Birmingham council's 'equal pay' bankruptcy provided cover for Oracle disaster | Hacker News Reader

Birmingham council's 'equal pay' bankruptcy provided cover for Oracle disaster

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108 pointszeristor73 comments

> None of the in-year deficit cited in the section 114 notice relates to the settlement of new equal pay claims. And none of the £149 million of cuts to services relate to any deficit created by equal pay settlements.

Instead, the council’s spiralling deficit, estimated at more than £300 million, appears to relate to the disastrous launch of the Oracle IT system that went live in April 2022. Originally budgeted at £40 million, the latest report by the head of financial planning to the cabinet on February 27 2024 showed that the Oracle finance and human resources system has now run to an astonishing £131 million. <end>

In short Birmingham Council claimed that equal pay settlements are the reason for the bankruptcy, but the investigation shows that an Oracle IT implementation which has overrun its budget is to blame. The nefariousness is not just mismanaging the project, but casting blame on a scheme that’s supposed to correct more past wrongs. It’s turtles all the way down.

My state of Oregon paid Oracle something like $250M for a healthcare system that never materialized. The lawsuit that followed was settled for $100M, but most of that was “free” Oracle licenses and no less than $60M of customer support.

I don't understand why any human being on planet earth would ever hire Oracle at this point, it's like asking for trouble.

It’s like paying for trouble.

Actually it's the opposite. I worked for an NGO half a decade ago, and they wanted to add 2FA authentication to their login system used by ~400 staff. I created a quick demo using Google Authenticator in less than a week.

However the director of IT didn't like this solution. He insisted we use RSA keys and hire IBM to build a solution using that - I think the original estimate was a few million $ and it would take six months or so for their team (of basically new graduates) to build.

I asked my boss why the director was pushing so much for IBM to build it:

He told me that if we build it, and it doesn't work, then the director has to take the blame. If IBM build it, and it doesn't work, then IBM take the blame.

Same reason why it took companies very long until they were ready to accept OSS. "But who can we sue if something doesn't work?" - at the end of the day it's always about someone being responsible. And if people can make sure that that someone is not them they will often take that option.

While I understand your point, the point the GP and I were making is that by bringing in (eg) IBM to the project, you're increasing the chance of failure.

I suppose the irony is that you bring in this huge bureaucracy to reduce the risk of blowback, but not the risk of failure.

That’s definitely a consideration: it increases the risk of failure but also increases the odds that you won’t be held accountable personally. One of the interesting dynamics here is that if they fail you, they have an extensive PR machine which will shop around excuses for the problems and help minimize them. If you do your own thing, the same people will tell their other marks that it was because you didn’t use them.

In the public sector, there’s often a political aspect as well - the senior management of the big consulting companies are far more likely to meet with the politicians than you, and even if you are certain that your decision is correct you have to ask what the odds are that their narrative will set the tone at a level you’re rarely asked to appear at.

Yes. There’s also the revolving door problem. The bureaucrat making the decision is often angling for a cushy role at the contractor. And the contractor is making the offer under the table to get the gig. From the decision makers perspective, it doesn’t matter if the project succeeds, they’ll be long gone. I’ve seen this with my own eyes.

Literally "nobody ever gets fired for buying IBM".

No one person gets fired but there might be a round of layoffs to pay the bill.

> if we build it, and it doesn't work, then the director has to take the blame. If IBM build it, and it doesn't work, then

...the guy who decided to outsource it to IBM has to take the blame. No? Oh, right, "there is no way he reasonably could have known that it could fail". Then again, the same argument could have been used with the in-house development as well?..

I guess it basically boils down to what is and is not a "socially" acceptable way to deflect blame from yourself and those things, as all things social/customary, don't have to really be consistent.

The question is rather why people like asking for trouble so much.

If you have a large organisation and you need software to support all of the relevant processes - you don't exactly have a lot of options...

Nobody ever needs an “IT system” to support all of the relevant processes, no matter how large the organisation.

Nobody ever got fired for choosing IBM...

then let's blame and fire the people who hire oracle

The people making the decisions get kickbacks, and the general population is stuck with the bill.

Not to give Oracle a pass, but there was plenty of blame for the state as well.

https://upperedge.com/erp-program-management/7-decisions-tha...

Granted 2 of those mistakes were chose oracle and listened to oracle.

This is a massive one; they tried to do the integration themselves under a deadline with no expertise while increasing scope under said deadline. They also had massive churn. Any vendor's solution they chose would have most likely failed.

In an attempt to save money, the appointed CIO determined that the state did not require the services of a systems integrator independent from Oracle. Instead, they decided to train their own team on Oracle products to drive a self-sufficient organization. The logic behind this decision is clear, if you train your own people, you can create independence from your service provider and ultimately create the potential to deliver greater value to the organization.

However, the State of Oregon did not have the staff available to train and were losing as many people as they hired. A staff of Oracle programmers coupled with a program lead that lacks experience is typically a recipe for disaster.

>chose oracle and listened to oracle

All the other vendors decided not to accept the contract based on the deadline and scope. That's also pretty telling.

Frustratingly the article makes no effort to explain what they mean by equal pay liability.

The same goes for something called "savings delivery rate" that supposedly dropped form 91% to 70%.

And the mentioned "£131 million" for the Oracle finance and human resources system, is that annual or lifetime?

Clicking around a bit leads to this:

“ The 2012 settlement followed a landmark court ruling which found hundreds of mostly female employees working in roles such as teaching assistants, cleaners and catering staff missed out on bonuses which were given to staff in traditionally male-dominated roles such as refuse collectors and street cleaners. ”

https://www.bbc.com/news/uk-england-birmingham-66042403

These £131 million are likely just for the initial implementation, given that the number grew rather quickly in recent times: https://www.bbc.com/news/uk-england-birmingham-66042403

The "landmark" part of the 2012 court case was actually about how far claims could effectively be backdated, not the "equal value" part of the claims (which as I understand it was relatively straightforward because the council effectively admitted they were equal value by applying a common grading scale for all employees from what I understand). The UK supreme court judgment in question is here:

https://www.supremecourt.uk/cases/docs/uksc-2012-0008-judgme...

The Oracle number is, I think "one off". But some of that number also appears to be "intended savings that could not be made".

The savings delivery rate .. is something of a work of fiction, but if you build a new accounting system sold as being able to give greater insight and reduce costs, and it does not in fact reduce costs, or even work properly, that obliterates the hypothetical "savings" that were intended.

That's almost certainly implementation costs - paying consultants to make the off the shelf software work for an organisation.

Lol I have never heard of a single happy customer of Oracle. How do they stay in business? Is it just about finding new people to scam every year?

>How do they stay in business? Oracle's main line of competency is not providing good software services. They are in fact, specialists of acquiring government contracts.

I did a proposal for a very large city council in Australia some years ago. We were a little upstart company with an idea that fitted nicely with councils priorities.

Long story short, they loved the proposal but they were quite clear that unless we “partnered” with a company like IBM, we had no chance.

The reasoning I was given was that they needed a company that was big enough to be able to accept liability for failure. In other words, someone they could theoretically sue.

It was one of the most depressing meetings I’ve ever attended.

Did you show them your company's Errors & Omissions (E&O)/Professional Liability policy?

If your limits are high enough, some customers would find that acceptable.

Haha, no, they were quite explicit that we had to partner with a brand name. It was entirely political.

Probably good that we didn’t get it, in hindsight.

It’s really only us tech nerds who actually see through the scam.

When you don’t know what you’re doing and you’re spending other people’s money, the greater the cost and complexity the greater your accomplishment looks.

If I had to guess I doubt if this was actually Oracle's fault - sounds like implementation problems not problems with software itself?

When you hire a company like oracle to create you a business system, they already know that their job is primarily to characterise your existing processes, suggest new ones, document existing ones -- to very high levels of detail. Then the job is to provide an IT system.

They know, very very well, that if they screw up the first part, the second part will be undeliverable. Of course, a local council would not know this.

So the blame is entirely on them. That's the job they bid for. They may be cynically doing a bad job on the first part, convincing the local gov that it's their fault, then exploiting that for more time/money.

This seems highly likely.

A newer tech consultancy might not realise that this is the biz they are in; oracle do. You job is business process consultancy using IT.

Oracle weren't doing the implementation in this case?

Probably not, more often than not you get a KPMG/Accenture or some one equally useless.

That's on point. I've witnessed a similar transition within a company, and every time they tell you "automate X" and you ask "Define X", you get a wrong answer. Even basic calculations are often done incorrectly or with hidden and inconsistent assumptions. I was always too focused on detail to do what others did in my position: somehow deliver a number they like and stop asking difficult questions.

That's it. All problems solved by a week of smart work get zero recognition, because "it was an easy problem". But if you tender to the oracle's of the world, use teams of people, preferable switch sub contractor half way, it looks like a massive undertaking with the appropriate recognition. Corporate snakery is all about visibility.

> In response to the points made in this article, Birmingham city council said: “The implementation of Oracle has been the subject of extensive discussion in the public domain.”

Well, all is forgiven.

for context, tthe actual reason Birmingham Council is fucked is the same reason that nearly every council in Britain is fucked: the deliberate policy choice by central (what every other country calls "federal") government to de-fund councils and cause them to slash things for 14 years and now start collapsing.

funding from central government is now at 40% below 2010 levels: https://www.instituteforgovernment.org.uk/explainer/local-go...

Only the small number of countries that are a federation of states/provinces call their highest level of government "federal".

https://en.wikipedia.org/wiki/Federation

Like all levels of government, they spend too much on things they don't need to, inevitably. Blaming too little or too much money when these organisation have many millions and sometimes billions available (certainly in the long term) is to miss the point entirely.

They waste what they have through poor implementation. That's the story here.

this is an extremely dumb take, kudos.

The of the news I have read about this before has mentioned Oracle, so the real news is the attempt to deflect blame.

What has been missing from much coverage of it has been any mention of the cause.

What the multiple failures show is that there was pervasive bad management, not a failure in one area.

1. What exactly is "equal pay" in this context?

2. Is there any IT consultancy that ever does a job right and in budget?

1) Basically it was found that jobs done predominantly by mens had bonuses which could more than double basic pay, but not those predominantly done by women.

An employment tribunal found in favour of female workers employed by Birmingham city council in 49 different jobs, including lollipop ladies and cleaners, who complained of being excluded from bonuses – worth up to 160% of their basic pay – paid to men.

https://www.theguardian.com/society/2010/apr/28/pay-female-s...

2) Not usually at that scale - particularly if the decision making/effective management is done by elected officials who may not be there for the whole project and where large project management experience/skills aren't what gets them elected

In Britain, councils have a permanent civil service who are responsible for running the council. The elected councillors are responsible for policymaking and oversight.

1. Female/male emoloyees paid the same for equivalent role.

https://www.bbc.co.uk/news/uk-england-birmingham-66730165

> It heard workers in roles such as teaching assistants and catering staff, had missed out on bonuses given to staff in jobs traditionally done by men, like refuse collectors and street cleaners.

Did you read your link before posting your commentary about it?

What problem do you think you're exposing? I said 'equivalent', not 'same', if that's what you mean.

Teaching assistants and refuse collectors are not “equivalent” roles by any reasonable interpretation of the word.

Perhaps you would have preferred I said 'of equal value' (though probably someone else would have complained it was subjective) but that is what it means. https://www.acas.org.uk/equal-pay/equal-pay-law

I was only answering what 'equal pay means in this context', and I did so succinctly because I think they already knew just doubted themselves or would be familiar by another name with a hint, take it up with the employment tribunal if you don't like this particular equivalence.

I’d say it’s better to post what the law actually says. You’re right, people will complain because it quite clearly is subjective nonsense. But sticking with the facts makes for better discussion than trying to cover them up imo.

That is the ruling, and they were "equivalent" because they were deemed to be the same "grade"; i.e. a grade 2 teaching assistant and grade 2 refuse collector are equivalent.

https://www.anthonycollins.com/insights/news/landmark-ruling...

Birmingham City Council v Abdulla and others [2012] UKSC 47. https://www.bailii.org/cgi-bin/format.cgi?doc=/uk/cases/UKSC...

Specifically, Birmingham had hired these jobs at the same pay grade, after formally assessing them to be equivalent. It then paid people hired under the same contract differently with special payments after garbage strikes.

If they had hired under a more complex pay grade structure, they would have been fine.

This is relevant to tech companies which may use fairly simple level structure.

Most likely not fine, but a tad trickier to be found out. U say a tad, because job classifications and pay grades are straight forward to do, even in court. In the end, it wouod have been an additional step during litigation.

> garbage strikes

So, the garbage workers -- men -- used strikes to extort illegal, privileged pay raises for themselves?

You could think of it like they're all doing exactly the same job, and then a union voted to strike, as a result of which only the unionised workers got a bonus, and were kept at the same grade.

(Although I'm not really sure what my point is - that the council's lawyers should've (if they didn't) made that argument? - because unlike gender I don't think union membership is a protected characteristic per Equality Act 2010, obviously there are some different rules like you can't fire someone for being a member of a union, but paying someone less because they're not a member of a union seems probably fine? But anyway, as a public body the council has extra requirements for equality, not less, and the intention probably doesn't matter at all.)

Certainly hard to argue the higher wage was set by the market when it was set by strikes rather than the need to fill jobs.

Yielding to the strikers' demands may or may not have been wise, but I have not seen anything here saying this was, in itself, illegal: it became so when the council failed to extend those increases to other workers deemed (by its own rules, apparently) to be in equivalent positions.

To 2, yes there is, but that's not newsworthy.

You need very strong technical oversight, something that is often missing when a job is handed out to a contractor.

If you don't have that, you should hire it, although I haven't seen anybody offer this kind of service. Maybe that's something that needs to evolve in the IT industry. And, no, Gartner et al. don't count; they are just buzzword pushers.

Gartner et al. need to be seen as trendy and at the forefront of each industry they are in, so as you say there is never a trend they won't jump on. I suspect there is some value in actually talking to their analysts to work out which products actually work well, and which failed implementations are really due to client problems, but their written reports aren't much more than a list of the biggest players in each sector.

It's also often forgotten that local government in the UK has two income streams:

* Council Tax, which is based on the value of your home. * Government funding, which makes up the vast majority of the income.

The latter has seen a cut of £800m in the last 13 years.

Birmingham has been set up to fail by a government run by the other political party. The same area is also covered by the West Midlands Combined Authority, which is headed by an elected Conservative mayor. Somehow, his organisation has tons of cash to do all sorts of nice projects (like campaigning to rebuild a wonky pub) but doesn't have any tax raising powers (something they're very proud of).

Where is that money coming from? Why is it not being used to bailout the council instead of forcing 20% tax rises on residents along with shutting public services.

Birmingham has been left out to dry by political opponents. Nothing more, nothing less.

Pedantic point but they have more streams than that, but the grant is certainly the largest and the council tax definitely notable.

Why should a failing organisation, that knew cuts were coming and still went ahead with this disastrous project (among many others) and broke the law (a law implemented by the same side of government) that consequently cost them a huge barrel of cash, be bailed out?

Let them fail, make cuts, make government smaller because it fails just like this again and again.

I had to mangle the original title a fair bit to fit:

“How Birmingham city council’s ‘equal pay’ bankruptcy provided cover for ongoing Oracle IT disaster”

PwC and KPMG were appointed to help rectify problems with the system earlier this year, while the council had previously employed EY on the implementation.

I'm sure those three bandits lined their pockets nicely!

Has anyone ever heard of an Oracle project that has ever ended well?

After 25 years in IT consulting all over the US in different businesses, Oracle is never NOT a 4 letter world, where projects involving them always over-promise, under-deliver, and project costs end up some 3-10x any initial projection. Particularly any ERP, CRM, now EMR in hospitals as well since acquiring Cerner. Anyone that does use them only do as a necessary evil of some dubious or shady circumstances, otherwise Oracle is a term almost universally reviled and hated amongst end users and organization leadership alike.

30 years ago, when I was a grad student, Oracle was just a relational database rather than the bloated, unwieldy mess it is today

Disclaimer: n=1.

Easy to blame something you sort of "understanding" than something you did not?

Not coming clean and using the cover they did is pretty slippery behaviour, unfortunately it fits right into the worst kind of behaviour people expect from local politics.

It also fits right into the agenda of certain right wing papers who were happy to publish the story, I bet they don't give the same prominence to the fact this is an Oracle problem.

Note that pushing it on 'equal pay' settlements also covered up for the senior executives who were responsible for Oracle issues.

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