HMRC plans 2bn technology spending spree as legacy systems prove stubborn

"HM Revenue & Customs is preparing to embark on a technology spending programme worth more than £2 billion over the next two years, as long-running efforts to modernise its ageing IT estate continue to run into delays and rising costs. According to HMRC's latest procurement pipeline, the tax authority will begin with a large-scale data warehouse transformation programme, expected to be worth around £410 million. The contract will combine the running and modification of existing systems with the migration and eventual decommissioning of legacy data warehouse platforms."

"Procurement documents state that HMRC intends to award a single contract to deliver the transformation of its legacy data warehouses, replacing no existing agreement. The legacy technology is widely understood to include SAP's ECC Business Warehouse, which sits at the centre of HMRC's wider enterprise resource planning overhaul. SAP has already secured major uncontested contracts with HMRC, including a £246 million ERP modernisation deal and a separate £275 million upgrade to core tax systems, both awarded without a competitive tender."

"One of the largest upcoming procurements is a £350 million contract for public cloud computing services with Amazon Web Services, replacing an existing AWS agreement of the same value. The pipeline also highlights a £306 million contract for "Digital Platforms Run and Change Products", covering IT services to support live application services, including legacy platforms. This would replace a contract awarded to Accenture in May 2024, also valued at £306 million."

HMRC plans over £2 billion of technology spending across the next two years to modernise an ageing IT estate amid delays and rising costs. The programme begins with a large-scale data warehouse transformation expected to cost around £410 million, combining running, modification, migration and decommissioning of legacy platforms. Procurement intends to award a single contract to deliver the warehouse transformation, replacing no existing agreement. Legacy systems include SAP's ECC Business Warehouse central to a wider ERP overhaul. SAP has already won uncontested deals including a £246 million ERP modernisation and a £275 million core tax systems upgrade. The pipeline also lists a £350 million AWS public cloud contract and a £306 million Digital Platforms Run and Change Products contract replacing an Accenture award.

Read at Business Matters