Europe’s largest local authority has delayed the introduction of a vital income management system (IMS) amid confirmation that total spending on a disastrous Oracle implementation could hit £170 million (c $230 million).
Elected representatives of Birmingham City Council’s audit committee vented their frustration this week after hearing that the rollout of the IMS – designed to replace the council’s banking reconciliation system (BRS), which went so badly wrong after the April 2022 go-live of Oracle Fusion – is to be postponed again.
The council’s financial management has been unable to file auditable accounts since it replaced an aging – but functioning – SAP system with new cloud-based software from Oracle. Although the council had expected to implement the system out-of-the-box, it made customized modifications including the introduction of the BRS, which failed to function as planned. The council was declared effectively bankrupt in September 2023, because of the ERP disaster and outstanding equal pay claims. It is now working to reimplement Oracle from scratch and go live in April next year.
In the meantime, it is implementing the IMS. In March 2024, the council decided to buy the off-the-shelf software to resolve the BRS customization issues from the initial Oracle deployment, opting for a CivicaPay solution, which it said would “go live no later than March 31, 2025.”
By February this year, however, that implementation date had been put back to April, and then September, after project stakeholders became aware of concerns over the “validity of the original design,” according to a paper presented to the committee.
The delay raises questions about the cost of staff doing manual work to make up for problems with the BRS. In February last year, the council allocated £5.3 million (c $6.6 million) in the 2024/25 budget to pay for manual workarounds and backfill to support the release of Oracle subject matter experts.
In a hastily convened Audit Committee meeting this week, councilor heard how that date has now been put back until November, expressing their anger that the news hit the media before they were told.
Presenting to the committee, Oracle program leader Philip Macpherson said the testing of the new IMS showed a pass rate of 73.3 percent and 10 severe deficits, below the acceptance criteria of a 95 percent pass rate and zero severe deficits. The substantive issues were connected to data, which an environment refresh in September was able to help solve, he said.
The program board approved the decision to delay the implementation of IMS on 11 September, and communicated to the Oversight Board and Chair of the Audit and Risk Committee on 14 September.
However, the test failure and likelihood of delay had already been leaked to the press on 9 September.
In the meeting, some members of the Council Audit Committee voiced anger that they had been left in the dark about problems, as they saw it, as well as the apparent escalation of the cost of the overall Oracle project.
Conservative councillor Meirion Jenkins said: “This is a council that was going to buy an Oracle implementation for £19 million. We’re now running at £170 million, right? And the officers are again telling us, don’t worry. It’s in hand. I think we do need to worry. The audit committee was misled the first time round. Now it’s happened again,” he said.
Original plans for the replacement of SAP with Oracle Fusion set aside a £19.965 million budget for three years implementation until the end of the 2021 financial year. Go-live date was later put back until April 2022 and the budget increased to £40 million. After the council realised it would need to reimplement all of Oracle, the budget for running the old system and introducing the new one increased to £131 million.
Carol Culley, executive director of finance, said the new £170 million figure included not just the running cost and licensing of the current system and the reimplementation of the new Oracle system, but also a £20 million budget provision for 2026/27, which would be tapered in future years to run the new system and strengthen support.
Myron Hrycyk, one of the central government commissioners sent to oversee Birmingham’s recovery from its financial problems, told the meeting: “It is a complex implementation, and it’s right to be cautious about it. I have urged the officers to put quality above speed; that’s really important.
“If you rush at this hoping to save some funds, you will probably pay for it 10 or 20 times over in sorting it out afterwards, although [you have to] ensure that you’ve got visibility of the spend. I really urge you not to rush this. Get it right.”
Hrycyk, who is the Cabinet Office Crown representative for Oracle, IBM, and Microsoft, also backed the implementation team. “You have some very committed people to make this council a success,” he said. ®