The flow of public IT contracts arising from the $196 million SAP-based enterprise resource planning (ERP) mega-project being undertaken by Transport for NSW (TfNSW) could be on the wane as the NSW Audit Office puts the project on notice.
In a report published on December 1, the NSW Audit Office warned TfNSW that further changes or deferrals to the project are likely to impact its total costs.
It is already well over the original expected budget of about $150 million, when it was first announced in 2013.
While the cost blow-out has no doubt been a boon for some of the private-sector IT partners that have been involved in the project, the Audit Office's calls to review project budgets and delivery schedules in order to address the impacts of deferred implementation could see the flow of lucrative government IT work associated with the project somewhat diminished.
The agencies involved in the project include the Roads and Maritime Services, Sydney Trains, NSW Trains, State Transit Authority, and the WestConnex Delivery Authority, all of which come under the state’s Transport Cluster.
The project involves the replacement of multiple legacy financial, human resource, payroll, and procurement systems across all transport agencies with one SAP solution.
The local IT partners that have been involved in the project include NTT Data Business Solutions Australia, which won a $1.13 million contract to work on a part of the project in 2014.
The program completion date has already been postponed from 2015 to 2017, to align with the Sydney Trains’ Enterprise Asset and Management go-live date.
According to the report, the State Transit Authority (STA) was removed from the SAP ERP program in January 2016, to better “manage business risk and the program budget,” despite being part of the original business case in 2011.
Instead, STA will enhance its existing Ellipse system. A capital budget of $12 million was approved for the STA financial system solution. It is expected that the STA finance and procurement solution will be delivered by July 2017, and human resource and payroll functionality delivered July 2018.
As the project continues to roll on well past its original delivery date and initial budget, the NSW Audit Office recommended that transport agencies should review project budgets and delivery schedules to address any impact of deferred implementation due to the SAP ERP program scope and timeline changes made to manage risks and costs.
The current implementation status shows the SAP ERP program has varied the scope, extended the timelines, and limited the program budget, according to the Audit Office.
The Contract and Catalogue Management functionality for all agencies, for example, was deferred from its original implementation date, and is now scheduled for June 2017.
The deferral means some agencies will not realise the full benefits and efficiencies from the new procurement function and integrated SAP ERP system until mid-next year.
The report said that 111 change requests were approved since the program’s inception in January 2013 to October 2016, costing $82 million. In 2015, 31 change requests were approved costing agencies $11 million and ERP program $27 million, with 18 per cent of this cost coming from two change requests.
A further 19 change requests worth $12.7 million were approved in 2016, with one change costing the agencies over $5 million.
While the SAP ERP program management has advised that further changes to the system will not be accepted, the report said that limiting the project scope when legitimate changes are needed could "impair quality and result in a system that does not fully meet agencies’ needs".
The report comes as TfNSW continues with its Next Generation Infrastructure Services (NGIS) program, aimed at overhauling the agency’s IT infrastructure.
In April, the NGIS saw UXC Limited win a three-year contract with Transport for NSW, worth over $100 million, to consolidate seven separate networks used by 25,000 people across the Transport Cluster’s agency footprint.
In September, CSC subsidiary, UXC Connect, won a $24.15 million contract from Transport for NSW for the provision of network design and hardware supply services, in a multi-year deal that will see over 1000 sites around the state receive new infrastructure.