IBM says Queensland Health SAP failure is not its fault

Queensland Auditor-General places large proportion of SAP rollout blame on Big Blue

The Queensland State Government has used an Auditor-General report to slam IBM for allegedly failing to deliver payroll services. But Big Blue is fighting back, claiming it was not responsible for many of the problem areas.

According to the report, IBM was taken on as a reseller by the Queensland Government to implement an SAP HR payroll system for its health system. But the start date for the project expanded from eight to 26 months and when it finally went live on March 14, a litany of major problems ensued.

Thousands of health staffers were incorrectly paid and the cost for the project blew out from an initial $6.19 million to $64.5m. The system is still not fixed and emergency measures are currently underway to pay employees correctly.

“The system implementation was over 18 months after the scheduled Go-Live date and approximately 300 per cent over the original cost budget for the prime contractor [IBM],” the report said. “To date, amounts paid to [IBM] for the implementation have totalled over $21m.”

The report went on to state that giving IBM responsibility for managing the project and supplying the services created problems as well as a potential conflict of interest.

In a statement the QLD Government said it had issued a Show Cause Notice to IBM, reserved its right to withhold final payment and could seek damages against the IT giant.

“The Auditor General’s report, not surprisingly, has found that there has been a fundamental failure in the process of implementation of the new payroll system,” Queensland Premier, Anna Bligh, said. “We have sought Crown Law advice in relation to options for terminating the payroll contract with IBM.”

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

The Government has accepted the Auditor-General’s seven recommendations, which include stabilising the payroll system, reconsidering its business model and rigorously applying business models.

But in a statement, IBM was adamant it delivered a high-quality system to the State Government health service.

“We vigorously defend the quality of the system we delivered to Queensland government,” IBM said in a statement. “We were not responsible for many key aspects of the systems implementation as confirmed in the Auditor-General's report.

“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.”

Regardless of who is to blame, the failure is set to radically change the way Queensland’s State Government purchases IT. Its whole-of-government IT provider, CorpTech, will be overhauled and shared services business models will be formally reviewed by auditing body, PriceWaterhouseCooper.

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