The Payroll System Implementation Disaster at Queensland Health in 2010: System Analysis Case Study, TUD

Read the case study and answer the following questions:

1. How well was the project planned?
2. Evaluate the overall governance of the project
3. Assess the role of IBM in the failure of the project
4. What would you have done to increase the likelihood of success?

Introduction

The payroll system implementation disaster at Queensland Health in 2010 is said to be the most spectacular technology project failure in the Southern Hemisphere and arguably the worst failure of public administration in Australia’s history.

Queensland Health is the public sector healthcare provider for the Australian state of Queensland, located in the country’s northeast. It provides dental, medical, and aged-care facilities in Queensland, which has the most geographically dispersed population of all Australian states.

Queensland Health needs to ensure that adequate healthcare services can be provided in the most remote parts of the state, which has a population of 5.07 million across an area of 1.85 million square kilometers. Every day, the organization provides hospital services to approximately 40,000 people and is responsible for approximately 85,000employees across 300 sites.

Timeline of Events

2002

At this point in time, Queensland Health used two systems for their payroll: Lattice and the Environment for Scheduling Personnel (ESP) rostering engine. Lattice and ESP were rolled out progressively over six years from 1996 to 2002.

2003

In 2003 the Queensland State government formally established a government shared services initiative (SSI) mandating that all state government departments, including Queensland Health, replace their existing legacy payroll systems with a standardized software solution that incorporates SAP HR and SAP Finance.

2005

In 2005, just three years after the progressive rollout was completed, QueenslandHealth received notification from the Lattice system vendor, Talent2, that their existing lattice system was becoming obsolete and was no longer going to be supported, with services and updates ceasing on June 30, 2008.

2007

As part of the SSI, the Queensland government established CorpTech within the Queensland Treasury to oversee the standardized implementation across all state government departments. Corp Tech was responsible for overseeing the consultant selection process (Request for information, Request for Proposals, and Invitation to Offer) and managing the consultant organizations.

2008

Around October 2008, IBM had not achieved any of the “contracted performance criteria.” It had, however, been paid AU$32 million of its AU$98 million contract.

2009

To cater to Queensland Health’s specific business needs, including the complex award structure, retrospectivity, and concurrent employment, a significant number of customizations were made to both Workbrain and SAP.

2010

A second payroll test occurred in February 2010, which only resulted in an AU$30,000discrepancy: however, casuals and overtime claims were not tested. Queensland health accepted the inherent risks and opted to go-live without full testing of all the functionalities of the system.

2012

The cost of going live with a premature system resulted in more than 35,000 payroll mistakes, and by this point, it had cost the state in excess of AU$400 million just to operate the system. KPMG estimated that the cost of making the system function for the next five years would be another AU$836 million.

2013

IBM should never have been appointed as the prime contractor in Queensland’s failed health payroll project, according to the finding of the Commission of Inquiry that investigated the bungled project.

2016

The Queensland government was ordered to pay significant costs to IBM Australia after failing in a bid to recoup losses from the health payroll debacle. The Newman government launched legal action against IBM in 2013, arguing the company had misrepresented its capability to deliver a new payroll system on time and on budget.