Largest local government body in Europe goes under amid Oracle disaster
Authority effectively bankrupt as ERP car crash adds to equal pay liability
Birmingham City Council, the largest local authority in Europe, has declared itself in financial distress after troubled Oracle project costs ballooned from £20 million to around £100 million ($125.5 million).
Contributing to the publication of a legal Section 114 Notice, which says the £3.4 billion ($4.3 billion) revenue organization is unable to balance the books, is a bill of up to £760 million ($954 million) to settle equal pay claims.
In a statement today, councillors John Cotton and Sharon Thompson, leader and deputy leader respectively, said the authority was also hit by financial stress owing to issues with the implementation of its Oracle IT system.
The council has made a request to the Local Government Association for additional strategic support, the statement said.
In May, Birmingham City Council said it was set to pay up to £100 million for its Oracle ERP system – potentially a fourfold increase on initial estimated expenses – in a project suffering from delays, cost over-runs, and a lack of controls.
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After grappling with the project to replace SAP for core HR and finance functions since 2018, the council reviewed the plan in 2019, 2020, and again in 2021, when the total implementation cost for the project almost doubled to £38.7 million ($48.5 million).
The project, dubbed Financial and People, was "crucial to an organisation of Birmingham City Council's size," a spokesperson said at the time.
Cotton said the system had a problem with how it was "tracking our financial transactions and HR transactions issues as well. That's got to be fixed," he said.
Earlier this year, one insider told The Register that Oracle Fusion, the cloud-based ERP system the council is moving to, "is not a product that is suitable for local authorities, because it's very much geared towards a manufacturing/trading organization."
They said the previous SAP system had been heavily customized to meet the council's needs and it was struggling to recreate these functions in Oracle.
In 2021, Oracle founder and CTO Larry Ellison said Birmingham City Council was one of a number of successful wins to migrate large SAP ERP customers to Oracle Fusion.
We have asked Oracle to comment. ®