Birmingham City Council (BCC) will sink £46.5 million ($58 million) into a “disastrous” attempt to implement Oracle’s financial reporting system.
The BCC intended to replace SAP with Oracle’s Fusion Cloud ERP (Enterprise Resource Planning) system, but it has ended up running both systems in parallel to ensure its reporting is up to date.
This doesn’t appear to be a foolproof solution either, however, as some suppliers are said to have received duplicate payments or have not been paid altogether.
A recent report by the council acknowledged that these costs may not even account for half of the total spend required to fully integrate Oracle:
Significant resources will be required to arrive at a position where the system can be fully implemented, and we estimate that the final costs of this will be in the region of £100m ($129 million).
“Whilst this further investment is substantial, the proper functioning of Oracle and its role in Financial and People management is crucial to an organization of BCC’s size and complexity with a gross revenue budget of £3.4 billion ($4.4 billion) per annum.”
The BCC is the largest local authority in Europe by population, generating roughly £3.4 billion ($4.2 billion) in revenue per year.
By switching to Oracle’s ERP, it would gain a suite of advanced capabilities, including automatic updates, analytics to react effectively in real-time, and AI and automation capabilities, and had hoped to reduce burdensome, manual processes.
It began implementing Oracle in 2018, and it has been live since April last year, albeit in tandem with its old system.
The Conservative leader, Robert Alden, told the council in April that, throughout this time, the ERP project has been reviewed three times; in 2019, 2022, and 2023.
Where Did It All Go So Wrong?
In the same council report, the BCC explained why the integration of Oracle had been so problematic:
The council had planned to adopt the Oracle system, changing its existing business processes and upskilling staff to support its implementation.
It continued: “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.”
That explanation underlines a common conundrum many businesses face when rolling out ERP systems: should I modify the software to fit my business processes or vice versa?
Of course, both options bring unique difficulties. Yet, the BCC seemingly did a bit of both – and encountered many more quandaries than most.
The Cabinet Failed to Act
The timescale of this issue has also made people question cabinet’s involvement, or lack thereof, over the past five years.
Cllr Roger Harmer, Lib Dems Group Leader, described the BCC’s system changeover as a “disastrous” chain of events. Indeed, The Birmingham Mail reported:
Why was there such a staggering lack of oversight that this disastrous change happened… clearly there is a scrutiny inquiry that will shed light on that but how can we be sure other projects do not go wrong?
The cabinet does not appear to have signed off on the BCC’s decision to modify Oracle’s system, but some councilors believe this does not relinquish them of their responsibilities.
Last month, Oracle released a new generative AI cloud service for enterprise customers during its Q4 2023 earnings call.
Oracle, which says it has the largest database management company, has grown bigger still. In Q2, Oracle added new IaaS customers, which have signed billion-dollar contracts.