Digital transformation in the public sector: optimizing SAP projects for lasting success

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Digital technologies are helping to transform the UK’s public sector. From central government to healthcare, emergency services to local authorities, organizations are finding new ways to deliver public services more efficiently and cost effectively. Historically, ERP has always sat at the heart of these operations – making it a prime candidate for modernization. However, in an SAP context, these efforts have a greater urgency, with public sector customers advised that maintenance on several core products including SAP ECC 6.0 will end in 2027.

Migration to S/4HANA, SAP’s next-gen cloud-based platform could result in big operational wins for public sector bodies. But it won’t be easy. Navigating the complexity of public sector procurement processes while managing budgetary and skills constraints will be challenging. However, it can be done with the right partners and careful planning.

The race for digital

During the pandemic, the UK public sector redoubled efforts to scale up and accelerate the delivery of critical applications such as the NHS COVID Pass. But while this set new benchmarks for digital public services, there was a less positive impact on longer term projects. Also, the financial impact of COVID also risks eroding spend once earmarked for digital. In fact, many public sector bodies still rely on legacy equipment and software, highlighting there’s still a long way to go before we see advanced digital technologies powering the majority of government systems and services.

Navigating the complexities of procurement

The most common path to buying public sector IT is via the Crown Commercial Service (CCS), which helps thousands of public sector organizations spend billions of pounds annually. It offers three key frameworks designed to streamline the procurement process: G-Cloud 13 for cloud computing; Software Design and Implementation Services (SDIS) for cloud-based ERP support; and the Back Office Software (BOS) framework for support applications.

Yet while these frameworks purport to save government IT buyers time and money, that’s not always the case. For example, at the time of writing, the frameworks do not have definitions around service levels or service credits, and definitions around liability and agreements of liabilities are often limited.

For SAP customers, this can leave them in a situation whereby they buy through a framework, but then subsequently have to negotiate specific terms and conditions with SAP. Clearly, this isn’t ideal for either party, and it’s a potential roadblock as more public sector organizations moving to the cloud. The message here is for public sector organizations to engage with SAP as early in the process as possible. Make sure to ask SAP how the unique aspects of your organization will impact the contract, and if you are purchasing through a CCS framework, how that will affect the terms and conditions.

Overcoming resource constraints

Public sector IT buyers have another major challenge to navigate: budgetary and skill shortages. The latter is particularly acute. In UKISUG research from 2020, 80 percent of organizations said their skills make-up had changed over the previous three years and even more (92 percent) believed it would change again in the succeeding three years. A separate 2022 study found 92 percent of organizations were concerned about a lack of available skills and how this would impact the speed they could move to SAP S/4HANA.

Public sector IT leaders must remember they are not only competing against their peers in government but also private sector enterprises with deeper pockets. The labor market for SAP in particular is highly competitive. With major skills shortages looming in the coming years, organizations should sit down now to map out what roles they need to fill in-house, in order to support their specific transformation goals. The longer they wait to kick-start a project, the more expensive that talent will become.

A two-way dialogue

Many SAP user organizations across the public sector are at a tipping point and face important decisions regarding the future of their ERP. For a lot of customers, it boils down to if or when they move to SAP S/4HANA. As such, ensuring they have a really strong business case and clarity on what is the right deployment model for their organization is essential.

At the same time, technology continues to evolve, so procurement processes and commercial agreements also need to change in line with the new digital world. By having a two-way dialogue and following best practice learnings from industry peers, public sector organizations can achieve more successful outcomes and a time when they are facing considerable financial pressure.

UKISUG and SAP have published a new whitepaper entitled Digital transformation in the UK public sector: How customers and SAP can work better which is available to all UKISUG members.