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4.1.1 Tier 1 reuse opportunities

Considering the current state of ERP capabilities, as outlined in section 3.2, APS entities have expressed hesitation regarding Tier 1 reuse (see Reference 1).

4.1.2 Tier 2 reuse opportunities

The Panel considers there is greater potential for Tier 2 or Tier 3 reusability. Building on existing GovERP capabilities with a separate ERP instance may be desirable for larger entities grappling with complex ERP requirements and integrations, particularly where those agencies have substantial in-house functional and technical skills in their digital and ICT workforces (such as Services Australia). In such a case, GovERP could serve as a potential accelerator.

• The GovERP build to date had 167 customisations to workflows, reports, interfaces, conversions, enhancements, or forms (WRICEFs). Given the size of the GovERP program, development beyond standard configuration and customisation to meet the needs of government is to be expected.
• That said, the Panel considers that larger, highly skilled entities with complex ERP requirements are best placed to make use of, and maintain, the existing GovERP capabilities and their related customisations.

Most notable from the Assessment’s engagements with the Consultative Committee, is the Department of Health and Aged Care stakeholders’ interest in leveraging GovERP’s reusable architectural patterns/architectural documents and architectural decisions. The Department of Health and Aged Care’s currently proposed approach to its own ERP upgrade is to reuse GovERP’s capabilities wherever they are assessed as being fit for purpose. 

The cost of reusing GovERP capabilities to support ERP delivery in smaller entities with less complex requirements may be a challenge, particularly given the need for strong in-house functional and technical skills to support delivery and operations. Ensuring that any commercial arrangements already in place are leveraged to their full effect (where applicable) may help offset ERP delivery and operating costs.

An entity intending to reuse any aspect of the GovERP product as an accelerator must assess the effort and financial investment required to develop capabilities based on the current build and test status. The Panel heard that any potential opportunity to save effort in implementing a process would have to be balanced against the effort to modify an existing entity’s business process to fit the GovERP implementation (or added effort to modify) (see Reference 1).

The following decision-making principles may provide a useful basis for entities considering Tier 2 reuse opportunities: 

1. first preference is to consider other SaaS or out-of-the-box solutions (SAP or alternatives) 
2. if not appropriate, then build on existing GovERP capabilities, and leverage any commercial arrangements already in place, or 
3. if SaaS or out-of-the-box solutions or building on existing GovERP capabilities are not appropriate, customised configuration will only be considered where assessed as necessary.

The Panel notes any on-premises specific solutions will likely have limited reusability.

4.2 Potential ongoing reuse costs to entities

As the current state of GovERP diverges significantly from its initial whole-of-government vision, entities will likely need to invest additional resources to customise and configure the templates to some degree to ensure they are fit for purpose (while adhering to the data standards currently built into the GovERP solution).

In this context, even if capitalising on the reuse opportunities identified in Chapter 4, the resources required to cater to the diverse complexities and requirements of different entities across the APS appears to be prohibitive for many entities, particularly if each entity was to pursue its own uplift. The Panel notes that while there are many opportunities to re-use components, licences, environments, and documentation from GovERP, only large and complex entities with sufficient capability could implement one or more instances of GovERP as proposed, and have it represented as reasonable value for money.

In an individual entity-based ERP scenario, the ongoing maintenance costs are also likely to have a substantial impost posing an increasing challenge in an environment with scarce financial resources and available skills. For example, any bespoke customisations or WRICEFs would need to be maintained in a re-use scenario, with an associated resourcing impact. Of the 167 WRICEFs potentially applicable to whole-of-government needs, 58 (35 per cent) are considered medium-high effort to maintain.

The Panel also considers there needs to more challenge against entity-specific customisations seeing to address “complex” requirements. Instead, the Panel considers that a greater focus on adoption of SaaS / “out of the box” capabilities, and avoiding designing in legacy process, could help to reduced costs.

With no single value stream completely built or viable for adoption as-is, clarity is required regarding what work arounds would be needed for any reuse opportunities.

5. Alternate designs or delivery pathways 

Noting the new APS ERP approach is underpinned by the principles of choice, market competition, and affordability, the Panel recognises the cost of ERP upgrades (as a core underpinning capability of all government entities) can be prohibitive for some entities. 

As a mechanism for reducing ERP development and maintenance costs, alternate designs and pathways could include: 

• Componentisation of ERP capabilities. 
  • While the GovERP solution was not originally conceived with componentisation in mind, there was consideration given to implementing an iterative go-live approach, indicating that some level of modularisation may be feasible. 
  • In considering a modular approach to ERP delivery, the Panel considers maintaining a clean or common core solution across entities would help maximise ERP uplift success. This approach still provides opportunities for greater complexity and entity-specific customisation as solution add-ons at the ERP edge (i.e. the development of unique or customised requirements using integration techniques that leave the ERP itself unmodified.) o The Panel notes substantial work needs to be completed to achieve true modularisation, such as establishing commercial agreements, hosting solutions, completing components, and adhering to data standards. As such, while treating each capability as a separate reusable component is possible, the cost-effectiveness of this has not been confirmed. 
• Considering the sequencing of ERP uplifts to focus on like-entities. 
  • Given the scarcity of resources available for ERP uplifts, there is still merit in pursuing economies of scale from grouping ERP services. Rather than pursuing a whole-of-government, one-size-fits-all approach (or conversely if the divergent requirements of the different agencies make instances for each entity critical), the Panel considers the grouping of entity cohorts with like needs warrants consideration and support. 
  • This grouping could be pursued based on portfolio, entity size, purpose, ERP needs, or other similar characteristics. 
  • The Department of Finance’s work to support a small-entity solution, may help to identify next steps for a collective or group-based approach. 
• Considering the scope and scale of ERP uplift projects to focus on smaller initiatives with lower delivery risks and faster onboarding. 
  • DTA analysis through its Assurance Framework (see note below) highlights that larger-scale, higher complexity digital and ICT projects present a heightened delivery risk. Scoping ERP uplift projects into smaller staged initiatives delivered over shorter timeframes may help to reduce the risk of large-scale digital failures.

Note: The DTA is currently tracking 103 in-flight projects across 35 agencies. Of the 13 digital and ICT projects escalated for Ministerial attention over the period August – October 2023, nine were large-scale, flagship investments that represented some 43.1 per cent of the total value of all in-flight digital investments.