The health department of the state of Queensland in Australia (henceforth referred to as QueenslandHealth) payroll system failure is said to be the most spectacular Information Systems (IS) implementationfailure in the Southern Hemisphere. It was 18 months behind schedule and 300% over budget.Additionally, upon going live a large number of Queensland Health employees, including doctors andnurses, were either incorrectly paid or not paid at all. The total project costs including implementation,stabilization and maintenance is estimated to be approximately $1.
25 billion AUD (KPMG 2012). Therewere heavy casualties for the failure, including the resignation of the minister of health, industrial strikeaction and in some cases, loss of staff members to other employers. The state government of Queenslandembarked upon the highest judicial form of enquiry in Australia (Royal Commission) to examine thecause of the failure and to provide a series of recommendations to be applied to future large governmentalIS projects. Findings of the Auditor General and Royal Commission reports highlight issues pertaining toproject management and governance.
“Those causes were: unwarranted urgency and a lack of diligence on the part of Stateofficials. That lack of diligence manifested itself in the poor decisions which those officialsmade in scoping the Interim Solution; in their governance of the Project; and in failing tohold IBM to account to deliver a functional payroll system.”The Honourable Richard N Chesterman (2013, p.
217), Commissioner”Whilst the accountability for payment of staff within Queensland Health ultimately lieswith the Director-General, Queensland Health, I consider that the governance of the projectwas unclear between his responsibilities and the responsibilities of the Director-General,Department of Public Works as the Accountable Officer responsible for the management ofCorpTech and its responsibility for the implementation of the whole of government HRsolution.”Glenn Poole (2010, p. 2), Auditor GeneralThis teaching case further examines the reasons for the disastrous Queensland Health IS implementationproject. Included in this teaching case are: (1) an overview of the environmental and technological projectdrivers; (2) the roles and responsibilities of the key stakeholders involved in the project; (3) theimplementation approach; (4) the outcome of the implementation project; and (5) a discussion into thereasons for the implementation failure.The Organization and its SystemsThe Queensland Government consists of predominantly three types of organizations: (1) Governmentagencies and departments; (2) Government owned corporations; and (3) General statutory bodies. All ofwhich report to both the Queensland State Treasury and their respective ministers in the QueenslandParliament. With Queensland state government elections occurring every three years, ministers andcorporate goals ultimately change to be reflective of the strategies of the political party in power. Hencegovernment organizations are turbulent in nature due to the shifting power and embedded bureaucracy.
Queensland Health is the public sector health care provider for the Australian state of Queensland. Itprovides dental, medical and aged-care facilities in Queensland, which has the most geographicallydispersed population of all Australian States. Therefore, Queensland Health needs to ensure that1 Contact Rebekah Eden for a copy of the teaching notes.Largest IT Failure in the Southern HemisphereThirty Fifth International Conference on Information Systems, Auckland 2014 3adequate healthcare services can be provided in the most remote areas of the state (Queensland Health2013a). Everyday Queensland Health provides hospital services to approximately 40,000 peoplethroughout Queensland. Consequently, Queensland Health is responsible for approximately eighty-fivethousand employees (85,000) across 300 sites (Queensland Health 2013b).
Furthermore, being a stategovernment department in the healthcare industry, Queensland Health is riddled with substantial layersof bureaucracy (Dunbar et al. 2011), thus adding to the complexity and increasing the difficultiesassociated with decision making, visibility and accountability. Due to the vast number of employees andtheir diverse skill sets there are a substantial amount of complexities inherent in the payment of staff.With, the existing payroll structures yielding more than 24,000 payroll calculation combinations (Poole2010).In order for Queensland Health to pay their employees, the disparate payroll system, LATTICE and theESP (Environment for Scheduling Personnel) rostering engine, was utilized.
The LATTICE and ESPsolution was rolled out progressively over six years from 1996 to 2002. However, the LATTICE solutionrequired a substantial amount of manual interventions to accommodate the complex award and incentivestructures evident within Queensland Health (Poole 2010). Yet, in 2005, just three years after theprogressive rollout was completed, Queensland Health received notification from the LATTICE systemvendor, Talent2, that their existing LATTICE system was becoming obsolete and was no longer going to besupported, with services and updates ceasing on the 30th June 2008 (Chesterman 2013). Consequently,in order to continue paying their employees Queensland Health needed to consider appropriate softwareto replace the obsolete LATTICE system.
Additionally, in 2003 the Queensland State government formally established a whole of governmentShared Services Initiative (SSI) mandating that all state government departments replace their existinglegacy system with a standardized software solution that incorporates SAP HR and SAP Finance(Chesterman 2013). The overarching objective of the SSI was to consolidate technology and resourcesthrough delivering a high quality solution with standardized business processes (Queensland Government2006). The SSI was expected to deliver the following benefits: (1) increased opportunities throughenabling workforce mobility; (2) increased visibility into the cost of services; (3) reduced data duplicationthrough the consolidation of systems; (4) reduction in costs associated with licensing agreements; (5)reduction of personnel; (6) achieve economies of scale; (7) enables the government organizations to focuson their core competencies, thus increasing the standard of service; and (8) consistency of HR and financeinformation across all government agencies (Chesterman 2013; Queensland Government 2006).As part of the SSI the Queensland Government established CorpTech within the Queensland Treasury tooversee the standardized implementation across all state government departments (Poole 2010).Therefore CorpTech was responsible for overseeing the consultant selection process (Request forInformation, Request for Proposals, and Invitation to Offer) and managing the consultant organizations.CorpTech sent out a Request for Information (i.e.
document used to gather information and shortlistpotential consultant firms) on the 2nd of July 2007, in which four consultant firms responded, Accenture,IBM, Logica, and SAP (Chesterman 2013). CorpTech then requested detailed proposals (i.e. documentused to determine the appropriateness of the consultant firm based on specific organizationalrequirements) from the aforementioned consultant firms on the 25th of July 2007 (Chesterman 2013).However, prior to the RFI being issued, CorpTech had managed the implementation of SAP HR at theDepartment of Housing, and SAP Finance at the Department of Justice (Poole 2010).
Theseimplementations proved to be quite costly as a substantial number of consultant firms and privateconsultants had been utilized. Due to the large expense associated with the multiple consultant firms, theconsultant methodology for the SSI was changed to the prime contractor model on the 16th of August 2007(Chesterman 2013). Subsequently, on the 12th of September 2007 CorpTech released an Invitation to Offer(i.e. document used to gather bids from perspective consultant firms), where IBM, Accenture and Logicaresponded. Ultimately on the 5th of December 2007 IBM officially signed the contract to be the primecontractor of the SSI (Chesterman 2013).During the tender process IBM put forth the use of “Workbrain” rostering system to be utilized to performthe award interpretation and rostering of staff members (Chesterman 2013). Workbrain is a best-of-breedsolution for awards interpretation.
If Workbrain was not utilized the awards would have needed to behardcoded into SAP using the ABAP programming language, which is a complex, time consuming, andIS Curriculum and Education4 Thirty Fifth International Conference on Information Systems, Auckland 2014labour intensive process (Bloomfield 2013). Hence, future SSI projects were to utilize SAP HR, SAPFinance and the “Workbrain” rostering system.Whilst the government had formed the SSI prior to LATTICE notifying Queensland Health of thediscontinuation of support; the unsupported LATTICE system was the predominant project driver asongoing support was critical. Therefore to mitigate the risks inherent with an obsolete and unsupportedsystem, Queensland Health undertook the SSI, thus alongside CorpTech and IBM replaced their systemwith SAP HR, SAP Finance, and the “Workbrain” rostering solution. Thus, the purpose of the WorkBrainsystem was to process the timesheets and transport them to the SAP system. SAP was then used to furtherprocess the timesheets into a format that was acceptable to the appropriate financial institutions, so thatemployees could be paid. The focus of this case narrative is on the SAP HR and WorkBrain rosteringsolution. The 85000 employees and the complex award structures within Queensland Health resulted in acomplex and challenging implementation project.