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Defense ERP 2.0

Defense ERP 2.0

The persistent march of technology leaves defense organizations scrambling to keep up with the latest innovations and increasingly dependent upon enterprise resource planning (ERP) systems to support every aspect of their operations, from back office to the combat theater | 🕒 3-min read.

Mike Stone

Global Lead for Defense and National Security & Global Head of Technology Transformation for Infrastructure, Government and Healthcare

KPMG International


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Defense officer

After long, costly and often complex ERP implementation programs – some have been known to take as much as 5 years and billions of dollars – defense forces often find themselves with systems that fail to meet user requirements and, worse still, have already become obsolete. 

There is a better, more effective and efficient way. Rather than try to reinvent the wheel by building their own infrastructures and developing dedicated software from scratch, governments could look to the private sector to take the strain – and help relieve the pressure on federal budgets. 

The logic is compelling. Companies from sectors such as manufacturing, retail, healthcare, logistics and facilities management have developed world-class processes, data centers and supply chains, all powered by cutting edge ERP. So, why try to build your own system when you can outsource from the very best?

In a public statement in 2013, the US Department of Defense (DoD) anticipates “significant use of public-private partnerships (PPPs) with 'non-federal entities' across a wide range of activities that vary in scope and scale.” 

Today the DoD already outsources training, buildings and facilities, logistics, weapons systems, fleet maintenance for tanks and other vehicles, transportation and fuel, utilities and water. Defense organizations in the UK, Australia, the Netherlands, Mexico and France have all embraced outsourcing.

Supporting the mobile battlefield

Most of the communications on a modern battlefield involve replenishment of materials and fuel, as well as critical ‘command and control’ tactical decisions, all of which rely on robust ERP.  

An ERP is, in essence, a huge data center and some governments have entrusted private providers to build and operate such facilities, albeit outside the defense sector. Canada’s Ministry of Government Services has a data center located in the province of Ontario, while in Brazil, an external contractor built and operates IT and telecommunications equipment for the country’s private and state-owned financial institutions. 

Understandably, governments are reluctant to place such ‘crown jewels’ in public space and most IT outsourcing is ‘inside the fence’ in secure sites within a country’s home borders, typically staffed by nationals only.

Given the concerns over security, will the DoD or other agencies be bold enough to extend their outsourcing to encompass that most prized asset: information?  

The UK has, arguably, gone further than most, with its Government Communications Headquarters (GCHQ), which offers managed infrastructure services via a 30-year PPP, providing critical support to the government's security, defense, foreign and economic policies. 

Growing use of cloud technology inevitably means accessing commercial cloud services. In February 2016 the US Defense Information Systems Agency signed up for IBM cloud services for controlled unclassified information. 

The DoD has acknowledged the need to be more efficient and more centralized in its ERP infrastructure, to avoid duplication and achieve common, consistent standards. It has created a center of excellence to accelerate this shift.

These developments, though positive, still rely largely on in-house resources to manage IT – which goes against the trend in the private sector, where outsourcing has proved enormously successful in reducing costs and complexity and raising efficiency, in the process avoiding painful implementation.

Security may be an obstacle – and one that would-be ERP providers are working hard to overcome – but, otherwise, ERP for defense is really not unique. Regardless of the organization, or the sector, many of the functions being driven by systems, such as HR, Finance, logistics and supply chain, share similar characteristics and have common user needs.

Many US military communications rely on commercially owned satellites. If the DoD can take this lead and push for outsourced ERP, then large-scale program failures could become a thing of the past, ushering in a new era of efficient, cost-effective, cutting edge operations – on and off the battlefield. 

Read more about ERPs for defense, which features a series of insights on the use of technology in modern defense forces along with profiles of the US, UK, Australia, New Zealand and Canada.  

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