Defense Enlists Contractors for Vital ERP ‘Practice Run’

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Defense Recruits Contractors for Essential ERP ‘Practice Run’

Defense Seeks Expert Guidance for ERP Financial Management System Upgrade

Defense Enlists Contractors for Vital ERP 'Practice Run'

Quick Read

  • The defense department seeks expert guidance for upgrading its ERP financial management system.
  • Concentrate on data transformations, trial runs, and preparation standards.
  • The ERP project was initiated in 2019 and involves transitioning to SAP S/4HANA in multiple stages.
  • The existing financial system manages a budget of $56 billion and has not been updated in two decades.
  • Expert guidance on accounting and ERP implementation is required to reduce financial risks.
  • An audit criticized the high number of contractors, and key decisions now depend on internal staff.

ERP Upgrade: A Prolonged Initiative

The Department of Defence has entered the concluding phase of its extended ERP upgrade initiative, enlisting contractors to conduct business readiness testing. The emphasis is on the financial management system segment of the ERP implementation. This effort is a component of a broader shift to SAP S/4HANA, which started in 2019.

Revamping the Financial Management System

This year, the department is focusing on tranche “1B,” which involves upgrading the financial management information system. This tranche also encompasses supply chain management, enterprise asset management, purchasing, finance, and human resources. The existing financial system, which hasn’t been updated in twenty years, supports operations for a complex $56 billion budget.

Call for Contractors

A Defense spokesperson disclosed that they are seeking contractors for “business readiness” tasks. These tasks comprise data conversions, practice operations, and establishing readiness criteria for go-live decisions. The aim is to ensure that all financial risks are mitigated to a high standard.

Specialist Advice Needed

According to Defense, implementing the ERP system requires considerable technical skills. Therefore, they seek consultants to collaborate with Defense CFO Steven Groves to enhance business preparedness and mitigate financial risks to acceptable levels.

Addressing Audit Criticism

The choice to seek external assistance comes three years after an audit criticized the extensive reliance on contractors at all levels of the ERP program. The department has promised that crucial decisions regarding the project will stay with internal employees to reduce any risks linked to contractor dependency.


The Department of Defence’s ERP upgrade project is designed to bring its financial management system up to date, after two decades without updates. To facilitate a smooth transition, the Defence Department is hiring contractors to conduct business readiness testing, with an emphasis on data conversions and other essential tasks. Although there have been past criticisms about the use of contractors, the department maintains that core decisions are controlled by its internal team.


What is the primary objective of the ongoing ERP enhancement?


The primary objective is to enhance the financial management information system under tranche “1B.” This encompasses supply chain management, enterprise asset management, procurement, finance, and core human resources.

Why is expert consultation being pursued for this project?


Expert guidance is essential for thoroughly addressing all financial risks and for preparing for business readiness activities such as data conversions and dress rehearsals.

How long has the present financial system been operational?


The existing financial system has been operational for two decades and manages activities for a budget of $56 billion.

Q: What are some of the critiques associated with using contractors?


An audit found fault with the widespread reliance on contractors at all levels of the ERP program. The department now guarantees that primary decisions are handled by internal staff.

Q: Can you explain what SAP S/4HANA is?


SAP S/4HANA is a unified enterprise resource planning (ERP) solution that utilizes in-memory computing to handle vast quantities of data rapidly and effectively.

What does tranche “1B” refer to?


The term “Tranche 1B” pertains to the emphasis for this year’s Defence ERP upgrade, which encompasses financial management information systems, supply chain management, enterprise asset management, purchasing, finance, and foundational human resources.


Posted by Nicholas Webb

Nicholas Webb is a Queensland-based Consumer Technology Editor at Techbest focused on connected home and streaming products.

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