UK government's newest department to lead mega ERP procurement

A five-month-old UK government department is set to lead a massively complex ERP procurement to bring together software running some of Whitehall's largest units.

Expected to bring together up to 48,000 users on 15 instances of nine different software solutions, the tender for the Matrix cluster of the ERP program was published earlier this week, with the Department for Science, Innovation & Technology (DSIT) – formed February 10 – leading the procurement.

According to official documents, the deal could be worth up to £215.6 million for 10 years, with the option of a two-year extension.

The deal is called a "bundled" procurement for a systems integrator for implementation, and support services will be for an initial period of five years, together with a Software-as-a-Service (SaaS) deal for 10 years initially.

Departments within the Matrix cluster include the Department for Business, Energy & Industrial Strategy, the Attorney General's Office, the Cabinet Office, the Department for Digital, Culture, Media & Sport, the Department for Education, the Department of Health & Social Care, the Department for International Trade and HM Treasury. It also includes 20 arms-length bodies including the UK Space Agency.

The procurement is part of the government's Shared Service Strategy, launched in March 2021. It bundles central government departments and arms-length bodies into five clusters. Aside from Matrix, they include Defence, Overseas, Synergy and Unity.

Speaking to Parliament's spending watchdog in January, Alex Chisholm, permanent secretary and chief operating officer of the civil service, said [PDF] the Matrix bundle was the "trickiest one of the five."

It had to form over an 18-month period, he said. "That required that process of compromise and mutual commitment, and understanding where you can't add excessive customisation and where the benefits will be. They are at a different stage, but they have got there, which is great, and they are committed," he told the Public Accounts Committee (PAC).

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Within with the Synergy cluster, departments currently rely on software from a range of vendors including Workday, Oracle, iTrent, Integra, and Microsoft Dynamics.

The PAC has criticized the government's plans for Shared Services as unfunded. In its April report, it said there were both short and long-term funding uncertainties to delivering the strategy.

"In the short term, HM Treasury approved a funding envelope of £300 million to support the clusters to deliver the strategy and to address the risk that departments could be left with unstable and unsupported systems in the interim. This covers the 2021 Spending Review period to 2024–25," the report said.

"Departments have stated that this settlement may not be enough to allow them to proceed with their preferred procurement options if final costs, which they currently estimate to be between £382 million and £403 million, continue to exceed the funding envelope."

The PAC said that in the long term, the clusters have forecast requirements for an additional £480 million of investment after the 2024–25 period.

"There is clearly a risk to the delivery of this business-critical change programme since there is no guaranteed level of funding," it said.

Other clusters have also begun their procurement. In June, the Department for Work and Pensions launched a £934 million competition to update ERP systems within the group it leads. The 12-year contract includes both software and systems integration services as part of a "bundled procurement." ®