Efficient government without digital deadweight: Balancing digitalization and cost optimization

Municipal offices often miss budget savings by avoiding the secondary software market, despite EU legal support. By integrating secondary software in their infrastructure, they can achieve savings of up to 70% without losing functionality or compliance.

In the quest for modern administration, municipal and city offices often hesitate to embrace the secondary software market. This caution leads to missed opportunities for significant budgetary savings. Meanwhile, public organizations in Germany and the Czech Republic have successfully utilized this path for years. For instance, the Czech city of Most issued a tender exclusively for pre-owned software because their budget could not accommodate new licenses. Since EU law supports these solutions, there is no reason for local governments to remain sidelined.

The term “used software” can be misleading. Unlike physical goods, computer programs do not suffer from wear and tear. A secondary software license provides the exact same functionality as one purchased directly from the manufacturer. The installation and activation processes are identical, and access to security updates remains guaranteed according to the product lifecycle policy.

Approximately 80% of the secondary software market consists of the latest Microsoft versions still under manufacturer support. This trend is driven by large organizations migrating to cloud solutions and selling thousands of redundant perpetual licenses. The only difference is the price, with potential savings reaching up to 70% compared to “new” products.

Solid legal foundations

The legality of trading pre-owned software is anchored in European Parliament Directive 2009/24/EC and the landmark 2012 Court of Justice of the EU ruling in the UsedSoft case (C-128/11). Under the principle of exhaustion, if a perpetual license was legally placed on the market within the European Economic Area (EEA), its resale is fully compliant with the law. Microsoft itself has confirmed in official correspondence that if a license was once legally sold, the new holder is treated as an authorized user. The same rules apply to other vendors.

Furthermore, Directive 2014/24/EU on public procurement prohibits the artificial narrowing of competition. Excluding bids that include secondary market software can be viewed as a violation of fair competition and equal treatment – a stance already upheld by supervisory authorities in Germany and the Czech Republic.

How to ensure a secure and compliant purchase

Buying from the secondary market requires proper documentation, but the procedure is straightforward. The key is obtaining "ownership documentation" from the provider to verify the legal chain of title. This should include:

• Identification of the initial purchaser along with proof of purchase from official distribution.

• Product identification via the license agreement number.

• A declaration from the first owner (and every subsequent owner) stating the software is fully paid for, uninstalled, and no longer in use.

• Confirmation of the perpetual nature of the license and its first placement on the market within the EEA.

When drafting specifications for a tender (Tender Technical Specification), avoiding terms like "new software" or "unused license" is recommended – simply using "software license" is sufficient. Instead of demanding the latest version, specify minimum functional requirements. Additionally, do not strictly require registration in the manufacturer’s licensing portal; professional software brokers offer alternative license management portals that meet ISO/IEC 27001 standards. It is also wise to require suppliers to hold ISO 9001 certification and professional liability insurance.

Institutions already seeing results

The list of public entities opting for pre-owned software is growing. Notable examples include the Polish Ministry of Culture and National Heritage, the Podkarpackie Voivodeship Office, and the City of Chorzów. These entities followed standard procurement procedures to acquire legal, functionally identical products.

International results further highlight the scale of potential savings:

• General prosecutor’s office (Slovakia): Saved 65% on Microsoft licenses through Forscope.

• Hospital (Czech Republic): Achieved 64% savings on Microsoft Office 2019 Professional Plus.

• Prague District 15 (Czech Republic): Reached a record 90% in savings.

• Újpest District (Budapest): Saved over €100 000, representing a 73% reduction in office software expenses.

Insights from the field

Practitioners from various offices emphasize that once legal concerns are addressed, the benefits are clear. Officials note that saved funds are often redirected toward critical network infrastructure upgrades that previously lacked funding. As one representative noted:

The software works exactly the same, and we have complete documentation confirming the legality of the purchase.

Save smartly, not riskily

Secondary software is a powerful tool for standard office applications, offering a significantly cheaper alternative without compromising digitalization. The key to success is partnering with a verified provider who delivers full ownership documentation and professional support throughout the procurement process.