A “business process” error has caused two Somerset councils and a police authority to make duplicate payments totalling £4.6 million to suppliers.
According to Southwest One, a joint venture between Somerset County Council, Taunton Deane Borough Council, Avon and Somerset Police and IBM, duplicate payments arose in the early stages of the adoption of SAP’s invoicing software, but problems persist with the system according to Somerset's latest accounts.
Southwest One implemented SAP in March 2009, with some help from IBM. Although the duplicate payments were made in 2009-2010, a Somerset audit committee report from December 2010 indicates that they were not identified until 2010-2011.
“There were the usual teething problems of implementation relating to ensuring everyone who needed to use the system was adequately trained, but the main problem was the implementation of a bolt-on invoice scanning system that did not work well to start with,” a spokesperson for Somerset County Council said.
The scanning problem meant that Southwest One staff were unable to tell staff at the county council where invoices were in the system, and whether they had been paid, or were soon to be paid.
Staff therefore bypassed the scanning system by making payments by cheque, to avoid urgent payments – for example, to foster carers – being delayed.
“Because of the poor implementation of the scanner solution, some invoices were input twice by either Somerset or Southwest One staff.
“But because SAP’s invoice-matching tools are very poor – i.e. unless there was an exact match – it was extremely difficult to identify duplicates before payments went out the door,” the spokesperson said.
To solve this problem, in January 2011, Southwest One added another data matching tool designed by Etesius to the payments system, which the spokesperson said “has proved to be more effective.”
A spokesperson for SAP said: “The issue was a business process problem rather than a software fault, where invoices were inputted into the system twice.”
Southwest One has now been live on SAP financials for more than a year, and has so far recovered more than 95 percent of the duplicate payments. Around £200,000 remains outstanding.
“SAP will work with our partner and Southwest One to ensure we are continuing to improve all processes so that risk of any further repeats is minimal,” the SAP spokesperson added.
According to the BBC, around 2,200 invoices were paid twice in total, with the largest overpayment of £800,000 made to bus company First Group. This amount has been refunded.
Somerset County Council overpaid by £3.6 million, while the police paid out £404,000. They are still owed £169,000 and £10,426, respectively.
Taunton Deane Borough Council paid out £517,000 and is chasing the remaining £12,200 owed.
“This represents a very small proportion of the council’s overall budget and has had no effect on the delivery of services,” a spokesperson for Taunton said.
The Taunton spokesperson added that the SAP system had delivered considerable benefits. For example, it allows the council to monitor accurately the speed at which the council is paying invoices, and to identify and correct any problem areas, which was not possible in the past.
Taunton council leader John Williams said: “Although it is acknowledged and regrettable that the SAP system as implemented suffered teething problems I am now heartened by the relatively rapid recovery of the system which in turn gives us far greater control over the finances of the council.”
Despite the duplicate payments problem being attributed to early teething problems, Somerset’s 2010-2011 unaudited statement of accounts published on 30 June 2011 reveals that issues with the SAP system are still being ironed out.
“Since its introduction in April 2009, our financial system (SAP) has proved difficult to use effectively.
“Despite a number of SAP experts helping us resolve a number of issues, finance staff in particular continue to struggle with the poor initial set-up. While some improvements have been made to the system, work continues to resolve the remaining issues.
“It has been a much more stable year, but improvements are still required so we can reduce our dependency upon spreadsheets and access our information quicker. The speed of the system and management information must still be improved so that budget holders can access their own reports,” the county council said in its report.