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Birmingham City Council, Europe’s largest local authority, faces a deepening crisis as its ambitious Oracle software rollout grapples with persistent delays and spiraling costs, now projected to hit a staggering £170 million. The latest setback involves the new CivicaPay income management system, whose recent testing revealed a mere 73.3 percent pass rate and 10 critical unresolved issues, falling significantly short of the council’s mandated 95 percent pass with zero severe defects.
Deepening Crisis: CivicaPay System Faces Latest Delay
Consequently, the CivicaPay-based system, intended to replace the problematic banking reconciliation platform launched alongside Oracle Fusion in 2022, will not commence operations before November at the earliest. Philip Macpherson, the Oracle program leader, attributed most identified defects to data quality concerns, noting that a system refresh in September had addressed some issues. Despite these efforts, the inadequate test results compelled the project board to push back the go-live date once again.
The Oracle Saga: From £20 Million Promise to Financial Catastrophe
The council’s IT woes began in April 2022 when it migrated from its legacy SAP system to Oracle Fusion. This transition, initially planned as a straightforward “out-of-the-box” implementation, quickly became mired in complications due to extensive customizations, including a bespoke reconciliation solution that failed upon launch. This critical failure of Oracle’s financial management platform was a significant contributor to Birmingham’s effective bankruptcy declaration in September 2023, alongside substantial equal pay liabilities. As a result, a complete reimplementation of the Oracle software became necessary, with a new target go-live date of April 2026.
A Legacy of Missteps and Manual Work
To mitigate the immediate operational challenges, Birmingham City Council introduced the CivicaPay Income Management System (IMS) in March 2024, initially promising its delivery by March 2025. However, this deadline has been repeatedly missed, first shifting to April, then September, and now beyond into November. The prolonged absence of a fully functional reconciliation system has forced staff to manage essential processes manually, leading to substantial additional expenditures. The 2024/25 budget already allocates £5.3 million specifically for backfilling positions and recruiting temporary staff to cope with the increased manual workload.
Escalating Costs and Mounting Frustration
Frustration boiled over at a recent Audit Committee meeting, where elected officials expressed dismay after learning of the latest delay through media reports before receiving official briefings. Conservative councillor Meirion Jenkins voiced sharp criticism regarding the enormous cost overruns. He highlighted that the project’s initial budget was under £20 million. “We’re now running at £170 million,” Councillor Jenkins stated, “and the officers are again telling us, ‘don’t worry, it’s in hand.’ I think we do need to worry. The audit committee was misled the first time round. Now it’s happened again.”
The £170 Million Breakdown
The initial budget, approved in 2018, stood at £19.965 million, earmarked for three years of development concluding in the 2021 financial year. This figure escalated to £40 million due to initial delays that pushed the Oracle Fusion go-live date to April 2022. By 2024, when a full reimplementation of the Oracle software was deemed essential, the projected costs had already climbed to £131 million.
Carol Culley, the council’s executive director of finance, clarified that the current £170 million projection encompasses a broad range of expenses. This includes licensing and operational costs for the existing Oracle system, alongside the significant expenditure for developing a completely new platform. Additionally, a £20 million provision has been set aside for the 2026/27 financial year, which Ms. Culley anticipates will decrease in subsequent years as the new system matures and requires less extensive support.
Government Oversight Demands Caution
The troubled Oracle project continues under the stringent oversight of central government commissioners, appointed following Birmingham’s declaration of effective bankruptcy last year. Myron Hrycyk, who serves as the Crown representative for major tech firms including Oracle, IBM, and Microsoft, emphasized the importance of quality over haste. “It is a complex implementation, and it’s right to be cautious about it,” Mr. Hrycyk advised. He warned, “If you rush at this hoping to save some funds, you will probably pay for it 10 or 20 times over in sorting it out afterwards. I really urge you not to rush this. Get it right.”