B'ham Council's SAP system - local MP remains defensive

The brave and campaigning Birmingham MP John Hemming is continuing to use an online forum to defend the city council and its SAP-based “Voyager” system.

For nearly a month Hemming has regularly posted defensive comments to “The Stirrer”, a forum that’s popular with employees of Birmingham City Council.

Hemming is a Liberal Democrat MP where the local council – the largest local authority in Europe – is run by a coalition of the Tories and Lib-dems. The Lib-dems want to maintain a reputation for competence in helping to run some local councils.

So Hemming was moved to join The Stirrer’s forum after the council went live with the SAP financial system last October and it quickly built up a backlog of unpaid invoices to its suppliers. The IT service including Voyager is run by Capita and the council through a joint venture company Service Birmingham.

At one point the backlog stood at 30,000 unpaid invoices but Hemming now says it’s down to 10,000. Baliffs were called into at least one site and there were allegations that some suppliers were waiting months to be paid.

The problem for the council was not the backlog only. It was the comments on The Stirrer which in some cases were informed.

This is one of the dozens of posts:

“The system prior to Voyager was Glamis which is a SAP system and introduced in October 1999… Like all public sector organisations the council is subject to intense financial pressures which requires it to review how its resources are used. One way of releasing resources to ‘frontline services’ is to make better use of IT. The City is undertaking a Business transformation process which it has advertised will release £800m+ of benefits for £140m of investment (mainly consultants).

“The City has set itself an ambitious timetable. Voyager had to start on October 29th despite officers at all levels of the organisation having and expressing concerns. They were reassured that the system would be up and running with a few teething problems but nothing significant. The reality has been somewhat different….

“In virtually every facet of the finance area I am reliably informed that there have been extensive problems which three months after the system going live means that the payment teams have had to have additional resources, agency staff, working overtime and weekends, to assist in the processing of invoices, and still there is a backlog…These may be teething problems but they cover fundamental financial process and control areas.

“Stephen Hughes [Chief Executive of Birmingham City Council] has been quoted as saying that he has a very real and personal interest in the transformation process…Mr Hughes quotes the late F1 racing driver Gilles Villeneuve who said that if he didn’t feel out of control he wasn’t going fast enough. This philosophy is being use in this process…

“The whole transformation process has lofty aims but staff at all levels of the organisation have very real and honest concerns about how this process is being handled and the accuracy of some of the information which is being shared between officers and members.

“Budgets have been reduced by millions of pounds at the start of the financial year for Business Transformation Services savings which have not yet been realised, but members and senior officers have been assured by Service Birmingham (CAPITA) that they will be found during the course of the year.

“The City is only two months from the end of the financial year and amongst most officers and some members of all parties there is real concern that these savings will not be found and that the City will end up with embarrassing overspends…”

To his credit John Hemming has been listening to criticisms and has sought answers from council officers; and it has been a partial success for the council. Through Hemming the council has had a semi-official voice on the forum. It’s a measure of the success of some blogs and forums that the progress or otherwise of major public sector schemes can be discussed by sometimes well-informed individuals in near real-time.

But Hemming’s posts are limited largely to passing on the council’s assurances that it is coping well. There is more to the story.

When an IT system hits problems that affect the public – in Birmingham’s case its suppliers, and the council staff who deal with complaints – any credible explanation to the world outside should ideally comprise three sides: the good, the bad and what people wouldn’t know unless they have the knowledge to ask the right questions.

Hemming has been passing on only the good news. This is some of what he has said on The Stirrer:

“There is a backlog which is being cleared. The place where the bailiffs were sent in was one involving someone being paid 3 days late. …

“They [Birmingham City Council] process around 30,000 [invoices] a month. So a backlog of 18,000 is just over a fortnight.

“… it appears that things are getting sorted out.

“Figures for last week:

-Volume of invoices processed this week 23357 (last week 17799)

– 7724 more invoices processed than received (last week 3424)

– Purchase Order compliance has risen from 35% to 55%

– Purchase order compliance 16,22,35,55 in last 4 weeks.

“To me these figures imply a backlog being cleared. Hence I see no reason for me to wade into the technical details…”

“Can I suggest that anyone who has [a] specific issue to raise about the system emails me. It should not require anonymity to raise concerns about the system.

“New computer systems can cause problems. If I believed that things were not getting sorted out then I would look at the situation in more depth. Obviously as people get to understand the new system better they end up being more capable of using it. This can be seen in last week’s trend of average invoices processed per person:

Mon – 67

Tue – 67

Weds – 71

Thurs – 105

Fri -113

“What is clear from the figures is that some people who were only processing say 6-9 invoices on the Monday/Tuesday were processing 70 or more on the Friday. There are also people managing to process over 200 invoices in a day. What this demonstrates is that clearing the backlog should accelerate although there is an issue with departments authorising payment. That, however, is a control issue that is important. Historically the council’s systems of control were not that tight. (Although we did stop the £3m fraud before the attempt became a reality).

“Backlog clearance accelerates again.

– Backlog cleared 11-2 – 15-2 8284, previous week 7724

– Invoices processed in total 26149 previous week 23357

– Purchase Order compliance is not doing that well under 40%

– Invoices awaiting directorate approval down from 15,101 to 12,781…

“The backlog was reduced by about 10,000 last week [posted by Hemming 26 February 2008] …

“For all that it matters the backlog should be eliminated by the end of this week.”

The “bad” not mentioned by John Hemming is how much it is costing to hire agency staff to help clear the backlog. What effect will this have on the planned savings from the partnership with Capita, Service Birmingham?

Then there’s the third element to credibly handling bad news: volunteering information that people do not have the knowledge to ask the right questions about. In Birmingham’s case we don’t know how much attention is paid to checking the thousands of invoices that are arriving each week while the backlog is being cleared. And are backlogs of work building up elsewhere while staff are diverted to clearing unpaid invoices?

Hemming is doing the right thing in listening to criticisms and trying to get the answers. And the council deserves recognition for coping well in an apparent administrative disaster (coping well once the backlog became public knowledge).

But Hemming is telling only one side of the story, and the knock-on effects of IT-related failures are rarely so easily explained. Credible explanations need all three sides of the story. The other two sides are as yet untold.


SAP go-live leaves 18,000 unpaid bills at Europe’s largest local authority – what went wrong

The Stirrer forum on the Voyager system

Birmingham City Council’s bills unpaid as SAP project falters

Not now voyager

SAP-based voyager gets lost

Service Birmingham