The UK public-sector bet on Microsoft

In 2025 the UK government signed SPA24, a five-year Strategic Partnership Agreement that effectively commits public sector organisations to spend about £1.9B per year on Microsoft products and services. Over five years, that adds up to nearly £9B. That kind of spending demands real accountability and a fresh look at whether Microsoft is the right partner, not simply because it’s familiar but because it’s truly the best value and most sustainable option.

Many arguments support the Microsoft-first approach: they deliver scale, reliability, and deep integration. For a public system with hundreds of legacy applications, tight budgets, and complex user needs, that kind of “safest bet” can be tempting.

But there are major structural and strategic risks associated with such a deep dependency.

What’s working: why Microsoft attracts public-sector clients

• Scale, breadth, and compliance capabilities: With offerings like Azure, productivity tools, and cloud-based services, Microsoft covers a full stack from infrastructure to end-user applications. They claim deep experience navigating public-sector procurement, regulatory compliance, and governance frameworks.
• Ease of deployment and familiarity: For public organizations that often lack in-house engineering talent, Microsoft’s suite offers a “works out of the box” option. Existing staff are likely already familiar with Windows, Office, Active Directory, which lowers friction and training costs.
• Speed of modernization and access to new capabilities (e.g. AI / Copilot): Tools like Microsoft Copilot bundled into SPA24 offer a shortcut to deploying AI-driven productivity tools across the government, without building from scratch or evaluating many fragmented alternatives.

Why there’s pushback: cost, lock-in and missed opportunities

• High cost for questionable value: Even with negotiated discounts under SPA24, critics argue the sheer volume of public funds involved risks becoming a “convenience premium” that subsidises comfortable corporate margins rather than delivering real savings or service improvements.
• Vendor lock-in and reduced competition: Defaulting to Microsoft, especially as a bundled suite, can squeeze out open-source or cloud-agnostic alternatives. That reduces future negotiating leverage and may block innovation or cost-effective substitutes.
• Data sovereignty and privacy concerns: The fact that Microsoft has admitted it cannot guarantee full data sovereignty under certain laws (e.g. U.S. Cloud Act) raises real alarms for sensitive public data, particularly in environments with strong privacy or national-security requirements.
• Missed opportunity cost: The same £9B could, if invested differently, accelerate modernization, expand capacity in fields like healthcare, infrastructure, law-enforcement IT, or support innovation via open-source and interoperable systems. That trade-off matters.

What this debate means more broadly

For any country or organization evaluating large-scale software licensing / cloud deals (especially in public sector), the Microsoft-first model highlights both scale benefits and strategic risks.

• Big incumbents like Microsoft gain advantage from familiarity, procurement maturity and integrated offerings, but that advantage can become structural inertia.
• Over-reliance on a single vendor may stifle competition long-term, reduce flexibility, and inhibit adoption of open standards or newer technologies.
• Data sovereignty, regulatory compliance and transparency must remain non-negotiable when public data is involved. Cloud-first strategies should always be matched with governance, exit-strategy and vendor-agnostic planning.

What I’d do if I were advising a public-sector CIO today

Given the tradeoffs, my advice would be:

• Adopt a hybrid vendor strategy: Use Microsoft for legacy workloads or where reliability and support are critical; simultaneously run pilots with open-source, cloud-agnostic or smaller-vendor solutions.
• Demand price and discount transparency: Independently audit what deals like SPA24 deliver in real savings vs margins for Microsoft.
• Insist on data-sovereignty & governance guardrails, possibly mandating local data residency, encryption, and exit-readiness before contracting.
• Establish multi-vendor competency internally: invest in skills, open-source tooling, interoperability frameworks, so the organization isn’t tied to a single vendor long-term.

For someone like me, leading a company in Software Asset Management, this debate reinforces key lessons: lock-in, pricing opacity, lack of competition, and lack of open ecosystems are real failures in long-term value. That’s precisely why there’s space and demand in the market for modular, vendor-agnostic, transparent SAM tools, and why Licenseware’s mission isn’t just timely, but strategically aligned with where public sector and enterprise clients should be heading.