Defence hands IBM $42m for SAP case management system

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Defence hands IBM $42m for SAP case management system

Under second phase of ERP overhaul.

The Department of Defence has handed IBM Australia $42 million to deliver an SAP case management system under the second tranche of its massive enterprise resource planning (ERP) overhaul.

The department revealed the 19-month deal late last week, bringing the total value of contracts signed with IBM on the ERP program this year to more than $170 million.

IBM has spent the past two years as the system integrator on the project after it fought off Accenture in a protracted procurement process to secure an initial $95.5 million deal for the first tranche of work.

The new ERP system, which is anticipated to cost as much as $1 billion by the time work is finished, will be based on SAP’s Defence Forces and Public Security solution and hosted on S/4 HANA.

It is expected to replace more than 500 existing applications currently used for finance, logistics, procurement, engineering, maintenance and estate functions, including 90 percent of ERP apps.

A spokesperson for Defence told iTnews the contract for the “case management capability” followed on from a $17 million contract signed with IBM last December, which expired over the weekend.

“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 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.”

The spokesperson confirmed that IBM Australia is delivering the case management capability for Defence through SAP's S/4 HANA integrated case management (ICM) product.

The government approved $250 million for tranche two of the program last December, when the first phase of tranche one – which is funded to the tune of $364 million – reached initial operating capability (IOC).

The more significant second phase of tranche one, or the logistics and maintenance capability release, is expected to reach IOC at the end of 2022. Tranche three is yet to receive funds.

According to an audit that was highly critical of Defence for farming out too much of its decision-making in the ERP program, the case management system will replace 16 existing systems.

The system had initially been a “standalone program with its own integrated investment provision”, but Defence took the decision in September 2020 to move it under the ERP overhaul.

“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.

While Defence is yet to replace any of the 500 legacy applications in scope under the program, the spokesperson said the case management capability would enable this to occur in the future.

“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.

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