It was all smiles when the City of Edinburgh Council announced the extension of its managed IT services contract with supplier CGI in September. But talk of smart city services using artificial intelligence and IoT belied a sorry tale of an abandoned Unit4 ERP project which led two suppliers to the courtroom door.
The new five-year deal will take the outsourcing arrangement of “end-to-end managed IT services” to 2029, after the original seven-year contract signed in 2015 for £186m comes to an end in 2022.
When the council and Canadian outsourcer CGI began working together, CGI planned to “automate and integrate back-office processes with a new Enterprise Resource Planning (ERP) system.
“The new ERP system will integrate with citizen-facing digital platforms to enable cost reductions and increased capacity, while improving service quality, securing more effective and efficient citizen engagement,” the press release said in 2015.
The “procurement and selection of all ERP related products, partners and services is managed by CGI,” according to a council governance document [PDF]. As such, there is no record of their public procurement.
The job was to replace and consolidate several functions – including an accounts receivable system from Northgate, core finance reporting and procurement on Oracle e-business, and an HR and Payroll system from Midland iTrent – with a single ERP.
CGI and the Council opted for Unit4’s Business World, formally known as Agresso, a decision which only came into public view when, in 2018, the contractor ended up in Scotland’s supreme civil court [PDF], facing off Agilisys. Agilysis was subcontracted to provide the Unit4 solution.
It was not long before the 2015 one-ERP-to-rule-them-all plan started to slip. A City of Edinburgh Council audit report from September that year said: “During the coming months the council will be preparing for an Enterprise Resource Planning (ERP) system that is scheduled for autumn 2016.”
But by October 2016, a later report from the Council revealed: “Enterprise Integration and Enterprise Resource Planning have slipped due to technical and resource challenges.”
Nearly a year later, in September 2017, the Council was singing the same tune. “Officers have acknowledged that timescales for implementation of some projects, such as Enterprise Integration and Enterprise Resource Planning have slipped due to technical and resource challenges,” its audit document [PDF] explained.
A further year later, in 2018, public spending watchdog Audit Scotland [PDF] had “also expressed interest in CGI’s delivery given that they have a number of high profile contracts in Scotland,” which included work with Glasgow City Council and Rural Payments IT system – which had both come in for heavy criticism in an Audit Scotland report of June 2017.
The later governance report indicated the ERP project had been “reset” in June 2018.
‘Reset’, ‘rescoped’ – but where’s Unit 4?
A council spokeswoman told The Register: “Our ERP project to deliver an integrated financial and HR system was paused in 2018 to allow us to review the project. It was agreed that the previous plan was potentially not going to meet today’s needs or our future requirements, and a revised project was scoped.
“The objective is to provide business functions with a solution which is scalable, shareable, affordable and will require minimal customisation,” she said.
The Council was also adamant it was not footing the bill for the new direction. “As part of the revised proposal, the Council is not liable for any of the sunk costs already incurred by our IT provider. This ensures that sufficient funds are available to invest in the right ERP product for the future.
“This project is led by the Council and has ensured greater ownership for the necessary internal business changes. Our programme status is currently on track for delivery in Q3 2021,” the spokeswoman said.
Whether “paused” or “reset”, the ERP project no longer includes Unit4.
Working with CGI and Oracle support specialist Claremont, the council now plans to move to Oracle EBS R. 12.2 to ensure support for the next 10 years. Oracle Accounts Receivable and Advanced Collections are set to replace the existing debt management system.
Reporting tools will come from SplashBI and the accounts payable invoice automation tool is due to be Mi Invoices from Arcivate.
“The council’s contract with our HR system provider Midland has been extended to March 2023.”
But where did it all go wrong?
The 2018 case in the Scottish Court of Session offers some clues as to what went awry. Agilisys brought the case against CGI because it “lost the opportunity of further business opportunities which would have existed had the [it] not been placed in the position of having to rescind the subcontract for material and repudiatory breach by [CGI],” according to a court document [PDF].
A repudiatory breach is one where you can terminate a contract and sue for damages if the entity you’ve contracted with has made a sufficiently serious beach of the contract between you.
Later, CGI brought a counterclaim against Agilisys.
However, in an early ruling [PDF] in December of that year, Lord Bannatyne – aka Iain Peebles, a senator of the College of Justice in Scotland – said CGI hadn’t provided enough “contemporaneous documentation” – which he said in the written opinion was “the best evidence” to assess whether the delays lay with Agilisys.
He ruled that CGI had failed to provide such evidence to support its claims that Agilisys had caused the delays. CGI said its lack of contemporaneous evidence was because it had not endeavoured to “attribute and document fault”, because it was “interested in moving ahead with the contract”, which Lord Bannatyne said he’d found “wholly unconvincing”. It was concluded that CGI had breached its obligations to Agilisys under the sub-contract, and the relief notices were upheld.
Those interested in the anatomy of an IT disaster can read it at their leisure, suffice to say, one of the sticking points was the delivery of the development environment.
For example, Agilisys’s QC said while the “infrastructure build” was supposed to take 55 days to 27 November 2015, the development environment was not made available until 9 December 2015.
“When it was made available, it was unusable. It was not made fully available until 16 February 2016. Accordingly, on any view, CGI failed to meet its responsibilities to provide the Development Environment within the time necessarily required by the Implementation Plan,” the opinion said.
The test environment was also an issue. “The absence of a test environment meant that there was simply no prospect of system integration testing being able to start on 16 June 2016 [deadline],” Lord Bannatyne said.
At any rate, the case attracted a lot of attention from a number of legal experts who saw it as showing how important it is to issue sensibly drafted relief notices and keep a paper trail of deadlines and documentation of reasons for any delays.
CGI has turned down the opportunity to comment. Unit4 declined to comment. Agilisys has been contacted for its reaction. ®