RTÉ writes down €3.6m on partly abandoned IT project

The project was to see the replacement of five 'disparate, legacy systems that were used for finance and HR, which were at or near end of life'

The broadcaster had sought to update its finance and HR systems using funds from the €107m sale of lands at its Montrose base. File picture: Leah Farrell/© RollingNews.ie

Politicians are demanding that RTÉ appear before TDs and senators to answer how it lost €3.6m on an IT system.

In a statement, the broadcaster said it had sought to update its finance and HR systems using funds from the €107m sale of lands at its Montrose base.

The Enterprise Resource Planning (ERP) project was approved in September 2016. It was intended to replace five "disparate, legacy systems that were used for finance and HR, which were at or near end of life". One had been installed in 2001, with another two installed in 2003.

The project had appointed two suppliers in 2018 following "an extensive procurement process", but RTÉ said issues arose almost immediately and the project was already behind schedule by January 2019.

"These issues were largely due to a lack of resources provided by those parties to the project, resource constraints within RTÉ, the build quality of the product in testing which did not meet expectations and over-ambitious timelines. This was compounded in 2020 with the outbreak of covid-19 and the disruption caused by same.

"As a result of issues arising, the contract was terminated with one of the appointed suppliers. This was the subject of a Settlement Agreement which is the subject of a confidentiality clause."

RTÉ said it then "engaged extensively with the other supplier to agree a plan that would facilitate the supplier delivering the maximum possible value of the contract".

In August 2022, the project restarted "following a phased approach with an initial finance implementation followed by subsequent phases for HR and other auxiliary functionality," and the finance system went live in March 2023. 

However, RTÉ did not ultimately proceed with the HR modules and said that "in accordance with accounting standards" was required to "review and record impairments in respect of this project from 2019 to 2023".

"The majority of the impairment relates to the effort to deliver the HR part of the project, amounting to €2.3m. The remaining €1.3m related to the delay and effort in delivering the Finance element of the project. Impairments were noted in RTÉ's approved Annual Accounts during the years 2020-2023, but more specific details relating to this project have been disclosed to the Minister as part of the review of capital projects.

"This impairment is very much an exception in the context of extensive projects delivered annually by RTÉ. This is evidenced by the fact that in Q1 2023 RTÉ recognised that this project was an ‘outlier’ and commissioned consultants (Ernst & Young) to conduct a review of it so that lessons could be learned to minimize the risk of recurrence. 

"The Ernst & Young report was presented to the RTÉ Board's Audit and Risk Committee at its meeting on 20 April 2023 and discussed. It was also discussed by the RTÉ Board at its meeting on 27 April 2023.

"Furthermore, the corporate governance reforms introduced by RTÉ over the past 18 months are designed to mitigate against the risk of recurrence of such issues."

A statement said that Arts and Media Minister Patrick O'Donovan has been alerted to the issue, which has been confirmed by the Department, after bodies were queried about projects over €500,000.

"Following submission of the required material from RTÉ, the Minister met with the RTÉ Director General on April 8 last to discuss further the background to the project and the reasons for the failure to deliver on the original scope of the project. 

"RTÉ also set out a range of measures that have been put in place in the interim to improve internal control procedures and project delivery. The Minister asked for further written details to be provided and this is awaited."

The revelation has led to confirmation from the Chairperson of the Media, Arts and Culture Committee Alan Kelly that he will invite the broadcaster to explain the situation.

He said: “The latest revelations from RTÉ of a massive write down on a failed IT system demands serious attention.

“At the time of the controversy in 2023, I and others asked at the PAC committee was there anything else we needed to know. Why wasn’t this brought up then?

“What about RTÉ’s commitments on openness and transparency with the public?"