How Birmingham’s $48M Oracle ERP project turned into an epic failure

Birmingham City Council’s (BCC) troubled enterprise resource planning (ERP) system, built on Oracle software, has become a case study of how large-scale IT projects can go awry. The system, intended to streamline payments and HR processes, is now “unlikely” to function correctly before 2026 — four years after its 2022 launch.

The project involved replacing the city council’s long-standing SAP system with Oracle Cloud.

The catastrophic failure of the project, which has ballooned from an initial $48 million (£38 million) investment to an estimated $114 million (£90 million) after including re-implementation costs, stands as a stark reminder of how large-scale enterprise software projects can spiral out of control.

In a damning audit report, Grant Thornton has exposed how the project implementation turned into a cautionary tale of project mismanagement, highlighting critical failures in governance, technical oversight, and vendor management that continue to impact the council’s core operations.

According to the report, the implementation has “fundamentally impacted the Council’s financial management and its operations,” forcing the council into a costly re-implementation phase that has more than doubled the project’s original budget.

Cost overruns and delays: where did it go wrong?

The audit revealed that the project’s budget ballooned from an initial £19 million to over £90 million, with delays pushing the system’s full functionality to 2026—four years beyond the planned 2022 launch.

“Integration with Oracle’s systems proved more complex than expected, leading to prolonged testing and spiraling costs,” the report stated. Payroll integration issues, combined with the volume and quality of data migration, required extensive retesting, further inflating costs.

BCC’s heavy reliance on Oracle and external consultants became a double-edged sword. While third-party expertise was essential, it also weakened internal control over the project’s financial and operational outcomes.

“The council’s reliance on external support undermined financial controls and increased costs,” the audit noted. Licensing and customization fees added further strain to the budget.

The governance-expertise gap

The investigation uncovered a governance structure plagued by fundamental weaknesses.  At the heart of Birmingham’s ERP crisis lies what we might term the “governance-expertise gap” – a critical disconnect between oversight responsibilities and technical understanding. The absence of Oracle expertise within the council’s digital department created a dangerous scenario where those responsible for governance lacked the technical foundation to evaluate and challenge their implementation partners effectively.

This governance-expertise gap manifested primarily through the council’s inability to function as an “intelligent customer,” which severely compromised their capacity to manage and direct their system integration partner, EvoSys.

Moreover, the lack of technical oversight led to the acceptance of extensive customizations that violated their own “adopt not adapt” principle, accepting extensive customizations to align with existing business processes based on their legacy SAP system. Change requests affecting critical aspects of the solution were accepted late in the implementation cycle, creating unnecessary complexity and risk.

The council’s approach to governance showed a startling lack of independent oversight. Despite the program’s complexity and critical nature, no review was undertaken by Internal Audit until just before go-live.

When this review finally occurred and identified key issues, its findings were ignored, highlighting a systemic failure in the council’s risk management approach, the report added.

Grant Thornton’s is not the first audit report to question the systemic flaws involved in the ERP implementation. There are multiple reports including one from a manager at BCC highlighting the discrepancies at the Council, way back in June 2023.

Vendor management crisis

The relationship with system integration partner EvoSys exemplifies the project’s troubled vendor management. Despite providing a senior director to advise council officers and recommending go-live, EvoSys’s actual contribution to program discussions appears minimal in meeting minutes and other documentation.

A particular point of concern centers on the custom Bank Reconciliation System (BRS). The system has not functioned effectively since implementation, with the council identifying posting errors in April 2022.

However, EvoSys claims they weren’t informed of these issues until January 2023, after their support contract had ended, highlighting serious communication breakdowns between the council and its key vendor.

Culture of silence and suppression

Perhaps most concerning is the report’s revelation of a pervasive culture where “bad news was not welcome.”

The audit found that reporting consistently presented an optimistic view, burying serious risks and challenges in supporting materials where they were less likely to attract attention or scrutiny.

Staff concerns were systematically downplayed or ignored. The report notes that “concerns raised went unheard or were downplayed” across all levels, from members and staff to the program team.

This culture of suppression prevented early identification and mitigation of serious issues that later proved catastrophic.

Change management: The overlooked critical path

The council’s approach to change management reveals a common misconception in enterprise software implementations – treating user training and stakeholder engagement as secondary considerations rather than critical path items.

This manifested through training programs that didn’t reflect the actual system configuration, combined with late engagement of key stakeholder groups and insufficient attention to business process changes.

Technical expertise must be embedded within governance structures, not relegated to merely advisory roles. Cultural transformation should precede technical transformation, while vendor relationships require structured communication frameworks and clear accountability measures. Change management deserves elevation to a primary project workstream.

The project’s setbacks have had far-reaching consequences.  The council’s financial position was already strained, with ERP costs contributing to its September 2023 bankruptcy declaration.

Opposition leaders have been vocal in their criticism.

“This was an abdication of responsibility on a grand scale, with costs once again falling on Birmingham residents,” BBC reported quoting Robert Alden, leader of the Birmingham Local Conservatives. Taxes are set to increase by 7.49% from April 2024, adding to the public backlash, the report added.

The re-implementation challenge

Birmingham’s current re-implementation effort presents an interesting test case for these principles. The success or failure of this second attempt will likely depend on whether the council can address not just the technical issues, but the deeper organizational and cultural patterns that contributed to the initial failure.

While the road to full ERP functionality remains long, BCC is working to address the issues identified in the audit.

“We have significantly strengthened governance, addressed system issues, and are committed to learning from past mistakes,” BBC reported quoting a council spokesperson.

As public sector organizations increasingly adopt digital solutions, the lessons from BCC’s ERP implementation serve as a reminder that success requires not only advanced technology but also effective governance, skilled project management, and realistic expectations.