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It's not as simple as government cancelling SAP contracts

07 May 2018, 13:12

The Black Business Council (BBC) chairperson of the BBC’s ICT portfolio committee Keith Thabo recently criticised Public Enterprises Minister Pravin Gordhan on when contracts with software provider SAP will be cancelled due to their admission of dodgy dealings with the Guptas.

As chairman of the ICT portfolio Thabo is showing incredible naivety. One cannot compare a software vendor like SAP to an auditing firm. They are chalk and cheese.

One can change audit firms quite easily. A new audit firm simply takes over and gets to grips with the company being audited. There is no tangible operational risk in changing audit firms.

The government cannot easily cancel contracts with SAP - the government has purchased and implemented hundreds of millions of rands of SAP software. This software needs to be continually maintained: supported and upgraded. Stop maintaining the software and it is at risk of failing. When software fails, internal processes or client-facing services will be impacted. There would be major operational risks in not maintaining the SAP software. And since it is SAP software, you cannot get the upgrades from any other company.

The government equally cannot simply replace the SAP software - this will again cost hundreds of millions of rands, if not billions, and will take years. Not only is this expensive, but it will divert spending from elsewhere, for no tangible functional benefit.

Will this move punish SAP? Sure, they're lose a little revenue but they've already been paid their hundreds of millions. Their reputation will take a very slight, if noticeable, knock.

Such a move can be nothing other than cutting off one's nose to spite one's face.

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