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Birmingham sets aside £25m for Oracle transformation

Council’s budget report shows that £5.3m is needed to continue support and manual intervention on troubled Oracle system

Birmingham City Council’s 2024/25 Budget setting for general fund revenue account report shows the council has set aside £25m this financial year on its Oracle transformation programme.

During a meeting held today (27 February), council leaders discussed Birmingham’s Improvement and Recovery Plan (IRP), which sets out the actions necessary to bring about change and restore public trust across the authority’s functions. A key part of the IRP is Birmingham’s financial recovery plan, which aims to address the exceptional financial challenges and risks facing the council. The budget report highlights stabilisation of the Oracle system as a major component of this plan.

While other councils around the country are facing budget shortfalls, council leader John Cotton discussed some of the issues that are unique to Birmingham, including its Oracle system. “I will continue to be absolutely clear that this is something this organisation needs to own and get right,” he said.

The council has faced serious challenges implementing an Oracle ERP and HR system to replace a heavily customised SAP system that was originally implemented in 1999. The problems with the ERP systems have required manual interventions in the financial planning process, which have impacted efforts by the council to put in place an effective financial recovery plan.

For instance, the budget report shows a deterioration in bad debts of £12.5m. While this shortfall is due, in part, to the cost-of-living crisis, the report states that “issues with the implementation of the Oracle ERP finance and HR system also delayed enforcement action”.

Since its implementation in April 2022, the Oracle system has continued to post transactions incorrectly, which has meant that significant manual work has been required to ensure the finance system is accurate. The budget report shows that for 2024/25, the council has set aside £5.3m for Oracle support including manual work.

Chief financial officer Fiona Greenway, who is also the Oracle senior responsible officer at Birmingham City Council, said problems with Oracle ERP need to be remediated to ensure the budget is credible and deliverable. “We need to accelerate that,” she said. “We’ve got to prioritise income management where we have most of the issues such that the council has a suitable and stable financial management system, because without that, it’s difficult to make the key decisions you need to make.”

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The council has already budgeted £85m to help sort out the Oracle system. It’s now stated it needs a further £45m for significant work required to stabilise and improve the operation of the Oracle-based ERP and HR systems.

Councillor Robert Alden asked if the £45m was merely “a sticking plaster” and more money will be required in two years’ time.

The council is currently assessing whether to continue with the existing Oracle ERP implementation or reimplement it using Oracle best practices. This would potentially require internal business processes being reworked.

The council aims to have a functioning financial system by 1 April.

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