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Finance evaluates ERP systems standardisation

by Pallavi Singhal •
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The Department of Finance and Deregulation has taken the first steps to providing standardised Enterprise Resource Planning (ERP) systems across the public service, with the launch of a $2.8 million research project.

Finance was allocated funding of $1.4 million per year for 2013-14 and 2014-15 in the outgoing Labor Government’s last budget “to undertake a detailed study of the costs and benefits of rationalising the number and type of Enterprise Resource Planning systems used in the Australian Public Service”.

This initiative also aligns with the direction outlined by the Coalition’s ICT Policy.

An information paper released today outlines Finance’s plans “to undertake a whole-of-government analysis of ERP systems, to determine a strategic approach for the medium to long term”.

The Department has requested industry engagement as it investigates systems and public service business processes, including financial, administrative and operational processes.

“The devolved nature of the public service has resulted in Commonwealth entities, over time, implementing various, often customised ERP systems or systems for key functions,” says the paper.

“This has afforded Commonwealth entities the opportunity to pursue systems and processes that best meet their needs. However the fragmented approach may also have reduced the overall efficiency and effectiveness of government operations.”

This aligns with the Coalition’s plans to “simplify Government ICT and eliminate duplicated, fragmented and sub-scale activities across agencies”, outlined in its Policy for E-Government and the Digital Economy.

The scope of Finance’s investigation into the standardisation of ERP systems is now likely to also be informed by the Coalition’s policy distinction between agencies that are ‘heavy’ and ‘light’ users of ICT.

The Policy identifies light user agencies as “less intensive users of ICT, whose needs in most cases are considerably less specialised”.

It notes that “where [light user] agencies have unique needs, legacy systems or other sources of complexity, these are usually less crucial to core tasks”, suggesting that these agencies would be prime contenders for the standardisation of business process and deployment of common ERP systems.

In contrast, heavy user agencies “have IT environments as complex as any in the private sector; multiple legacy systems; highly capable IT staff; a keen grasp of the centrality of ICT to the agency; and responsibility for systems crucial to core tasks, such as paying employees or welfare recipients”. These agencies include the Australian Taxation Office, the Department of Defence and the Department of Human Services.

Intermedium’s Analyse IT Federal Government contracts database shows that in 2012-13 the top six IT using agencies accounted for two thirds ($3.6 billion) of the total Government ICT contract value. The remaining third ($1.8 billion) was spread across more than 100 agencies.

While the Coalition has stated its plans to allow “heavy users to retain autonomy and control over ICT operations”, there remains scope for larger ICT-using agencies to undertake lead agency roles in any future ERP systems consolidation.

“The model is for ‘heavy user’ agencies to take on service-wide responsibility and leadership in fields that fit with their activities,” says the Coalition’s Policy.

According to the estimated timeline for the project, industry consultation and environmental research will continue until December 2013, with research and analysis and the development of a roadmap and implementation options to follow in 2014. Finance aims to report to the Government on project findings in the first half of 2015.

In evaluating its options, Finance may look at recent ERP systems consolidations around the country, most notably within the NSW Government.

The NSW Department of Premier and Cabinet embarked on a state-wide consolidation of corporate functions with the launch of its Corporate and Shared Services Reform Program in 2010. The Program aims to reform and standardise finance, human resource management, ICT and other functions within separate agency clusters.

In December 2012 the NSW Department of Trade and Investment, Regional Infrastructure and Service (DTIRIS) successfully transitioned its ERP systems to an as-a-service model. It is now looking to extend its solution to other agencies within the Trade and Investment cluster, which includes DTIRIS, the Department of Primary Industries, Art Gallery of NSW, Sydney Water Corporation and Energy Corporations.

Transport for NSW also approached the market in August 2013 for an overhaul of ERP systems across the Transport cluster, which includes Roads and Maritime Services, RailCorp, State Transit Authority, and Port Corporations among others.

View the Finance profile on GovFacts >>>

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  • Federal
  • Software
  • Finance & Services
  • Coalition's Policy for E-Government and the Digital Economy
  • Department of Finance and Deregulation
  • Enterprise Resource Planning (ERP)
  • NSW Corporate and Shared Services Reform Program
  • NSW Department of Premier and Cabinet
  • NSW Department of Trade and Investment
  • Regional Infrastructure and Services
  • Transport for NSW