Lessons from history: the hidden dangers of proprietary software

Procurement decisions can be complicated and time-consuming. It’s tempting to look short term, solving the current issue of the day by making a quick decision to outsource to a tech giant that promises the world without costing the earth.

After all, these tech companies are the experts, right?

But the loss of control over your system can have devastating financial and operational implications. In this post, Paulo Barreto, Technical Expert at Calypso Networks Association, explains what history teaches us and why operators and authorities need to have true sovereignty and mastery of their technical systems.

When vendor lock-in lasts for decades

In 1999, the UK government, sole shareholder in the UK Post Office, decided to start automating accounting processes. It contracted IT supplier Fujitsu to create a centralised system, known as Horizon. IT expert Jason Coyne would later say that it was at this point that the Post Office became “operationally reliant” on the system.

The £548 million deal soon ran into problems with accounting discrepancies. But the Post Office only owned the service from Fujitsu, not the code, which meant it could not inspect the system fully.

According to the BBC, the Post Office “wanted to switch suppliers since 2012, [but] buying the rights to the code from Fujitsu or building a completely new system from scratch was considered too expensive.” An attempt to replace the system with one from IBM wasted a further £40 million, and the Post Office subsequently spent another £600 million retaining Horizon.

In total, it’s estimated that the Post Office spent £2.5bn on contracts with Fujitsu since 1999. Experts believe a further extension will be necessary beyond March 2026, before it can finally transition to a new system.

Despite its desire to end the partnership, the Post Office is still unable to free itself from its dependency on one proprietary vendor nearly thirty years later.

The UK Post Office is not alone in its mistakes…

Fujitsu is not an isolated case. “Vendor-lock has allowed software vendors to leverage their power to impose a number of harmful practices,” wrote independent procurement expert Michael Garland in 2023, as part of a study of US government spending.

 FedScoop reported that, in 2021, the US Department of Agriculture spent $112 million more to buy Microsoft Office than it would have cost to purchase Google Workspace, in order to avoid switching costs that it believed would be even higher.

The UK government, in an apparent failure to learn the lessons of Horizon, admitted last year that its “current approach to cloud adoption and management across its departments faces several challenges” which results “in risk concentration and vendor lock-in that inhibit UK government’s negotiating power over the cloud vendors.”

 These examples all highlight the risk of ‘putting all your eggs in one basket’ with a single vendor: often they make it easy to enter into an agreement and hard to leave. Vendors count on the cost of migrating to another provider being prohibitive, further discouraging customers from leaving.

What has history taught us? Own your system.

Calypso is a standard defined and driven by its community of users. We believe every authority and operator should have full sovereignty and control over their system, free from proprietary control. Not only does this facilitate lower pricing by fostering fair competition and removing hidden costs, but it helps protect networks from workflow disruptions or being forced to upgrade to new products.

With open-source software development kits (SDKs), such as Eclipse Keyple, independent certification and a licensing framework, Calypso provides all the tools and knowledge required for implementors to have true mastery of their technical systems.

Anyone with an active interest in mobility can get involved. Does this sound like you? Contact us.