When ERP projects go awry: Surrey County Council incurs £3.2m additional costs in delayed Unit4 project
Select committee set to examine causes of the setbacks
Surrey County Council is set to incur an additional £3.2m costs on its delayed £22m ERP project that is scheduled to replace an ageing SAP R/3 system with Unit4 software-as-a-service.
Following a testy council cabinet meeting discussing the budget-busting slippage, the project is set to go before the council's Resources and Performance Select Committee later this month.
The cost increase of £3.2m represents a 14 per cent hike on the original planned total implementation budget of £22.4m between 2020/21 and 2023/24. However, the council already agreed to £718k annual SAP support and maintenance cost to keep their existing ERP system – which dates back to 2004 – up and running. The total estimate for the four-month delay from December 2021 to April 2022 is just north of £3.9m.
Speaking at a cabinet meeting on 21 December, Tim Oliver, the Conservative council leader, said the body had hoped the project would be delivered by the end of this year. "As always, inevitably, with any IT program, these things take a little bit longer as things move around. There is an additional cost because specification has changed."
Will Forster, Liberal Democrats Group leader, challenged Oliver's conclusion. The cabinet meeting and related papers were not "really saying all the information that the council is aware of," he said.
"This is a delay, and this is an overspend because something has gone quite badly wrong. The project was meant to cost £22m and your decision would mean an increase of £3m because of these issues," Forster said.
Oliver then refused to concede the project had gone wrong. "I think that's an inappropriate phrase. There are lessons to be learned, and that's something we haven't discussed with our officers. This is a complicated project. It is moving significant parts of our system onto a new system. As that process happens, inevitably, there are changes that are needed," he said.
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Nick Darby, Residents' Association and Independent Group leader and chairman of the Resources and Performance Select Committee, said it was fair to say that "the project did go off track" and he looked forward to discussing the issues at the select committee hearing later in January.
"We need to learn lessons now and to avoid similar issues in the future," he told the meeting.
Leading the project is Andrew Richards, interim digital business and insights programme manager, who trades as A C Richards Consulting. His £177,000 fee covers the years 2019/2020 and 2020/21. He is being retained by the council, as he authored the cabinet report describing the cause for the delay, although the council has yet to reveal the cost and length of his contract extension in response The Register's questions.
Richards' report [PDF] identified two problems holding up the project.
Data migration had caused difficulties because "the quality of the migrated data received in September for User Acceptance Testing was of insufficient quality and completeness to enable effective testing, severely impacting the coverage and pace of activity."
Analysis found issues identifying the correct data in the existing SAP R/3 system, determining how the council's data needs to be transformed for use in Unit4. There were also gaps in the council's data.
Meanwhile, the project team received a "volume of new or clarified requirements" for the system's HR module, which "emerged during the Build stage when business stakeholders were able to physically see the solution for the first time." These issues "extended the build timescales and caused a backlog of work for the supplier."
"In addition, a key assumption agreed during the high-level design stage regarding reuse of the same forms across both council and external customer payroll users was invalidated. By September it became clear that the combined impact of these issues was increasing the build workload for the supplier and causing delays to the start of users acceptance testing for HR and payroll, rendering the December go-live unfeasible," the report said.
The implementation team now plans to focus on completing User Acceptance Testing and Payroll Parallel Running activities to complete by the end of January 2022. "The team will then progress the plan to prepare for and deliver the cutover to the new Unit4 ERP system for go-live in April 2022," the document said.
If it fails to meet that date, there could be knock-on consequences. Other council IT projects and plans rely on the completion of the Unit4 implementation, it said.
Surrey County Council is not the only public authority to hit difficulties implementing Unit4. Edinburgh City Council planned to replace Oracle with Unit4 by 2018, but abandoned the mission to stick with Big Red, a move which led contractors Agilysis and CGI to court.
But council ERP problems are not unique to Unit4. West Sussex's County Council's Oracle project has been delayed by two years. ®