Earlier this month, councillors had an opportunity to discuss the past and current issues faced by Birmingham City Council in its implementation of an enterprise resource planning (ERP) system from Oracle.
The council’s extraordinary meeting, held on 11 March, gave council members a chance to voice their concerns following publication of a Grant Thornton report in February looking at what went wrong with the implementation of the Oracle ERP system. Work will continue on the reimplementation, which is due to go live in April 2026. During the meeting, council members sought reassurance that this deadline would not slip.
Councillor Albert Bore noted that the council previously ran a 10-year joint venture with Capita to run an SAP ERP system. This ended in 2018, when the council took the decision to insource its IT function and move to a cloud-based Oracle ERP system.
During this time, Bore said IT expertise was held in the council, but what followed was, according to Bore, “a predictable debacle”.
A complete mess
Councillor Meiron Jenkins, who has previous experience of implementing ERP systems, said: “Implementing ERP systems has been my life for 40 years and over that time I’ve seen some pretty bad implementations, but this really is a one-off. It is truly remarkable what a complete mess you made of implementing it.”
The findings of the Grant Thornton value-for-money report into the Oracle ERP project highlight serious governance concerns, lack of ownership among senior executives and a culture that deterred negative concerns being raised.
As Jenkins points out, if senior managers are not closely involved in the details of an ERP implementation, the chance of it going wrong increases significantly. “And that’s what’s happened here,” he said, referring to the Birmingham City Council’s implementation of Oracle to replace SAP.
Jenkins said that in 2020 he collaborated on a scrutiny inquiry into the Birmingham City Council Oracle project before it began. “We made some recommendations. If only those recommendations had been followed, so many of these problems would have been avoided,” he said.
In his 2020 letter to councillors about the forthcoming Oracle project, Jenkins included a link to an article covering great ERP disasters. “I put it in because I thought [they could] read these great ERP disasters – and these were big companies, run by experienced senior people, who had gone so badly wrong.”
As well as failings of senior management, some councillors raised concerns that the external professionals paid to audit the council should have put more emphasis on the risks being carried by the council due to its ERP implementation.
Questions on external audit
One councillor said to Computer Weekly: “Were the senior executives not being truthful to the external auditors? I think this is one of the things we need to understand as an organisation.”
Councillor Lee Marsham said: “We should all be alarmed at this report because, regardless of our political leanings, we were all misled. In the spirit of cross-party working, I want to praise councillor Jenkins who asked the right questions in the audit committee and was told by very senior officers, ‘Nothing to see here’.”
Marsham also praised the work of councillor Paul Tilsey as vice-chair of the audit committee, and the previous audit committee chair, councillor Fred Grindrod, who he said “challenged officers and was told repeatedly that he was wrong to do so”.
Marsham pointed out that in March 2023, the external auditor reported that Oracle was not a significant risk. “Our external auditors [Grant Thornton] last week revealed to the audit committee for the first time that they were not told the full facts either. Could our external auditor, a corporate partner, have done more?” he asked.
Tilsey went further, saying: “I’ve read the report very, very carefully. There is a criticism I would have to make of Grant Thornton, because in the report it says quite clearly that senior officers were not responding to Mark [Stocks] and his team.” Stocks, who works for Grant Thornton, is Birmingham City Council’s external auditor. “I think I might have taken some very affirmative action in that kind of situation,” Tilsey added.
Six months after the March 2023 auditor’s report, there appears to be a very clear indication that the auditor was seeking greater clarity on the project and the reimplementation. September 2023’s external auditor’s report prepared by Grant Thornton lists a statutory recommendation that the council should set a target date for the completion of the “safe and compliant” phase of the Oracle implementation. “We consider that this should be completed by 30 November 2023,” the auditor stated.
Another statutory recommendation stated: “The council should consider the capacity of its senior staff to deal with the Oracle ‘safe and compliant’ and ‘reimplementation’ phases alongside the other competing pressures.”
The latest auditor’s report recommends that the council ensure additional resources are provided to ensure the “critical project” is completed at the earliest opportunity. “This may include additional internal or external IT capacity and capability. In the longer term, the council will need to ensure that it rebuilds its own IT capacity and capability,” the report stated.
A spokesperson for Grant Thornton UK said: “We note the comments and questions raised by councillors in relation to our report in the public interest; however, we do not agree with some of these comments and believe they stem from a fundamental misunderstanding of the responsibility of auditors amongst certain council members. As has previously been explained to the councillors, auditors are not responsible for the implementation of council financial systems – this is the responsibility of the officers and members.”
The National Audit Office code of practice sets out the responsibilities of auditors – as Grant Thornton notes, there is no requirement to audit the implementation of financial systems.
“We note that other councils implement financial systems every year without auditor involvement and without the level of failure that has occurred at Birmingham,” the spokesperson said. “Given the previous failure to effectively implement Oracle, we continue to monitor the situation and whether we should take the unusual step of carrying out an audit of the reimplementation.”
Still running late
During the extraordinary meeting, councillor Jaime Scott stated that Birmingham’s income management system (IMS), which is one of the most fundamental parts of how the council understands its financial position, is running behind its original timescale for implementation.
Previously, Grant Thornton auditor Stocks discussed the workaround the council had put in place with its existing bank reconciliation system (BRS). When asked about the delays of the new IMS, Stocks said: “You can’t go live until because you have your workarounds for the current cash system. You have to delay until you’re ready and we actively encourage all our clients to delay until all the testing is done,” adding that unless the system is running properly, “all you will be doing is replacing one dysfunctional system with another”.
Speaking to Computer Weekly, Scott said that after a conversation with the Oracle project lead, the Oracle implementation team is confident the IMS will be ready. But, he added: “We need to keep a check on it to ensure there’s not any further slippage, because if these things slip, we could easily then be into Christmas.” Such a slippage could impact the new provisional live date of April 2026.
