SAP wins first big Centrelink systems overhaul deal

German software giant SAP has been selected as the preferred tenderer for the Department of Human Service’s billion-dollar replacement of its welfare payments systems.

The DHS and SAP are now locked in contract negotiations to bed down the terms and value of the multi-million dollar deal; a final price has yet to be determined.

However, SAP's recently-signed $86 million, five-year software licensing deal with the Department of Defence for its own systems replacement - a project of a similar scale - gives an indication of the likely cost of the DHS contract.

A spokesman for SAP said the company welcomed the "opportunity provided by the Australian government to work with the Department of Human Services as the core software vendor for the transformation of Australia’s welfare payments infrastructure".

“Pending commercial agreement, SAP looks forwards to partnering with the department in this strategic program which will modernise and improve the way welfare payments are delivered to Australians,” he said.

Tender documents released today by the DHS confirm it is in talks with the software vendor for a “commercial off-the-shelf integrated technology platform”. No further detail is provided.

However, the department has also flagged that it is looking for systems integrators with a background working with the SAP CRM, SAP ERP, SAP Social Services, and/or the HANA suite of cloud products.

Whatever products the DHS licences from SAP are likely to undergo a series of customisations to fit the complex and unique nature of the Australian welfare system.

A number of SAP products are have already been integrated into the behemoth welfare payments infrastructure at DHS to patch up weaknesses in the 30-year-old mainframe-based system, and give it a veneer of modernity on the front end.

In 2014, DHS CIO Gary Sterrenberg likened keeping the ageing ISIS architecture afloat to “peeling an onion” and replacing layers of functionality with newer SAP products one-by-one, from the outside in.

Green-screen access to the welfare payments system for staff has already been updated through the installation of a SAP CRM interface, creating a unified window into the department’s core business systems.

SAP’s Web Channel Experience Management (WCEM) tool is being used at the customer end to enable the online registration and online claims for welfare payments.

ISIS currently acts as the master database tracking customer payments, before this data is replication into the supporting SAP systems.

The massive IT replacement, known as the welfare payments infrastructure transformation (WPIT) was given the green light by government in April last year, and is estimated to cost between $1 billion and $1.5 billion over the course of a seven-year implementation.