FCA blows £3.2 million on unused Oracle licenses

FCA blows £3.2 million on unused Oracle licenses

The Financial Conduct Authority (FCA) has admitted squandering £3.2 million on Oracle software licenses it did not need.

The embarrassing revelation by the City watchdog was revealed in its financial accounts for the year.

"In May 2014, the FCA entered into a one year contract to purchase a number of software licences," states the report. "The contract involved the FCA making a prepayment in order to secure the licences at a significant discount to the list price. Utilisation of these licences by the FCA has not materialised as originally anticipated and thus £3.2m of the prepayment has been written off as a constructive loss. The contract expired in May 2015 and is not being renewed."

Three months prior to entering into the contract, the FCA had identified technology risk as a key area of focus for the coming year, vowing to conduct a major year-long review into how well UK banks and building societies were managing their exposure to technology risk issues and the adequacy of their IT systems in general.

The FCA does not receive funding from the UK government as it funds the cost of delivering its objectives by raising fees from the firms it regulates. It's total IT bill for the year came in at £91.5 million.

In response to a Freedom of Information request on the debacle, the FCA said: "The value of the licences that the FCA estimated it would require during this one-year deal proved to be incorrect for three key reasons.

"The assumptions underpinning the agreement did not anticipate that some projects that originally required Oracle licences would be de-prioritised by the FCA thus reducing demand; some projects would be implemented later than anticipated and hence fell outside of the agreement’s one-year timeframe; and some projects would adopt an alternative technical solution."

Comments: (3)

Craig Lawrance
Craig Lawrance - Starkspur Ltd - Chalfonts 11 September, 2015, 08:27Be the first to give this comment the thumbs up 0 likes

So how many firms does the FCA regulate? And how do they feel about their fees going towards the licensing of unused software?

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 11 September, 2015, 16:50Be the first to give this comment the thumbs up 0 likes

While I'm not advocating wastage, "shelfware" - as this would be called in the software industry - @ 3.5% (3.2M/91.5M*100%) of IT budget is not exactly abnormal. Full Disclosure: I'm an ex-Oracle employee. SAAS is only an ostensible remedy: Beneath the veneer of its "pay for use" pricing model, in actual practice leading SAAS vendors (e.g. SFDC) insist on upfront contracts for a minimum of 12 months regardless of whether the software is really used by the contracted # of users during the contracted period.

A Finextra member
A Finextra member 21 September, 2015, 11:08Be the first to give this comment the thumbs up 0 likes Most notable is other choices for software. The financials and healthcare are moving away from Oracle to enterprise NoSQL such as MarkLogic.