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Eight ways Novopay failed

Published: 5:55PM Tuesday March 19, 2013 Source: Seven Sharp

In Dangerous Enthusiasms Professor Robin Gauld outlines the eight habits of highly effective IT fiascos.

Novopay fulfils all eight.

 Heres how:

1. Have an ambitious project scope the more ambitious the better

The project scope outlines the work which needs to be accomplished to deliver a service with the specified features and functions.

The New Zealand Education payroll is the largest in New Zealand and is in the top 10 in Australasia.

According to the Ministry of Education Novopay is the equivalent of a mega payroll and consists of 2,457 payrolls (one per school) running a complex set of business rules that are specific only to the New Zealand education sector.

  2. Change technical specifications during the project

Novopay was originally designed to be rolled out slowly. This approach is usually taken so the issues faced by one small group can be fixed before taking the issues to another group.

However, in May 2010, because of complexities, it was decided to do a single nationwide implementation. The same month, the go-live date was postponed, the costs increased and government and project mechanisms were added.

3. Develop long and complex contract and assume this will solve problems that arise (and they will)

In May 2008 the Ministry of Education completed contract negotiations with Talent2. It was confident the Novopay system would achieve its goals of cost, quality and contractual remedies. In case of failure the government moved much of the risk to the provider of the service, Talent2.

The original contract is 116 pages long and has 16 pages in the delivery service schedule.  National then renegotiated twice. The first time adding five pages, the second time adding 16 pages. Thats 153 pages in total.

4. Rely on the advice and skills of salespeople and contract and use lots of consultants rather than develop in house IT expertise. Ensure as many different consultants are involved so knowledge is fragmented.

It was February 2005 when the Ministry of Education first selected Talent2 as preferred provider of a payroll service which would be hosted and supported by third parties.

In August 2007 the Labour Cabinet agreed to outsource the payroll operation because it would require less expertise and resource from Ministry.  It would also result in a lower cost, lower risk and higher quality payroll service.

It was April 2008, under the Labour government, that Talent2 was chosen as the preferred vendor because it had an excellent track record in payrolls.

5. Ensure project has a long development time-frame so technology becomes outdated and the likelihood of organisational changes increases.

Cabinet first approved funding to develop a new payroll system for schools in 2005. It was seven years later, on 20 August 2012, the system finally went live.

During those seven years there were two governments, many different education ministers and ministry staff, different payroll systems for Talent2 (the original was called Alesco). And this doesnt even take into consideration any staff turnover at Talent2 during this period.

6. Believe everything youre told about the progress of the project and assume bugs will be ironed out once project is live.

147 software defects were detected when cabinet ministers Bill English, Hekia Parata and Craig Foss signed off Novpay and allowed the system to go live.

7. Look for indication of forthcoming failure, do not terminate project. Instead rely on promised IT fixes, more process and more monitoring.

Two major milestones, Confidence Points 1 and 2, needed to be met before going live, and were not.

Confidence Point 1 was not fulfilled, with the Ministry concluding that on balance, enough of the criteria had been met.

Confidence Point 2 was not achieved by Novopay. The government got advice from third parties on the issue and decided to continue.

8. Continue throwing money at the project

More than $100 million has already been spent implementing the Novopay system.

Now $6 million has been added to the bill to compensate affected schools and teachers. 

Source: Professor Robin Gauld &  Ministry of Education