Defence switches on initial SAP ERP system capability

The Department of Defence has begun to see the fruits of its massive ERP transformation, with the first major capability release under the billion-dollar program now underway.

iTnews can reveal that initial finance reporting capabilities were rolled out through the SAP-based ERP system last month after 18 months of work by systems integrator IBM.

“ERP capability release for finance and reporting, which includes near real-time replication of financial data, commenced on schedule in December 2020,” a spokesperson told iTnews.

It comes 18 months after IBM fought off Accenture to secure a $95.5 million contract to help Defence move to SAP’s Defence Forces and Public Security solution and the S/4 HANA cloud platform.

The contract has since climbed to $112 million, including by $14.6 million earlier this month due to a “change in work requirements”.

The spokesperson would not disclose the nature of the change, stating only that the amendment “supports the iterative design process being undertaken to deliver the ERP program”.

“Defence planned to implement new work packages on this contract as the ERP design matured,” the spokesperson added.

The ERP program, which the department first revealed five years ago, is the largest ERP program underway across the federal government, as well as the one of the largest IT programs at Defence.

It will see a single ERP system introduced to give Defence a “near real-time view of critical information ... to better inform decision making”.

In the process, it will shed as many as 500 existing systems across the department in a bid to align with the One Defence business model called for in the 2015 First Principles Review.

This includes up to 90 percent of its existing ERP applications, as well as other systems used to manage finance, HR, logistics, procurement, engineering, maintenance and estate functions.

But with Defence less than two years into what is expected to be an eight-year program, the department is yet to replace any legacy applications.

“Rationalisation (including decommissioning) of legacy applications will occur once the ERP fully replaces the functionality of existing applications,” the spokesperson said.

The department is now turning its attention to the larger logistics and maintenance capability release, which remains on schedule for its 2022 release.

“Additional work to be performed this financial year includes both the progression of the design phase for the logistics and maintenance release (which remains on schedule), and planned design work to accommodate the changes included in the latest release of SAP S/4 HANA,” the spokesperson said.

“The logistics and maintenance capability release rollout to Defence users is planned to commence in the second half of 2022, to be completed by mid-2023.”

Last year, Microsoft revealed that the SAP ERP system would be hosted on protected-level public cloud from Canberra’s Azure region – the first major Defence workload to have migrated.

“With Azure as its underlying platform for the ERP transformation, Defence will be able to cost effectively scale and continuously adopt new functionality as it becomes available,” it said.