Qld Health starts work on major SAP installation

All eyes will be on Queensland Health over the next two years as it attempts a new round of SAP ERP upgrades with a striking resemblance to its catastrophic $1.2 billion payroll replacement.

By December 2019, the health department hopes to have decommissioned its heavily customised, 20-year-old SAP R/3 4.6B ERP suite, and moved to a new on-premise version of the SAP S/4HANA solution.

It will be its second attempt at the upgrade.

A cancelled endeavour to replace the legacy systems - aborted in 2014-15 - cost the state $36.6 million.

Health has now been given another $105 million to complete the project, which it is calling the financial system renewal (FSR), topped up with seed funding of $2.7 million from the department itself to complete the move to HANA.

It is under no illusions about the scale of the challenge. Tender documents for a change management partner call the job a “once in a generation opportunity” to modernise the way finances are run across the 90,000 person Queensland Health system.

“This is a major ... initiative, with enormous positive potential for one of Queensland’s largest, highest profile and service-critical organisations,” the department said.

“The benefits expected to be derived from improved, contemporary processes are substantial and have ramifications across the state, as do the potential risks from an unsuccessful transition.”

The department is no stranger to these risks. It partnered with IBM in 2007 to replace its out-of-support LATTICE payroll system with new SAP software in a now notorious project that saw thousands of nurses unpaid or overpaid, and which ended up costing an estimated $1.2 billion to fix.

The latest project will install new systems for finance, logistics, warehousing, assets, and procurement, and will interface into Health’s now-stable SAP payroll system.

Queensland Health ran a study last year to confirm the feasibility of implementing SAP S/4HANA across the huge and geographically dispersed healthcare system.

It said it has already started work on a prototype implementation that will “fast track the project delivery” and build up user confidence before the rest of the rollout takes shape.

More than 7000 finance officers across the health department and Queensland’s 16 health and hospital services will need to re-learn how to go about their work as the system adopts standard SAP best practice business processes that align with the new software suite.