SAP’s NSW Trade & Investment deal a proof point for cloud

The success or failure of a recent agreement between NSW Trade & Investment and SAP, which will see the government department deploy SAP’s Business ByDesign SaaS (software as a service) ERP solution, will be an indicator of the future of cloud services in Australia, according to Ovum.

SAP recently announced that its cloud-based ERP solution was selected by the NSW state government’s Trade & Investment department following a public tendering process.

Dr Steve Hodgkinson, Research Director IT Asia/Pacific at Ovum, said the project is “charting new territory in government use of cloud services in Australia”.

“NSW Trade & Investment is to be admired for embracing a new model for public sector ICT procurement. The hope is that the multitenant architecture and configurability of the SaaS solution will enable the many agencies within the Trade & Investment portfolio to use it as an efficient and flexible shared service.

“If this hope is realised it will be an important proof point for the efficacy of the cloud services model as an alternative to more traditional in-house shared ICT services arrangements.”

The deal is SAP’s largest Business ByDesign implantation to date and the vendor’s first cloud platform win in the Australian public sector.

“Many eyes, therefore, will be on this project and SAP will need to put its best foot forward. Cloud sceptics will be eager to see it fail. Cloud proponents, on the other hand, will be keen to see both SAP and the agency succeed in taking a major step into the future of public sector ICT-enabled innovation.”

Hodgkinson said the timing of the project is good for several reasons.

“Firstly, the benefits and risks of the cloud model are becoming better understood - and the department has gone into this project with a pragmatic, strategic, approach and with its ‘eyes open’. Secondly, the maturity of cloud services is evolving rapidly, particularly with regard to the management of the data sovereignty, record keeping and security requirements necessary to obtain the trust of risk-averse government executives and procurement officers.

“Thirdly, the crisis of confidence in the ICT capabilities of agencies, particularly in a shared services context, shows no sign of improving. Recent budget cuts mean that it is now difficult for agency executives to pretend that either the ICT status quo or traditional underinvested in-house approaches to application consolidation and sharing are sustainable.

“Confidence in cloud services, in contrast, is growing rapidly. The promise that cloud services might actually be better, faster, less expensive and less risky than previous ICT projects … is an attractive and timely proposition.”