Birmingham City Council, the largest in Europe, has found itself in a financial situation as a result of a series of costly expenditures and expensive investments. These expenditures ultimately led to the council declaring itself bankrupt. The investments the council put all their financial resources into, one of them being an IT system, essentially failed.
The council had invested in a £13million Oracle IT (the world's leading database management company) system with the hopes of it streamlining and simplifying payments across its public services. However, due to delays in the project, technical difficulties, and cost overruns, it has led to a spiralling of costs and the council losing control over most aspects of the project. Documents dating back to March 2022 show that costs have already risen from £19 million to £38 million. The council will now have to pay up to £100 million to rectify the project and get it back on track.
The project - which was approved back in 2019 - was set to go live in April 2022. However, due to the loss of control with the council led to several delays. The system is now set to go live in 2024.
The council took full accountability by confirming that Oracle IT is not to be blamed for. They also confirmed that the way they implemented the system had caused many issues.
According to sources, the council is sometimes unaware of who owes them money and has been using credit cards to pay outstanding invoices.
Importance of an IT budget:
This case highlights the major importance of having an IT budget, and what happens when budgets are overlooked. Excessive IT spending can seriously harm your finances while generating little return on investment. Despite the fact that Birmingham City Council has spent millions of pounds on this 'investment,' they have received no return. A budget can help in financial planning and allow you to make more informed business decisions. It allows you to track your expenses, prioritise your spending, and see where your money is going and where it should be going. It also allows you to be more proactive with your spending, putting a stop to areas where you may be overspending and allocating more resources to areas where you may be under spending. Read more about the importance of having an IT budget and managing your IT budget.