Mega council officers had no idea what they were buying ahead of Oracle fiasco

Lack of skills left Birmingham officials unable to challenge suppliers and with a system incapable of managing finances

Council officers heading up a disastrous Oracle implementation that left Europe's largest local authority unable to manage its finances lacked an understanding of the cloud-based solution they had chosen to buy.

Birmingham City Council went live with Oracle Fusion – a cloud-based ERP, finance, and HR system – in April 2022. The authority has since been unable to provide compliant financial management and now plans to reimplement the product.

The estimated total cost has gone from around £19 million ($24.07 million) to £108 million ($137 million), with schools taken out of scope.

A report from independent auditors Grant Thornton shows council officers and the digital department did not have a sufficient understanding of the Oracle Fusion solution they had selected in a procurement process in 2019.

Officers' understanding of the system was "limited," meaning they relied on external partners to design the solution and manage the program, the report says. At the same time, the Digital and Customer Services directorate's lack of Oracle knowledge meant it struggled to act as an "intelligent customer" and critique the work of systems integrator Evosys or other suppliers.

"The failure to properly invest in ERP implementation capacity and capability and to manage the turnover of staff in key positions within the program was a significant weakness in arrangements," the Value for Money report states.

"The failed implementation of the ERP system has fundamentally impacted the Council's financial management and its operations. In our view the council has failed to fulfil its duty to deliver best value and did not put in place proper arrangements to secure economy, efficiency and effectiveness in its use of resources in relation to this project".

In a statement to the BBC, a council spokesperson said the authority will "take on board" its findings and that it was making significant progress in reimplementing Oracle and "getting our finances back on track."

"We have worked to significantly strengthen governance, to understand the issues within the system, and to learn lessons from what went wrong," they said.

The disastrous ERP project contributed to the council becoming effectively bankrupt in September 2023, with unsettled equal pay liabilities also a factor.

An earlier report from the auditors found that, two-and-a-half years after going live, the Oracle system was still not "safe and compliant" and had "effectively crippled the council's ability to manage and report on finances."

Grant Thornton's assessment says the council had not fully resolved the design of the solution before it went live. At the same time, the council is "unlikely to have a fully functioning finance system until at least 2026," when the reimplementation is scheduled to go live.

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 determine whether any financial fraud had taken place using the system.

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. ®