In 2019, IBM Australia won against Accenture in securing the deal for the ERP modernisation project of the Australian Department of Defence wherein IBM would cover initial design work of the projected $1 billion project slated to be completed in eight years.
The first phase of the massive transformation project of the Department of Defence was centred on modernising information systems and optimising processes. The new SAP-based enterprise resource planning (ERP) system is based on SAP’s Defence Forces and Public Security solution and hosted on the SAP S/4 HANA cloud platform. The design phase of tranche one reached $112 million from the initial $95 million deal, with the initial finance reporting capabilities rolled out through the SAP-based ERP system after 18 months.
Defence’s billion-dollar, multi-year modernisation journey would be replacing 500 existing applications currently used for finance, logistics, procurement, engineering, maintenance, and estate functions, including 90 percent of ERP apps.
In April 2021, IBM Australia was officially appointed to lead the second phase of Defence’s ERP system overhaul under a $128 million contract over two years. According to an ITNews article, the new contract would involve configuring the SAP system in compliance with the approved design and delivering it to Defence personnel as part of the build and rollout of tranche one of the Defence ERP program.
IBM Australia Taking the Lead for Tranche Two
Moving forward with the second tranche of the modernisation project, the Department of Defence handed over $42 million to IBM Australia to deliver the case management capability for the department harnessing the SAP S/4HANA integrated case management (ICM) product. The 19-month deal was published last 7th of October 2021 by the department, bringing in over $170 million total value of contracts to IBM.
“The contract with IBM Australia is for the delivery, transition into service, and initial support for Defence’s new case management capability, under the Defence ERP program,” Defence spokesperson said. “The work falls under tranche two, and follows on from [the former contract with IBM Australia]; being for the requirements definition and design stages of the new case management capability.”
Tranche two was allocated $250 million December 2020 when the first phase of tranche one reached initial operating capability (IOC). Meanwhile, the second phase of tranche one, which would cover the more significant logistics and maintenance capability release, is slated to reach IOC by end of 2022.
The case management system, which had been originally planned as a “standalone program with its own integrated investment provision”, will replace 12 existing systems according to an audit. The department decided to include it in the ERP transformation project in September 2020.
“In July 2020, Defence investigated whether the case management program could align with the ERP program, and found that SAP’s case management product could meet Defence’s needs,” the audit stated.
“The capability being delivered will enable the rationalisation of a range of Defence’s existing case, investigation, and incident management systems and capabilities,” Defence said.
The case management capability powered by SAP S/4HANA is anticipated to support the replacement of the 500 legacy applications in the scope of the program. For the time being, tranche three of Defence’s ERP modernisation project is yet to receive funds.
