Defence puts new deals to market in $1bn ERP overhaul

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Defence puts new deals to market in $1bn ERP overhaul

Moves onto program design, change management.

The Department of Defence is inviting bids for two vendors to help it through a $1 billion effort to rationalise more than 500 ERP applications and replace them with a new SAP suite.

In its latest approach to market, the department has asked for 'strategic partners' to take over planning and vendor management and change management.

The ERP scheme - previously referred to as Project Insight, a moniker Defence appears to have now discarded - will replace more than 500 applications currently governing the department’s finance, logistics, procurement, engineering, maintenance and estate functions.

Defence’s giant IT shop thinks it can get rid of 80 percent of its largest applications and up to 95 percent of the smaller ones to deliver “standardised end-to-end best practice business processes across domains” over a period of eight years.

One of the applications already marked for decommissioning is the department’s relatively new but troubled military integrated logistics information system (MILIS), delivered by Mincom. Tender documents reveal the agency is looking to determine the “most expeditious approach for removing MILIS from the Defence information environment”.

Defence has already signed licensing deals with SAP for its Defense Force & Public Security (DFPS) solution and S/4 HANA in memory processing tools.

It previously signalled plans to split the hands-on SAP software implementation into two modules, to be outsourced to two systems integrators. The department approached the market for bids in May, and expects to have finalised a shortlist of respondents towards the end of this month.

Defence is now looking for two organisations to deliver higher-level oversight and coordination capabilities.

One “strategic partner” will deliver stakeholder management and coordination, plus program delivery strategies.

Defence can’t commit to long-term contracts until it obtains second pass approval under the Department of Finance’s ICT two-pass review process.

The strategic partner will be expected to steer the project through this sign-off process by refining the business case and companion documents, completing a cost benefit analysis, and finalising cost estimates for submission by October 2017.

Beyond this point, the deal is likely to extend to project governance, data migration, solution testing, and performance management functions on an ongoing basis.

Defence is also looking for an organisational change management lead to embed a team of specialists into the Defence implementation team.

The OCM partner will produce a change management plan, workforce requirements plan, initial change readiness assessments, a system of change management KPIs, and take over internal communications about the project.

Defence wants to build a number of self-protection mechanisms into its ERP program contracts, including program-wide reporting frameworks to track contractor performance, explicit IP conditions and dispute resolution conditions, program-wide KPIs, and a framework for incentive payments and liquidated damages, in case implementation doesn’t proceed as promised.

It also hopes to defend against budget blow-outs through a number of pricing rules, like fixed caps on work package prices.

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