£214m effort to modernize SAP ERP in UK govt systems marked Code Red
Experts warn agreement needed and skills lacking in HMRC-led project
The UK's major government projects experts have warned a programme to overhaul ERP systems in three central government departments is undeliverable in its current state.
Although named Unity, the £214 million ($276 million) shared services SAP-based ERP project, which is between tax collector HM Revenue & Customs (HMRC), Department for Transport (DfT) and Department for Levelling Up, Housing and Communities (DLUHC) Programme, has "a number of key design decisions outstanding, which all three departments must agree" for the project to remain on its critical path, according to HMRC information published to support the Infrastructure and Project Authority's recent report [PDF].
"The programme also lacks a number of critical skills and dedicated resources, which further puts progress at risk," it said.
The IPA – the government's centre of expertise for infrastructure and major projects working across the Cabinet Office and HM Treasury – found that successful delivery of Unity to transform HR, finance and procurement across its three government departments "appears to be unachievable."
According to the IPA's definition of a red rating – which Unity received [PDF] – there may be "major issues with project definition, schedule, budget, quality and/or benefits delivery, which at this stage do not appear to be manageable or resolvable". This means the project "may need re-scoping and/or its overall viability reassessed."
In information submitted to the IPA, HMRC, which leads the Unity project, said the programme costs for the 2022/23 financial year had fallen by 33 percent against the forecast because the outline business case was not approved until November 2023, "which was much later than anticipated and meant that the delivery phases of the programme were pushed back."
As a result, the technology delivery partner was not appointed until Q4, "later than originally planned, the programme team was not ramped up until Q4 and the next version of the business case pushed into 2023/24 which meant that the original plans to spend £3.3 million on a technology delivery partner in 2022/23 did not materialize."
To help with its skill deficit, the project has now appointed a deliver partner in Accenture, which was awarded an £8.3 million contract in May.
In information published alongside its report, the IPA said: "The programme has been working with its delivery partner to create a critical decision path and a back to Amber plan which has been agreed with the programme board."
It said over the next quarter, the program was trying "to get key decisions agreed, key resources in place and build stakeholder confidence in the plans in advance of moving into the delivery phase."
Baseline benefits expected from the project are £43 million ($55 million) over its 10-year lifecycle, with £239 million ($308 million) "cumulative efficiencies."
Unity is part of a central government plan to revamp, consolidate and update its shared services support for ERP. Launched in 2021 [PDF], the strategy groups central government departments into clusters, which include Matrix, Defence, Overseas (aka Hera), and Synergy, as well as Unity.
Synergy involves the Department for Environment, Food and Rural Affairs (DEFRA), the Department for Work and Pensions, Home Office (HO) and the Ministry of Justice (MOJ). Meanwhile, the Overseas or Hera programme relates to the merged Foreign, Commonwealth and Development Office offices. Both got an amber rating from the IPO which means that "successful delivery appears feasible but significant issues already exist, requiring management attention."
Said to be the most complex programme, Matrix involves eight government departments and had been made exempt from IPA publication for "exceptional circumstances and in accordance with Freedom of Information requirements, eg national security."
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The five-month-old Department for Science, Innovation & Technology kicked off Matrix procurement with a £215.6 million ($278 million) tender earlier this month.
Departments within the Matrix cluster include the Department for Business, Energy & Industrial Strategy, the Attorney General's Office, the Cabinet Office, the Department for Digital, Culture, Media & Sport, the Department for Education, the Department of Health & Social Care, the Department for International Trade and HM Treasury. It also includes 20 arms-length bodies including the UK Space Agency.
Parliament's spending watchdog, the Public Accounts Committee, has slammed the shared service strategy as underfunded as only £300 million ($387 million) had been allocated by the Treasury to 2024–25, the PAC report said.
In June, the DWP went to market with a £934 million ($1.2 billion) procurement for Synergy. ®