Microsoft to keep its foot in the door despite losing Israel bid

Microsoft Corp. (Nasdaq: MSFT) recently withdrew its appeal to Israeli courts after losing in the massive NIS 4 billion tender for the government’s Nimbus cloud computing project. Nimbus includes the migration of data from all ministries and authorities of the Israeli government to the cloud and the tender was won by Amazon Web Services (AWS) and Google Cloud.

In withdrawing its petition, Microsoft has given no explanation for the sudden reversal of its objections to rivals who win the tender, but sources familiar with the matter told “Globes” that Microsoft is profiting. currently the increasing use of its services by the Israeli government. ministries. In addition, Microsoft also expects the state to extend the agreement to use its personal computer (PC) software, which for the tech giant represents a kind of “foot in the door” to be able to continue to provide services to Israeli government ministries, even after those services have been transferred to competitors Google and AWS.

Organizations such as the ministries of finance, transport, justice, health and tourism use the various services associated with the cloud PC products of Microsoft and Office 365. The most popular service of all is the platform of Microsoft’s communication Teams as well as various Office applications including Word, Excel, Power Point and Planner management software, the forms software widely used by Israeli government departments and agencies.

An opening for the use of cloud products

According to the protocols of the tender signed by Microsoft, Israeli government departments are allowed to use Microsoft PC applications such as word processing and PowerPoint presentations only when they are installed on government and office computers. public bodies. However, the government-purchased package from Microsoft also allows ministries an opening to use Office 365 Unified Cloud management applications, if approval is granted by a special committee of the Ministry’s ICT Authority. the “Cloud Committee” Economy. Despite this, “Globes” was informed that departments continue to use Office 365’s unified cloud management applications, without the approval of the “Cloud Committee”.

Even though the generalities of the initial agreement between the state and Microsoft saw the use of Microsoft’s cloud products as the exception, over time, government departments have invested millions of shekels in upgrading various services. Microsoft cloud. For example, rabbinical courts spent nearly NIS 1.2 million on upgrading Microsoft Office 365, in addition to training seminars, including lunch for those seminars.

Millions of investments

Many ministries depend on the large number of Microsoft products regardless of the Office 365 tender. The Ministry of Health, for example, has invested NIS 6 million in purchasing cloud services from Microsoft. The Justice Ministry invested NIS 300 million to upgrade its data security systems for Microsoft in the cloud, and the Foreign Ministry purchased storage services and advertising management equipment from the cloud services from Microsoft Azure for 251,000 shekels. It should be noted, however, that these services were purchased before AWS and Google Cloud won the Nimbus tender.

The Office agreement between the state and Microsoft is in effect until the end of 2022. Despite the award of the Nimbus tender to AWS and Google Cloud, the Government ICT Authority believes that the next agreement with Microsoft for cloud products will almost certainly be signed, with negotiations expected to be concluded by the end of the third quarter for a contract extension.

The date for the migration of departments to AWS and Google Cloud cloud servers has yet to be determined. “Globes” understands that the government ICT authority and finance ministry procurement administration are already preparing for the transition from government servers to Google Cloud and AWS. In recent weeks, possibly due to the results of the tender and legal action, permissions to upgrade cloud infrastructure have only been issued in small numbers and many applications have been delayed.

“Not in a hurry to move to the cloud

Government employees are full of doubts. A senior executive at a data systems company that works with the government told “Globes,” “The Ministry of Finance will encourage IT staff in government offices to migrate to cloud storage or cloud security from AWS and from Google, but I don’t see them migrating so easily to places where Google and AWS don’t have a comparative advantage.

“Departments can ask AWS or Google to fund the move to one of their partners and if they refuse, there will be no move and Microsoft will continue to serve them. All local authorities, Israel Electric Corp ., Mekorot, all work with Microsoft and I find it hard to see how government departments won’t be able to connect with them with the same kind of programs. “

Another source said: “Microsoft is hoping that the Finance Ministry will make Office products exempt from the tender, or that the delay created by the tender will result in an extension of the Office deal.” It is not impossible that this is one of the reasons for the withdrawal of the software giant’s appeal. Despite the loss, Microsoft is banking on having its foot in the door even after its current major loss in cloud services. “

Engaged in the call for tenders

The government ICT authority said: “In exceptional cases, subject to the approval of the Cloud committee and the purchasing administration, some of the Office 365 products will be used. shortlisted for the Nimbus tender, the government ICT Authority has actively engaged in the migration of government departments to the use of winner’s clouds. ”

The Ministry of Finance Public Procurement Administration said, “The Nimbus project and the cloud tender in particular has been professionally and thoroughly managed, with its many complexities. For this reason, we understand why Microsoft has announced that it does not plan to appeal the results of the Government as a general rule will purchase public cloud services from winning Nimbus vendors and all other ratings and comments are unfounded.

Posted by Globes, Israel business news – en.globes.co.il – on August 25, 2021

Copyright of Globes Publisher Itonut (1983) Ltd. 2021

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