NSW Trade and Investment has signed a $14.5 million agreement to run finance, human resources and payroll functionality for 16 member agencies in a hosted SAP environment.
SAP's deal with Trade and Investment is broken into two architectural components.
Business ByDesign will be used to manage finance, procurement and sourcing functionality for Trade and Investment, from servers based in Germany.
Separately, the department will run a locally hosted SAP payroll and human resources platform, implemented with assistance from SAP partner CN Group.
SAP A/NZ's head of cloud Greg Harbor told iTnews that SAP had worked with the Trade and Investment to address data sovereignty concerns for the ByDesign element of the project during the tender process.
Data sovereignty concerns generally relate to whether data on citizens is at rest in its country of origin.
Data and information control and security were of "paramount importance" to the project, NSW Trade and Investment chief information officer David Kennedy told iTnews.
"Concerns in relation to offshore holding and processing of our data were assessed and managed as part of our overall risk based evaluation," Kennedy said.
"The ERP system does not contain classified or protected data. Sensitive HR / Payroll data is held exclusively in Australia, with only a subset passed to the foreign data centre sufficient to allow full function.
"Foreign hosted data with SAP in Germany is subject to EU data protection directives and is not hosted in the USA or by a US parented entity.
"All tender responses with foreign hosting components were required to address repatriation of data both on a routine ongoing basis and at end of contract."
Trade and Investment tendered for a cloud-based enterprise resource planning platform in late April.
Harbor described the 13-week period from the public release of the tender through to the awarding of the contract as a "pressure cooker process".
"We had people literally working 24x7 globally," he said.
"This [was] vitally important to SAP, and we had the resources of the global organisation at our disposal to help us work through all the things we needed to."
Implementation timelines are similarly tight. The SAP platform is to be rolled out in two tranches to Trade and Investment agencies.
The first phase — to be completed by the end of the year — will consolidate nine agencies onto the hosted platforms.
A second phase to be completed mid-next year will bring cultural institutions such as the Sydney Opera House and State Library on board.
"It's a very aggressive timeline to get this solution in place," Harbor said.
"The finance [and] procurement aspects [implemented with Business ByDesign] are relatively straightforward compared to the HR/payroll component.
"[But] we're confident. As a joint program team, both sides of the organisations have sat down, considered ... and put in place some very practical and pragmatic strategies to mitigate and manage some of those time-based risks."
In its tender documents in April, Trade and Investment sought a platform that could be rapidly deployed with minimal configuration.
It expected to make savings of more than $12.5 million a year by bringing all its member agencies and institutions onto a single ERP system.
"This solution aligns with both the NSW Government's goals under its Corporate and Shared Services Reform Program and the recently released 2012 ICT strategy," SAP Australia managing director Andrew Barkla said.
SAP's deal with Trade and Investment represents the largest finance-oriented deployment of Business ByDesign globally.
"There are other very large instances of people using Business ByDesign in areas of CRM or other areas where there tends to be lots of users, but [on the] finance and procurement side of the house this is the biggest one globally," Harbor said.
"It's a real feather in Australia and New Zealand's cap".
New territory for Government
Analyst firm Ovum's research director for IT in Asia Pacific, Steve Hodgkinson said in a research note that the project would be "an interesting [one] to watch".
"NSW Trade and Investment is to be admired for embracing a new model for public sector ICT procurement," he said.
"The hope is that the multi-tenant architecture and configurability of the SaaS solution will enable the many agencies within the Trade and Investment portfolio to use it as an efficient and flexible shared service.
"If this hope is realised it will be an important proof point for the efficacy of the cloud services model as an alternative to more traditional in-house shared ICT services arrangements."
Hodgkinson expected there to be "many eyes" trained on the project, particularly given its importance to SAP.
"Cloud sceptics will be eager to see it fail," he said.
"Cloud proponents, on the other hand, will be keen to see both SAP and the agency succeed in taking a major step into the future of public sector ICT-enabled innovation."