Enterprise resource planning (ERP)

Definition

Enterprise resource planning (ERP) tools integrate and automate core business functions and allow organisations to manage corporate services. 

Corporate services generally include the following core business processes/capabilities, and supporting governance, risk, and compliance:

• Finance – budget to report and revenue to bank processes
• Human capital management – hire to retire of staff
• Procurement – procure to pay processes
• Travel and expense management – travel planning, expense reimbursement, and relocation

ERP systems coordinate data flow between these core business processes/capabilities, providing a single source of truth and streamlining operations.

Purpose

ERP systems help entities:

• operate efficiently through centralisation and automation of basic, repetitive tasks
• maintain regulatory compliance
• improve their services
• provide necessary reporting 

These systems are often extended and customised to meet the specific needs and complexity of agencies. 

The ERP capability is realised through:

• adopting a capability-driven approach to ERP
• implementing flexible ERP solutions that meet the specific needs, budget and complexity of agencies
• collaborating across government to identify opportunities and undertake efficient and effective ERP uplifts.

ERP systems are commonly deployed along a continuum that reflects increasing levels of configurability, complexity, and governance control. While these models are indicative, they can overlap and evolve based on organisational needs. Examples include, but are not limited to:

• Micro-scale Software as a Service (SaaS) ERP solutions These are subscription-based, normally low-cost shared technology platforms, with limited system configurability. They generally support simple business capability models (like accounting, invoicing etc.) or standard core business processes. They may support basic workflows and can allow some integration, with limited customisation.
• Mid-scale SaaS ERP solutions – These are subscription-based solutions with a higher level of configuration and customisation available. They are scalable and suitable for more complex business functions usually in a single-company structure. These solutions generally allow integration with third-party or non-core ERP solutions and can support moderate business capability models.
• Enterprise-scale cloud ERP solutions – These are bespoke systems built specifically to a single or group of entities’ needs. They are cloud based and able to support more complex business capability and IT operating models. They can include complex hierarchy management processes such as consolidations and eliminations.
• Government Platform as a Service (GPaaS) – This is a combination model where government is the platform provider and controls the design, implementation, maintenance, and support of the combined ERP services.

In SaaS offerings, the external provider is contractually responsible for the design, implementation, maintenance, and support of the software and technology layer. 

In private cloud offerings, the external provider involvement is limited, and the entity has greater control over the management of the ERP solution.

Objectives

The objectives of this content are to ensure Non-corporate Commonwealth Entities:

• implement efficient and effective ERP systems that align with their specific requirements and comply with whole-of-government standards
• benefit from previous investments by using shared service models, repurposing recent cloud implementations, or leveraging existing patterns and learnings
• reduce redundancy and improve operational efficiency by standardising data management and governance approaches, and enabling interoperation and seamless data exchange
• ensure compliance with government regulations, while supporting accountability and transparency in reporting
• deliver data-driven insights that help identify trends and highlight actionable areas for improvement.

Whole-of-government applicability

In November 2023, the Minister for Finance announced a new strategic direction for managing ERP systems across the APS titled ‘A new approach for back-office functions in the Australian Public Service’. The new ERP approach replaces the Shared Services Transformation Program and sets the strategic direction for managing ERP corporate systems across the APS.

The APS ERP approach is underpinned by principles of choice, market competition, and affordability. The new approach acknowledges technology and market offerings have evolved presenting new opportunities for the APS to modernise its ERP solutions.

This approach is expected to increase competition in the ERP market and provide new opportunities for Australian small and medium businesses to sell ERP solutions to the APS.

It reflects a shift from highly aggregated demand for shared services, premised on a whole-of-government ERP system, to more distributed models.  While some will act as hubs or providers, most entities will be empowered to directly use ERP capabilities themselves. 

The new ERP approach will continue to support existing arrangements, including those that will be out of support soon, until they transition into a new one. 

ERP systems continue to help agencies manage corporate back-office functions effectively and efficiently, while meeting obligations under the Public Governance, Performance and Accountability Act 2013.

The Data and Digital Government Strategy (DDGS) sets a vision for 2030 to deliver simple, secure and connected public services for all people and business, through world class data and digital capabilities.

ERP maturity is of critical importance to delivering on the following DDGS missions:

• Simple and seamless services: ensuring technology is scalable, secure, resilient and interoperable, with new systems and infrastructure that supports data access and discoverability.
• Data and digital foundations: uplifting APS capability to ensure staff can effectively engage with data and digital technologies to produce useful insights, advice and operate more productively.