Original URL: http://www.theregister.co.uk/2012/12/13/queensland_payroll_ibm_sap_inquiry/

Australian State launches IBM probe

SAP-based payroll system said to need $AUD245m of repair work

By Simon Sharwood

Posted in Government, 13th December 2012 06:27 GMT

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. ®