Facepalm: Birmingham City Council has delayed the launch of its new income management system after key testing results fell short, reigniting concerns over the troubled Oracle software rollout and rising costs, which could reach £170 million. Testing of the CivicaPay system earlier this month showed a pass rate of 73.3 percent with 10 critical issues outstanding – well below the council's requirement of a 95 percent pass rate with no severe defects.
The council confirmed that the CivicaPay-based system, designed to replace the malfunctioning banking reconciliation platform introduced with Oracle Fusion in 2022, will not go live until November at the earliest.
Oracle program leader Philip Macpherson told The Register that most defects were related to data quality, and that a system refresh completed in September had resolved some issues. However, the shortfall forced the project board to delay the rollout.
Members of the Audit and Risk Committee were informed at the time, but news of the problems had already surfaced in the press, intensifying tensions between elected officials and council officers.
Birmingham, Europe's largest local authority, has been unable to submit audited accounts since abandoning its older SAP system in April 2022 in favor of Oracle Fusion. What had been envisioned as an "out-of-the-box" implementation quickly became complicated by customizations, including the council's own reconciliation solution, which failed on launch.
The collapse of Oracle's financial management platform was a key factor in the council's effective bankruptcy declaration in September 2023, alongside long-standing equal pay liabilities. Officials were forced to begin a full reimplementation of Oracle software, with the go-live target set for April 2026. To bridge the gap, the council turned to the CivicaPay IMS in March 2024, originally promising delivery by March 2025. That deadline has slipped repeatedly, first to April, then September, and now further into November.
In the absence of a functioning reconciliation system, staff have been handling key processes manually, generating significant additional costs. In the 2024/25 budget, councillors had already earmarked £5.3 million to cover backfilling roles and hiring temporary staff to support manual accounting work. Frustration mounted at this week's Audit Committee meeting, as elected members were informed of the latest delay after details had appeared in the media before they were officially briefed.
Conservative councillor Meirion Jenkins was highly critical of the scale of overruns, noting that the project had originally been budgeted at just under £20 million. "We're now running at £170 million, right? And the officers are again telling us, don't worry. It's in hand. I think we do need to worry. The audit committee was misled the first time round. Now it's happened again," he said.
The initial £19.965 million budget, approved in 2018, was intended to cover three years of development through the 2021 financial year. That figure rose to £40 million following delays that pushed Oracle Fusion's go-live date to April 2022. With the need for a complete reimplementation made clear in 2024, the budget increased again to £131 million.
Carol Culley, the council's executive director of finance, said the current £170 million projection includes licensing and operating costs for the existing Oracle system as well as expenses associated with building a new platform. It also incorporates a £20 million provision for 2026/27, which Culley said would be reduced in future years as the new system matured and required less support.
The project remains under the oversight of central government commissioners, appointed after the council declared effective bankruptcy last year. One of them, Myron Hrycyk, who serves as Crown representative for Oracle, IBM, and Microsoft, urged councillors not to sacrifice quality for speed.
"It is a complex implementation, and it's right to be cautious about it," Hrycyk said. "If you rush at this hoping to save some funds, you will probably pay for it 10 or 20 times over in sorting it out afterwards. I really urge you not to rush this. Get it right."
Birmingham faces IT catastrophe as Oracle project costs balloon from £20m to £170m
