desk. So we have a process with the HR team. And so when a new user is created or a new user is terminated,
00:17:00 it comes through as a request to IT, and then we adjust the licensing. In terms of does a user need a 4E5 licence or an F3 licence, we are in regular communication with the business around those. The F3 licences have certain restrictions around desktop apps. And we, in our communication with managers, if we find some of the lower level licensing impacts some of our staff, that we can then manage it through an uplift. And that's what the CSP contract allows us to do. So we've targeted a lot of our casuals and our outdoor staff that don't sit at a desk. And we identified about 185 that we could reduce. And that was a significant savings to Council by right-sizing our licences to our user needs. Speaker 4: So through the Chair, if that's right, Councillor Lorentson, just to summarise that, we've engaged with the whole of the leadership team
00:18:00 to determine what the various areas business needs are and what their licensing requirements are. And through that, that's where we've been able to identify some significant savings. And tailored the licensing to suit the actual business needs. So rather than just have that full suite that's not necessarily used, we have the tailored full business need. So that's what we've done through this process. Councillor Lorentson: So down from 500 licences, E5 licences, or we... It's 500... Speaker 3: In our current contract, we have 677 full licences. And we'll be moving to 500 full licences. And 185 F3 licences. Which is that flex... Sorry. Speaker 4: Yeah, which is that flexibility, sorry, through the Chair, that allows us to dial up or dial down. Yep. Mayor Wilkie: Just go ahead. I did see some hands up online. Is anyone online wishing to ask a question?
00:19:00 Speaker 1: Mr Chair, no questions from there. Thank you. Mayor Wilkie: Thank you. Councillor Stockwell, it looked like you were speaking, but we couldn't hear you. Speaker 2: No, I put my hand up because we were off agenda there for one of the questions, but then that ended, so I took it down again. So no questions from me. Thank you. Councillor Lorentson: Councillor Morrison. In terms of risk, what are the, let's say, the top three risk of entering this arrangement? Are there any? Mayor Wilkie: I don't. Speaker 3: Look, I think the risk is some of the, I would think that in maybe some regards, we might have been a bit aggressive with downsizing licences and the turnaround time of bringing them back up to full licences. But I think what that would, from what we were trying to achieve,
00:20:00 it's better to be aggressive, because we knew we could then lift back up pretty quickly. That's the main risk. I mean, the way it works is at the moment, the enterprise agreement is a three year agreement. So that gives us price certainty for three years. Our 185 licences are an annual licensing agreement through the cloud service provider model. So that only gives us price certainty for 12 months. So one of the risks for council in software agreements is, how long can we get a vendor to guarantee prices for? To lock in, yes. So, you know, ideally, there would be, I can't see any plans to move off Microsoft because it is such, it's so integrated into our systems and everyone else's systems. I'd love them to be able to offer us a 10 year agreement. So then we've got price certainty for 10 years. We only get price certainty for three years under an enterprise agreement.
00:21:00 And that's always been the case with Microsoft DAs. So the only risk I could see is that the cloud service, Microsoft crank up those prices in over 12 months' time for CSP. I think that they'll always push up prices. That's what vendors do. There will be a price adjustment, but I don't think it will be that significant. And I think the way we've structured it with EA and CSP is the best arrangement. Mayor Wilkie: Thank you very much. Look, I'll ask the alternative question. What are the risks of not renewing this agreement? Speaker 4: Well, as, through the Chair, thank you, thank you, thank you, Mayor. As Cameron alluded to before, it's the way how we access everything that we do. So it's the way how we access our emails. It's the way how we access Resolve, all of our systems. It provides us our cyber security platform.
00:22:00 If we actually didn't have this within the time constraints, well, then we wouldn't be able to operate administratively. Speaker 3: Yeah, we would be able to operate as of the 1st of January. Councillor Wegener: Councillor Wittman. Just out of curiosity, what are the other companies that could provide the same service as Microsoft? Or is Microsoft just pretty much head and shoulders above? Speaker 3: Um, there would, um, Councillor, there's probably not a single company that provides the federated services that Microsoft provide. So they provide services from collaboration, desktop, server management in the cloud through Azure, identity management, cyber security. MFA. Um, we, um, it would be a... It needs to be a collaborated effort with other pa... ..with other agencies like ours, other local councils.
00:23:00 Um, but what you would find is that identity management would be with one company. Desktop and productivity tools would be another. Collaboration and communication tools. So there'd be a lot of integration. There'd be a lot of fragmentation of different knowledge required. So it's a...you know, we... One of the benefits of using Microsoft is most people use it at home. So when we bring them into our organisation, we don't need to train them. If we went from...to a different system that wasn't what would be considered mainstream, there'd be additional training and support costs required by Council to bring them up to...to...to a standard. So one of the advantages is, is it's...it's so well recognised that people coming from any other Council or any other organisation are extremely familiar with the Microsoft products. So whilst there may be an opportunity to save money on licensing costs, our training costs and bringing everyone on board and getting people in that compliance space would be a much...much more expensive exercise.
00:24:00 Mayor Wilkie: Councillor Wegener? Councillor Wegener: I was going to move. Mayor Wilkie: Oh, well, move it. Councillor Wegener: I'll...I'll move. Mayor Wilkie: I'll move it to second. Um, second...move Councillor Wegener, seconder, Councillor Phillips. Councillor Wegener? I did have a question, mate. That's OK. Can I ask...can I ask...can I speak or not? Do I have this right to speak? Can I ask a question? Councillor Wegener: Ah, just quickly. I thought that the report was... Councillor Wegener? Yeah. It was very excellent, and I'm very happy of the...the savings of $90,000, which is surprising that you're finding a savings with dealing with a monopoly, basically, as Microsoft is. So, thank you very much, and it's, um, a very well-considered report, and so we really appreciate you bringing it to us in this fashion. Thank you, Councillor. Councillor Lorentson: Councillor Lorentson? Um, just following up from what you just mentioned before in terms of costing, is there any opportunity in terms of negotiating power to work with Sunshine Coast Council or even Gympie Council,
00:25:00 um, and, um, negotiate with two other councils? Um, has that been explored, Cameron? Speaker 3: Um, look, I...I've... I've been at a few councils... Councillor... And, look, this is the conversation, and this is where, um, we need more than two or three councils. We need every council in the Queensland state to be able to put pressure on these suppliers. It's not just the Microsoft contract. It's the Technology One ERP contract, whether...or if it's Civica or the like. Um, it's very difficult, um, for each individual council, and there's...we've often discussed it, and there's just a resistance, uh, from these vendors to create specific contracts for... for, um, specific customers. Uh, they would have multiple agreements all over the place. The way it currently works now is that, you know, other councils can back on to other council contract agreements, etc.
00:26:00 So it provides a bit of a contractual risk and a price risk for some of these vendors. Um, I think our best, um, opportunity is to put pressure on our vendors through the State Government and advocacy of the LGAQ. Um, um, and I'd be happy to work with Councillor Phillips in...in that area. Um, I've got some strong opinions on what I'd like to see from... from State Government and LGAQ. So, um, I...I think the direction that your question is heading is the correct one. I don't believe that, um, councils such as Sunny... uh, a collaboration between three of us small... uh, three of us councils... is enough leverage for...for Microsoft, so... Councillor Phillips: Wow. Okay. Councillor Phillips. I'll just speak quickly. Um, thank you for the report. I am very much looking forward to doing some work with you on an advocacy piece for LGAQ because that's where I feel it would be most appropriate as well.
00:27:00 And thank you for trying to find some efficiencies in a time where we probably should demonstrate to community that we are. Mayor Wilkie: Thank you, Councillor. Any other councillors wish to speak to the motion? Councillor Lorentson: Councillor Lorentson. Um, just a quick... No. Just a quick acknowledgement, um, to the people around this desk and the team behind you. Um, thank you for keeping us safe. Mm. Thank you. Mayor Wilkie: Councillor Wiggity, Mr. Ploys. Put it to the vote. Those in favour? Councillor Wegener. Aye. Lawrence. Phillips. Aye. And that's unanimous. Okay. Speaker 4: Okay.
6 MEETING CLOSURE ¶
Council's recording ends before this item. Where a meeting resolved to close its doors, that is what the end of the recording means — see what council discussed in private.