Council transformation savings hit by ERP implementation issues

Problems implementing a council’s enterprise resource system have shaved almost 10% off anticipated savings, according to a public sector spending watchdog.

Fife Council in Scotland signed a four year, £26m, deal with provider Capgemini in 2013 for the new system, aimed at providing the bulk of savings planned under a reorganisation of services.

However, a report by Audit Scotland for the council said that problems with delivering the ERP have been the main factor behind a 9.1% reduction in estimated savings from £53.6m to £48.7m in the period to 2019.

The report said: “Indications are that the programme will not achieve the benefits initially anticipated and there is a risk that the council might need to consider further budget reductions to achieve the savings target, potentially impacting on front-line services.”

The Oracle ERP is intended to transform the council’s financial management system.

However, the report revealed that changes to business processes and systems, such as validation checks over data transfer for ordering and receipts has not functioned properly.

When the system went live, this caused additional costs, delayed payments to suppliers, and a loss of confidence.

In addition, the council has been forced to employ temporary staff to rekey information due to other legacy software remaining in place.

Separate databases are in still in use for the different software, which the report said would mean additional effort would be needed when analysing data.

Future software updates will also be “more complex and expensive” because links between different systems will need to be tested and updates carried out.

“Had the programme started afresh, with no ongoing projects, rationalisation of the technologies could have been considered,” the report said.

The lack of efficient data transfer between systems has resulted in the postponement of £86,000 of anticipated benefit from an “improved accounts payable and procurement linkage” and £363,000 of anticipated benefit from “financial management & analytics”. There is a risk that some of these benefits may not actually be realised.”

Management at the council has admitted that there was insufficient detailed understanding of the processes that required change to fit into the ERP model before training on the new system was delivered.

The council has now slowed down the implementation of the ERP in order to allow staff and other users to gain more confidence in it.

It has also agreed a 10-point action plan in an attempt to get the transformation back on track.

Colin Marrs

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