Finance picks SAP S/4 HANA for govt-wide ERP platform

The Department of Finance has settled on SAP’s S/4 HANA platform to underpin the federal government’s new common enterprise resource planning (ERP) system, dubbed GovERP.

The department revealed its decision in an industry advisory on Thursday, as it prepares to move into the delivery phase for what is one of the government’s largest ERP undertakings this decade.

Plans for the centrally managed ERP platform emerged late last year in a bid to standardise corporate and financial systems across the government’s six shared services hubs.

The hubs, which were introduced in 2016 as a result of the whole-of-government shared services regime, currently serve the core transactions corporate services needs of 73 agencies.

The platform is eventually expected to be used by the majority of the hubs to “bring together personnel and financial data that can be accessed for analysis in near real-time”.

It was prompted by the need for five of the six hubs to replace their existing separate SAP-based ERP systems before they reach end-of-life in 2025 or pay a premium.

Only one of the six hubs – located in Services Australia, the Australian Taxation Office and the departments of Treasury, Finance, Industry and Foreign Affairs – currently rely on non-SAP system.

“GovERP will allow the hubs to invest once in a new ERP and share the asset, avoiding the cost of each hub investing separately for the same capability,” Finance said in its most recent annual report.

Working with the hubs, Finance’s shared service ERP transformation group is currently leading the design and development of a prototype, which is expected to be trialled with agencies this year.

But while the department said the prototype would be based on “existing platforms used by the Hubs, it had not made a decision on the core technology solution as at the end of last year.

“No decision has been made on the core ERP platform underpinning GovERP,” a spokesperson told iTnews in December.

“The shared services provider hubs are working together to undertake discovery work to inform common ERP solutions, based on the existing platforms already owned and used by the Hubs (including SAP) and additional market approaches where appropriate.”

But the industry advisory released on Thursday indicates Finance has now decided on S/4 HANA as the core technology solution for the prototype.

“The first tranche of the initiative will prototype a foundation ERP platform for trialling across the provider hubs that already operate an SAP-based ERP,” the department said.

“As such it will use SAP/4 HANA as the core technology solution; along with a range of complementary cloud-based products sourced from the open market, to test the delivery of common HR and financial services via a provider hub model.”

Briefs posted on the digital marketplace over the past three months confirm the department's choice and indicate that SAP's S/4 HANA 1909 release will form the basis of the prototype.

Finance has been contacted for comment.

The department is now preparing to enter the project delivery phase for the prototype, which it said would involve “approach to market to procure appropriate cloud-based complimentary products and services to integrate with a Core SAP/4 HANA platform”.

The next phase of work will also involve “further work to develop and validate program solutions including a new operating model, fit for purpose solution for small agencies and a new implementation schedule”.

The department will hold an industry briefing on February 17.

The wider shared services program has already clawed back more than $70 million in savings through its consolidation of core transactional corporate services such as finance and HR back-office systems.