Too much speculation...
Not enough detail in the article to support a number of assertions made here, except one.
SIMS has been implemented in many LAs with very little user training - this refers to the updated version which is SIMS.net, not the older SIMS which was hosted within the school.
So, as Admin staff are very stretched, they will use the most familiar methods that they know to complete a task.
It is likely (my 6-pennorth of speculation) that:
The deceased flag was set on the database as stated by the head,
The pupil list was exported from SIMS so that a Word mail-merge could be completed in the time allowed.
i know reports are available, but my experience in schools has shown that if staff don't know how to use them they won't be used.
Time to get back to lurking...