While experts have questioned why Birmingham City Council (BCC) chose to modify and adapt a new Oracle system rather than alter its own business processes, a series of documents seen by Computer Weekly reveal project management failures over a number of years contributed to the IT failure.
These point to a systemic lack of leadership and an unwillingness to address concerns raised by the council’s audit committee, internal experts and people directly involved in the project.
In September 2023, BCC issued a Section 114 notice, effectively declaring the council bankrupt. The Centre for Governance and Scrutiny was commissioned to investigate what went wrong.
Dereliction of duty
In Birmingham City Council’s audit report of April 2024, councillor Fred Grindrod, who until recently chaired the council’s audit committee, described the Oracle system as “the all-encompassing problem” that underlies BCC’s current woes.
He said the audit committee was misled. Citing correspondence with the Centre for Governance and Scrutiny, after its November 2023 Governance stabilisation plan report into the council’s problems, Grindrod said he was told that the audit committee could “credibly assert” that it had been misled by senior officers.
“What this chamber needs to understand is just how serious this is. If the audit committee has been misled, then every single member of this chamber has been misled, a dereliction of duty by some of our senior officer leadership, and this is what has happened to our council,” he said.
Computer Weekly has seen notes from a manager at BCC highlighting a number of discrepancies in the Birmingham City Council report to cabinet published in June 2023, 14 months after the Oracle system went into production. The report stated that some critical elements of the Oracle system were not functioning adequately, impacting day-to-day operations. The manager’s comments reveal that this flaw in the implementation of the Oracle software was known before the system went live in April 2022.
The manager’s notes also show that council leaders were urged to investigate the failure in communications between the programme management, steering committee and members, and raise questions over why the council’s senior management team was unaware of issues with the Oracle system given its importance to council operations.
These and other comments from the manager point to a desire of the programme board, and in particular the programme manager, to go live in April 2022 regardless of the state of the build, the level of testing undertaken and challenges faced by those working on the programme. The manager’s notes reveal concerns that the programme manager and steering committee could not be swayed, which meant the system went live despite having known flaws.
Broken bank reconciliation process
An insider at Birmingham City Council who has been closely involved in the project told Computer Weekly it went live “despite all the warnings telling them it wouldn’t work”.
Discussing how the Oracle system failure impacted the council’s ability to manage its finances, the insider said: “We were withholding thousands of supplier payments because we couldn’t make any payments. We didn’t have any direct debits for cash collection. We had no cash collection, no bank reconciliation. When you do a project of this size, you must have your financial reporting and you must have a bank reconciliation system that tells you where the money is, what’s being spent and what’s being paid.”
Since going live, the Oracle system effectively scrambled financial data, which meant the council had no clear picture of its overall finances.
The insider said that by January 2023, Birmingham City Council could not produce an accurate account of its spending and budget for the next financial year: “There’s no way that we could do our year-end accounts because the system didn’t work.”
A three-year-old issue
The June 2023 Birmingham City Council report to cabinet stated that due to issues with the council’s bank reconciliation system (BRS), a significant number of transactions had to be manually allocated to accounts rather than automatically via the Oracle system. However, Computer Weekly has seen an enterprise resource planning (ERP) implementation presentation given in 2019, which shows that the council was made aware of these issues at that time, three years before the go-live date.
The 2019 presentation slide deck shows that Oracle’s out-of-the-box BRS did not handle mixed debtor/non-debtor bank files. The workaround suggested was either a lot of manual intervention or a platform as a service (PaaS) offering from Evosys, the Oracle implementation partner contracted by BCC to build the new IT system.
The lack of a functioning BRS has directly contributed to the council’s current financial crisis. In BCC’s April 2024 audit report, councillor Grinrold said: “We couldn’t accurately collect council tax or business rates.”
Responding to the allegations, a Birmingham City Council spokesperson said: “We recognise that the challenges faced since the implementation of the Oracle system in 2022 have been frustrating, particularly for our finance and people services staff, and ultimately the people the council serves. At the time, we apologised unreservedly to those affected. We have worked to significantly strengthen governance, to understand issues and learn lessons from what went wrong.”
As of April 2024, it is believed the manual intervention needed for the bank reconciliation process is costing the council £250,000 per month.
When asked about this cost, Birmingham City Council said: “The indicative cost for Oracle work is a high-level estimate based on planning work performed so far and represents a worst-case planning scenario. This includes Oracle subscription/licence costs, IT running costs and business running costs, as well as the expected costs for reimplementation.
“We recognise that further work and investment is significant to resolve issues identified, that a properly functioning finance and HR system is crucial to the effective running of the council.”