news Diversified technology products and services giant IBM has rejected a number of the findings included in the Commission of Audit’s inquiry into Queensland Health’s botched payroll systems upgrade, blaming the majority of responsibility for the catastrophic consequences of the botched initiatives on the State Government.
Queensland Health’s payroll systems upgrade project was first kicked off in late 2007, when the department determined there was a need to look at a new payroll platform to replace the previous platform, based on Lattice and ESP software, which had been progressively implemented from 1996. Partially as a result of the fact that the state had decided to standardise on SAP’s ECC5 and Infor’s Workbrain software across its whole of government operations, those same platforms were picked for the Queensland Health implementation.
However, the project, implemented by prime contractor IBM, Queensland Health itself and government shared services provider Corptech — quickly went off the rails as poor governance and the complexity of Queensland Health’s award system kicked in, with the result that many of Queensland Health’s 85,000 workers went without pay for a period, or were overpaid, at various periods from early 2010, when the system went live. The LNP administration in Queensland recently announced additional funding of the project of $384 million, taking total project costs to an estimated $1.25 billion.
A series of audits and inquiries into the project, the latest being a Commission of Inquiry Investigation conducted by a former Supreme Court Justice and published yesterday, has found that the the project’s difficulties were caused by woeful project scope definition at the project’s commencements, as well as poor governance throughout, with all three key parties involved — Queensland Health, Corptech and IBM — significantly underestimating the scope of the work required.
The Commission of Inquiry report delivered new findings specifically dealing with IBM’s role in the debacle. Specifically, it found that IBM received favourable information during the contract procurement process that helped it win the initial contract unfairly, that the company may have low-balled its bid based on that information, that the company’s executives breached its own ethics policy in the bid, and that the Government should never have settled the case in a legal sense with IBM. IBM was paid just $25.7 million for its role.
However, in a statement issued this afternoon, IBM pushed back on the findings. “IBM cooperated fully with the Commission of Inquiry into Queensland Health Payroll, and while we will not discuss specifics of the report we do not accept many of these findings as they are contrary to the weight of evidence presented,” a spokesperson for Big Blue said.
“As the prime contractor on a complex project IBM must accept some responsibility for the issues experienced when the system went live in 2010. However, as acknowledged by the Commission’s report, the successful delivery of the project was rendered near impossible by the State failing
to properly articulate its requirements or commit to a fixed scope. IBM operated in a complex governance structure to deliver a technically sound system. When the system went live it was hindered primarily through business process and data migration issues outside of IBM’s contractual, and practical, control.”
“Reports that suggest that IBM is accountable for the $1.2 billion costs to remedy the Queensland Health payroll system are completely incorrect. IBM’s fees of $25.7 million accounted for less than 2 percent of the total amount. The balance of costs is made up of work streams which were never
part of IBM’s scope.”
IBM has previously claimed it “successfully delivered” on its obligations to the payroll project. In a letter to LNP Health Minister Lawrence Springborg, quoted by Springborg in Parliament on 5 September last year, the company said:
“As you may be aware, IBM successfully delivered against milestones agreed with the Queensland and concluded the implementation of the project on agreed terms. IBM consistently delivered beyond the scope of the contract to assist Queensland Health to identify and address concerns with its payroll process. We delivered within the governance structure established by Queensland Health and CorpTech and outlined in the Auditor-General’s report.”