SAP Cloud Services and Associated Subscriptions

Single supplier - technical reasons

(1) Direct Award - Conditions met

The SAP Cloud Licenses and Associated Services will be a direct award under section 41 and Schedule 5 Procurement Act 2023.

This is on the basis that only SAP can supply the services required due to the following conditions being met:

Schedule 5, Paragraph 6

(a) due to an absence of competition for technical reasons, only a particular supplier can supply the goods, services or works required; and

(b) there are no reasonable alternatives to those goods, services or works.

• TfL's current Enterprise Resource Planning (ERP) solution provides TfL necessary functionality through critical licenses. Cloud subscription examples include Ariba, Success Factors, CPEA. On-prem licenses include: SAP Payroll Processing, SAP Bank Communication Management, SAP Data Services. These components form the core of TfL's operational and financial processing landscape. Their extensive embedded use across Payroll, HR, Procurement and Finance means that any interruption, incompatibility or delay in renewal would materially impact TfL's ability to operate safely and legally.
• TfL's reliance on the SAP-based ERP system and the operational and business-critical modules mentioned above mean that they must be renewed, so that they are supported in the long term. This reliance is not just functional but architectural: TfL's entire ERP ecosystem has been designed, customised and integrated around SAP's proprietary technologies, data models, workflows, and interfaces. Maintaining long‑term support, security patching, and guaranteed interoperability therefore requires direct continuation of SAP‑provided licensing.
• Although there is potential for SAP's resellers to provide the necessary licenses with SAP product, this is conditional on their being approved by SAP. In addition, any reseller would commercially only be likely to provide those services if TfL were to commit to additional "wrap-around" services at extra cost (plus general on-costs). Even if resellers were used, they would ultimately be dependent on SAP as the OEM for activation, support, and assurance of licence validity. This introduces commercial inefficiency, potential dependency risk, and unnecessary service layering.
• To use a reseller would also be sub-optimal as it would add an extra layer of contract management, together with the costs of unnecessary additional services.
• Given that TfL's SAP ERP estate and components are highly customised, SAP's associated experience and know-how in supporting TfL specifically is unique. Accordingly, TfL has no option but to commit to the necessary licenses to ensure that business-critical ERP tools, remain interoperable and can be supported in future.
• The facts explained above mean that any competition for these essential licenses with SAP product is effectively absent.

SAP is the sole entity technically capable of supplying, validating, updating, integrating and supporting the licences and cloud services required for TfL's existing ERP system. Any alternative procurement route would fail to meet TfL's operational, technical, and continuity‑of‑service requirements.