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Defence postpones $1 billion ERP program

by Justin Hendry •
Free resource

Since the publication of this article, Defence has released an Invitation to Register Interest (ITR) for systems integrators. It has not yet sought first pass approval.

Topics: IT Services; Software; ICT Strategy; Fed.

The $1 billion-plus enterprise resource planning (ERP) transformation program known as Defence INSIGHT has stalled, with the Department of Defence opting to defer major milestones in its delivery schedule despite an extensive period of early market engagement.

The seven-year program – the largest ERP implementation of its kind in Australian Government – aims to help the agency realise the One Defence business model after the 2015 First Principles Review called for the consolidation and standardisation of current information management practices.

From the outset, the agency made it clear that the program would remain unapproved until Defence sought first pass approval from the Government in March 2016, and that any risk or expenses associated with participating in INSIGHT activities would need to be incurred by vendors regardless of results.

An initial approach to market in early December 2015, in line with recommendations in the Review, gave suppliers a six month preview of INSIGHT’s intended implementation roadmap. While it was expected that first pass approval would be granted in July 2016, it now seems as if this date will be pushed back by at least three months, if using the project timeline in Defence’s December 2015 market briefing pack.

A spokesperson from the department has told Intermedium that the program “has not yet been submitted for first pass approval. It is planned for submission post-election.”

As the federal government has now entered its pre-election caretaker mode, Defence will now make its first pass submission after the July 2 election, as per the Department of Prime Minister and Cabinet’s Guidance on Caretaker Conventions.

However, even before the election was on the horizon, Defence appears to have halted the early engagement process.

It has not yet commenced the Registration of Interest (ROI) for potential System’s Integrators (SIs) that had been planned for 15 February 2016, despite having received responses (or enquiries for further information) from 20 vendors following the market briefing in December and the market sounding questionnaire shortly afterwards.

The ROI process was intended to gauge industry’s intention to participate as either a prime or subcontractor prior to short-listing potential SIs, which had been expected to occur before May 2016. Two SIs, a Strategic Partner and an Organisation Change Management Partner are likely to be required for the program.

SAP has already been selected as Technology Partner following an $86 million contract in August 2015 for SAP’s Defence Forces and Public Security application to support Defence’s transition to One Defence. 

Defence INSIGHT will need to integrate with Joint Project 2080 (Defence One), which will deliver a single payroll and HR system using Oracle PeopleSoft HCM software, the spokesperson said.

“Defence INSIGHT will require integration with Defence One so that accurate and up-to-date HR data can be provided to meet process and information needs, whilst maintaining a single source for HR data.”

Accenture was contracted as the SI for the Defence One program in October 2011, and has since provided the bulk of the services.

It signed a $58.5 million deal with Defence for the development of a single, unified payroll system through Applications Managed Services Partnership Arrangement (AMSPA) in October 2013. Accenture also provided Defence with Personnel Modernisation ADF Payroll Build Services between 24 March 2014 and 21 December 2015 worth $13.6 million, and 22 October 3013 and 31 May 2015 worth $4.8 million.

Accenture currently holds a HR & Payroll Systems Sustainment Service contract with Defence worth $40.3 million between 10 February 2012 and 30 June 2017.

Accenture is one of five preferred industry partners on AMSPA, which also includes BAE Systems, CSC, IBM and Hewlett-Packard.

Defence is currently looking to replace AMSPA having contracted Deloitte for its AMSPA replacement project. Deloitte has also signed three business consulting contracts with Defence under the heading: Enterprise Resource Planning Roadmap Program, totalling $13.7 million since 30 March 2015.

The Integrated Investment Program, which was released alongside the 2016 Defence White Paper, has outlined the allocation of $1-2 billion towards an ERP system/service between 2016 and 2025. An additional ERP system/service, scheduled for approval in 2015-16, will also receive less than $100 million.

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