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Woe Canada: Rather than rise from the ashes, IBM-built C$1bn Phoenix payroll system is going down in flames

Canucks to pull plug on ill-fated mismanaged govt IT project

By Shaun Nichols in San Francisco


Canada is about ready to pull the plug on its IBM-built error-plagued Phoenix payroll system that has cost the nation nearly CAN$1bn ($790m).

According to the latest version of the Canadian government's spending plans, the Trudeau administration will move to dump the ailing platform in the coming years, but not before blowing a budgeted CAN$431.4m ($335m) over the next six years to tackle ongoing IT gremlins that have left thousands of government employees getting too little, too much, or no pay at all.

Launched in 2016, Phoenix was an IBM implementation of the Oracle PeopleSoft platform that was supposed to handle payroll for 46 Canadian government agencies and departments.

Unfortunately for the Great White North, the system was almost immediately beset with problems. Nearly two years later, officials have had to expand their payroll support staff from 550 heads to more than 1,500 to cope with the cockups, and some CAN$460m has been spent on support and fixes.

Now, America's Hat says it's time to cut bait and move on. The administration plans to begin a two-year CAN$16m project to design a new system to replace Phoenix.

"Over the last year and a half, the government has hired several hundred people to rebuild capacity that was lost due to the previously flawed business plan," the budget report said of Phoenix.

"In addition, action has also been taken to reimburse employees who have incurred personal expenses as a result of pay issues. However, serious issues and challenges with the Phoenix pay system continue, and too many federal public servants are not being properly paid."

Systems nominal

IBM is taking the news in stride, and insisted it has held up its end of the bargain.

"As the government has repeatedly acknowledged, IBM is fulfilling its obligations on the Phoenix contract, and the software is functioning as intended," a spokesperson told El Reg on Thursday.

"IBM continues to working in partnership with the government's efforts to resolve the project's issues, and we remain committed to the project's overall success."

Lest we accuse Big Blue of trying to pass the buck, Canadian officials have in the past admitted the project was doomed by management blunders early on – and that "IBM has done what we asked them to do… It's not IBM that was the project manager."

Regardless of who is at fault, the situation is a bad look for all parties involved. For IBM, the ordeal is another major government project failure its name is attached to at a time when Big Blue was just righting its financial ship.

The Canadian government, meanwhile, said this week that on top of the nearly CAN$900m support costs, it will have to cough up about CAN$5.5m in charges to smooth out tax headaches caused by botched payments to employees and additional costs to support the legal fallout.

"To address the real mental and emotional stress and unacceptable financial impacts on public servants, the Government has initiated discussions with public service representatives to address the numerous grievances and legal actions," budget officials stated.

"Similarly, the government will also take action to reimburse missing and inaccurate dues that are owing to public sector unions." ®

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