IBM, Accenture fight for massive Defence ERP deal

By Justin Hendry

System integrators shortlist finally revealed.

IBM and Accenture are battling it out for the coveted role of systems integrator in the billion-dollar transformation of the Department of Defense’s ERP ahead of a final selection later this year.

iTnews can reveal the pair are locked in a protracted procurement process for the SAP-based replacement project that first kicked off more than three years ago.

It follows second pass approval last June for what is considered the government’s largest ERP implementation, likely to cost upwards of $1 billion to complete over eight years.

The project, previously known as Defense Insight, will see the department rationalize the more than 500 applications currently used to govern its finance, logistics, procurement, engineering, maintenance and estate functions.

It is expected to see Defense ditch 90 percent of its existing ERP applications to help the One Defense business model after the 2015 First Principles Review called for consolidation of the information management environment.

The department opened bidding in May 2016 for two systems integrators to help it move to SAP’s Defense Forces and Public Security solution and S/4HANA cloud platform.

This was followed by a second market approach in the latter half of 2016 for strategic partners to take over the planning, vendor management, and change management aspects of the program.

Defense settled on KPMG and Ernst & Young as the strategic partners for the first stages of the program last year, while it waited for second pass approval.

Now with second pass approval granted, the department has whittled down the SI bids to Accenture and IBM.

The pair were shortlisted last November and, according to a spokesperson, are currently undertaking in a post tender submission offer definition and improvement activity (PTS ODIA) with the department.

PTS ODIA is a further stage of evaluation that it reserved for some of Defense’s most complex procurement processes.

Defense has signed two initial contracts with Accenture and IBM worth $550,000 to “cover a portion of the cost of participating in the PTS ODIA process”.

The contracts will run until the end of June and will result in the selection of a single SI for the project in the final three months of this year.

“The PTS ODIA process will lead to a systems integrator selection decision in the third quarter of 2019,” the spokesperson told iTnews.

The successful SI will take charge of the program’s first tranche, which will cover the foundational implementation of the SAP solution, as well as integration with PeopleSoft and financials.

However exactly how long this phase will take to complete still isn’t confirmed, with the spokesperson indicating this would be “determined as part of the PTS ODIA process”.

One, not two

The decision to appoint a single SI represents a change to the department’s original plan for the program.

Tender documents from 2015 reveal the department had proposed appointing two SIs, each responsible for the delivery of a bundle of modules in six-monthly capability drops.

However the spokesperson told iTnews the department had only ever specified an “intention to appoint up to two SIs, without indicating whether a single systems integrator or multiple systems integrator model was preferred”.

“Defense has progressed the ERP program planning and has determined a single systems integrator as the preferred approach,” the spokesperson said.