IBM wins $95.5m Defence ERP contract

IBM takes charge of design work for massive ERP program

IBM has won a $95.5 million contract to deliver the initial design for the Department of Defence’s enterprise resource planning (ERP) program.

The new contract with IBM covers the provision of system integrator services to deliver the design phase of Tranche 1 of the new platform, which will be based on SAP S/4HANA. Defence said that the contract includes high-level design work for subsequent tranches and will “set the foundation elements for finance and human resources.”

Defence in 2016 begun seeking systems integrators for the ERP program.

The Defence Integrated Investment Program foreshadowed spending $1 billion to $2 billion for implementing an ERP system. The IIP was released alongside the 2016 Defence White Paper that found an underinvestment in ICT over the course of a decade “coupled with the lack of a coherent enterprise-level strategy for Defence’s complex and rapidly evolving information and communications requirements, has led to serious degradation across the information and communications capabilities of Defence”.

The ERP program is the largest undertaken by the Australian government, with Defence intending to have initial capability for finance reporting in 2020. Logistics and maintenance capability is expected to be delivered in 2022.

“The program will progressively deliver solutions that will affect every Defence member and transform the way Defence does business,” a statement issued by Defence said.

“It will provide a near real-time view of critical information across Defence to better inform decision making.

“ERP will modernise, integrate and transform Defence's approach to managing its finances, human resources, logistics, engineering, maintenance and estate.”

The First Principles Review (FPR), released in 2015, called for Defence to implement “an enterprise approach to the delivery of corporate and military enabling services to maximize their effectiveness and efficiency” as part of a move to “One Defence”

The FPR called for business and information processes and their supporting applications to be standardised, which it said would “necessitate a move over time to a small number of standardised information and communications systems supporting enterprise-wide processes and a radically simplified application landscape through retiring legacy solutions and adopting enterprise master data”.

“This is a testament to our 40-year partnership with the Australian government, and more than two decades of working with the Department of Defence,” said David La Rose, managing director for IBM Australia & New Zealand.

“It is another example of the confidence in IBM’s ability to transform and deliver highly complex and world-first initiatives. We look forward to helping the Department of Defence drive greater efficiencies, trust and innovation that will benefit all Australians.”

“With SAP S/4HANA, Defence can leverage embedded intelligence and deliver real-time insight to critical business operations,”  said Damien Bueno, president and managing director at SAP Australia and New Zealand. 

“As the foundation of an organisation-wide transformation, SAP S/4HANA will help optimise the value of important defence investments and resources, in addition to underpinning future innovation.”

“This decision builds on the 20-year strategic relationship between SAP and the Department of Defence, delivering critical infrastructure to the organisation. IBM and SAP also have a long partnership delivering innovation programmes together for customers. We look forward to working together on the success of this transformation that will support Defence in its important mission of serving and protecting Australia,” Bueno said.  

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Tags governmentIBMEnterprise Resource Planning (ERP)Department of Defence (DoD)

More about AustraliaDepartment of DefenceIBMIBM AustraliaRoseSAPSAP Australia

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