Grant Thornton has issued a forensic 66-page report relating to a failed Oracle Fusion enterprise resource planning (ERP) implementation at Birmingham City Council, which has left it without a functioning finance system until at least 2026.
When the council’s Oracle implementation steering committee took the decision to go live in April 2022, say the auditors from Grant Thornton, “the level of risk inherent in the Oracle solution was not properly understood. This resulted in the implementation failing at a significant cost to the council, contributing to a breakdown of financial control such that it has been unable to adequately control its finances throughout 2022/23, 2023/24 and into 2024/25.
“The governance and programme management for the Oracle programme had fundamental weaknesses that were never effectively remedied and were further exposed by high turnover of staff in both senior and operational roles,” they said.
Birmingham City Council implemented an SAP ERP system, ECC6, in 1999, for finance, procurement, HR and payroll purposes. Over the years, it was customised to fit the organisation’s business processes. In 2006, Capita was engaged to provide council services, including the hosting of the SAP instance.
And then came SAP’s ERP system based on its reportedly high-speed, columnar, in-memory database, Hana, S/4 Hana, in 2015. SAP also announced end of support for the older ERP by 2025, later extended to 2027.
Like many other SAP customers, Birmingham had a choice to make. It opted to switch to cloud-based Oracle Fusion, following advice from Socitm Advisory, and announced its decision in July 2019.
It also announced programme support contracts for Insight UK Ltd, in partnership with Evosys for systems integration; Socitm Advisory, for programme and change management; and Egress, for data migration services.
Ameo Professional Services was appointed to provide programme management and assurance to the council form January 2021. The effectiveness of Ameo and the other suppliers is the subject of another report commissioned by the council, Grant Thornton says. Its findings are legally privileged, according to the auditor, and they are not included in the 11 February 2025 report.
As previously reported in Computer Weekly, the financial business case for the upgrade showed that the SAP system, run by Capita, was costing the council £5.1m per year. Over the nine years between 2022/2023 and 2031/2032, this would amount to £46m. For the same period, the Oracle system was meant to save £563k in 2022/23 and £788k in 2023/2024, with the savings accumulating over the nine years to £10.9m.
In August 2019, the council ended its contract with Capita and the majority of IT services were transitioned to an in-house team, including 300-plus Capita staff, for the most part not Oracle specialists. Building in-house Oracle capability proved to be “very challenging”, according to the report.
As previously reported in Computer Weekly, after the go-live in 2022, the Oracle system required manual remediation to fix accounting issues. The council’s 2024 financial report showed a budget of £5.3m for continued support and manual intervention on the Oracle system.
The report’s authors note that the failure of the implementation of Oracle Fusion has been a “contributory factor to the council’s financial position rather than being a fundamental factor”.
It also notes that the implementation programme failed to adhere to its design principles to adopt Oracle-standard functionality, instead choosing to adapt it to align with the council’s existing processes.
Business culture change ignored
Grant Thornton also found that the council did not focus sufficiently on the business and culture change required to prepare the organisation for the Oracle system. End users were “unprepared and unequipped to use the system”, it claims.
It also notes that “the culture of the council appears to be one where either bad news was not welcome or officers felt uncomfortable to communicate bad news. We have reported previously on the high level of turnover of senior officers at the council. If the council is to succeed with other major projects, including the current ERP project, and avoid similar issues to the failed ERP implementation, then it will need to carefully consider how it can change its culture to one of openness, mutual support and transparency.”
Among the impacts of the failed Oracle implementation, the auditors note its overall cost, plus the investment necessary to put it right, will be at least $90m in excess of its original budget. The reimplementation of the system is not expected to be complete until 2026.
The council will hold a meeting on 11 March 2025 to consider the Grant Thornton report, which draws lessons from the botched implementation. These include “learning points” with respect to governance and oversight, programme management, solution design, business change and culture.