Published on the 30/07/2024 | Written by Heather Wright

While Auckland Council gets new SAP deal…

Australia has added ERP to its federal government software marketplace, enabling agencies to access a wider range of ERP offerings including local offerings, while across the ditch New Zealand’s largest council is heralding a projected $42.1 million in savings over the next seven years after inking a deal with SAP.

Australia’s inclusion of ERP in the BuyICT Software Marketplace has been billed as providing new opportunities for Australian small and medium businesses to sell ERP solutions to the Australian Public Service (APS).

“It will offer new opportunities for small to medium businesses.”

For the first time since 2016, a wider and more diverse range of businesses will be able to sell ERP systems to government.

Thirty-five ERP core and edge providers are included in the ERP marketplace listings, including SAP, Oracle, Accenture, Datacom, Deloitte, Torque and Novabridge.

Eight related services, including research and design services, project and change management, cybersecurity, data analytics and business intelligence and application software development services, are also included.

The launch of the ERP category on BuyICT comes just months after the government abandoned the ambitious – and expensive – GovERP consolidation project which would have provided SAP-based back office services, including financial, human resources and procurement services and reporting as a common platform for the government. It would have forced around 100 agencies on to the platform.

The initiative, which began back in 2019, had seen about 40 agencies upgraded from dated SAP instances to GovERP. It included an SAP S/4Hana-based core with software-as-a-service offerings which could be added for additional functionality.

But GovERP was ‘retired’ late last year as a mandatory solution, though it was repurposed and renamed Services Australia ERP for use by Services Australia and any other entities choosing to use it.

In dumping the program, Minister for Finance Katy Gallagher said GovERP was ‘based on naïve ideas about the ability to standardise complex corporate systems across 100 or so organisations’ and accused it of locking in providers without adequate testing of the market to see what else was available.

The program had cost almost $400 million over six years.

It was replaced instead with a new Australian Public Service (APS) ERP approach designed to provide agencies with access to competitive ERP solutions.

“The new approach acknowledges technology and market offerings have evolved presenting new opportunities for the APS to modernise its ERP solutions,” the Department of Finance says.

Wayne Poels, general manager of the digital investment advice and sourcing division at the Digital Transformation Agency which established the ERP category on its existing software marketplace, says the change gives the Australian public service more autonomy and choice in modernising their ERP systems.

“The establishment of the new category means agencies now have access to a wider variety of technologies, vendors and innovative solutions that best meet their needs and budgets,” Poels says.

“It will offer new opportunities for small to medium businesses to sell ERP solutions to the APS, boosting the local economy and building domestic capabilities through government purchasing.”

Gallagher says for too long small and medium sized businesses have been locked out of selling to the Australian government.

“The establishment of this marketplace category means that the government is again open for business,” she says.

A project management office in the Department of Finance will support smaller, non-corporate Commonwealth entities to choose cost-effective solutions.

Use of the ERP products and service solutions on the Digital Transformation Agency software marketplace is mandatory for non-corporate Commonewealth agencies and is also available for corporate Commonwealth entities, state and territory governments.

New SAP deal for Auckland Council

Meanwhile, in New Zealand, Auckland Council has inked a new contract with SAP, renewing a core software contract with the vendor.

SAP underpins many critical elements of the council’s tech landscape, including payroll, finance, employee management and regulatory functions, with a line-up including SAP CRM, core ERP, Ariba, SuccessFactors, Business Objectives and Concur, with the council spending $8.6 million with SAP in the year to July 2022.

Auckland Council says the previous SAP contract was ‘constraining’ the council and needed to change. It says the new deal will have projected savings of $42.1 million over the next seven years.

Neil McGowan, Auckland Council general manager of technology services, says the council decided to seek a new contract with SAP that would better suit its needs and improve capabilities over time.

It signed a four year deal with SAP in June.

“New terms were negotiated by making use of SAP’s Rise with SAP, a comprehensive business transformation package that includes an AI-powered cloud ERP solution, infrastructure and services,” McGowan says.

“This cloud offering will see previous constraints removed, significant costs avoided and the ability to shrink or grow the SAP function depending on the needs of the council in the future.”

He says the new deal protects the council’s existing SAP installation base while providing the opportunity to make use of modern SAP cloud software ‘should we choose to’.

“It also allows us to pick and utilities fit for purpose technology solutions from a broader range of suppliers while maximising the potential for any core services that may be modernised with SAP.”

The council’s technology strategy if focused around moving to non-customised, out of the box solutions to reduce complexity and ‘establish the ability to keep pace as technology evolves more rapidly’.

“The new agreement contains the ability to leverage SAP’s services to remove and contain complex customisations during any migration activity to ensure the council can achieve its strategic goals for simplification.”

Auckland mayor Wayne Brown says instead of reinventing the wheel, the move gets the best out of existing services, creating savings by making the most of what the council already has and fine tuning systems to contribute to the $20 million savings target.

He says the deal will also set council up to take back control of council controlled organisations (CCOs), which, alongside property optimisation, includes an expansion of shared services across the council group.

“This is about maximising efficiency ahead of some changes coming to CCOs,” he says.