Facing a £47.1m budget shortfall, Surrey County Council has been forced to delay the implementation of a £30m Unit4 ERP system, incurring additional annual support fees of £700,000 on its ageing SAP system.
Unit4 was awarded the contract in autumn of 2020 following a competitive tender process to replace a SAP R/3 system first rolled out in 2004 by Capgemini. The plan was to go live with the new cloud-based SaaS system by 1 December 2021, with implementation partners Embridge Consulting and Proactis on the project.
In the business case justifying the project [PDF], the council noted the risks attached to its timeline.
It noted the council would need to "provide notice to SAP by September 2021 to end support & maintenance contract by January 2022."
"There is a risk that the completion of the implementation phase slips into Q4 2021/22, which will result in the council incurring the full cost of SAP support & maintenance for 2022 (£700k), which becomes due in January 2022."
In a statement to The Register, the council admitted the implementation of the new system had been delayed until April 2022. "We are having positive ongoing conversations with SAP about support beyond 31 December," it said.
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"The decision was made by the Digital Business and Insights Strategic Programme Board to revise the date in order to maximise the opportunity to ensure the safe and smooth delivery of the new system, give more time to get everyone trained and go-live with the full-set of improvements."
Not only will the council incur additional support fees for the German vendor, it will presumably have to wait for the imagined benefits of the new system. The business case says it is looking forward to "new efficiencies realised from a reduction in annual running costs of £77k in 2022/23 and rising to £327k in 2023/24."
Also listed in the outline business case are requirements for other resources outside the main contract, which would amount to £394,000 to provide consultancy support for business requirements and an internal project manager. They also allocate £177,000 for Andrew Richards, interim digital business and insights programme manager, who trades as A C Richards Consulting. The fee covers the years 2019/2020 and 2020/21.
The council has been asked if these contracts will be extended into 2021/22 given the delay to the project. ®