Gallagher pulls back ‘naïve’ $344m GovERP project

The federal government has abandoned its massive enterprise resource planning system consolidation project known as GovERP in favour of a new approach that promises greater autonomy for agencies.

The move effectively ends SAP lock-in for around 100 agencies that were scheduled to transition to the single across-government platform, with Services Australia the only confirmed agency to continue using GovERP in a repurposed form.

All remaining agencies will now be given the option to take up the repurposed GovERP platform or an entirely different platform from a proposed ERP category on the government’s Software Marketplace panel.

Finance and Public Service minister Katy Gallagher revealed the decision on Tuesday as part of the government’s new “APS ERP” approach to back-office functions that replaces the Shared Services Transformation Program.

The Shared Services Transformation Program began in 2016 with the aim of standardising the corporate systems and processes at 100 agencies for 130,000 public servants, reducing duplication and costs in the process.

The GovERP program, a subset of the Shared Services Transformation Program, began life three years later in 2019, when the Department of Finance approached the market for a whole-of-government prot0type ERP platform.

The platform was to replace the existing ERP systems in use at five shared services hubs across the departments of Finance, Foreign Affairs and Trade, Home Affairs, Services Australia, and Industry with a single across-government platform based on SAP S/4 HANA.

But after four years of work, it remains unclear how much of the functionality has been delivered, bar a travel and expense management capability. It is also unclear whether any of the initial 14 agencies in line to transition to the platform have done so.

In July, Finance also revealed the cost of the GovERP to be $344.7 million over the last four years, leading to renewed scrutiny of the project, including from Independent senator David Pocock and local ERP provider TechnologyOne.

On Tuesday, Ms Gallagher said the government’s new approach to ERP would give agencies more autonomy to choose the technology and vendors that make sense for their needs and budgets and was underpinned by the principles of “choice, market competition, and affordability”.

She said the former government’s Shared Services Transformation Program was “based on naïve ideas about the ability to standardise complex corporate systems across 100 or so organisations” without any regard for the pace of technological change.

Even before the GovERP announcement on Tuesday, agencies like CSIRO and the Future Fund Management Agency had opted to go their own way on ERP. In the case of the Future Fund, this was due to their “distinct” requirements.

Ms Gallagher also criticised the use a limited tender to select SAP as the ‘core’ GovERP software provider in 2020, with an open tender only used to create the panel of ‘edge’ products and services that complement the core offering.

“The fact that the Liberals/Nationals locked in long-term deals for the GovERP program without proper consideration of competition is remarkable for a government that talked big about being the friends of business,” Ms Gallagher said.

Under the new approach, the Digital Transformation Agency will shortly begin market testing ERP solutions, with a view to establishing an ERP category of core and edge products on the Software Marketplace that agencies will use from mid next year.

The DTA will use a staged procurement approach to establish the new ERP category. It plans to issue a Request for Information in the coming days, followed by a Request for Tender that will be informed by industry review in February 2024.

“We will be engaging with industry sellers and government agencies throughout the establishment of the new category to ensure that it delivers a fit-for-purpose arrangement that supports increasing competition in the ERP market and drives the uplift of government services delivery,” the DTA said.

GovERP will continue in a repurposed form and be used by Services Australia, as well as any other agencies that wish to do so. A new Project Management Office within Finance will help smaller agencies to choose cost-effective solutions.

Future ERP uplifts will be informed by an independent reuse assessment to ensure they are cost effective, while the government also plans to review existing transactional processing arrangements across the APS.

Ed Chung, the chief executive of home-grown ERP software outfit TechnologyOne, described the decision to abandon the GovERP program as a “major win for Australian taxpayers and the Buy Australia Plan”.

He said the previous government had wasted millions “trying to implement overseas software solutions in a shared service model based on outdated technology” while local alternatives struggled to gain a foothold with their own government.

“Abandoning the program is a unique opportunity for the Australian government to now build real sovereign capabilities in technology, while enabling Australian technology companies… to compete on the global stage,” Mr Chung said.

“For years, TechnologyOne has been advocating to government the need to better support the local tech sector. Even a 10 per cent uplift of government purchasing from Australian providers would deliver a near $10 billion benefit to our national economy.

“TechnologyOne welcomes this announcement and looks forward to helping departments and agencies further modernise their system while stripping tens of millions of dollars from the cost of administrating Government, now that their shackles have been removed.”

Do you know more? Contact James Riley via Email.

1 Comment
  1. 8 months ago

    And so, another GSM (Great Stinking Mess) bites the dust…

    And the DTA stumbles further away from what it could have been.

    One thing’s for sure – you can’t digitally transform anything when your focus is on the technology rather than the business that the technology must support. Does Katy Gallagher understand that digital transformation is about transforming the business so that it uses technology better? Better tech without better business is an absolute waste.

    Then again, one has to remain gobsmacked by how the burrow crats of yesteryear (oh no – are they still there?) thought force-fitting already obsolete tech into intransigent agency business models was ever going to achieve anything.

Leave a Comment

Related stories