Consulting giants, DXC join IBM on $1bn-plus Defence SAP project

Consulting giants Accenture and Deloitte and DXC Technology have been brought in to work on the final phase of Defence’s multi-billion-dollar enterprise resource planning (ERP) system project.

The Department of Defence entered into a panel arrangement with the trio earlier this month to deliver system integration services for the third tranche of the program over the next six years.

The third tranche, which will run until the end of September 2028, follows on from two previous tranches delivered by IBM, which has had its pick of contracts to date as the sole system integrator.

A Defence spokesperson told the three-member panel covers “all remaining scope for the ERP program”, including HR, fuels management, catering management, engineering and maintenance, and estate management”.

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.

The program was recommended in 2015 with the intent of enabling better governance, faster processing and lower maintenance and support costs.

IBM has secured the bulk of contracts on the project to date, beating Accenture to be named systems integrator for the program’s first two tranches in July 2019.

Tranche one is delivering a “logistics, land material maintenance and a finance capability, while tranche 2 is delivering an investigative case management capability, based on SAP S/4HANA”.

The $95 million deal – which ultimately climbed to $112 million – covered preliminary design work under tranche one of the program.

A $128 million follow up contract was signed in April 2021, but a “contract extension” last month saw its value grow by a further $39 million.

The spokesperson said the contract was “varied to reflect the outcomes of a review and re-plan of the scope and delivery of tranche one and tranche two”.

The go-live date for the remaining deliverables has also been extended and is now expected to take place in “Quarter Four 2023”.

Initial finance reporting capabilities were rolled out through the SAP S/4 HANA system in December 2020. The logistics and maintenance capability release is slated for competition in mid-2023.

Last year, the Australian National Audit Office 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”.

According to the audit, IBM has secured six orders for individual work packages worth $274.5 million since winning the deal in July 2019. A total of $614 million had been approved by the government for tranche one and two at the time of the audit.

Do you know more? Contact James Riley via Email.

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