The New South Wales government has extended its main sourcing agreement with German software giant SAP by another year, as it prepares to re-negotiate the contract now estimated to be worth $490 million.
One of the longest-running standing offers in the NSW government, the SAP contract, codenamed C2601, was first signed in March 2008 to procure ERP software products, both perpetual and cloud software licences.
The contract – which was valued at $1.65 billion until it was revised down last year – was slated to expire in March this year, even while the government’s latest attempt to consolidate ERP systems continues.
But in April, the agreement was extended by a further 12 months by the Digital NSW arm of the Department of Customer Service (DCS), briefly causing the notice on the eTendering website to disappear.
A spokesperson told InnovationAus.com that the extension would allow agencies to continue to procure products and service under the agreement, which DCS will “renegotiate” before March 2024.
Estimated spend is approximately $490 million since the agreement was established in 2008, according to the spokesperson, putting its value at around $15 million higher than last year’s estimate of $475 million.
“The whole-of-government agreement does not include any future spend commitments from the NSW government,” the spokesperson added.
At $490 million to date, C2601 is the NSW government’s biggest contract with SAP. The next largest is a $168.6 million contract with Education that also began in March 2008 and expired in March this year.
Last year, DCS entered a $78.5 million contract with SAP for the huge ERP system consolidation, known as the Process and Technology Harmonisation (PaTH) program, which has since climbed to $81 million.
PaTH is the government’s latest attempt to standardise the ERP system used across the public sector, with 40 agencies from the Stronger Communities, Planning, Regional NSW and Premier and Cabinet clusters expected to be the first to move.
The whole-of-government effort, previously known as ‘ERP 2.0’, began in the wake of the 2019 state election and was initially overseen by the Department of Customer Service, before responsibility shifted to DCJ last year.
Accenture is leading the project as systems integrator, with PwC engaged to develop the data migration strategy at a cost of $12.2 million over two years. The strategy aims to ensure the new system is populated with “clean data”, minimising the transfer of historical data where possible.
It is unclear what last month’s decision by new Premier Chris Minns to scrap the cluster model will mean for PaTH.
NSW’s SAP agreement is one of two whole-of-government contracts nearing the end of their life, the other being a $110 million Salesforce deal. The government is expected to replace both before March 2024.
The federal government is also preparing to renegotiate its software licensing agreement with SAP, which as at February was valued at $827.1 million. The deal has climbed $44.6 million since September 2022, according to documents released under Freedom of Information laws last month.
