Birmingham council leader admits £100m budget hole in ERP upgrade

Birmingham City Council’s new council leader has informed local newspapers of spiralling costs in a major enterprise resource planning (ERP) upgrade project.

In an interview given to the Birmingham Mail, city council leader John Cotton described the “disastrous” Oracle system, which has left taxpayers with a £100m bill.

Although details of the problems the council faces have not been revealed, the IT problems stem from an ambitious upgrade of an SAP system, which the council has been running since 1999. The council admitted that significant resources will be required to arrive at a position where the system can be fully implemented. “We estimate that the final costs of this will be in the region of £80m to £100m,” the council told Computer Weekly. “This will be over three years.”

In 2006, Birmingham City Council signed a strategic deal with SAP, Capita and Axon in what, at the time, was the largest local government IT transformation project in Europe.

Last year, Peter Bishop, director of digital and customer services at Birmingham City Council, discussed the implementation, which involved migrating from the council’s SAP ERP to Oracle.

In a webinar posted on YouTube, he described the SAP-based platform Oracle was replacing as being unable to meet the challenges of customers. “It’s not intuitive; it’s a very poor user experience,” said Bishop. “We’re too heavily reliant on expert users to extract and manage information.”

This platform, based on SAP, has been used by the council since 1999. “We’ve invested heavily in it as part of our strategic partnership formed in 2006, which ended in 2019,” he said, adding that the old system supported a raft of business processes in human resources, finance and procurement, and been heavily customised. It also operated a payroll bill of £700m annually, processing 26,000 payslips, handled supplier invoices and receipting, and integrated with 140 other council systems. In the video, Bishop said the various modules did not talk to each other, which was among the reasons to migrate to a new platform.

In 2017, Bishop said Birmingham City Council put together a business case for migrating to a new system. Discussing the complexity of the migration, he said: “Data migration is a particular challenge. You’ve got so much data that’s been so heavily customised and all the feeder systems both in and out.” This, he said, presents a significant challenge.

At the time the webinar was run, Bishop said he was confident the council would meet the April 2022 deadline even though the ERP upgrade required a large data migration project. “Things may still go wrong,” he said. “We're all fingers crossed, and we’ve got a very good process and a set of partners who know what they’re doing.”

The council said it’s currently working at pace, and has developed a plan which focuses initially on stabilising the situation and optimising the implementation of Oracle.

“Whilst this further investment is substantial, the proper functioning of Oracle, and its role in financial and people management is crucial to an organisation of Birmingham City Council’s size, with a gross revenue budget of £3.4bn per annum,” the council said.