Bravo.
The Tale of Birmingham City Council’s IT woes: Why Do Businesses Continue to Pick Big Software Vendors…
** Note: all text in this article is purely opinion **
Birmingham City Council recently made headlines for deciding not to abandon Oracle, despite the continuing saga of the disastrous rollout of their new software system.
The decision comes after, reportedly, millions of pounds were lost and a significant increase in the council tax bill.
This situation begs the question: why do businesses continue to pick big software vendors, even when they seem to fail so spectacularly?
The Lure of Big Names
Big software vendors have built a reputation over decades.
They promise stability, support, and a suite of products that can integrate seamlessly into existing systems.
For many organisations, especially public sector entities like Birmingham City Council, these promises are incredibly appealing. The logic is that a big, well-known company should have the resources and expertise to deliver on their promises.
The Complexity of Large-Scale Projects
Implementing a new software system in an organisation as large and complex as Birmingham City Council is no small feat. It involves migrating vast amounts of data, training staff, and ensuring that all parts of the system work together seamlessly. Big software vendors often have the experience and resources to handle these complex tasks, which smaller vendors might struggle with.
However, as seen with Birmingham’s rollout, even these giants can falter. The complexity of the project, coupled with potential mismanagement and lack of proper customisation, can lead to significant issues. These problems can quickly escalate, resulting in financial losses and operational disruptions.
The Safety Net Illusion
One of the reasons big software vendors continue to get contracts despite past failures is the perceived safety net they offer. If something goes wrong, organisations believe that a large software vendor will have the resources to fix it. This safety net can sometimes be an illusion, as seen in Birmingham’s case. When the rollout goes wrong, the fixes are often expensive and time-consuming, adding to the original costs and complications.
Vendor Lock-In
Once an organisation commits to a large software vendor, switching to another provider can be incredibly difficult and costly. This phenomenon, known as vendor lock-in, means that even when things go wrong, the organisation may feel it has no choice but to stick with the original vendor. This is particularly true if significant investments have already been made in terms of time, money, and training.
The Blame Game
In large organisations, the decision to choose a big software vendor is often made by a committee or through a complex procurement process. This diffuses responsibility and makes it difficult to hold any one person accountable for the decision. If the project fails, it’s easier to blame the vendor than to admit that the wrong choice might have been made in the first place.
Motivation Dilution
A significant issue with large software vendors is the dilution of motivation among their teams. These vendors often assign various personnel to multiple projects simultaneously, leading to a lack of focus and dedication. The teams have little incentive to go above and beyond because their performance on any single project is unlikely to impact their overall standing within the company. This lack of intrinsic motivation can result in subpar outcomes and insufficient attention to project-specific needs.
In contrast, local software consultancies and businesses have a strong incentive to deliver successful outcomes. Their reputation depends on it, and each project can significantly impact their ability to secure future contracts. A successful implementation not only enhances their portfolio but also serves as a powerful testament to their capabilities, driving new business opportunities.
The “Cookie Cutter” Approach
Big software vendors often employ a “cookie cutter” approach, applying standardised practices and solutions across different clients. While these practices might work in some scenarios, they frequently result in shoehorning an organisation’s unique processes into a rigid, pre-defined mould. This lack of customisation can lead to inefficiencies and frustrations as organisations struggle to adapt their operations to fit the software rather than the software being tailored to fit their operations.
This approach contrasts sharply with bespoke software solutions, which are designed with the specific needs and workflows of the client in mind. Bespoke solutions offer flexibility, ensuring that the software aligns perfectly with organisational requirements, enhancing productivity and user satisfaction.
The Rise of Bespoke Solutions in the Gen-AI Era & Rise of Customer Expectations
With the emergence of AI, there is an increasing demand for more bespoke and customised experiences. The concept of “enshittification” — where products and services degrade over time due to misaligned incentives and lack of innovation — highlights the sluggishness of big software vendors. They are often slow to improve and adapt, hampered by their size and bureaucratic processes.
Bespoke software, on the other hand, is lean, agile, and more personalised. Smaller teams can iterate quickly, integrate the latest technologies, and adapt rapidly to changing needs. This agility is particularly valuable in today’s fast-paced digital landscape, where organisations must continually innovate to stay competitive.
Leveraging Partnership Delivery Models
Another significant opportunity lies in partnership delivery models. Instead of relying on a large vendor, organisations like Birmingham City Council could collaborate with local consultancies to build and run software solutions together. This collaborative approach not only ensures that the software is tailored to the specific needs of the council but also opens up potential revenue streams.
For instance, if a suitable market is identified, the developed software or its spin-off products could be offered as Software-as-a-Service (SaaS) to other businesses or councils. This partnership model fosters innovation, ensures a high level of commitment from the local consultancy, and creates opportunities for shared success. Big vendors, with their standardised offerings, simply can’t provide this level of personalised engagement and potential for mutual growth.
What £14 Million Could Achieve
Building an In-House Software Team
With a budget of £14 million, Birmingham City Council could have opted to build an excellent and well-paid in-house software team. Here’s how that budget could be allocated:
- Salaries: Hiring a team of 20 highly skilled software developers, each earning an average salary of £70,000 per year, would cost £1.4 million annually. Over a three-year project, this totals £4.2 million (excluding NI & pension costs at a pure guesstimate of £1.5M over three years).
- Benefits and Training: Adding benefits and continuous professional development at an additional 30% of salaries would cost another £1.26 million over three years.
- Infrastructure: Setting up the necessary infrastructure, including hardware, software licences, and office space, might cost around £500,000.
- Project Management and Additional Staff: Including project managers, QA testers, and support staff might add another £1.5 million over three years.
This totals £7.46 million over three years (+ guesstimated £1.5M in NI and pension costs), leaving substantial room for contingency funds, additional hires, or further investments in technology and innovation.
Engaging a Local Software Consultancy
Alternatively, Birmingham City Council could have engaged a local consultancy, which would likely be more motivated to deliver a successful outcome due to closer ties to the community and a more vested interest in maintaining their reputation.
Here’s how the budget could be utilised:
- Consultancy Fees: A local consultancy might charge between £800 and £1,200 per day per consultant. Assuming an average rate of £1,000 per day and needing 10 consultants for a year, the cost would be approximately £2.5 million annually. Over a three-year project, this totals £7.5 million.
- Customisation and Integration: Additional costs for customisation, integration, and unforeseen challenges might add another £2 million.
- Ongoing Support and Maintenance: Providing ongoing support and maintenance for the system could cost around £1 million over three years.
This brings the total to £10.5 million, again leaving a significant buffer for unexpected expenses and ensuring the project remains within budget.
The Need for Accountability and Due Diligence
The Birmingham City Council’s experience underscores the need for greater accountability and thorough due diligence when selecting a software vendor. Organisations should critically assess whether a big vendor’s promises match their actual capabilities and past performance. References, case studies, and small-scale pilot projects can provide valuable insights into what the vendor can realistically deliver.
The Big Vendor Cycle of Extravagance
Let’s not sidestep how ludicrous this situation is.
Many big vendors, swoop in with grand promises and hefty contracts.
The council, in turn, takes the taxpayer’s money to foot the bill for this colossal expenditure. And where does a significant portion of this money go? To massive bonuses for executives, it seems.
The taxpayers of Birmingham end up funding luxury yachts and private jets, rather than seeing real value reinvested into their own community.
Imagine if that £14 million had been invested in the local economy instead.
Not only would Birmingham have had a bespoke software solution tailored to its specific needs, but it would also have supported local businesses, created jobs, and fostered innovation within the city.
Instead, we’re left with a software rollout debacle and inflated council tax bills.
Bravo.
Conclusion
The tale of Birmingham City Council is a cautionary one, highlighting the pitfalls of relying on big software vendors.
While their reputations and resources can be appealing, these vendors are not infallible. Businesses and public sector organisations must perform rigorous evaluations, seek accountability, and consider alternatives to avoid falling into the trap of costly and disruptive software failures.
In the end, the goal should be to find the right fit for the organisation’s needs, rather than being swayed by the allure of a big name.
This approach can save money, reduce risk, and ultimately lead to more successful outcomes. Bespoke solutions, local consultancies, and innovative partnership models present viable alternatives that can provide more tailored, efficient, and motivated service delivery.
