Lakes DHB’s Rotorua Hospital.
Credit: Supplied
The former Lakes DHB is one of six leaving obligations to pay for ERP software that may no longer be used after shifting to a shared Oracle platform.
Lakes, which was using Technology One for ERP, was contractually obliged to keep paying for it, yearly in advance, until September 2025.
However, on the 31 May 2022 the DHB was directed to begin using a shared, purpose built Oracle-based ERP by June 2024.
Tairāwhiti, Hawke’s Bay, Whanganui, MidCentral, and Nelson-Marlborough DHBs are all similarly moving to Oracle while continuing to pay for their legacy software.
“Health New Zealand aims to have all former DHB’s using one ERP system for reporting and operational efficiency,” Lakes DHB wrote in its annual report.
“The Lakes DHB therefore has an unavoidable contractual obligation to pay the TechnologyOne fees for the period June 2024 to September 2025 during which time it will not receive substantial benefits, as it will be using the new Oracle-based ERP.”
Lakes DHB costed its onerous contract liability at $407,000.
“It has been assumed the DHB will meet all its current minimum contractual obligations but will not excise any rights to extend the contract term or purchase additional, post-term, services,” the DHB reported.
Te Whatu Ora – Health NZ told Reseller News the six legacy ERP contracts were of varying terms and conditions. An impact assessment process to onboard the DHBs into the new uniform Oracle-based platform by June 2024 was ongoing.
“As such, it is still too early to comment on whether there will be continued use of any non-Oracle ERP software platforms, in some form, and any costs associated with that,” a spokesperson said.
The shared ERP platform project, which was the subject of a scathing audit in 2018, dates back at least to 2012, well before the founding of Te Whatu Ora and associated sector reforms.
District Health Boards were forced to recognise millions of dollars of unbudgeted costs as they impaired their investment in the new shared financial management systems, then dubbed the National Oracle Solution, or NOS.
After the government requested an indefinite pause in further development of NOS, for instance, Nelson Marlborough DHB reported a full $2.26 million impairment of its contribution to the project.
“The impairment of the National Oracle System asset was not expected when the budgets were developed and shows as a variance in the statement of comprehensive revenue and expenses,” the DHB’s annual report said.
The following year, after $32.9 million was written off, the project was reset to embrace 10 DHBs rather than all of them as originally planned.
