Largest Local Government Body In Europe Goes Under Amid Oracle Disaster (theregister.com) 110
Birmingham City Council, the largest local authority in Europe, has declared itself in financial distress after troubled Oracle project costs ballooned from $25 million to around $125.5 million. The Register reports: Contributing to the publication of a legal Section 114 Notice, which says the $4.3 billion revenue organization is unable to balance the books, is a bill of up to $954 million to settle equal pay claims. In a statement today, councillors John Cotton and Sharon Thompson, leader and deputy leader respectively, said the authority was also hit by financial stress owing to issues with the implementation of its Oracle IT system. The council has made a request to the Local Government Association for additional strategic support, the statement said.
In May, Birmingham City Council said it was set to pay up to $125.5 million for its Oracle ERP system -- potentially a fourfold increase on initial estimated expenses -- in a project suffering from delays, cost over-runs, and a lack of controls. After grappling with the project to replace SAP for core HR and finance functions since 2018, the council reviewed the plan in 2019, 2020, and again in 2021, when the total implementation cost for the project almost doubled to $48.5 million. The project, dubbed Financial and People, was "crucial to an organisation of Birmingham City Council's size," a spokesperson said at the time. Cotton said the system had a problem with how it was "tracking our financial transactions and HR transactions issues as well. That's got to be fixed," he said.
Earlier this year, one insider told The Register that Oracle Fusion, the cloud-based ERP system the council is moving to, "is not a product that is suitable for local authorities, because it's very much geared towards a manufacturing/trading organization." They said the previous SAP system had been heavily customized to meet the council's needs and it was struggling to recreate these functions in Oracle.
In May, Birmingham City Council said it was set to pay up to $125.5 million for its Oracle ERP system -- potentially a fourfold increase on initial estimated expenses -- in a project suffering from delays, cost over-runs, and a lack of controls. After grappling with the project to replace SAP for core HR and finance functions since 2018, the council reviewed the plan in 2019, 2020, and again in 2021, when the total implementation cost for the project almost doubled to $48.5 million. The project, dubbed Financial and People, was "crucial to an organisation of Birmingham City Council's size," a spokesperson said at the time. Cotton said the system had a problem with how it was "tracking our financial transactions and HR transactions issues as well. That's got to be fixed," he said.
Earlier this year, one insider told The Register that Oracle Fusion, the cloud-based ERP system the council is moving to, "is not a product that is suitable for local authorities, because it's very much geared towards a manufacturing/trading organization." They said the previous SAP system had been heavily customized to meet the council's needs and it was struggling to recreate these functions in Oracle.
swapping one pile of manure with another (Score:5, Insightful)
No wonder there are problems.
Re:swapping one pile of manure with another (Score:5, Insightful)
It's easy to flippantly call these systems "manure" and, admittedly, they both have shortcomings. Issues that arise during implementation are seldom caused by these shortcomings. The blame can usually be laid in non-IT stakeholders being too inflexible to consider change in process and IT consultant's inability to demonstrate the benefits in process change. The whole thing will then devolve into finger pointing and blame, as costs continue to escalate and battle lines are formed.
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I have to disagree with this. A lot of times, a new vendor will promise like-for-like functionality on their platform, only to later find out that there's no feasible way to get there from here. That's when the change orders and T&M estimates balloon out to infinity.
Yes, the non-IT stakeholders are part of the problem in that they don't start with a list of what's really needed for the business and simply go the lazy route of dragging the old specs out to slap a new coat of paint on before posting as an
Re:swapping one pile of manure with another (Score:4, Interesting)
I have to disagree with this. A lot of times, a new vendor will promise like-for-like functionality on their platform, only to later find out that there's no feasible way to get there from here.
No the issue is in the statement of requirements. SAP vs Oracle they can both like for like each other and there's basically always a feasible way to get from A to B. The issue comes in when people highly customise something in ways that are not articulated during procurement. Yeah Oracle can replace SAP, and here's the price. *goes do* and then suddenly someone says "oh we previously customised that package to do Y in stead of X". Project team: Okay *implements Y instead of X* and writes that in the timesheet as an unexpected cost.
It's a classic example of "we can make it do anything you pay for it to do". These projects live and die on how much customisation the customer insists is required and too few people ever consider that if so much customisation is required for an industry standard tool then maybe it's their processes that are wrong.
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The issue comes in when people highly customise something in ways that are not articulated during procurement.
You nailed it. That's the root cause.
This is where mature organizations conduct lengthy feasibility studies that force vendors to prove they can do as promised, with UAT pre-deployments involving customers' IT, security and enterprise architecture, and vendors' engineers.
I've been involved in such feasibility processes, and man, that's when pesky details crawl out like roaches when you turn the light on.
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No one ever got fired for buying Oracle. /s
You can be assured that someone in Birmingham Council will, likely mid-tier/front line managers or IT teams, not the big culprits up the food chain.
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A lot of times, a new vendor will promise like-for-like functionality on their platform, only to later find out that there's no feasible way to get there from here.
I've seen this happening, and I say the blame sits squarely on both, the vendor's marketing and sales engineering teams as well as the customer's IT and Enterprise Architecture management.
There's supposed to be feasibility studies and UA deployments to verify all goes well, on customer supplied hardware and at vendor's expense, to verify that the product can indeed be deployed and customized (within acceptable expense parameters) to fit the customer's requirements.)
I've worked with tech companies that s
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The council should have taken the lessons of ACA (aka "Obamacare") and their "marketplace launch". That's what happens when the municipalities have unlimited amounts of money. It's actually our money and I would be livid if I found out that the town that I live in has paid Oracle Corp. millions of our tax money in order to run their office. I would be livid enough to vote against the current mayor on the next election. This
Funny thing is that
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Really? My impression is that SAP has been pushing large customers to move to using SAP HANA as the back-end database for quite a few years now. Yes, even before this project started.
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Yes, the next release of SAP forces you to use HANA. Where I use to work, they are moving from R/3 to HANA, when that started, I ran out the door screaming. Maybe it will go well, but wit stories like this for both Oracle and SAP, I expect a big cluster ****.
With that said the people who are still there are very good and maybe it will work, but there will be plenty of 14 hour days which I am way too old to do. I already put my time in like that when I was young.
Pay peanuts get monkeys (Score:3)
Government, be it local or federal, should solicit offers from the market and select the cheapest one.
Unfortunately this naïve approach is what a lot of governments actually do because it's easy to understand and explain. Unfortunately the problem is that this is a very dumb way to do procurement. Firstly it weighs initial costs of a product to heavily against ongoing surprise costs when they realise they need it to do something they forgot to put in this spec. Most of the costs in this project are of that nature, likely paying for consultants because they ran out of hours in the initial package. Secon
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So "you're holding it wrong?"
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Stop putting everything you don't like in the same bag, everything have their own problems, but assuming wrong things is even worse
this is bit techs vs government, nothing to do with Europe (that by the way, due to the brexit, UK is not anymore in EU, so at most, this is UK bureaucratic monstrosity), happen all over the world... and the richer they are, the more common it happen.
Most politics do not care about money, government leaders and workers run away from taking responsibilities, so it is always safer
Re: swapping one pile of manure with another (Score:1)
Im positive it's the five-year Oracle project that is crushing the city's budget, not the nearly billion dollar judgement against the city regarding equal pay claims...
Birmingham City Council, the largest local authority in Europe, has declared itself in financial distress after troubled Oracle project costs ballooned from $25 million to around $125.5 million. The Register reports: Contributing to the publication of a legal Section 114 Notice, which says the $4.3 billion revenue organization is unable to balance the books, is a bill of up to $954 million to settle equal pay claims.
Oracle claims it's "unbreakable" (Score:4, Insightful)
But they certainly manage to break a lot of things.
Re:Oracle claims it's "unbreakable" (Score:5, Informative)
I struggle to think of ANY Oracle deployments that succeeded and on budget. I dont *get* why the enterprise guys keep falling for this shit.
Hire a gang of 5-6 Django (or Rails or whatever the current all-in-one ap server thing is) coders, a front end guy and a project manager with a proven history of getting big jobs done fast, and it'll done in 5-6 months for well under a mil.
Re:Oracle claims it's "unbreakable" (Score:5, Insightful)
Hire a gang of 5-6 Django (or Rails or whatever the current all-in-one ap server thing is) coders, a front end guy and a project manager with a proven history of getting big jobs done fast, and it'll done in 5-6 months for well under a mil.
"They said the previous SAP system had been heavily customized to meet the council's needs and it was struggling to recreate these functions in Oracle."
Underestimating the complexity of the current system is how everyone repeatedly gets into this sort of mess, don't rush in blind.
Re:Oracle claims it's "unbreakable" (Score:5, Interesting)
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Ans: SAP. I've never seen a system with more diabolically pointless complexity than SAP's ERP. I doubt Oracle's is any better. A big part of the problem with these sorts of Frankenprograms is bean counters in companies and governments being given the power to run things. They have an almost infinite capability to imagine the Grand Unified Organization so they want a software program to give it to them. SAP and Oracle step up to the plate to give them their dream works. And the result is pile of steaming din
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Well, all these banks that run COBOL code made decades ago aren't managed by fools, are they?
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That is just a testimony to the sales and legal teams of Oracle to be able to formulate contracts such that all these estimate mistakes are charged back to the buyer.
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That is just a testimony to the sales and legal teams of Oracle to be able to formulate contracts such that all these estimate mistakes are charged back to the buyer.
This. I can't understand why anyone would enter into a binding blank check contract. Would anyone even consider hiring a contractor to remodel your house for $100k but escalating to an unbounded amount due to contractor mistakes? How about taking your car to the garage for an oil change for $30 but end up paying $1000's because the mechanic somehow destroyed your engine?
In these blank check contracts, the vendor would be stupid to finish the work on time and leave the unbounded money on the table. It's
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So double the number of people and the time estimate. It will still be at most 5 mil, including a nice profit.
Of course if the requirements were not locked down before the project started, you will keep getting requests for additional functions / change of functions.
That can keep things going for longer with additional costs. But even that will be unlikely to hit even 20mil without crazy changes requested midway.
Thats what an experienced project manager (from the both sides) supposed to prevent.
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Hire a gang of 5-6 Django (or Rails or whatever the current all-in-one ap server thing is) coders, a front end guy and a project manager with a proven history of getting big jobs done fast, and it'll done in 5-6 months for well under a mil.
And it will fail miserably. The ultimate problem here is customisation and not correctly articulating the statement of requirements, or rather not understanding up front what the requirements are in the first place.
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Worked on several Oracle deploys that succeeded and were on budget that I was on. It's neither Oracle nor SAP at fault here.
Malcolm Tucker is on his way (Score:2)
How many bureaucrats will get thrown under the bus?
Re:Malcolm Tucker is on his way (Score:5, Informative)
None of the ones who made the decisions.
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How many bureaucrats will get thrown under the bus?
No unelected EU bureaucrats will. Birmingham isn't in Europe, the article is mistaken.
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Oops. Birmingham is within the continent of Europe, just not in the European Union (EU).
Re:Malcolm Tucker is on his way (Score:4, Funny)
Oops. Birmingham is within the continent of Europe, just not in the European Union (EU).
No no, England has never been in the European continent! Thats why the English refer to "The continent" to mean those other people over there on the other side of the water to the East. OTHER. PEOPLE. England is its own continent!
Brexit just made this concrete reality!
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You remind me of an old newspaper headline...
Fog blocks channel Europe isolated.
People in the remote southeast of England are under the very mistaken idea that they are the centre of everything. They thought that leaving the EU would isolate them!
Re: Malcolm Tucker is on his way (Score:2)
They are most definitely on the European continental shelf. It depends on what meaning of "continent" you're using. From a purely geological sense, UK is Europe.
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From a purely reality sense, you've just been wooshed.
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the English refer to "The continent" to mean those other people over there on the other side of the water to the East.
That's only some of the English people. Others, like myself refer to the continent as a whole - including the UK.
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Whether or not Birmingham is in Europe, I seriously doubt the claim that it's the largest local authority in Europe. I doubt it's the largest local authority in the UK.
To make this claim, they must apply some special restrictive definition of "local authority".
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Whether or not Birmingham is in Europe, I seriously doubt the claim that it's the largest local authority in Europe. I doubt it's the largest local authority in the UK.
To make this claim, they must apply some special restrictive definition of "local authority".
It's a local authority, for local people.
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.. I seriously doubt the claim that it's the largest local authority in Europe. I
and your doubt is based on... what? Anti-Brum sentiment? Look, I hate Brum just as much as the next guy but yeah, they are the largest local authority, everything larger has been split up into sub-divisions, e.g. "arrondissements" in Paris and "boroughs" in London.
the Oracle fail is just a relatively minor part in Birmingham's bankruptcy, the main item is a £760m bill for equal pay claims, after years of underpaying women.
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This is what they are talking about in the UK: https://en.wikipedia.org/wiki/... [wikipedia.org]
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My understanding is that only England and possibly Wales have local authorities. It's kind of like advertising that your "the largest town in the state", and not mentioning that the state capital is a city.
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Re:Malcolm Tucker is on his way (Score:5, Funny)
Birmingham isn't in Europe
Of course not, it's in Alabama.
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No unelected EU bureaucrats will. Birmingham isn't in Europe, the article is mistaken.
Do you also consider Canada as part of the USA? I mean you think Europe (continent) is the EU, so I guess you think all of North America is the USA as well right?
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No unelected EU bureaucrats will. Birmingham isn't in Europe, the article is mistaken.
Do you also consider Canada as part of the USA? I mean you think Europe (continent) is the EU, so I guess you think all of North America is the USA as well right?
Canada is part of America, and since the USA is America, yes!
You buy a gilded toaster.. (Score:5, Insightful)
..and ask someone to modify it to make pancakes. It'll be expensive, when done it will make strange sounds, leave stains all over and produce something that somewhat resembles pancakes and that taste like cardboard. Everyone will be forced to eat them even though they hate them with a burning passion.
That is essentially what you do when you buy and modify Oracle Fusion or SAP for something they were never intended to do.
We are in the process of ripping out and replacing a hideously expensive custom SAP solution. I happened to know one of the "highly paid SAP consultants" that worked on the development of it. He was told by his boss to shut the fuck up when he argued that SAP wasn't the solution for this particular customer's needs.
The person who pushed through the purchase quit a couple of months after the project "finished" and moved to Switzerland, apparently she managed to "acquire" a swanky chalet there and a new job. Funny that.
Re:You buy a gilded toaster.. (Score:4, Interesting)
The U.S. Navy showed interest in switching to SAP ERP back in 1998. More than a billion dollars later in customization, the Navy is still struggling to consolidate their financial systems under it. SAP: "you need to change your business processes to align with our software." The U.S. Navy: "we're not a generic commercial entity, so let's customize your software." ERP Contractors: "Sure, we can do that"... lol
Someone still uses Oracle?? (Score:3, Funny)
Bahahahaha
it's the 10x larger "equal pay" payout (Score:4, Informative)
that's the main problem, not this ERP implementation, bad though this may be too.
They've already paid $1.1B over and still owe $950M (over something like 20 years total. not clear on the timeline)
https://www.cnn.com/2023/09/06... [cnn.com]
"""
Birmingham’s effective bankruptcy is uniquely tied to hefty compensation claims it has had to pay former female employees who were historically paid less than men for similar work.
"""
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Yeah it's bad, but not uniquely tied. When your budget is 80million the hole then a 100million project overrun isn't irrelevant simply because you have something else that is more expensive.
Sure the equal pay debacle makes it inevitable, but the Oracle debacle contributes to it. Don't scapegoat crap IT projects by pointing to something else.
AT&T Cellular flashback (Score:4, Informative)
This reminds me of the upgrade in back end customer data infrastructure of AT&T Cellular (back before the Baby Bell reconsolidation) that went so badly that they're bought by Bellsouth for their customer list.
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Oh, AT&T eventually was bought out by BellSouth and retain its name.
Look at the upside (Score:3)
Larry was able re goldplate the propellors on all of his superyachts.
Thanks Birmingham Ratepayers!
It's not so bad (Score:2)
Birmingham City Council, the largest local authority in Europe
Nah. It's only the largest local authority in the UK now.
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...The UK is still in Europe, just not in the EU ...
Birmingham is larger than any local authority outside the EU in europe
"No one ever got fired for buying IBM" (Score:2)
no need to fire when the whole org goes under
Misleading headline (Score:5, Informative)
They aren't flying the bankruptcy flag because of Oracle. The Equal Pay ruling is what is causing the most pain.
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Maybe the huge equal pay mess is what caused them to upgrade their IT systems!
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It's both. Their budget gap is around 90million pounds. Sure the 760million pounds equal pay ruling was a major contributor, but if they didn't blow their oracle budget by 100million pounds they'd equally not be bankrupt.
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Yeah, Oracle could be a contributing factor, but not the main reason in this case.
Find someone competent... (Score:2)
Re: Find someone competent... (Score:2)
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I think BeauHD removed the GBP numbers from the story and just left the USD amounts that were in brackets in TFA because they knew /. is so buggy that it can't display the GBP currency symbol properly.
Just waiting for some anti-Apple nob end to pipe in with: turn off smart quotes! As if that will fix the problem!
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The is an example of the way people grossly misjudge the relative costs of build vs buy.
"Buy" always looks easy. You have the price, you pay it and its done.
"Build" looks hard because you have to hire humans and manage them and keep paying when the job is done.
But the job is never done, you have to keep paying for the contracted out job and when the thing is up and running, you don't own it. Meanwhile the build option is owned and understood in detail by the engineers that built it and can be subject to inc
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The way I try to explain it is that there is never Buy vs. Build.
Never.
There is only Buy+Integrate and Build+Integrate.
And since integration is usually by far the biggest single component, and since you can build something dramatically easier to integrate than anything you could buy, Build+Integrate usually comes out WAY ahead.
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Thank you. I will use that. I have business decisions people made that need reversing.
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That's better than the hole you're in when the dev team was owned by someone else who wants a cool extra $100,000,000 to fix things for you.
If things were budgeted correctly, the pay would have been set at a retention level.
but, but private enterprise is more efficient! (Score:2)
I mean just look at all the money they saved by outsourcing! Lucky they didn't do something dumb like use free software!
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IMO you always need competent people in house, and allow them to make the decisions rather than management.
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More info (Score:1)
https://itassetmanagement.net/... [itassetmanagement.net]
Just another issue due to management. Original specifications had been to change business to work with the new system and then after implementing it they decided that no they wanted the software to be changed to how they were doing business.
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Welp (Score:2)
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But the sales guys assured them that they aren't evil!
Kudos to Oracle sales and legal teams! (Score:2)
These folks must be fantastic to extend a 25 mil contract to 125 mil contract and still going. I see big bonuses coming in! And iit great for shareholders of Oracle too. Win-Win!
Seriously - how are these contracts written and how a government entity accepted it? Seem like an open ended contract with a clause - "all extra work billable at $1000/h".
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It's run by left-wing Labour. As Maggie Thatcher said: "The trouble with Socialism is that eventually you run out of other people's money."
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Re: Kudos to Oracle sales and legal teams! (Score:2)
Maybe two-bit politicians who are only good enough for local politics just arenâ(TM)t cut out for this kind of thing like managing big projects and budgets? Actually, itâ(TM)s a serious problem for politics in general with the quality of candidates dropping. Seriously, who in their right mind would give up a good job to deal with the crap they have to in politics these days?
time for a long term internal team (Score:2)
this is a typical project where paying an external consultancy firm will cost way more than hiring an internal team of developers for the next 20 years or so.
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It's a council...they don't have a team of developers ...
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Oracle and/or the external consultants will just offer better benefits and hire away your developers. The competent ones anyway. The city council will just be left with the rest, effectively becoming the vetting service for qualified employees.
Only 5x? (Score:2)
5x overrun for Oracle? That's actually not bad...
That's why I created Stack360.io (Score:1)
Anybody sane moves away from Oracle (Score:2)
Seems some have not gotten the message. With entirely predictable results.
$100 million+ and 5 years? (Score:2)
Yeah What did they Expect... (Score:2)
It's Oracle .. Larry Ellison has to pay for more houses in Hawaii somehow.
Anoither example of stupid (Score:1)
Any of these systems can be run much cheaper, safely and stably by hiring 1 or 2 good engineers. You try to go to these large vendors and larger projects and they will nip you in the behind everytime.
Must be run by MBAs trying to solve everything with powerpoints and sub standard architects and developers. Seen this many many times. It makes me cry.
What is so special? (Score:2)
Why do they need a bespoke ERP system to do the same things every other city/government body on the planet does?
I need a pair of shoes. I better hire a team of designers, cobblers, and buy a ranch to start raising cattle for the leather.
Or I can buy a pair for $50.