IBM Australia scoops $95.5m Defence ERP deal

IBM has beaten off Accenture to claim a $95.5 million contract to design Defence’s new SAP-based enterprise resource planning (ERP) system.

The Department of Defence said that the IBM contract would cover initial design work for what is ultimately anticipated to be a $1 billion project and could take up to eight years to complete.

The selection process to reach this point has already taken three years, with iTnews revealing in February that IBM and Accenture were the shortlisted vendors battling to be named systems integrator on the project.

“The IBM contract will see the provision of system integrator services to deliver the Design phase of Tranche 1 of the capability,” Defence said in a statement.

“It will also cover the high-level design for subsequent ERP Tranches and set the foundation elements for finance and human resources.”

IBM Australia said the initial contract is for 18 months. However, it noted this is "the first phase of an extensive multi-year journey to modernise the department’s information systems and to optimise processes", suggesting further tranches of work will be put up for grabs.

The ERP program plans to roll out initial capability for finance reporting in 2020, followed by a larger logistics and maintenance capability in 2022.

The logistics capability is currently called the Military Integrated Logistics Information System (MILIS) and is based on an off-the-shelf Mincom Ellipse system for which the vendor has withdrawn support, according to a defence ERP tracker published by KPMG.

Australian Defence Magazine yesterday revealed that MILIS would continue to operate while out of vendor support, raising its risk profile and creating some internal concerns.

The magazine also revealed the contents of a 2016 discussion paper from Defence’s CIO Group that sought a path forward with the MILIS system.

Defence’s ERP replacement is its largest ICT transformation program. The department said it would “meet Australian Defence Force demands as it modernises capabilities and builds high-performing supply chains.”

“The program will progressively deliver solutions that will affect every Defence member and transform the way Defence does business,” it said.

“It will provide a near real-time view of critical information across Defence to better inform decision making.

“ERP will modernise, integrate and transform Defence's approach to managing its finances, human resources, logistics, engineering, maintenance and estate.”

IBM Australia & New Zealand managing director David La Rose said the ERP agreement came one year after IBM struck a $1 billion whole-of-government deal in Australia.

“This is a testament to our 40-year partnership with the Australian Government, and more than two decades of working with the Department of Defence," he said.

"It is another example of the confidence in IBM’s ability to transform and deliver highly complex and world-first initiatives.

"We look forward to helping the Department of Defence drive greater efficiencies, trust and innovation that will benefit all Australians.” 

IBM said it "plans to work with delivery partners including COSOL, Dalmation 6, DASC, DXC, Ernst & Young (Plaut), Fujitsu, Infosys, KBR, Noetic, Southern Cross, Synchrony Global, TAMS, XKG and Veritec."

Defence is planning to deploy the SAP S/4HANA Defence and Security Industry Platform.