Oracle finance system at Europe's largest city council still falls short 2.5 years later
Auditors find solution design 'was not fully resolved' when it went live in 2022
An Oracle-based ERP system used by Europe's largest local authority is still not "safe and compliant" two-and-a-half years after it went live and has "effectively crippled the council's ability to manage and report on finances," according to external auditors.
The cloud-based Fusion system went live in April 2022, before Birmingham City Council had fully resolved the design of the solution, said auditors Grant Thornton, which has not received financial statements for the two most recent years because of problems with the ledger implementation.
Birmingham City Council is responsible for a budget of around £3.2 billion ($3.98 billion), which covers spending on social care, schools, refuse collection, and other services. In three reports set to be presented to the council's Audit Committee on Wednesday, the auditors relayed a litany of failures during the vital software project.
As The Register has already reported, the project to replace an aging SAP system began in October 2019 with an expected budget of £19 million ($23.6 million) and go-live dates of December 2020 and February 2021. Auditors now say the costs may be as much as £130 million ($161 million), and although the new software went live in April 2022, the council is "unlikely to have a fully functioning finance system until at least 2026."
The auditors first set the deadline for the system to be made "safe and compliant" regarding accounting and reporting in October 2023. As of November 2024, the council had still not achieved this goal, the latest reports said.
However, the decision to go live and the culture and governance surrounding the project will concern both taxpayers and critics of IT project failures.
Remarkably, the auditors found that the design of the Oracle solution created by the council, the vendors, and its partners "was not fully resolved when the system went live."
Meanwhile, the council authorized the go-live when "there were known deficiencies in the design and functional effectiveness of the system that required correction," they said.
Problems also permeated organizational culture. The auditors said council leadership was guilty of not wanting to hear "bad news."
"This culture significantly undermined the effectiveness of the risk management process," the auditors said.
Speaking to council staff, the Grant Thornton team also found that, in terms of program governance, there was little or no independent assurance, ownership by senior officers, oversight by council members, or a strong design authority.
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There was also "a lack of transparent reporting with evidence that known weaknesses were not reported to key decision-making groups" and the authority was overly dependent on outside contractors. "The council did not equip itself with sufficient in-house skills, capacity and experience in key program management roles," it said.
As with many IT project failures, the council did not sufficiently work with those who would end up using the system before the project started and as it got going. "There was a lack of effective and timely engagement with the operational teams who would be the end users, in the design and business change process," the auditors found.
Lastly, the top-level managers in the council were faced with juggling a number of priorities, including a certain level of self-interest.
"Senior officers with responsibility for the safe delivery of the program faced conflicting priorities to keep to budget, avoid further delay, and protect reputations," Grant Thornton said.
Both Oracle and Birmingham City Council have been asked to comment on the report.
In September 2023, Birmingham City Council became effectively bankrupt owing to a combination of its outstanding equal pay liabilities and the cost of the Oracle project failure.
In April last year, it emerged that the council did not have an audit trail in the accounting system for nearly 18 months, meaning that from April 2022 until August or September 2023, it was unable to say whether any financial fraud has taken place using the system. ®