The cost of Defence’s mammoth upgrade of backend systems is nudging $600 million, after lead systems integrator IBM landed another lucrative contract for platform services last month.
Big Blue is the lead systems integrator on Defence’s enterprise resource planning (ERP) upgrade after beating out Accenture in 2019.
It has now secured more than $362 million in contracts from the ERP project, despite adverse findings in an audit of the program’s establishment in 2021.
The audit found IBM representatives were present and involved in decisions at several meetings for tranche one of the ERP program, causing “real and perceived conflicts of interest”.
Slated to cost at least $1 billion between 2016 and 2025, the ERP program is delivering an SAP S/4 HANA system to progressively replace around 90 per cent of the department’s existing ERP application.
A further 500 applications currently used for finance, logistics, procurement, engineering, maintenance and estate functions will also be replaced as part of the overhaul.
Alongside the GovERP program being led by Services Australia, it is the largest ERP program underway across the federal government.
IBM has secured most of the contracts for the project. IBM’s contracts for Defence ERP to date include the initial two-year systems integrator contract that rose from $95 million to $111.9 million.
IBM inked a new four-year systems integrator contract in 2021 for $127.6 million. This has risen to $207.3 million through a dozen extensions or amendments.
Last month, IBM secured another $43.8 million contract for services support.
“[The contract] is for the provision of technical platform services for the ERP program over a three-year period,” a Department of Defence spokesperson told InnovationAus.com.
“The ERP Program is being delivered incrementally with the first release in operation and another release due in November 2023.”
Consulting giants Accenture and Deloitte and DXC Technology were brought in a year ago for work on the final phase of the ERP project
As of 30 June 2023, Defence has spent $591 million on the ERP project, with outsourced providers accounting for nearly all of the spend.
In 2021 the national audit office revealed IBM representatives were present and involved in decisions at several meetings related to the ERP project, which resulted in the company receiving contracts for the first tranche of work.
IBM’s second tranche contract, now its biggest and extended 12 times, was not covered by the audit.
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