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Oracle project close to bankrupting Birmingham

by on07 September 2023

No one saw that one coming

Birmingham City Council, the largest local authority in Europe, has declared itself in financial distress after an Oracle project costs ballooned from $25 million to around $125.5 million.

Contributing to the publication of a legal Section 114 Notice, which says the $4.3 billion revenue organisation is unable to balance the books, is a bill of up to $954 million to settle equal pay claims.

In a statement today, councillors John Cotton and Sharon Thompson, leader and deputy leader respectively, said the authority was hit by financial stress owing to issues with the implementation of its Oracle IT system. The council has made a request to the Local Government Association for additional strategic support, the statement said.

In May, Birmingham City Council said it was set to pay up to $125.5 million for its Oracle ERP system -- potentially a fourfold increase on initial estimated expenses.

The Oracle Fusion cloud-based ERP system project was to replace SAP for core HR and finance functions. Since 2018 it suffered from delays, cost over-runs, and a lack of controls. The council reviewed the plan in 2019, 2020, and again in 2021, when the implementation cost for the project almost doubled to $48.5 million.

When the project was switched on In 2021, Oracle founder and CTO Larry Ellison said Birmingham City Council was one of a number of successful wins to migrate large SAP ERP customers to Oracle Fusion.

However, earlier this year it was discovered that the Oracle system was not a product that is suitable for local authorities because it's very much geared towards a manufacturing organisation."

The previous SAP system had been heavily customised to meet the council's needs and it was struggling to recreate these functions in Oracle.


Last modified on 07 September 2023
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