THE cost of a council’s new finance and HR upgrade has nearly tripled to £14m as the much-delayed project faces yet another hold-up.

Sandwell Council has revealed the bill for ‘some’ of its switch to finance and HR system Oracle has now risen to £14 million – a huge rise on the projected £5.6m cost five years ago. 

The system was supposed to have ‘gone live’ in April but has now been pushed back to September and October, the council has said.

The software manages the council’s day-to-day business such as accounting, finance and procurement as well as human resources (HR) and payroll for thousands of staff.

The cost could rise even further according to an auditor’s report, which states the sharp rise only accounts for the financial and accounting side of the IT upgrade and not the human resources side.

The audit of the council’s Oracle work up to March last year is due to be discussed by the authority’s audit and risk assurance committee after bosses decided to delay its roll-out further.

Most of the work was originally expected to have been finished four years ago before a long list of delays and hold-ups.

The roll-out had already been split in two with the council’s finance and procurement systems and its HR and payroll systems going live months apart because of several delays. 

The financial side is expected to be up and running by September, the council said, with the updated HR and payroll system now starting from October.

The audit by Grant Thornton has also revealed that Sandwell Council paid £3.5 million “in full” for five-year Oracle licences although only a “small proportion” were needed to start work.

“It is unclear whether there is in-house expertise [at Sandwell Council] with sufficient depth and knowledge to undertake the Oracle licencing activities,” the auditor said.

In its audit, Grant Thorton also said it was “unclear” over whether the council had included a ‘rebalancing clause’ in its contract with Oracle – which could have proved expensive and put the council at risk of overpaying for licences.

The council was also insisting on using spreadsheets to log and monitor security risks such as ‘segregation of duty conflicts’ – where hugely sensitive data and processes could be jeopardised or exploited – rather than paying for the appropriate software.

The council, at the urging of the auditor, has now bought the software.

The mess created by the IT switchover was one of the main reasons the government placed the Black Country authority in special measures in 2022.  The switchover has faced several delays since receiving approval from councillors in late 2019.

The upgrade began five-and-a-half years ago and with an original cost of £5.6m.

Inoapps, the company first trusted to get the system up and running, had its contract terminated and was replaced in 2021.

Sandwell Council said it had moved to a fixed-price contract, on the advice of Inoapps, to ‘manage the council’s risk and limit its financial liability’ but was then asked for more money by Inoapps with the work not finishing until October 22. 

Inoapps was replaced by Infosys who said the work could be done by January 2024 but the start was delayed until April to tie in with the financial year.

The work was then expected to cost £9.8 million. HR and payroll would not be fully upgraded until this month, the council then said.

The delay on top of the delay has now become another delay with the system again not expected until October. 

The ongoing saga with Oracle remained a major concern of Grant Thornton earlier this year, despite the auditors saying it no longer had ‘serious’ concerns over Sandwell Council – a ruling that led to the local authority coming out of special measures and government intervention.

Auditors still raised concerns about rising costs and increasing delays to the council’s multi-million-pound switch to HR and finance software Oracle Fusion and that “significant improvements” still needed to be made in the council’s finance department.

“The risks associated with poor and ineffective implementation [of Oracle Fusion] remain significant,” Grant Thornton said.

In its audit from earlier this year, Grant Thornton said Sandwell Council still needed to “significantly improve” how it produced financial statements in one worrying recommendation and “significant progress” needed to be made in the council’s financial team if it were to become “fully effective.”

Auditors said the council’s switch to planning and finance software Oracle Fusion – what has often been described in cabinet papers as a “key component” of Sandwell’s ‘improvement plan’ – had continued to face “delays and increased costs” despite the focus.

Sandwell Council’s audit and risk assurance committee meets today (Thursday July 18) to discuss the report.