Europe's largest local authority settles on ERP budget 5x original estimate
- Reference: 1733482875
- News link: https://www.theregister.co.uk/2024/12/06/birmingham_erp_budget/
- Source link:
Birmingham City Council has been struggling to implement an Oracle Fusion HR and finance system, in a project that has left the council unable to file auditable accounts or detect fraud. The project was " [1]the poorest ERP deployment " government commissioners have seen.
In a [2]written response to a councilor's question, the local authority said the total spend on the Oracle implementation from 2018 to 2023-24 was £63.4 million ($80 million). Due to catastrophic failures as the system went live in April 2022, the council has been struggling to make the current system – which includes a series of customizations – "safe and compliant" and plans to reimplement Oracle out of the box in the next two years, with a further £45 million ($57 million) dedicated to that project allocated to the next two years to 2026.
[3]
It was all so different back in 2019, when the council wrote its [4]business case for the migration away from SAP, which it first implemented in 1999. Before it met the unforgiving reality of large-scale enterprise application projects, the plan said the estimated total implementation cost for the new ERP would be £19.965 million ($25 million) and offered the assurance of accuracy down to the last thousand pounds. It said the project would run within the financial years 2018/19 to 2020/21.
[5]
[6]
As it turned out, the initial implementation went live a year late and was so bad the council was forced to spend £61,300 ($78,000) per week on manual workarounds for its bank reconciliation service and other interventions. The council plans to procure and implement third-party bank reconciliation software.
The council might be assured that the total estimated cost of the initial project and reimplementation has come down.
[7]
Earlier this year, the council estimated it might spend up to £131 million ($167 million) on the project in total. Documents released in February [8]said the council allocated an additional £45 million ($57 million) to the reimplementation across the next two years' budget, in addition to the £86 million ($108 million) budget already approved.
Slicing £23 million off the estimate might seem like a victory, if a Pyrrhic one, but in May the council significantly de-scoped the project by [9]taking out schools .
[10]SAP legacy ERP users wise to ignore offer of single leap to the cloud
[11]Get more licenses for less with SAP price tiering, advise experts
[12]Europe's largest local authority slammed for 'poorest' ERP rollout ever
[13]Inexorable march of progress at SAP threatens to leave users behind
"The view of the expert programme team and the Oracle Commissioner is that the Oracle system is not suited to providing these services to schools in the long run. Post-reimplementation, any Oracle-based solution for schools would be comparatively expensive and inefficient and the relevant costs would have to be borne by schools through trading charges, which would not represent good value for money for schools," [14]the report to the council said .
In September last year, the council became effectively bankrupt due to outstanding equal pay claims and the Oracle implementation.
Last month, a report from "best value commissioners" appointed by central government to investigate struggling councils said that following the Oracle implementation, "a serious lack of trust had developed between members and officers driven by the failed implementation and subsequent lack of progress to resolve the situation."
[15]
A council review had "identified a lack of effective governance and control of the Oracle program, a severe lack of Oracle skills, experience and capabilities across the council, with a lack of direction and ineffective leadership compounding the problems," it said. ®
Get our [16]Tech Resources
[1] https://www.theregister.com/2024/11/08/birmingham_oracle_erp_rollout/
[2] https://birmingham.cmis.uk.com/Birmingham/Document.ashx?czJKcaeAi5tUFL1DTL2UE4zNRBcoShgo=1H3EQIX0wsWAkW%2fjFM6gj89Wk8p0bTSDo7gHPOpmsuZkH0ZjCYbLVA%3d%3d&rUzwRPf%2bZ3zd4E7Ikn8Lyw%3d%3d=pwRE6AGJFLDNlh225F5QMaQWCtPHwdhUfCZ%2fLUQzgA2uL5jNRG4jdQ%3d%3d&mCTIbCubSFfXsDGW9IXnlg%3d%3d=hFflUdN3100%3d&kCx1AnS9%2fpWZQ40DXFvdEw%3d%3d=hFflUdN3100%3d&uJovDxwdjMPoYv%2bAJvYtyA%3d%3d=ctNJFf55vVA%3d&FgPlIEJYlotS%2bYGoBi5olA%3d%3d=NHdURQburHA%3d&d9Qjj0ag1Pd993jsyOJqFvmyB7X0CSQK=ctNJFf55vVA%3d&WGewmoAfeNR9xqBux0r1Q8Za60lavYmz=ctNJFf55vVA%3d&WGewmoAfeNQ16B2MHuCpMRKZMwaG1PaO=ctNJFf55vVA%3d
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Z1MtsnKFsntpXb-3spxBOQAAAME&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://birmingham.cmis.uk.com/Birmingham/Document.ashx?czJKcaeAi5tUFL1DTL2UE4zNRBcoShgo=muKBTWQz%2F4b1%2B7bMf8bVOz3WI6oRo5lS%2BPrRgY54ggnjPIFXBLgVsg%3D%3D&rUzwRPf%2BZ3zd4E7Ikn8Lyw%3D%3D=pwRE6AGJFLDNlh225F5QMaQWCtPHwdhUfCZ%2FLUQzgA2uL5jNRG4jdQ%3D%3D&mCTIbCubSFfXsDGW9IXnlg%3D%3D=jUgQCaU3L68%3D&kCx1AnS9%2FpWZQ40DXFvdEw%3D%3D=DAAyXi2rzhg%3D&uJovDxwdjMPoYv%2BAJvYtyA%3D%3D=ctNJFf55vVA%3D&FgPlIEJYlotS%2BYGoBi5olA%3D%3D=NHdURQburHA%3D&d9Qjj0ag1Pd993jsyOJqFvmyB7X0CSQK=ctNJFf55vVA%3D&WGewmoAfeNR9xqBux0r1Q8Za60lavYmz=ctNJFf55vVA%3D&WGewmoAfeNQ16B2MHuCpMRKZMwaG1PaO=ctNJFf55vVA%3D
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Z1MtsnKFsntpXb-3spxBOQAAAME&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Z1MtsnKFsntpXb-3spxBOQAAAME&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Z1MtsnKFsntpXb-3spxBOQAAAME&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2024/02/22/europes_largest_local_authority_weighs/
[9] https://schoolsweek.co.uk/birmingham-withdraws-schools-from-100m-it-system/
[10] https://www.theregister.com/2024/12/04/sap_legacy_erp_cloud/
[11] https://www.theregister.com/2024/10/14/sap_licensing_tiers_savvy/
[12] https://www.theregister.com/2024/11/08/birmingham_oracle_erp_rollout/
[13] https://www.theregister.com/2024/10/16/dsag_sap_innovation_survey/
[14] https://birmingham.cmis.uk.com/Birmingham/Document.ashx?czJKcaeAi5tUFL1DTL2UE4zNRBcoShgo=mM3Oy7pySCly3RJ6XA7nGvtnzSwbzZYvos3bO355NVNfIIsoc3X7WA%3d%3d&rUzwRPf%2bZ3zd4E7Ikn8Lyw%3d%3d=pwRE6AGJFLDNlh225F5QMaQWCtPHwdhUfCZ%2fLUQzgA2uL5jNRG4jdQ%3d%3d&mCTIbCubSFfXsDGW9IXnlg%3d%3d=hFflUdN3100%3d&kCx1AnS9%2fpWZQ40DXFvdEw%3d%3d=hFflUdN3100%3d&uJovDxwdjMPoYv%2bAJvYtyA%3d%3d=ctNJFf55vVA%3d&FgPlIEJYlotS%2bYGoBi5olA%3d%3d=NHdURQburHA%3d&d9Qjj0ag1Pd993jsyOJqFvmyB7X0CSQK=ctNJFf55vVA%3d&WGewmoAfeNR9xqBux0r1Q8Za60lavYmz=ctNJFf55vVA%3d&WGewmoAfeNQ16B2MHuCpMRKZMwaG1PaO=ctNJFf55vVA%3d
[15] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/publicsector&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33Z1MtsnKFsntpXb-3spxBOQAAAME&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[16] https://whitepapers.theregister.com/
I work at a public sector place and we're in the middle of moving to Oracle for HR & Finance. The writing is already on the wall that the project is going to fail. I'm just waiting for us to appear on The Register.
3 questions
How intransigent is the org?
How long is the list of customisations?
Did they hire the implementation co with the cheapest bid?
What system is suited to providing a service if it requires customisations?
Honestly whoever planned this needs to be taken to court for fraud.
ERP systems are always going to need some tweaking to accommodate some special requirements.
Birmingham's problem is they thought they could change the organisation to fit Oracle then flipped mid-project to change Oracle to fit the organisation.
Fundamental requirements change mid project will only lead to disaster.
Pretty much every large software implementation
I've ever witnessed started with we'll change our processes to fit the system and ended up with trying crowbar the system into working how the organisation' processes work. The reality should be a little in between but never is. There's a lot of "we can change" (but don't) and usually it's because people want to do everything 'how they've always done it' and won't accept that that's not a reason to carry on that way, Change is good ffs.
Re: Pretty much every large software implementation
There may be legal, regulatory or practical* reasons for the way things are currently done. Deciding to change before evaluating those is stupid.
If it ain't broke, don't fix it.
Re: Pretty much every large software implementation
'but we've always done it that way' is not a practical reason to NOT change it - you may not know how it's broken or at least bent/inefficient and you shouldn't decide not to change until you do evaluate the process properly. Pig headed people who want thing to stay exactly as they are will kill a project.
Care
Who cares, after all it is just tax payer's money. Government can always hike taxes and fleece people more.
Re: Care
Meanwhile in Canada taxes comprise 36% of the price of a new home. Effectively, Canadians work for the government rather the other way around. https://nationalpost.com/opinion/blame-bureaucrats-for-taxes-fees-that-comprise-35-6-of-the-price-of-a-new-home-in-ontario
Bureaucracies save money by wasting your time: https://thedailyeconomy.org/article/trouble-tax-we-all-pay-a-time-price-for-bureaucratic-dysfunction/
Bureaucracies cannot be reformed to make them “efficient,” because the need to follow the rules excludes efficiency as a goal: https://thedailyeconomy.org/article/elon-musk-tigers-and-the-nature-of-bureaucracy/
Reimplementation costs
So to reimplement a £20M out of the box Oracle CRM, the cost is... £45M. What a pile of shite. Dump the garbage now and start removing Oracle from all areas of government, national and local.
Re: Reimplementation costs
That won't come cheap either. Only marginally less than commissioning a time machine to go back and correcting the original decision.
Re: Reimplementation costs
If government was not made of brown-envelope-philes, then they could have commissioned a new tech department that would have delivered ERP system for all the needs of public sector at a fraction of the cost.
I guess after they closed down many of the circuses in the UK they had to find a home for them in local councils as leading politicians and certain placemen within their IT/infra team to define and manage these things...
Does Oracle have a "joke board" where they dare each other to find a bigger, more stupid, incredible mug of a client/contact salesperson as each time you think they've found their limit, someone comes and surpasses it.
Strange that all banks and utilities can provide accuracy down to the penny, yet Brum council are happy to have accounts accurate to the nearest £1000. Is that per item or for the annual accounts total?
I read it as the estimated cost of the project before it began; £1000 seems a reasonable rounding point for a budget of c£20m.
There comes a point we you have to put in notional amounts for anticipated expenses of the project as a whole, even on a fixed price contract there are costs to be bourne by the customer and can't be predicted exactly at the outset. Let's say an additional letter needs to be sent through the post about some issue - do you want them to have to go back for a budget increase of £2 to cover the envelope and the stamp?
The Missing Partner?
Oracle has its failings but as a functional ERP system, it's not entirely culpable here. It sounds as though a poorly experienced council employed an integration partner (not named here but named elsewhere as Evosys) and then failed to manage the expectation between technology change and business change. Then as it started going badly wrong, brought in multiple consultancies (KPMG, EY and PWC all seem to have been involved at some point) who undoubtedly ran up significant bills to tell the council what they should already have known.
I've not seen anywhere a breakdown of where the £108m has actually been spent, but I'd suspect Oracle themselves would have been one of the minor beneficiaries compared to the integration partner and consultancy firms.
Business Process Documentation?
Do large organisations actually have reliable information about what goes on day by day?
My experience of building business process documentation in large businesses is that management rarely knows much about the detail.
(1) Department A sends a regular report to Department B. When asked, Department B says the report is useless...they throw it away.
(2) Department X sends a regular report to Department Y. When asked, Department Y says they spent quite a long time revising the report every time.
(3) Director of an HR department is shocked (shocked!) to find out that there two completely separate processes for recruiting.
(4) Director from foreign owner asserts that two computer systems are "fully integrated".....and is shocked to see evidence that this assertion is completely false.
(5) A weekly financial report to directors is replaced. It turns out that the old report was wrong.....for years....no one noticed!
.....and so on......
This is what goes on.....and now we are supposed to be surprised that an SAP to ORACLE rip and replace is a disaster!
“…the Oracle system is not suited to providing these services…”
They should have stopped there.