Australian State launches IBM probe
SAP-based payroll system said to need $AUD245m of repair work
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IBM's dealings with the Australian state of Queensland will be the subject of an inquiry with the powers of a Royal Commission, after an SAP-based payroll system implemented in part by big blue failed so badly returning it to working order is expected to cost $AUD245m, with the whole project costing $AUD1.25bn.
Queensland is Australia's fastest-growing state, in terms of population. In early 2012 a Labor government was utterly demolished by the rival Liberal National Party, which won 78 of 89 seats in the sole chamber of parliament.
One reason for the crushing victory was messes in the State's health system, a service seen as a key issue in a State that attracts many retirees and young families.
Among those messes was a payroll system that saw staff paid incorrectly, or not at all. Some nurses were paid more than they were owed, but were told it was not possible to repay the extra money. The State government later docked wages to recoup the overpayments, a deeply unpopular move as some had been overpaid by 25% and did not enjoy the resulting cash flow hit.
Public anger about the payroll system has now reached the point at which Queensland's Premier, “Can-Do” Campbell Newman, has called a Commission of Inquiry with the powers of a Royal Commission – meaning it can compel testimony – to look into the mess.
One of the terms of reference is to “Analyse the contractual arrangements between the State of Queensland and IBM Australia Ltd and determine why and to what extend the contract prices of the Queensland Health Payroll system increased over time.”
Newman has signalled an intention to claw back cash from IBM and others found to have dudded the State. “The Inquiry will … fully examine the implementation of the Health Payroll and may be used to assist with the potential recovery of losses from any external party,” Newman said in a canned statement.
That statement asserts" At least $1.253 billion will be needed to fix the system," which appears to be a misrepresentation, as a document said to be KMPG's report (PDF)into the state of the payroll system hosted at Delimiter puts the work required to fix the system at $AUD245m and the total cost at the higher figure.
A spokesperson has told The Reg "IBM will actively participate in the full scope of the Commission of Inquiry." SAP is yet to respond to our inquiries. ®
COMMENTS
AU$1.25 *Billion*
I get US $1.35 Billion.
It's 1 state in Australia and it's population (if you believe Wikipedia) is c4.6 million
That's close to a US$300 a charge for every man women and child in the state FFS.
Icon expresses my surprise unless that includes all the over/under payments.
If that's the bill to fix the software alone then someone is having a very large pole up one of their orifices.
Re: AU$1.25 *Billion*
My thoughts exactly. I am sure the days of knocking up a payroll system in cobol over the course of a couple of months is long gone, but I would have been shocked to find it cost that much to begin with, let alone to repair it. If that was the cost of a national payroll system, including hardware, maintenance and support for say 10 years, maybe.
Are they sure they haven't screwed up some calculations? I've seen some pretty impressive 'mis'quotes over the years, usually due to a basic formula error. One poor sod ordered what they thought was 1 ream of paper \ 500 sheets, of course a large truck duly turned up with 500 reams.
I worked with SAP systems for five years; I think that the product design is out dated, processes are bureaucratic and not easy to learn; and the implementation process is generally very cumbersome. But if it is correctly configured and managed it does actually work.
Unfortunately, IBM have a record of promising the customer that they will manage and deliver a working system, but then buy in the cheapest people that they can find to work on the project (whilst charging the client an arm and a leg). These contractors often have limited experience or knowledge of SAP or its implementation; the result is inevitable.
As for the costs; I tried to find out what would be involved in that figure of $AU1.2 billion but there don't seem to be any hard figures. If it includes new hardware, a complete redesign, transfer of data, internal staff costs etc, then I would expect it to be around a tenth of that for the size of operation. It could be that they are asking for compensation for all the trouble caused; good luck on that!
SAP will probably stay at arms length from this (as they do with most other failures). The Queensland government has a contract with IBM so they have to sue them. If they try to get at SAP, their lawyers will simply show that the software works elesewhere and it is down to the implementation. IBM will probably try to off load blame onto the contractors, staff, managers; everyone they can (and yes I've been at the receiving end of something like this)
I feel sorry for the residents of Queensland; they are the ones that will end up paying for this cockup.
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