Birmingham City Council has been guilty of a stream of deficiencies in its implementation of an enterprise resource planning (ERP) from Oracle, an auditor’s investigation has found.
Grant Thornton has prepared the report – now published on the council’s website – in response to the widely publicised long delays and cost overruns in implementing the system.
Last year it was estimated that the costs of going live had risen from the initial projection of £19 million to £38 million, contributing to the serious financial problems that in 2023 led to the council effectively declaring itself bankrupt.
The new report, commissioned by the council under the Local Audit and Accountability Act, estimates that it will now need an additional £90 million, to come from Birmingham taxpayers, for the implementation.
outlines a range of deficiencies in implementing the ERP. These include the business case and governance programme being inadequately designed, a lack of the necessary in-house skills, a failure to identify risks and issues at various stages in the programme, and weaknesses in the design and testing of the system.
Adaptation of system
In addition, the programme was meant to be designed around processes being adapted to the standard Oracle functions, but this changed to adapting the ERP to the council’s processes. The problems were intensified by a lack of timely engagement with the operational teams who would be the end users.
Other issues included balancing the need to go live with the system with budgetary pressures, and a failure to inform council members of the difficulties. The report says members had indirect sources of information that could have enabled them to challenge officers but this never occurred.
“However, even if this had occurred, the issues with the ERP system implementation were so fundamental that it is unlikely they could have been resolved without the re-implementation that the council is currently undertaking,” the report says.
Other impacts of the failed implementation include limiting the ability of council departments to access accurate budget information, delays in auditable financial statements for the past two financial years, and a lack of adequate assurance for members and the public when other factors have placed the council's finances in a perilous state.
Additional contract
In June of last year Birmingham agreed on a new professional services contract with Oracle, worth just under £10 million, covering consulting, software development and support.
“The cumulative effect of these failures on the council has fundamentally impacted the council’s financial management and its operations,” the report says.
It adds that Birmingham is unlikely to have a fully functioning finance system within the RP until 2026 at the earliest.
