IBM under fire for QLD Health bungle

By Liz Tay on Jun 30, 2010 11:24 AM
Filed under Software

Government could seek damages for payroll implementation.

The Queensland Government has issued IBM with a Show Cause Notice following a damning audit of its recent payroll system implementation.

The court order requires IBM to justify the continuation of its role as the prime contractor of Queensland Health's SAP HR payroll system implementation.

Queensland Health also has reserved its legal right to withhold final payment of $3.3 million and seek damages for the project, which has been blamed for more than 35,000 payroll anomalies.

"We have sought Crown Law advice in relation to options for terminating the payroll contract with IBM and it's only fair that we seek to reserve our legal rights," Premier Anna Bligh said in a statement yesterday.

"The Government has issued IBM a Show Cause Notice as to why the contract should not be terminated."

IBM was contracted in December 2007 to replace Queensland Health's LATTICE payroll system by August 2008 for $6.19 million.

By the time the system went live in March this year, IBM had made 47 changes to the original specifications, and been paid $21 million.

In a report tabled yesterday, the Queensland Auditor-General highlighted poor project management and a lack of clearly defined business requirements in the payroll system implementation.

"The governance structure for the system implementation by [whole-of-Government IT provider] CorpTech and IBM, the prime contractor and Queensland Health was not clear, causing confusion over the roles and responsibilities of the various parties," the Auditor-General wrote.

"Inadequate documentation and agreement of business requirements contributed to the significant increase in the system development costs and timeframe."

The State Government responded by accepting all seven of the report's recommendations, to review and improve change management, Queensland Health's business model, and ICT frameworks, and to ensure all employees are correctly paid.

However, the State Government also noted: "The Auditor General's report clearly identifies failings on the part of contracted provider, IBM."

IBM defended its work in a statement provided to iTnews this morning, noting that it was "not responsible for many key aspects of the systems implementation as confirmed in the Auditor General's report."

"As a global company with deep expertise in dealing with highly complex systems implementations, we vigorously defend the quality of the system we delivered to Queensland Government," the company stated.

"We delivered within the governance structure established by Queensland Health and outlined in the Auditor General's report.

"IBM has relentlessly and consistently delivered above and beyond the scope of the contract to assist Queensland Health identify and address concerns with its payroll process.

"Our commitment to supporting the Queensland Government in its mission to provide quality services to employees remains unchanged."

7 comments in this discussion

"My own experience from working with IBM some years ago was not as bad as this, but they did change the scope significantly to promote there own experience and competencies above what was required ..."

By rollerdoor

Tags

ibm, qld, health, sap, hr, payroll, corptech, qgcio

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Comments: 7

redrock Jun 30, 2010 2:59 PM	its all very well blaming the vendor but what about the governance of this? accountability lies squarely on Q Health
frogg11 Jun 30, 2010 6:56 PM	Accountability lies squarely with the the Beattie and Bligh Labor Goverments who set the unworkable governance arrangements. They decided, without proper analysis, to centralise all government IT and processing activities. They created the monsters called CorpTech and SSA and this is their return on investment - an entirely predictable shambles. On top of that, no-one in the departments knows whats going on and we have an army of people in departments and in CorpTech and SSA whose job is dealing with each other. It is the completely wasteful and unproductive activity of government doing business with itself.
PeterA Jun 30, 2010 11:49 PM	Q Health is to blame. There have been some other notable qld projects in the press that also went over the odds. They should also research or google on "SAP + cost overruns" and "Top 10 SAP implementation mistakes to avoid". One claim is that SAP software will cost you 10 times initial cost - one expects $60 million after phases I II and III have gone in.
pondering Jul 1, 2010 1:53 PM	Agreed that this sounds like yet another balls-up by a State Government; no different to most States really.... incompetent management and mostly bankrupt (eg NSW.....). However, I cannot but feel that the comments below were written by vendor insiders! Pondering upon the situation as a total outsider I would like to comment that in my research between friends within the IT industry, it seems that most if not all SAP implementations are significantly over budget and over promised delivery timelines, so why should this be any different! And, it seems like yet another situation where people's interests, job security and fear always gets in the way of introducing new effeciencies. In conclusion, seeing that over the last 25 years it has been clear shown that the most significant hurdle to overcome, in these deployments, is change management (the impact of technology on humans) why is it that it is always technologists and technology biased consultants that end-up ramming technology into organisations? Could it be better served if HR was responsible for these deployments (with specific success targets), rather than a CIO? OK.... Shoot me!
wwwalker Jul 1, 2010 2:55 PM	This is why I never do projects with government departments as they invariably end in disaster. The easiest way is start anew rather than try to convert an old system to a new one. Testing should have been done before the handover and the vendor should not have trusted government IT guys to do it properly. That way the vendor can sign off without the inevitable recriminations of a failed installation. I would guess that IBM used waterfall methodology instead of agile methodology so when the final integration testing went through all hell broke loose rather than doing incremental integration which allows for feature creep and cost blowout. This what I have learnt in my own business so I implemented a project management system that can nail exactly the requirements and changes made and won't let the customer wriggle out of what they actually said. This can be used to stop jobs dead or rework resources to finish the job with less features to come in on budget.
robbotmodoina Jul 3, 2010 3:19 PM	The fastest way to have the surgery is to join a health fund like Medicare Private. Some of the big health funds are having specials, like dropping the waiting time. http://www.articlesbase.com/health-articles/force-factor-review-amp-free-trial-2113761.html
rollerdoor Jul 7, 2010 10:43 AM	My own experience from working with IBM some years ago was not as bad as this, but they did change the scope significantly to promote there own experience and competencies above what was required in the Statement of Work.