IBM scores second Defence ERP deal for $128 million

IBM Australia has scored a $128 million contract for the second phase of the Department of Defence’s enterprise resource planning (ERP) system overhaul.

The department revealed the new two-year deal last week, which more than doubles the total value of the project to date.

The contract follows on from an initial $95 million deal – which has since climbed to $112 million – for the design phase of tranche one

IBM fought off Accenture to secure the coveted system integrator deal in July 2019 following a protracted procurement.

The new ERP system, which is anticipated to cost as much as $1 billion over eight years, is based on SAP’s Defence Forces and Public Security solution and hosted on the S/4 HANA cloud platform.

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

Defence told iTnews that the new contract would cover the “build and rollout of tranche one of the Defence ERP program”.

“The work involves configuring the SAP system in accordance the approved design, and delivering it to Defence personnel,” a spokesperson said.

The contract comes just months after the initial finance reporting capabilities were rolled out through the SAP-based ERP system.

It is now looking to the larger logistics and maintenance capability release, which remains on schedule.

“The logistics and maintenance capability release rollout to Defence users is planned to commence in the second half of 2022, to be completed by mid-2023,” Defence told iTnews in January.

Defence is currently progressing the design phase for this release, as well as other design work to accommodate changes included in the latest release of SAP S/4 HANA.

“The design work for future phases of the ERP Program is not yet completed – this will occur as part of future tranches of the ERP program,” the spokesperson said.

Defence is yet to replace any of the 500 legacy applications, however, and is not expected to until the ERP fully replaces the functionality of existing applications.