Late yesterday, the United States Department of Defense announced a new agreement with Microsoft and Dell, aimed at consolidating and streamlining Microsoft software licenses across a huge variety of services and systems.
If you’ve ever worked in a big government department or corporation, you might know how complicated IT policies can be. Furthermore, you might be aware of how, over time, interweaving systems can become tangled and messy, as decades of technical debt accumulate and pile up. We might all be up to date running the latest version of Windows 11 at home, but your local airport, hospital, or bank might still be rocking Windows 7, or even older in some cases.
Few governmental departments are as complicated as the United States military apparatus. And Microsoft has long held contracts within the famed Pentagon for delivering things like Windows, Microsoft Office, and cloud services. Over time, the disparate cacophony of different provisions, license models, and service level agreements has become a tangled web of needless complexity and ongoing maintenance requirements. The Pentagon is taking action to cut costs, at least in theory.
The U.S. DoD announced that over the next five years, Dell will be tasked with consolidating and streamlining Microsoft services and software spread across the U.S. military apparatus, including its intelligence services and the U.S. Coast Guard.
The Pentagon (via CNBC) says the deal will save U.S. taxpayers $422 million annually, despite the $9.7 billion upfront cost of the cleanup operation.
Dell has a long-standing partnership with Microsoft, as one of the largest PC makers on Earth and third-party suppliers of Microsoft services and licenses. Despite the contract ultimately going to Dell, it still further entrenches Microsoft in the United States government as its primary software and cloud provider.
Dubbed the “Microsoft Department of War Enterprise Software Agreement II Core Enterprise Technology Agreement,” the funds reportedly come from existing budgets already allocated for Microsoft software purchases, covering Office suite and Azure servers and things like Active Directory. The goal is to centralize software purchasing into a single, more efficient vehicle, as opposed to the existing system of disparate and conflicting processes.
Dell stock reached an all-time high in after-hours trading on the news, hitting $305. Dell’s stock price has risen by 129% in just six months, and follows comments from U.S. President Trump urging people to “go and buy a Dell,” alongside Michael Dell’s $6.5 billion donation to a Trump-backed charity investment fund for American children.
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