Birmingham City Council's (BCC) Oracle Cloud migration will cost an estimated £216.5 million ($280.4m) by April 2026.
This is up drastically compared to the initial expected implementation cost of £19 million ($24m) when the project began, according to a report by the Sheffield University Management School's Audit Reform Lab.
The BCC began migrating to the cloud with plans to use the Oracle Fusion platform for its finance and HR operations, aiming for a December 2020 launch. This was then delayed to April 2022, which was also missed.
Ultimately, the Oracle project's cost rose from an initial £19 million ($24m) to £38m ($48m), and following ongoing issues BCC announced in June 2023 that it would have to spend an additional £46.5m ($58.7m) to rectify the problems that were being experienced, including being unable to file auditable accounts, as well as being unable to detect fraud for a period of 18 months.
In July 2024, UKAuthority reported that BCC had signed another contract with Oracle valued at just under £10m ($13.07m) that would run until December 2026. At that time, it was estimated that the system was still around two years away from working as it should, despite a relaunch.
This Audit Reform Lab report, however, suggests costs will actually be far greater, as first reported by The Register.
The report estimates that the true cost will reach £216.5m in April 2026.
"None of the anticipated direct savings were delivered, and, furthermore, due to the inability to monitor budgets, a significant amount of wider savings had to be written off. In total, £69m ($90.2m) of savings in 2023/24 were written-off, along with unspecified further savings in future years," the report said.
According to the report, the total impact on the General Fund as of March 2024 totals £171.5m, while the budget covering the period to April 2026 is an additional £45m.
It added: "Other costs, such as fines for late payment of suppliers, are unknown. The full direct and indirect costs of the failed Oracle implementation may run to hundreds of millions."
In September 2023, the BCC issued a Section 114 notice, effectively declaring bankruptcy. This was followed by a £149m cut from the 2024/25 budget, assets sales of £750m, and a capitalization direction of £1.255 billion.
However, the council put down much of this to a £760m equal pay liability as the cause of financial problems. The report, instead, suggests that blame should be put on the failed Oracle implementation, coming to the overarching conclusion: "there is, therefore, no evidence that the financial difficulties of the Council were driven by new equal pay claims, and very considerable evidence that they were driven by the Oracle failure, demand pressures, and price inflation."
In June 2024, the Oracle fiasco was put down to a series of project management failures.
ComputerWeekly reported that there was a systemic lack of leadership, with those in charge of the project failing to listen to concerns raised by a number of parties,
John Cotton, leader of Birmingham City Council, responded to the latest report: "We must take responsibility for the failings that have contributed to our current difficulties, but the mistakes made in Birmingham have not occurred in a vacuum.
"Report after report shows that there's a national crisis in local government caused by 14 years of neglect from the previous Tory government, combined with major rises in demand and cost-led pressures."
