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.

Tags queensland governmentIBMSAPqueensland healthpayroll

More about Big BlueIBM AustraliaIBM AustraliaOffice of the Auditor GeneralQueensland GovernmentQueensland HealthSAP Australia

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5 Comments

Justin2039

1

A recent SMH article, written by a savvy professor criticised the way Software Systems are Produced. He pointed out that the philosophy behind the design was wrongly based upon wysiwyg thinking, ie pragmatism. In IT it is called OOT.
OOT fails because it neglects the Subjective Element in Design.
The alternative requires a Copernican shift in thinking ie SOT.
It's nothing more than the ancient Parmenides V Heraclitus search for "truth" ie a Fail-safe System.
The only person to have discovered the methodology of Fail-safe Design is Immanuel Kant b1724-d1804, long before digital computing was even dreamed of. Yet in his Critique of Pure Reason he provided the "blue book" for a digital computer.
Another savvy programmer had the Idea that it might just work.
So he employed a savvy Information Architect to use Kant's Critique of Pure Reason as a Conceptual Business Requirement Definition. The result is a CAD tool for designing a Corporate Model. Like magic it works, again and again.
That software is now under beta test in a Melbourne Allied Health clinic. Look it up.
Sorry you will never know because I just signed a legal document which says I cannot.

Gary

2

Justin ..

English . .... .. Do you speak it?

Eric

3

I think he speaks some.... whether or not he reads English is a different matter.....

Oztikles

4

Justin, design whatever ... this what is the most annoying aspect, it shouldn't even be a topic of discussion. Yet it is ...

The key aspect is that programming have become a sweat shop concept rather than a professional service. We drive development prices down thinking that this is a competitive market space and the result is companies get burned for doing so in the long run, in this way alone I'm happy to see articles like this. On the flip side, that was tax payers money and what a horrible and costly lesson.

IBM struggles to find talent as do most companies because training for programmers is too short and wages are too small. We then overly trust these programmers who know how to bamboozle people into thinking they have skills and then put them in important roles and projects such like this.

Regarding the failure of the project, nothing surprising, the surprising factor is QLD Govt is allowing a budget blowout so casually and expecting a positive result, IBM must have some really good spin doctors working for them to convince the public servants on the receiving end of the project that everything was alright, If it were me after the 2nd double of up budget investment I'd be flying a red flag and demanding answers from IBM.

To get nearly 10x the budget estimate is laughable, maybe cause of the industry name IBM it was able to go so far.

from one who knows

5

[i]IBM struggles to find talent as do most companies because training for programmers is too short and wages are too small. We then overly trust these programmers who know how to bamboozle people into thinking they have skills and then put them in important roles and projects such like this.[/i]

You are correct in sayin IBM struggles to find talent. However, they do pay some of the highest starting salaries to technical graduates in the industry. What they don't do though is aquire skilled technical staff, because they off-shoring those more expensive jobs- thus they lack mature professionals. This failure though seems more due to poor project control in a very political environment , in an area of SAP (HR/Payroll) which IBM has little business acumen in. It was also a very complex assignment with multiple awards. The person who should be in IBM's gunsights is the IBM person who signed off on this project only to realise that it was indeed much more complex than originally thought.

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