UK Treasury still deciding whether to show up to £1.7B ERP program it agreed to fund

The UK Treasury will not say whether it will join the government's 1.7 billion finance and HR transformation strategy until December despite funding the program for five years. Savings from the so-called Matrix cluster of the shared service strategy are contingent on a bunch of departments - including His Majesty's Treasury (HMT) - adopting cloud-based finance and HR software from Workday. To do so, HMT would have to migrate from its customized version of Oracle Fusion. In a letter to a parliamentary spending watchdog, Jerome Glass, director general for the Future Civil Service at the Cabinet Office, said that following delays to the cluster's rollout of the new software, HMT's decision on whether to join had been put back. The Matrix cluster is led by the Department for Science, Innovation and Technology (DSIT), and includes the Cabinet Office (CO), Department for Energy Security and Net Zero (DESNZ), Department for Culture, Media and Sport (DCMS), Department for Business and Trade (DBT), Attorney General's Office (AGO), Department for Education (DfE), Department of Health and Social Care (DHSC), as well as HMT. In 2024, the Matrix cluster awarded Workday a contract for SaaS finance and HR software and Cognizant a system integration deal with a combined value of 144.3 million. Prime Minister Keir Starmer has told the departments to join their allocated shared service clusters. According to a report from the National Audit Office (NAO), published earlier this year, the Cabinet Office said it does not consider departments' joining shared services to be optional, and "departments cannot make the decision to move or leave a cluster without assessing value for money across government, nor the impact on the business case." Nonetheless, having agreed to fund the program with 1.15 billion since 2021, the Treasury is still making up its mind two years after the Workday contract was signed. In his letter to the Public Accounts Committee, Glass said HMT's accounting officers "must be satisfied that the proposal meets the standards set out in Managing Public Money," a government guide for financial management, "including delivering value for money for the Exchequer as a whole." He said HMT was working jointly with the Matrix program to "develop this evidence base." The plan was that departments in the cluster already using cloud-based systems (DfE and HMT) would not join until after the other departments. "HMT's onboarding has therefore always been planned on a longer timetable. Delays in the Matrix programme have had a knock-on impact on HMT receiving key documents and evidence, subsequently pushing back HMT's formal Accounting Officer sign-off decision," the letter said. The NAO has previously reported that aspects of the shared service program will see their go-live delayed from 2028 to 2029. Glass said HMT expected to receive the majority of the documentation "required to assess feasibility and the cost of service by the end of summer 2026." Provided there are no further delays, DfE and HMT should be able to make an "evidence-based decision" by December, he said. In an update earlier this year, the NAO said HMT and DfE had invested significantly in existing finance, HR, and commercial systems based on modern ERP platforms that are "highly configured to accommodate their requirements." Joining the Matrix shared service would "mean loss of some functionality as they seek to converge on data and processes and will have to bear an 'unnecessary cost' to develop their new processes," it said. The spending watchdog also pointed out that the Matrix cluster's business case includes the participation of both DfE and HMT in its financial assumptions. A "sensitivity analysis" revealed a reduction in the program's expected benefits from 185 million to 109 million if the two departments did not join. HMT disputed the calculations, the NAO said. HMT has provided funding for the whole shared service program for the spending review period up to and including the 2028-29 financial year. There are five clusters to the program, including Matrix, covering all Whitehall departments and arm's-length bodies, which have signed contracts totaling around 1.7 billion, some extending beyond the spending review period. Glass's letter said the clusters forecast that benefits from the Shared Services for Government Strategy would reach 4.37 billion over 15 years, broken down into 1.4 billion cashable benefits and 2.98 billion of non-cashable benefits. If the forecasts prove correct, it would be a good deal for the UK taxpayer. Some of the savings, though, will depend on HMT's willingness to join a program it agreed to fund. (R)