Oracle Fusion rollout costs 15 times council's estimates in SAP rip-'n-replace

No it's not Birmingham this time. West Sussex County Council ERP replacement price to hit £40M

Updated A local authority on the southern coast of England expects the cost of swapping its ERP system from SAP to Oracle to go from £2.6 million ($3.26 million) to nearly £40 million ($50 million), as the council seeks a new implementation partner for a project that began nearly five years ago.

The disastrous project joins Birmingham City Council on the list of Oracle's "wins" from SAP, which Oracle co-founder and supremo Larry Ellison may come to regret boasting about. Responsible for spending £2 billion ($2.5 billion) on local services, the council said it was reviewing the migration from an aging SAP ERP system to a cloud-based instance of Oracle Fusion, a migration which began in 2019, after parting ways with systems integrator DXC.

The program to procure new business and systems partners for the migration will kick off next month. The final element of the new system is expected to go live in April 2026, just months before support for the current SAP system is set to end.

According to a Performance and Finance Scrutiny Committee report [PDF] published earlier this month, the Council said that in November 2019 it decided to go to sign up an SI partner to "lead the implementation of a cloud based system (Oracle Fusion)."

The report added: "At that time, a budget of £2.6 million was agreed. Later decisions were made to deliver business change through a combination of other suppliers and Council staff and to reset the programme budget to £14.07 million (£7 million in March 2021… and £7.07 million in October 2022)."

However, the council is now asking for an additional £26 million to cover the implementation from 2024 to 2028, "including the procurement of external support, a programme delivery team and a contingency of £4 million." The request takes the total expected cost to around £40 million ($50 million).

The council can only put the cause of the increase down to "various delays and difficulties experienced in the programme."

Still, they were sufficient to provoke a joint review with its implementation partner in summer 2023.

"This concluded with an agreement to terminate the contract, with the Council taking on sole responsibility for the programme from September 2023," the committee documents said.

"Following this decision, it was agreed that officers would review the options for the programme's future delivery, alongside a review of the resilience of the current SAP systems as these continue to be relied upon until replaced," the report said.

The council now plans to begin a "refreshed programme to implement Oracle Fusion as the preferred ERP system, based on a model of 'adopt not adapt' with a new set of suppliers… The go-live is planned for the different elements for December 2025 and April 2026," it added.

The new deadline will push the council up against the end of support for the version of SAP ERP earlier than S/4HANA, which includes the system it bought in 2001 [PDF].

The council and DXC have been asked to provide a comment.

Register readers will be familiar with the difficulties of local government replacing aging SAP systems with Oracle Fusion. Birmingham City Council is attempting the same migration as West Sussex, and is expecting to spending around £131 million ($163 million), a massive increase on the £19 million originally estimated. More than two years after implementation, the system has yet to produce auditable accounts.

Larry Ellison promoted both projects on the third quarter earnings call in 2021, saying they were exemplary wins over its main rival in ERP software. ®

Updated to add

A West Sussex County Council spokesperson said: "Additional funding and procurement of services to support the implementation of the business support systems to replace SAP was discussed at the county council's Performance and Finance Scrutiny Committee on 18 April. The agenda, plus a webcast of the meeting, are available for your readers to view online at:"

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