Decision details

DECLARATIONS OF INTEREST MADE FOR THIS ITEM:

None

RESOLVED:

That Cabinet, after considering the information within the exempt appendices:

1.    Approved the Full Business Case for the replacement of the Council’s Enterprise Resource Planning (ERP) system, including the procurement of an integrated ERP solution, its implementation, and, if required, business integration and support services.

2.    Approved the commencement of two linked procurement activities in accordance with Contract Standing Order (CSO) 2.01(b), comprising:

3.    Delegated authority to decide whether to proceed with the procurement of Business Integration services to the Corporate Director of Finance and Resources, in consultation with the Cabinet Member for Finance and Corporate Services.

4. Approved a waiver of Contract Standing Order 6.03, pursuant to CSO 18.01.4(a), allowing the procurement to proceed with a Social Value weighting of 5%.
   
   
5. Approved the transformation element of the proposed budget, including implementation, stabilisation, licensing, support and associated costs, to be funded through the Flexible Use of Capital Receipts programme, subject to Full Council approval of the additional allocation required.
   
   
6. Noted that an increase in the revenue budget would be required when the new system became operational in July 2028. This would be considered through the 2028/29 budget-setting process and Medium-Term Financial Strategy.
   
   
7. Noted that:

·       the cost estimates were indicative and had been developed using market engagement, benchmarking, risk allowances and contingency provisions;

·       final contract values and the recommended supplier or suppliers would be subject to a future Cabinet decision; and

·       no cashable savings had been assumed at this stage, with potential benefits to be further assessed during procurement and implementation.

Reasons for the decision

The existing SAP ECC platform was approaching the end of mainstream support in December 2027. Following that date, the Council would have become increasingly dependent on third-party support arrangements and faced heightened risks relating to security, payroll operations, legislative compliance, system resilience and audit assurance.

The current system was also limiting operational efficiency. Core Finance, Procurement, Human Resources and Payroll processes relied on manual workarounds, offline spreadsheets, duplicate data entry and fragmented workflows. This increased the risk of errors, reduced efficiency and limited access to timely and reliable management information.

The recommended option was supported by a structured assessment process. The Council undertook market engagement, considered five options, and evaluated them against agreed criteria. Delivery approaches were tested through a Request for Information process and supported by a ten-year total cost of ownership assessment.

The Council was required to procure the technology, implementation, support and associated services in accordance with the Procurement Act 2023, Contract Standing Orders and relevant procurement legislation. The proposed route to market was a further competition through the Crown Commercial Service Back Office Software 2 (BOS2) framework.

The Council confirmed that it was an eligible contracting authority under the framework and that its requirements fell within the framework scope.

The Council intended to undertake one, and potentially two, linked procurement exercises in order to:

• secure an integrated ERP solution with clear accountability for implementation and ongoing support; and
• procure specialist Business Integration support, if required, to focus on organisational change, user adoption, process alignment and benefits realisation.
  
  

This approach reflected the Council's assessment that successful ERP implementation required both technology delivery and organisational change capability. The ERP Programme Board also considered whether Business Integration activities could be delivered internally and agreed that this option should remain under review.

If a separate procurement for Business Integration services was required, it would allow the Council to select the ERP technology first and then determine the most appropriate delivery model and support arrangements.

The financial model was developed using a prudent approach. It incorporated varying levels of cost certainty, risk allowances, contingency provisions and did not rely on unverified savings assumptions.

The decision was required to ensure sufficient time to procure, design, implement, test and stabilise a replacement ERP system before risks associated with the existing platform became unacceptable.

Alternative options considered

Do nothing / retain SAP ECC

This option would have retained the existing system and relied on extended support arrangements. It was not pursued because it did not provide a sustainable long-term solution, failed to address existing operational challenges and exposed the Council to increasing security, compliance, support and service continuity risks.

Direct award to the existing supplier

This option involved awarding a contract directly to the incumbent supplier. While considered legally and technically feasible, it was not selected because it would have reduced competition, limited commercial leverage and made it more difficult to demonstrate value for money when alternative suppliers were available within the market.

Competitive ERP procurement (preferred option)

This option involved conducting a competitive procurement exercise to identify the most appropriate ERP solution and delivery model. Following further development of the procurement strategy and market engagement, the proposed approach was to undertake a further competition under the Crown Commercial Service BOS2 framework.

This approach maintained competition, enabled comparison of alternative ERP solutions and delivery models, and provided a compliant and efficient procurement route. It was assessed as offering the best balance of value for money, implementation assurance, delivery confidence and risk management.

Separate systems for individual service areas

This option involved procuring separate systems for areas such as Finance and Procurement, and Human Resources and Payroll. It was not pursued because it would have introduced additional integration requirements, fragmented accountability, increased data synchronisation risks and generated higher long-term support costs.

The procurement approach could, however, accommodate limited partner components where there was a clear justification and appropriate controls.

Shared service arrangement

This option was also considered but not selected. Market engagement did not identify a shared service model capable of meeting the Council's implementation timetable, governance requirements and operational needs. Existing shared service providers were either unable to accommodate additional councils, were not aligned with the required timescales, or presented significant contractual and delivery risks.