City council megaproject mulls ditching Oracle after budget balloons to £131M

Birmingham City Council, the largest local authority in Europe, is considering ditching Oracle as its main ERP and HR software after a disastrous implementation has left it unable to file auditable accounts, with the budget rising from £20 million ($25 million) to £131 million ($166 million).

Speaking before the council's audit committee yesterday, officials said the council was still deciding whether to reimplement Oracle or look for another solution, as the public body struggles to stabilize the current Oracle implementation and make it fit for filing auditable accounts with a functioning banking reconciliation system (BRS).

City councilor and member of the audit committee Meirion Jenkins said: "There is a point in an implementation where companies would say, 'We're going to stop, we're just going to accept that we do not wish to throw good money after bad. We're going to implement something else."

He then asked officers whether the council — which is planning £300 million in overall budget cuts — had reached that stage.

Philip Macpherson, a recently appointed Oracle program lead for the Council, said: "We are looking at doing some options analysis to genuinely weigh up the pros and cons around that to sort of underpin the case for reimplementation [of Oracle] and spec out the outcomes the council's after."

The council's current plan is to re-implement a new version of Oracle, after its heavily customized version of Oracle for finance, HCM, procurement, supply chain management, CRM and payroll went live in April 2022, despite "red" warnings on several aspects of the functionality. The customization was against the council's original plan, and last June it decided to revert to a more "out of the box" Oracle solution.

In budget documents released earlier this week, the council allocated an additional £45 million ($57 million) to the re-implementation across the next two years' budget, in addition to the £86 million ($108 million) budget already approved. Earlier estimates had suggested it would take £100 million ($127 million) to sort out the Oracle project, which was originally estimated to cost £20 million ($25 million).

However, in yesterday's Audit Committee meeting, Macpherson said the team was currently unable to estimate the cost and timetable of the Oracle re-implementation.

Asked how many consulting days would be required and a timeframe for reimplementation, he said: "I can't tell you that today because we need to go through the detailed planning process... We've got a sense of the work that needs to be done. And part of that is also assessing what how much of the implementation can be reused, how much of it needs to be rebuilt from scratch. My commitment [is] to do that as quickly as possible. Some estimates have been put into the budget around what that might be. We will refine those," he said.

In a testy meeting, Councilor Jenkins said: "What we're saying [is] we have a train crash of an accounting system. It's all but unusable. The person who's in charge of sorting it out cannot tell us how much we will spend between now and the point when it is finished… that's how many consulting hours or how many consulting days [it will take] — and bear in mind these people are coming into the £1,000-a-day-plus. And we don't know when the projected go live with the reimplemented system is. That's incredibly unpersuasive to me.”

Council finance director Fiona Greenway, also now senior responsible owner for the Oracle project, said: "We are getting to grips with something… but [we] haven't got all of that information. I ask by-your-leave for us to get that information. We should be able to respond to those questions, absolutely. We've built more money into the budget to allow for what we think it may cost. But we don't want to give you a set of numbers or deadlines… then come back next time and say, 'Actually, they've changed'."

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She promised to give the audit committee more detail on the timetable and budget for the Oracle implementation.

As the council faces uncertainty on an Oracle project with a £131 million ($166 million) budget, it announced it would raise taxes by 21 percent over the next two years as part of efforts to slice £300 million out of the budget. In efforts to save money the council plans to dim street lights and cut waste collections. Up to 600 job losses are still likely, the local authority said.

Part of the council's financial troubles stem from historic equal pay claims, the settlement of which could amount to £760 million ($963 million). ®