WHAT PAYROLL PROJECT LESSONS WE CAN LEARN FROM THE QUEENSLAND HEALTH PAYROLL DISASTER...
There can be multiple reasons why projects fail. The combination of people, processes and technology are a breeding ground for tension and for projects within major enterprises, these tensions and the eventual fall out are magnified by the sheer size of the project. Common causes of project failure include insufficient or inexperienced and/or inadequate resourcing, poor communication, misaligned goals and expectations, poor technology selection, insufficient funding… the list goes on.
The impact of a payroll project failing is more severe than most, largely due to the economic and operational headaches they leave in their wake, making them particularly risky. Such is the case with the renowned Queensland Health payroll disaster, which left many reaching for the painkillers….
Queensland Health (QH) provides public healthcare services to Australia's state of Queensland employees over 80,000 workers. During 2006-2008 QH was looking for a replacement for its then soon-to-be-obsolete payroll system and contracted IBM Australia to design and implement a new system. The project had a budget of $6.9 million AUD and was to be deliverable in July 2008.
Early warning signs:
From its very beginning, multiple risks were present and were overlooked. The complexity of the project was vast, involving the management of over 24,000 different formats of wage payments, overtime accruals, individual personal payment award systems and multiple industrial agreements, impacting over 80,000 workers and subcontractors. Due to concerns that the soon-to-be-obsolete incumbent system was going to fail, IBM set aside only two weeks to scope out the "critical business requirements". Not surprisingly, the lack of detailed scope gathering was the first undoing.
In addition to insufficient scope gathering, this was IBM Australia’s first attempt at delivering a project of this size. Their inexperience, coupled with the complexity of the QH payroll environment and interoperability, was the next nail in the coffin.
The disastrous roll-out:
After almost 2 years of inadequate delivery, the payroll program finally went live in March 2010 with an estimated project cost blow-out of $101 million AUD.
According to AgileXperts’ Executive Director, Brett Cowan, the collapsed system had no chance of working. At the time of go-live, Brett was the User Acceptance Test Manager of the program and had reported over 2422 defects including a high number of “Severity Two” defects before go-live.
As a witness for the subsequent Queensland Health Payroll Inquiry, and with more than a decade of experience in software test management, Brett was stunned at the level of problems he found in the system during testing in 2009.
Evidence suggests that on July 7, 2009, forty Severity Two defects were downgraded to Severity Three to circumvent project quality gates, despite significant disagreement to this action within the project steering committee. The obvious intent of this manipulation was to keep the project moving forward, regardless of the quality of what was being built. This left many observers flabbergasted that the system was going to go live with so many issues.
A further analysis of the barely operational system in 2013 indicated that it was not performing as expected and the total cost of the project would end up at around $1.2 billion dollars.
But perhaps the project's worst failure was caused by the inability of team leadership to adequately plan, scope and remediate the system during the development process.
Due to time constraints and cost overruns, it was determined to let the system go live without fixing a lot of the true high severity defects which resulted almost immediately in over 35,000 payroll anomalies. Thousands of workers were underpaid or didn't receive payment at all, while the system overpaid thousands of other employees by a total of $400 million dollars. Queensland Health then went on to spend the next 5 years sorting out underpayments and overpayments.
It’s important that the client engages the most experienced and knowledgeable people to look after their success.
What we can learn:
Businesses considering their next payroll project are strongly advised to delve a little deeper into the measures that drove the QH payroll fiasco.
The expert payroll project team at AgileXperts outline these measures:
1. Do not rush the requirements: to avoid scope creep or cost blow-out, take the time to define requirements properly. This will highlight any issues, challenges or risks to the project that can be solved before they arise. Like architecting a building, well-thought out and detailed requirements will be the baseline and master document in a successful project.
2. Get watertight contracts with your suppliers: one of the major strengths of large system integrators is their legal teams and contract management processes. Engage your legal team and consultants experienced specifically with payroll systems contracts, align the contract with the scope from the vendor selection process and remain aware of contract breaches. These will ensure contracts will support a successful conclusion and a positive working relationship between all parties.
3. Make sure you’ve got the best team working in your interest: The vendors and Systems Integrators of payroll systems have their own definitions of success for a project – their first priority will always be to ensure the project makes money for them. In order to ensure that the client’s best interests are always being looked after, it’s important that the client engages the most experienced and knowledgeable people to look after their success.
4. Communicate, communicate, communicate: One key failing of the QH payroll disaster was a lack of stakeholder engagement, evident leadership and a building of department silos. All of these issues can be soothed with a cohesive and agile approach that is centralised on communication and inclusion.
For more information on how AgileXperts runs their successful payroll projects, join our webinar on Tuesday the 25th of August to learn the ‘Keys to Success for Payroll Projects’.