Oracle's examplar win over SAP for Birmingham City Council is 3 years late
It also required £20 million in extra funds – and Larry wants to brag about this?
Birmingham City Council's ERP overhaul to replace SAP with Oracle has required £20 million ($24.9 million) additional spending and is three years late, a meeting heard last week.
Robert Alden, leader of the council's opposition Conservative Group, claimed overspending on the project – which started in 2018 – was equivalent to a 9 percent increase in council tax for the UK's largest local authority.
The ERP project was reviewed in 2019, 2020, and again in 2021, "when a council had to allocate an additional £20 million to the cost of Oracle, doubling the cost and writing down a £16 million loss of savings, due to delays," he said.
Council documents reveal among the cost increase is a £5.1 million ($6.4 million) fee to provide access to SAP's legacy R/3 system for an additional 12 months owing to project delays.
"We understand from officers Oracle is still not fully working despite already being almost three years late," he told the meeting.
In 2021, Oracle CTO and founder Larry Ellison held up Birmingham City Council as an exemplar of big wins for Big Red as it supposedly took business away from ERP rival SAP, the German software giant.
The council leader, Labour's Ian Ward, admitted there had been "issues with the implementation of Oracle."
"It is the first major change of IT system the council has undertaken for almost 20 years and it is not unusual for the implementation of such systems to encounter difficulties. It is clear that there is more work to be done," he said.
The council had created an "action plan" with strengthened governance of the project, Ward said, while a new task force would be chaired by the chief executive.
"I've made it clear to the chief executive that we have to get the Oracle system working correctly as quickly as possible," he said. Ward confirmed PwC and KPMG had been appointed to help rectify problems with the system. The council had previously employed EY on the implementation.
According to documents leaked to local news outlet the Birmingham Mail, the Oracle system had been "heavily adapted with complex customisations which are failing, and proving hard to fix."
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In addition, there were no Oracle reports for monitoring budget comparisons until January 2023 and security issues prevented users from accessing reports. Staff had not received sufficient training and process automation in SAP had been lost in Oracle. The result was a series of complex manual workarounds, the documents said.
The system hit the headlines in May 2022 after local schools were left unable to pay their bills owing to the new Oracle system, local media reported.
In March 2022, a review of the project said a lack of engagement with the business-as-usual support team, which will take on responsibility for day-to-day administering the system, meant IT would "not have the necessary experience and skills to run with this from Go-Live in April '22."
Meanwhile, the ability to create roles in Oracle "currently sits with one person," the report said. "Therefore, this comes [with] a single point of failure."
The business case published in 2021 cut £16 million ($20 million) from the expected savings of the project. The council had initially expected to save £26.9 million ($33.5 million), but the new business case said £9.8 million ($12.2 million) additional implementation costs, and £5.1 million additional system support costs for extending use of SAP would be required. The document estimated total implementation cost for the new ERP would be £38.7 million.
In 2021, Oracle founder and CTO Larry Ellison singled out Birmingham City Council in a call to investors following the software giant's Q3 results. It was one of a litany of organizations he held up to exemplify big wins in grabbing customers from SAP.
Also on the list was West Sussex County Council, which, as of 2021, was experiencing two-year delay to the project. ®