Grant Thornton released a detailed 66-page report on a failed Oracle Fusion ERP implementation at Birmingham City Council. This setback has left the council without a working finance system until at least 2026.
The report highlights that the costs related to the failed Oracle implementation will exceed the original budget by at least £90 million, factoring in the funding needed to fix the issues. The reimplementation is unlikely to wrap up until next year or later. When the council’s steering committee decided to launch the system in April 2022, they didn’t fully grasp the inherent risks. This oversight led to a failure that significantly affected the council’s financial control, meaning they struggled to manage their finances through 2022 and into 2024.
The report identified serious weaknesses in the governance and management of the Oracle program. High turnover among both senior and operational staff only exacerbated these issues. Before Oracle, Birmingham City Council had run SAP’s ERP system ECC6 since 1999, adapting it to their needs, with Capita hosting it from 2006. In 2015, SAP introduced S/4 Hana and announced that support for the older system would end in 2025, later extended to 2027.
Faced with this choice and based on advice from Socitm Advisory, the council chose to shift to the cloud-based Oracle Fusion, announcing their decision in July 2019. They also signed contracts with various companies for program support, including Insight UK Ltd, Evosys, and Egress.
To ensure project oversight, the council brought in Ameo Professional Services in January 2021. However, Grant Thornton pointed out that the effectiveness of Ameo and the other partners is under review in a separate report, which remains confidential.
In terms of finances, the council noted that maintaining the SAP system cost £5.1 million annually, summing up to £46 million over nine years. The Oracle system promised some savings—£563,000 in 2022/23 and £788,000 in 2023/24—in hopes of totaling £10.9 million in savings by 2032.
In August 2019, the council terminated its contract with Capita and transitioned most IT services to an in-house team. However, developing in-house Oracle expertise proved tricky. After launching Oracle in 2022, the council faced serious accounting issues that required manual intervention. By 2024, they budgeted £5.3 million just to support and fix the Oracle system.
The report made it clear that while the failure of Oracle Fusion contributed to the council’s financial troubles, it wasn’t the sole reason. Birmingham City Council effectively went bankrupt in 2023. The implementation strayed from the intended design principles, opting for customizations that complicated matters instead of sticking to standard Oracle functionality.
One critical finding involved a lack of focus on the business culture and change management needed to help staff adapt to the new system. End-users were not adequately prepared to work with Oracle. The report indicated a culture within the council that discouraged the sharing of bad news, a situation worsened by high turnover in leadership roles. To succeed in future projects, the council needs to foster a culture of transparency and support.
A meeting is scheduled for 11 March 2025 for the council to discuss the Grant Thornton report and gather insights on governance, program management, solution design, business change, and culture moving forward.