Canberra gets its second billion-dollar IT project

The Department of Human Services may face competition in its claim to the biggest IT project in town, after the Department of Defence revealed it is also embarking on a systems overhaul likely to cost in excess of $1 billion.

All eyes were on the DHS last year as it finally secured funding for the long-overdue overhaul of its mainframe-based welfare payments system, expected to cost the government between $1 billion and $1.5 billion. It kicked off its first round of procurement in September.

But just days before Christmas, the Department of Defence snuck out a detailed market briefing that revealed cost estimates for its own ERP update – dubbed ‘Defence INSIGHT’ – put it past the billion-dollar mark, with the full plan likely to take eight years to complete.

Project Insight will see Defence’s CIO Group (CIOG) replace or integrate roughly 600 of its applications, more than 90 percent of which it expects to get rid of altogether.

The ambitious scheme will combat a sprawling IT environment and is set to take in corporate functions as far and wide as finance, logistics, procurement, estate, engineering and maintenance.

Insight will not, however, address Defence’s PM Keys or PeopleSoft HR and payroll systems, or any of its document management or e-health systems.

CIOG has already signed an $86 million deal with SAP that will keep it in licences until 2020.

SAP’s Defense Force & Public Security (DFPS) solution will form the foundation of the new ERP suite.

In early 2016 Defence intends to commence an approach to market to find two systems integrators that will take on a single tranche of the mammoth job each.

The first tranche will cover the foundational DFPS implementation, some of which will be driven by the HANA in-memory processing platform, plus integration with PeopleSoft and financials.

A second tranche will cover the remaining program modules, from procurement through to the tracking and management of Defence’s asset and estate holdings.

The department is aiming achieve first pass approval in July 2016.

The history of federal government IT projects on this scale is blotchy at best, but the CIOG is striving to fortify its plans with a number of structural protections.

The $1 billion-plus project value includes a 20 percent contingency fund to be built into the final budget.

Defence is also trying to avoid the pitfalls of customisation and scope creep.

“As a guiding principle, Defence intends to adopt a vanilla SAP and standard industry bolt-on applications where possible rather than accept significant customisation which drives up cost, complexity and risk,” the department advised potential bidders.

Project implementation is set to be broken into six to 12 month “capability drops”.

Defence has long struggled to contain the decentralised proliferation of applications amongst its large and complex structure.

The April 2015 first principles review criticised this IT organisational sprawl for blurring lines of accountability and generating institutionalised waste.

The Insight project is being designed to address some of these issues and further the Department’s ‘One Defence’ business strategy.