UK Treasury not sure about ditching Oracle to join £1.7 billion shared services program it is funding
The UK's Treasury is yet to fully commit to joining a multi-billion pound ERP and HR shared services program it has agreed to fund, potentially slashing any resulting savings, according to a report from the National Audit Office.
The UK's independent spending watchdog said His Majesty's Treasury has yet to make "a firm commitment" to joining the Matrix shared service cluster, in which the government plans to support eight departments with Workday cloud-based finance and HR software and shared services. The Matrix is one of five central government shared services clusters the government hopes might save it £1.8 billion over 15 years by moving 17 departments and 300 so-called arm's-length bodies onto their ERP and HR systems.
In its "Update on government shared services" report published today, the NAO said it had already highlighted "the importance of securing departmental buy-in" to the strategy's success.
"In principle, all the departments are supportive of the Shared Services Strategy. However, HM Treasury and the Department for Education (DfE), who currently have modern ERPs and are both in the Matrix cluster, have indicated they would welcome more information through the business case about likely costs for them before they assess that onboarding is feasible and value for money. The absence of a firm commitment presents challenges for planning within the Matrix cluster, as the business case assumptions include participation from both DfE and HM Treasury," it said.
The Matrix cluster is led by the Department for Science, Innovation & 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 HM Treasury.
In 2024, the Matrix cluster awarded Workday a contract for SaaS finance and HR software and Cognizant a systems integration deal with a combined value of £144.3 million.
However, HM Treasury is a well-established user of Oracle's latest SaaS software for HR and finance in Oracle Fusion.
Prime Minster Keir Starmer has said all departments must join their allocated shared service clusters.
"Cabinet Office has stated that it does not consider departments' joining Shared Services optional, and that 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," the NAO said.
The spending watchdog said HM Treasury and the DfE had invested significantly in existing finance, HR and commercial systems based on modern ERP systems that are "highly configured to accommodate their requirements or the sector which the departments fund."
"For the individually configured ERPs, onboarding to the cluster ERP will 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," the NAO said.
"A lack of a formal commitment makes planning for the Matrix cluster challenging, because its business case includes both DfE and HM Treasury's participation in its financial assumptions," the NAO report added.
According to a "sensitivity analysis" from October last year, there were financial consequences of the DfE and HM Treasury not joining Matrix.
"The analysis modelled a reduction in the program's Net Present Value, a key indicator of the net benefits it is expected to deliver, from £185 million to £109 million. HM Treasury told us that it disputed these calculations with Matrix and calculated the benefits to be significantly lower due to HM Treasury already using a modern ERP," the NAO said.
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HM Treasury provided significant funding for shared services during Spending Review 2025, allocating ringfenced funds to Matrix, whose business case seems to depend on HM Treasury joining. With Synergy and Unity — two more clusters in the strategy — it shares approximately £846 million in funding. The NAO said HM Treasury had committed £1.15 billion to the shared services strategy since 2021. Other clusters in the shared services strategy include Defence and Overseas.
In total, The Register estimates the government has committed £1.7 billion in contracts and ongoing procurement to the shared services strategy. Many of these contracts are set to last 10 years, lasting longer than the Spending Review period.
Last week, The Register revealed that the Synergy cluster — which includes the Department for Work and Pensions, the Ministry of Justice (MoJ), the Department for Environment, Food and Rural Affairs (Defra), and the Home Office — was the subject of a legal challenge following its award of a £370 million business services contract to Capita. In response, Capita said it "took part in a robust procurement process." ®
