The NHS has completed a three-year corporate software licensing deal with Microsoft Ltd, which will see all NHS computer users get access to the latest Microsoft software and potentially save the NHS £50m.

The new "NHS Enterprise Agreement", which has immediate effect, will dramatically rationalise the NHS’s previously fragmented purchasing of Microsoft products. Senior NHS bosses said the agreement will underpin NHS modernisation.

Originally due in July, the new agreement provides the NHS with one single national software subscription, replacing the 35,000-plus separate orders that took place through previous contracts.

Under the deal the number of licences taken by the NHS is not restricted, as a central annual licence fee will be paid. Some 300,000 users are expected to be covered in the first year, with the figures rising to 400,000 in year two and 500,000 in year three as levels of connectivity rise across the service.

Although the value of the deal was not disclosed, Medexonline has been informed that the Microsoft deal will account for the lion’s share of the £20m earmarked for national investment in software to support NHS connectivity.

Announcing the agreement, Health Minister Lord Hunt said: "One of our key priorities is to connect all NHS organisations and staff to compatible IT networks and systems."

However, both the NHS Information Policy Unit and Microsoft stress that the deal does not imply standardisation on Microsoft products. The NHS Purchasing and Supplies Agency (PASA) are currently negotiating smaller, separate deals with other software providers including Novell, Lotus and Corel.

Microsoft products covered in the national deal include Office Professional XP and Back Office Client Access Licence (CLA), which includes Exchange Email. The deal covers all updates released during the period of the contract, including, from 25 October, Windows XP.

Ellen Pirie, health industry manager at Microsoft, told Medexonline that the deal would “rationalise NHS software purchasing”, ensure all staff have access to the latest versions of software "and save the NHS ten’s of millions of pounds". The government believes the potential savings could be as high as £50m.

Pirie compared the deal to moving to a corporate mobile phone contract, "rather than everyone going out and buying pay-as-you-go cards". For Microsoft the NHS has now become a single customer – one of its top five globally – with a committed spend, rather than a complex, fragmented market.

Pirie said the move to compatible, modern software systems will “undoubtedly help drive the modernisation of the service”, and improve the management of and NHS IT department’s ability to support systems. "Just getting everyone onto a common version of software is seen as a key benefit by users," noted Pirie.

Sir John Pattison, director of NHS information, also stressed the deal’s importance to achieving NHS IT objectives: "This agreement represents a partnership that not only delivers improved value for the NHS but will give staff access to the most up-to-date version of software programmes enabling much quicker progress towards the modernisation of the NHS."

Jenny Duff, Industry Manager for Public Sector, Microsoft added: “Microsoft products provide a high level of functionality at commodity price levels, providing the NHS with a cost-effective IT infrastructure on which to build its modernisation plans.”

The nationwide deal applies to all NHS organisations in England. NHS organisations in Scotland, Wales and Northern Ireland and the Department of Health and its associated agencies are not currently included in the agreement, though they will be offered the opportunity to enrol.