When Birmingham City Council filed its Section 144 notice this week, declaring itself “essentially bankrupt”, there were many things to blame, but one thing that can’t be overlooked is its big, eye-wateringly over-budget ERP implementation bill.
Originally set to cost £19m, the council had partnered with Oracle to implement a new ERP and HR system, migrating from a legacy SAP ERP. But, the project quickly swelled in costs, rising up to £100m in what can only be described as a worst nightmare implementation. Originally set to go live in December 2020, the project was met by multiple delayed go-lives, pushed back to April 2022 and then again to 2024.
As significant elements of the Oracle project were delayed – including the council’s ability to issue invoices to businesses, it was reported in the Birmingham Mail that “the council is at times unaware who owes them money, and have been using credit cards to pay outstanding invoices.”
Originally meant to help the council streamline payments across its public services, the project had no doubt gone south.
Birmingham is not the only council struggling with ERP implementations. Surrey County Council also suffered multiple delays to its £30m ERP project, switching from SAP to Unit4, and had originally advertised the contract for £40m. Leeds City changed its tack after already kicking off procurement, switching from a single solution overhaul strategy to a phased replacement of core systems.
For Birmingham, when Prime Minister Rishi Sunak was asked about the possibility of emergency funds to help the council, he said it was “not the government’s job to bail out the council for its financial mismanagement” and it should “do a better job of managing the figures properly and delivering good quality services to residents”.
Harsh words dished from Rishi, but perhaps he is right, as in a wash of badly managed figures and expectations, there might be unrealistic hopes placed on ERP vendors to be the cure to all chaos.
What seems to be the elephant in the room here is that councils don’t know what they want. As much as a vendor can offer the tools to automate the process, if the business process is innately flawed and change management is not onboarded correctly by internal council agents, the project, no matter who the partner, vendor, or constituents, might as well be doomed to debt.
Before more councils are drowned in a similar threat of technology overspending, perhaps it’s time for a good think about what these projects hope to achieve prior to signing the dotted line.
