close
close

Ellison’s exemplary SAP-to-Oracle region rules out Oracle divestment • The Register

Birmingham City Council – Europe’s largest local authority serving more than a million customers – has agreed to redeploy an Oracle Fusion system following a failed rollout that saw costs rise by more than £100m pounds sterling ($125.6 million), and the authority could not meet. statutory duties.

In 2021, Oracle founder and CTO Larry Ellison named Birmingham City Council as one of several successful wins for migrating very large SAP ERP customers to Oracle Fusion.

The council is struggling to get the current heavily customized implementation, which went live in April 2022, “secure and compliant” so it can understand its financial position and produce auditable accounts.

Last June, a report to the cabinet said it would also develop an updated delivery plan that would include “systems integration work that will require a return to a more ‘promotional’ Oracle solution.”

However, earlier this year the council’s audit committee heard it was still deciding whether to redeploy Oracle or look for another solution.

Philip Macpherson, Oracle’s program lead for the council, said the team would conduct “analysis to really weigh the pros and cons around it, to kind of make the case for (Oracle’s) reimplementation.”

In a report to cabinet today, the council said the work was being completed without considering other suppliers in the market.

“An extensive business requirements collation and assessment exercise took place as part of the initial acquisition, which confirmed that Oracle was a good fit for the Council. This was recently reconfirmed by the completion of the Cloud Fit Assessment, which also verified that the Requirements could be met by out-of-the-box Oracle processes. There is therefore no reason for the board to repeat this costly and time-consuming market exercise or reconsider its outcome,” the report said.

As well as working to make the current custom deployment fit for purpose, the council is to launch a procurement for a new Oracle delivery partner to “scale, implement and work with the Council to deploy the initial solution by March 2026 and run the service. for another 3-5 years.”

The new delivery partner – whoever it is – will not be the only third party to benefit from the disaster. Oracle Consulting, Gartner, PwC and KPMG also worked on the project, as well as original partners Insight Direct (ULK) and Evosys.

The document says it will be delivered to the market through an “established public sector framework” and calls for £12.7 million ($15.9 million) in funding for the first phase of re-implementation.

But the total cost of re-implementing Oracle is uncertain. In its 2018 general business case, the council put the number at around £15m ($18.8m). This rose to almost £20 million ($25 million) in the case of the entire business study in 2019.

A report in February said the council had approved a further £45m ($56.5m) for the 2024/25 and 2025/26 financial years, “in addition to the £86m (108 million dollars) budget approved to date.”

Now the council’s cabinet believes it may not need all the money. “Work is ongoing to confirm the end-to-end cost to date and the projected final cost of the solution, taking into account the initial implementation, manual workarounds, interim fixes and re-implementation. This includes confirmation of the remaining funding level of the £86. million previously approved by the Cabinet, which will be used before additional funds are accessed,” the report said.

However, the scope of the project is to be reduced. The previous HR and Finance system – a SAP-based system first implemented in 1999 – supported finance, HR and payroll for schools.

“While the board remains strongly committed to ensuring that schools receive the best possible service to support their activities, it has concluded that it should not take steps to continue the current Oracle-based arrangements in the re-implementation of the Oracle system,”, said the latest Cabinet report.

It said that “the Oracle system is not suitable to provide these services to schools in the long term” because, even after re-implementation, an “Oracle-based solution for schools would be relatively expensive and inefficient”. The council said it would “identify the best options for schools to replace the council’s Oracle Finance and HR based services”.

Escalating ERP project costs, along with the failure of the accounting system, contributed to the council effectively declaring bankruptcy last year. A bill of up to £760 million ($954 million) to settle equal pay claims also contributed to the de facto bankruptcy. This figure is now disputed. ®