The NSW Department of Communities and Justice has taken control of the massive consolidation of the state government’s enterprise resource planning (ERP) system after department secretaries backed a change in management.
iTnews may also reveal that the single ERP system will now be used by fewer branches than expected, with the Customer Service and Treasury clusters not on the initial list of planned users.
The Board of Secretaries agreed to the standardization of systems in five government groups following the 2019 national elections, which saw the creation of three new departments and the transfer of other functions.
Treasury, Customer Service, Planning, Premier and Cabinet and Stronger Communities were to be included in the program, which was then called ERP 2.0, while Transport, Health and Education – the only clusters remaining at the time – were exempt.
Transport, health and education had all undergone major overhauls of their ERP systems in recent years at the time, including the infamous SAP epic at the Ministry of Education which cost over 750 million of dollars.
As is the case with the majority of government-wide IT and digital programs in New South Wales, the Department of Customer Service (DCS) has been named program sponsor, with approximately $187.3 million set aside in the Government Digital Restart Fund.
But after two years of planning and design, including the acquisition of a technology platform provider, the project was pulled from DCS last year and handed over to the Department of Communities and Justice.
The change in management, revealed in an annual audit [pdf] from the Customer Service group last month, was agreed to by the Board of Secretaries in August 2021, coinciding with the departure of the Department’s Chief Information Officer dedicated to ERP reform, Aaron Liu.
“The department was originally included in the scope of the ERP program … but its participation in the program has been delayed and the program is moving to stronger communities,” the 2021 audit said.
A spokesperson for the Department of Communities and Justice (DCJ) said iTnews the “governance and delivery approach” was revised and “all resources and funding” moved to “reduce program risk by breaking down scope into manageable phases”.
As a result of the change in focus, DCS suffered a “$21.5 million impairment loss,” after spending $23 million last year on “ERP 2.0 and enterprise-wide SAP licensing.”
“The impairment was based on management’s assessment that the future economic benefits of these costs to the department expired when the Secretary’s Board changed future direction,” the audit said.
“Management was of the view that there was significant uncertainty about this direction and the department’s role under the new arrangement.”
ERP 2.0 becomes PATH
Following the decision of the Board of Secretaries, the ERP 2.0 program was “reprofiled” into a Process and Technology Harmonization (PaTH) program, which “retains the strategic intent” of the consolidation.
PaTH has been divided into three “horizons”, the first of which will be to “deliver[ing] a scalable platform and operating model for future reforms” for “up to 40 agencies” from Stronger Communities, Planning, Regional NSW and Premier and Cabinet groups.
“Additional clusters for future horizons will be identified through future business case submissions,” the spokesperson said, adding that the customer service cluster is “not within the scope of the horizon one”.
DCS will, however, continue to “play a role in program assurance and governance,” as it does with all state government IT projects valued at $5 million or more, or deemed “of strategic importance.” or high risk”.
The spokesperson said PaTH is expected to “improve the overall experience for staff and other stakeholders”, with the standardized platform to reduce costs and improve efficiency and productivity.
The standardized platform will also enable agencies across the four clusters to “streamline government change mechanisms and support systems and processes” in the future, thereby reducing future costs.
Last month, the NSW Audit Office revealed [pdf] the consolidation of six ERP platforms when the Ministry of Planning, Industry and Environment was created in 2019 contributed $7.7 million in government-related IT machinery expenditure.