Europe's largest city council runs parallel systems to cover Oracle rollout mess

Decision to adapt software now subject of an independent management investigation

Birmingham City Council is running parallel systems to compensate for the troubled implementation of an Oracle system which will suck in £46.5 million ($58.81 million) in additional spending in the current financial year.

The Council's Cabinet committee heard officials say this week that the council was running parallel systems to ensure its financial reporting was up to date, even though it went live with the Oracle finance system in April last year.

Roger Harmer, Liberal Democrat councillor, told the Cabinet meeting that not all the additional spending was going towards fixing the Oracle system.

"The briefing I had was more about ensuring that the statutory reports the council has to give are given by… running parallel systems to ensure that all the financial reports are made. It is not actually fixing Oracle," he said.

Ewan Mackey, deputy leader of Birmingham Conservatives, said some suppliers to schools had received duplicate payments, while other had not been paid, owing to problem with the system.

Brigid Jones, cabinet member for finance, said the council had employed a dedicated officer to help schools deal with the issues they faced because of the Oracle implementation.

Birmingham City Council is the largest local authority in Europe by population, with around £3.4 billion ($4.2 billion) in revenue per annum. It has been struggling with the project to replace SAP with Oracle's Fusion cloud system to support core HR and finance functions since 2018. The ERP project was reviewed in 2019, 2020, and again in 2021, when the total implementation cost for the project was put at £38.7 million ($47.8 million), "doubling the cost," Robert Alden, Conservative leader, told the council in April.

Estimates given to the press suggest the total cost of the project could run to £100 million ($126.4).

Jones said the council was now working to "stabilize the situation" to ensure it could deliver on its statutory legal, contractual and policy obligations, as well as optimize the original vision for Oracle in line with the mandate from cabinet agreed in July 2019 and March 2021.

The heart of the problem with the implementation is the council changed tack on a vital dilemma faced by most ERP rollouts: whether to change business processes to fit the new software or modify the software to fit business processes. Either path can be difficult. Business change programmes can fail without sufficient time, resources and goodwill among users. Customizing software can be challenging and leaves tech teams with a burden of systems difficult to maintain and upgrade, incurring costs in the future.

"The council had planned to adopt the Oracle system, changing its existing business processes and upskilling staff to support its implementation," a recent council report said. The report went on to say: "This is what members gave officers approval for through Cabinet papers in July 2019 and March 2021. However, officers evolved the approach towards adapting the system - meaning that Oracle was customized to meet the council's existing business processes. This shift in emphasis (from adoption to adaptation) has severely impacted upon the council's ability to properly implement the Oracle system."

Jones said an independent management review would consider why the plan for the implementation changed.

"Cabinet gave approval for one course of action. That course of action changed. The management review will go into why that changed. It's important it is reported back to Cabinet that what Cabinet approved did not happen and something else happened instead," she told councillors this week.

Councillors suggested the Cabinet was trying to avoid responsibility for the project going off-track.

Robert Alden, leader of the Conservative Group at Birmingham City Council, said: "The question is, why wasn't the Cabinet following making sure they were aware of what changes were happening? The Cabinet looks at the risk register all the way through."

Mackey said he'd asked about the problems with Oracle in June 2022, and was told there was "intense Cabinet oversight" on the situation. "You all knew about the problems; they didn't just appear in February or March. If that is true, it implies that you knew what was going on, and there is an attempt to dodge the bullet and gloss over everything," he said.

Sources close to the project have told The Register the standard processes in Oracle Fusion do not meet the council's requirements and there was no alternative but to customize the software.

In 2021, Oracle founder and CTO Larry Ellison said Birmingham City Council was one of a number of successful wins to migrate very large SAP ERP customers to Oracle Fusion. ®

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