Auditor General Glen Poole has tabled a report in Queensland parliament critical of how the government implements computer systems. Among the many audits in the report “No 13 for 2010” is on Queensland Health’s troubled new payroll system. The auditor said Health’s problems were replicated in other agencies with their new payroll systems and there are some serious issues with the IT outsourcing process.
The report said QBuild’s (Department of Public Works) Ellipse system was implemented to replace their existing operational, financial and payroll systems at a cost of $32m. “Significant issues arose after this system was implemented,” the report said. Project management controls were not consistently applied across the system implementation lifecycle while governance structures were not effective in communicating complete and timely information. Testing was also unsatisfactory given QBuild’s financial reporting and payroll processes “were dependent on the rigour of this testing.”
The QBuild findings were consistent with what the auditor found at Health and they demonstrate “a critical need for improved system implementation skills within the public sector.” The original idea was whole of government implementation which was changed to a project governance arrangement in June 2009.
After many years of design, development and testing, Queensland Health implemented a new payroll system on 14 March this year. Poor requirements gathering and system design meant there were 47 change requests to the original scope, delaying the project by 18 months and making the project three times more expensive than original estimated. Health spent $100 million on their new payroll system and associated whole of government initiatives.
An auditor’s opinion was issued in Report No 7 in June 2010 after significant deficiencies were found in the completeness, accuracy and timely payment of employees when the system first rolled out. The audit found the deficiencies arose as a result of “weakness in internal control” and represented “material non-compliance with the prescribed requirements for the department to maintain an appropriate expense management system.
The system was not ready to implement on 14 March however the Go Live decision was made after project partners IBM and CorpTech signed off the technical readiness while the business signed off the Acceptance Testing report. Because of the project’s complex outsourcing, significant contractual and commercial challenges would occur if the project was further delayed. Yet there were no contingency plans for business cut-over and no testing done in the production environment to determine whether the pays were correct prior to the first live payroll. Nor did anyone consider the impact of the new system’s changed business rules on business practice.
The implementation problems were so bad and so widespread, Health had to establish a Payroll Stabilisation Project with KPMG. The auditor said the Stabilisation Project has ended and the project has transitioned into the Payroll Improvement Program. Health activities have resulted in a declining trend in payroll enquiries and outstanding transactions. Poole cautions “close monitoring of the transaction backlog and further improvement in the efficiency of business processes” was still required. The audit found the deficiencies had no material effect on the completeness and accuracy of the reported employee expenses.
The recommendations for the QBuild project closely mirror what was recommended for Health. The first key point is a lack of a project management methodology including requirements for project reporting, including key risks and issues. Poole recommends government departments engage an experienced project manager with strong enterprise resource planning implementation experience. He said strong governance frameworks should be established to ensure separation between senior supplier and the project manager while suppliers should only be paid on deliverables satisfying acceptance criteria.
Some recommendations may be unrealistic (eg “user acceptance testing should be completed prior to commencing user training”) however most is basic project management methodology. Given that experience of such methodology is plentiful at QH, CorpTech and IBM, it may be that too many cooks spoiled this particular broth. Serious questions need to be asked about the efficacy of outsourcing large government IT projects.
Disclosure: this writer is a former employee of IBM and worked very briefly – and unenjoyably – on the QHIT project before tendering his resignation in April 2009.