UK government embarks on £366 million cloud migration for core systems

To modernise legacy software across multiple central government departments, the UK government has committed up to £366 million ($461 million) to upgrade key ERP, HR, and finance systems by transitioning them to the cloud.

As reported by The Register, SAP has signed a £246 million ($310 million) agreement with His Majesty’s Customs & Revenue (HMRC) to provide cloud-based software-as-a-service (SaaS) over a ten-year period. Meanwhile, Deloitte has been chosen to deliver professional services for the same initiative for a maximum of £120 million ($151 million) over a five-year contract.

Unity cluster transformation

The contracts form part of the Unity program, a project uniting HMRC, the Department for Transport (DfT), and the Ministry of Housing, Communities and Local Government (MHCLG). The initiative aims to replace on-premises SAP ERP (ECC 6.0) systems with SAP’s latest cloud-based platform. According to the contract notice, the program aims to centralise finance, procurement, HR, and payroll systems into a unified, shared services model.

Key objectives of the Unity program include implementing standardised processes across participating departments and building a scalable system that meets future requirements.

Jim Harra, HMRC’s chief executive, emphasised the financial advantages of the collaborative approach. Writing earlier this year, they noted that the joint move to cloud-based SaaS systems such as SAP S/4HANA would save around £90 million ($113 million) compared to independent upgrades made by each department. By moving away from legacy systems nearing the end of their support lifecycles—SAP ECC 6.0 will lose mainstream support by 2027—the Unity cluster avoids costly interim fixes and secures long-term value, the government stated.

Once operational, the re-engineered shared services are projected to deliver benefits estimated at £585 million ($738 million) over a 15-year period, providing a strong return on investment.

Deloitte will oversee technical transformation and systems integration to address the complex requirements of unifying multiple departments. SAP will supply the SaaS platform to ensure the delivery of shared services for payroll, procurement, HR, and finance.

Challenges and oversight

The Unity project has come under fire despite its scale and potential benefits. In December, the programme was rated as a “red” risk by the Infrastructure and Project Authority (IPA), a government body that evaluates major initiatives, with the IPA pointing out potential deficiencies in critical resources and skills could hinder progress.

The IPA itself is undergoing structural changes, with plans to merge with the National Infrastructure Commission (NIC) to form the National Infrastructure and Service Transformation Authority (NISTA). Updates on the IPA’s annual report for 2023-24 are still pending.

The Unity program marks a significant milestone in the UK government’s digital transformation efforts, promising streamlined processes and cost savings through cloud technology. By aligning departmental efforts and adopting SaaS, the initiative sets the stage for a more efficient public sector.

(Photo by Unsplash)

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Tags: cloud, cloud migration, SaaS, SAP