It wasn't a paper system, it was replacing an electronic system (which might also have used paper records I suppose, but it was an electronic system at heart).
The problem with government IT is there are hundreds of chiefs to keep changing what the thing is supposed to do.
Finally, something is produced, and it is put in front of the people who are expected to use it, and they find that they cannot use it efficiently because it has been poorly specified and somehow mutated to do something that was never originally in spec, and so they continue to use the old software, at least for some tasks.
This means that you cannot then remove the old software, and so instead of delivering cost savings, the project has delivered extra costs.
It all comes down to poor management and design processes, which still happen a bit in the private sector, but not as much - if you screw up, you probably no longer have a job - so in the private sector we spend a lot of money making sure that our processes are good and deliver continuous improvement.
In the public sector, train-wrecks like this happen constantly, and so it seems it is not such a judgement on someone who led/designed these failed projects, they seem to land another one immediately after presiding over hundreds of millions of pounds in losses.