The just-created federal ERP marketplace is a generational re-write of the government’s enterprise software strategy, giving departments and agencies a broader choice and new opportunities for tailored deployments.
Established in July, the ERP marketplace has signalled the end of GovERP as a single monolithic shared service, a strategy set up under the previous Coalition government.
GovERP had effectively locked-in around 100 departments and agencies to using the single vendor, SAP-based system as a shared service.
With Services Australia now the only agency to have confirmed it will continue with a rebadged GovERP, those 100 departments and agencies are now free to move ahead with their own back-office transformation strategies.
The changes will rapidly accelerate the evolution of public sector shared services to better accommodate the impact of software as a service models. Ultimately the changes will deliver greater choice.
Traditional shared services worked well for decades under previous generations of technology, as departments ‘ordered’ their back-office services like finance and HR from a central unit. But that all changed once vendors began delivering software as a service (SaaS).
Earlier this year, InnovationAus.com held a roundtable discussion in Canberra, where representatives from government departments around Australia and New Zealand openly shared their experience with shared services.
The participants agreed that SaaS models had empowered agencies to take advantage of productivity and business process tools best suited to their own particular back-office needs.
Under a one-size fits all under a shared services model, it is the largest agencies with the biggest budgets that decide which technologies and applications are deployed. This meant smaller agencies were often supplied with services that are not fit for purpose.
Adding to the difficulties for smaller agencies, none of the shared services are bound by an enforceable service-level agreement (SLA), meaning that if the delivery of a service is disrupted, the agency is not protected.
By contrast, the roundtable participants said the software as a service had enabled smaller agencies to deploy services without a massive upfront capital investment or deep tech skills – making these SaaS systems deeply attractive when compared to mandatory shared services.
Agencies could suddenly enjoy the benefits of being a ‘real’ customer of a commercially driven vendor, getting access to tools that make them more efficient while also receiving support and guaranteed service levels.
The reality is that share services models for government have lost relevance in the face of more flexible and customisable SaaS platforms that can be deployed faster and at lower cost.
The federal decision to scuttle GovERP as a monolithic shared service is a recognition of this new reality, and the creation of an ERP marketplace is a recognition of this new reality.
According to roundtable recipients, the changes should usher in a new era in which government departments and agencies are able to reimagine their use-cases for SaaS architectures.
Individual agencies now have a choice of ERP services from a ‘marketplace’ of companies, giving departments and agencies the ability to choose their own back-office systems for the first time since 2016.
While agencies say the flexibility to use different ERP services is a positive, a critical challenge for some is a lack of specific expertise to identify which combination of SaaS products would provide the greatest benefit.
“This may explain why of the 35 ERP suppliers listed by the Digital Transformation Agency, only 11 are actual ERP software providers, the rest are consulting and business technology firms,” said IBRS’ global research director and future of work advisor, Dr Joe Sweeney.
The evolution of the shared services model and the growing impact of SaaS based ERP systems remains a challenge, particularly when integrating hybrid models or integrated different SaaS services are required.
Any major migration and integration project required extensive preparation and specialised technical expertise, making it no surprise that so many consultants and business transformation companies are on the ERP marketplace.
If all agencies could start from scratch, they would build everything on SaaS infrastructure and applications.
But the reality is that very few have the luxury of a greenfield start, most will have to somehow integrate with their legacy applications and federal services.
The roundtable participants agreed there is still a role for a shared services units in government, because even in a predominantly SaaS environments, the provision of things like data lakes, or developing AI and setting minimum security standards are still more effective when centralised.
But the central model is quickly evolving, and shared services are increasingly morphing into an enabler of the SaaS platforms used by every agency and department.
The ‘Adapting the evolving shared services model‘ whitepaper and accompanying article are produced by InnovationAus.com in partnership with TechnologyOne and IBRS.
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