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Stuck in R/3verse: East Sussex County Council struggles to move forward with $25m SAP replacement

The Register - Tue May 4 08:41

East Sussex County Council is set to be at least six months late in appointing a vendor to replace its ageing R/3 SAP system, which is showing its age and struggling with performance issues.

In June last year, the local authority on England's south coast said it would name a supplier to provide a software-as-a-service alternative ERP during December, in a management deal that could be worth £25m over 10 years.

By August, it published a contract notice calling for an ERP that could be a "fully integrated system or a fully integrated combination of best of breed ERP systems." This would include "modules for finance, procurement, HR and payroll, which are currently supplied by SAP."

But by November, the authority, which controls a budget of around £417m, said it would make the decision in March.

March has been and gone, and now a spokeswoman has told The Register: "The timescale for procurement of the new system has moved to ensure the council can properly review its requirements and undertake the appropriate quality assurance reviews. The impact of the COVID-19 pandemic, and changes to working arrangements over the past year, has also led to some unanticipated delays."

She confirmed the council continues to run the SAP R/3 System, which dates back to at least 2005, but assured taxpayers it had not had to extend any third-party software support or licensing agreements as a result, "meaning there have been no direct financial implications to the council due to the delay."

A council cabinet meeting is expected to approve a preferred supplier in June, after which final contract negotiations will take place.

While the council struggled to appoint a supplier, its leadership on the project also switched. Former chief operating officer Kevin Foster departed in January, to be replaced by Phil Hall as an interim.

The council wants one throat to choke: a single lead supplier or implementation partner to take responsibility for the whole show, but it will contract the software vendor separately to pay SaaS subscriptions, the contract notice said.

An audit committee report [PDF] published by the council last year underlines the importance of the incumbent R/3 system, which is currently supported by Orbis Information Technology and Digital (IT&D) teams based in Kingston and Lewes and is relied upon by more than 900 users.

In the June 2020 Cabinet Office report [PDF], Foster said the council must move off R/3 as it will "no longer be supported by the supplier beyond 2025 and the existing server hardware is now beginning to show its age with more performance issues arising."

But the council looks set to steer away from a straight SAP upgrade to S/4HANA, the in-memory ERP system. The report said that it "would not provide suitable value for money due to a lack of market testing and open procurement nor give the market an opportunity to demonstrate that ESCC requirements will be appropriately met."

SAP may still be in the running with its SaaS line, but will have to compete against a wider market. The council has also done soft market testing with Oracle, which Norfolk County Council opted for in May last year, and Unit4, which won Surrey County Council in September. Workday, Microsoft, and others are also in the running. ®