£500 does sound cheap, but if schools don't need to spend this money at all then it's actually £500 wasted - for a small school that's a lot of money which could otherwise be spent on the pupils.
I do understand that the council have spent a lot of time and money on setting up this system based on a requirement to give parents access to specific school information, but this requirement is no longer a mandate (I have spoken to the DFE). Surely East Sussex County Council have a duty to inform schools of this fact so that they can make an informed decision about whether or not to take on a project which will require a complete shift in processes for the school and in small schools this may mean having to get someone in to maintain it, costing extra money.
I appreciate that County don't want to lose out on their investment, but surely the schools shouldn't be taking on a system just to ensure the 'success' of a project? After all its not the schools fault that the government changed the goal posts.