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Cabinet Office shunned £47m Oracle ERP upgrade costs, says NAO

Kathleen Hall

The Cabinet Office’s new shared services strategy was driven by the prospect of a £47m upgrade for Oracle ERP systems in three of its shared services centres, according to the National Audit Office (NAO).

One of the urgent drivers in publishing its new strategy last year was that three shared service centres faced an investment of £47m to upgrade their Oracle ERP systems before November 2013, said the NAO.

“This gave the Cabinet Office an opportunity to see if it could derive better value-for-money options for shared services,” said the NAO.

The Cabinet Office data show that the total spend on finance, HR, procurement and payroll is £1.5 billion a year.

Under its new strategy, the Cabinet Office expects minimum savings of up to £128m per year. It will have to spend £50m in transition costs and up to £77m on redeployment to achieve this – although it will see a one-off saving of £32m by avoiding the Oracle upgrade costs, said the NAO.

The government’s previous £1.4bn shared services strategy failed to deliver value for money, said the NAO.

But in its new strategy, the Cabinet Office has challenged the requirement for departments to use large ERP systems. It acknowledges that smaller, simpler software solutions may be appropriate.

Risks identified in the plan included having to collaborate with Oracle to use licences more flexibly and to work more centrally rather than locally with individual departments.

Oracle and SAP have been singled out as having the most inconsistent prices for ERP licence and maintenance support across central government departments, according to the Cabinet Office.

The admission followed exclusive Computer Weekly research that revealed some Whitehall departments are paying up to three times more than others in ERP licence costs.

 


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