UK's Post Office shells out for SAP software it thought it had

'Significantly under-licenced' but didn't factor in Customer Success Manager when dealing with reseller


The Post Office, a UK government-owned company, has awarded SAP a contract worth up to £2 million for software services following a misunderstanding of its SAP licences and service bundles.

A contract award notice issued last week shows the Post Office – which issues postage stamps, manages the postal service, and runs one of Britain's largest network of retailers – handed SAP the deal for implementation, configuration, maintenance, and repair services for its SAP SuccessFactors performance management system.

Early in the morning, at eight o'clock, you can hear the auditor, knock, knock, knock

The Post Office stated in the award notice that it had first bought SuccessFactors software in 2016 following an audit that found Post Office Limited to be "significantly under-licenced."

The Post Office award notice said SAP, at the time, had quoted it a one-off figure of "£2.4 million plus £534k recurring annual costs" with "no additional business benefit except to maintain contractual compliance."

However, after some "significant negotiations," the Post Office secured an offer from SAP to "significantly reduce" its compliance costs and invested in SAP's SuccessFactors HR Cloud solution.

It then bought the licence from software reseller SCC via a Crown Commercial Services Framework.

But that was not the end of the Post Office's troubles.

"We have been facing operational issues since the last two years as SAP stood down our Customer Success Manager as that service is not available for indirect contract, something SAP failed to disclose," the notice said.

"There was an expectation for [services-based reseller] SCC to fulfil more activities than anticipated as an SAP partner. This has not been possible as through CCS Frameworks, SCC are limited to a 1 percent margin within the reseller contract."

As a result, the Post Office is paying SAP for services for an individual Customer Success Manager to support the SaaS product supplied direct from SAP in a deal which could be worth £2 million ($2.45 million).

SAP has been offered the opportunity to comment on the issues raised in the procurement.

A Post Office spokesperson said: "Like any business, it's vital that we have an efficient system to run our HR services. We had previously procured SAP SuccessFactors services using a SAP partner. Following expiry of that contract we have now progressed with Direct purchase through G Cloud competition and have awarded a new contract to SAP UK limited for a two-year period with an option to extend by 1 year."

The Post Office's track record with IT projects is not a happy one. A statutory public inquiry was launched into the Horizon scandal, which saw hundreds of subpostmasters prosecuted over 15 years for accounting discrepancies which were later found to be the result of flawed software. Last year, 39 convictions were overturned with up to 400 more potentially being quashed. ®

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