UK Pensions Department Awards Sopra Steria a £115 Million Contract Extension for Legacy ERP Project Due to Delays in Replacement Project
The UK's Synergy program, a shared service initiative aimed at replacing the existing ERP and HR systems for central government departments, is currently facing significant delays. Despite initial plans to have a new system operational by October 31, 2025, it is now unlikely that the project will meet this target date without further delays.
The complexity and scale of the project, which involves supporting around 280,000 employees and a substantial ERP and HR transformation, are contributing to these delays. The continued postponement is affecting cost forecasts and the overall business case, requiring updates to reflect procurement outcomes and extended support agreements with suppliers like Sopra Steria.
Some participating departments, such as the Ministry of Justice, have already been affected by these delays. The Ministry cancelled its previous ERP procurement in 2021 to align with the new shared service strategy, further pushing back timelines.
Currently, the Single Operation Platform (SOP) is being used by several departments, including the Department of Work and Pensions, the Ministry of Justice, the Cabinet Office, and the Department for Environment and Rural Affairs. These departments are all set to move to Oracle Fusion as part of the Synergy program. The SOP was migrated from an on-prem data centre to a hosted platform provided by Oracle Cloud Infrastructure (OCI) in October 2020.
The replacement ERP and HR project for Synergy is expected to cost around £2.5 billion in total. A critical milestone will be the agreement of a fully costed and deliverable integrated plan in summer 2025, incorporating the release dates for departments to move over to Synergy services following work to rephase and replan.
In September 2024, IBM and Oracle won a contract worth £711 million for Synergy's software and systems integration services. However, a recent procurement notice revealed the need to modify the contract with Shared Services Connected Limited (SSCL), a Sopra Steria company. Sopra Steria was awarded an additional £115 million to run the Single Operation Platform (SOP) for four major UK central government departments.
The Synergy program's business transformation across multiple departments to challenging timescales has caused early delays. The business process services deal for Synergy, set to be worth £958.7 million, is yet to be awarded. The Synergy program's value for money position is sensitive to delays, which lead to cost increases due to longer running of the Programme and reduced benefits as they are delayed within the business case period.
The UK's pensions and social security department has extended a contract with Sopra Steria, adding over £100 million to run legacy systems for another three years. Despite these challenges, finding an alternative, interim supplier for the SOP would result in significant duplicative and nugatory cost.
As of now, the Ministry of Justice remains beyond the horizon from being on a new system. The Home Office moved off SOP to Oracle Fusion in 2021 through its direct relationship with Oracle. The SOP is dependent on a bespoke operating platform and interfaces with numerous other systems within the respective Synergy Cluster members' IT environments.
The Synergy program's next iteration of the business case will update cost forecasts to reflect the Business Process Services procurement outcome. The extension of the Synergy program beyond its initial planned timeline has caused cost increases and reduced value for money. The hope remains that the program can be successfully implemented, providing a more efficient and modernised system for the central government departments involved.
- The Synergy program's delays and increased costs are due, in part, to the complexity of the technology involved, particularly the ERP and HR system transformation, which requires advanced software and AI.
- The Synergy program's Business Case is sensitive to delays due to the longer running of the Programme, as these cause cost increases and reduce benefits, affected by the cloud-based technology used for the Single Operation Platform (SOP).
- Security concerns are a critical factor in the Synergy program, as the replacement of existing ERP and HR systems for central government departments involves handling sensitive finance and business data.
- The Synergy program's future depends on the next iteration of the business case, which will update cost forecasts and must secure business process services contracts worth millions, aiming to provide a more efficient and modern system for participating departments.
