opinion Reading consulting firm KPMG’s first report into Queensland Health’s ongoing payroll disaster today, I felt as though I had been lobotomised and had every sensory organ in my body completely insulated by a smothering layer of cotton wool.
There are plenty of great-sounding words in the report that have clearly been inserted by someone with a high vocabulary. But the only problem is that they don’t make semantic sense when you read them in order. For example, I couldn’t work out what this paragraph really meant:
“Information on defects and systems issues was being captured separately in each of these aforementioned issues logs. It was therefore difficult to form a complete view of the systems issues and this was a major weakness. Whilst work was being undertaken to address issues, this was not being undertaken in an integrated and coordinated way. This therefore impacted on the ability of the team to prioritise activities in these areas and also impacted on communication with stakeholders.”
I could ask a million questions about a paragraph like this. For instance: What sorts of defects was Queensland Health experiencing, in what systems? How did they creep in? When were they first experienced? What problems did they cause? Whose responsibility was it to fix them? What work was undertaken to fix them?
None of these questions are answered in the report.
Or how about this pearler, which was contained in the “Moving Forward” section of the report — its broad conclusion:
“Progress has been made by Queensland Health in how the Payroll Stabilisation Project Team is structured and resourced. The project structure which has now been adopted provides a more integrated and consistent approach to the identification, assessment and resolution of these issues. The project structure and its resourcing will need to continue to evolve as further activity is undertaken across the various workstreams of the project.”
See what I mean? Doesn’t it sound like something out of Yes, Minister? My brain keeps on screaming at me — what does this all really mean?
KMPG was given a firm brief for this first report into Queensland Health’s ongoing payroll problems, which stem from the introduction of a new SAP-based system in March this year. The problems have resulted in 1,800 staff across the state receiving little or no pay in some periods since that time and have caused an absolute uproar in Queensland’s media.
The consulting firm’s mission was to consider and challenge the processes, procedures and metrics being adopted by Queensland Health to ensure that the next two pay cycles under the new system proceed with “an acceptable range of accuracy and timeliness” for a payroll the size of Queensland Health’s — affecting 74,000 staff.
KMPG’s job has also been to provide advice on the most appropriate governance arrangements for the payroll project in the short term.
I understand that KPMG’s job in this first preliminary report is not to conduct a full review of what went wrong in Queensland Health’s payroll project. That will be done in subsequent reports.
But surely it would have been appropriate to provide a bit more detail to the public about what’s actually going on inside the department, when the problem is on such a large scale.
The report does not name any names of anyone who might be responsible for Queensland Health’s woes or for fixing them. It does not mention what precise role the vendors involved — SAP and IBM have played in the problems or are playing in their resolutions.
It does not go into any technical detail whatsoever about what exactly has been wrong with Queensland Health’s new pay system, and how the department is planning to fix those problems, even in the short-term. There are simply no technical details involved at all — a staggering black mark on the report, when you consider that this is a highly technical project.
It does not mention whether Queensland Health is re-examining any of its contractual arrangements with any of its suppliers, or whether those suppliers have met their key performance indicators in helping to build the system — or even what the relationship is like now.
It does not go into the no-doubt complex relationship between Queensland Health and government shared services provider CorpTech, or what specific steps have followed from the establishment of a project management office to help resolve the problems.
It does not, in short, contain any real information about what is going on at Queensland Health at all — with the possible exception that a number of payroll staff have received dual-monitor setups to aid with their work on the problem, and that extra staff have been brought on board.
The document reads like the minutes of a meeting held between chief financial officers at two accounting firms who are each under non-disclosure agreements and unable to talk to each other about anything apart from the weather. It’s that boring.
Now I’m not saying KPMG deliberately obscured the truth of what is currently going on inside Queensland Health in its first preliminary report into the department’s payroll woes. And I’m not saying the Queensland Government asked it to keep the real details out of it.
But what I am saying is that the good people of Queensland shouldn’t be satisfied with the lack of government transparency that KPMG’s report today displays. It makes a mockery of the term “open government” and it simply increases the perception that there is a whole bunch of things going on inside Queensland Health that the state government is determined to hide.
The one thing I really don’t get is why. It’s not as if the whole gory story isn’t going to come out in an Auditor-General’s report eventually. You might as well be upfront to start with.
Image credit: cesarastudillo, Creative Commons
What I really don’t get is why they’re still struggling. Whilst it might be very painful to reconcile later, a reversion to the previous pay system that was presumably working reasonably well would a) start getting people paid, b) get them time to fix the system so it works properly and c) be able to work out where they’re getting things wrong when compared to the previously functional system.
I understand these systems are complicated and transferring information between them would be a headache but the cost to the Queensland Health’s reputation, and by extension the Queensland Government’s, has been much more significant. This is the second project I’ve seen where the desire to get the thing out the door on time was given more priority than adequate testing of the system. The other instance nothing critical (e.g. pay) broke but it appears QH wasn’t so lucky.
However, I can hear the LNP call now. “Do you remember Queensland Health? They couldn’t pay anyone properly. Over paid, under paid, some not paid at all. Do you really want to trust Labor with another term in government?” blah blah blah. The longer this drags on the worse it looks for everyone involved, QH, the Govt, SAP and IBM.
Hmm. From my experience reporting on these types of systems, it is usually more effort than it’s worth to revert to the old system temporarily — it’s usually a much better outcome to keep on plugging with the new system, gradually improving it.
This is because the process of migration off the old system has normally been so traumatic that it’s going to be as hard to go back as it is to go forward.
Having said that, I don’t really understand why both systems weren’t operating in a mirrored situation so that if the one system failed for certain jobs, that other one could simply take over. This is the sort of thing we were taught in high school – fundamental IT concepts. Maybe they were actually operating this way. But I’m not sure.
The other thing is that I don’t understand is why it seems that the replacement system wasn’t fully tested — the KPMG report mentions performance difficulties with the new system that seem to be being fixed by bringing in new, additional processing resources and so on. Didn’t they test the new system with a demo full load before sending it live? I don’t quite understand, and this, again, is detail I would like to see in a KPMG report on this.
I would also really like to know precisely what IBM and SAP’s involvement in this has been … so far their noses have been kept *very* clean.
I often ask the question, why do you want your accounting firm reviewing your IT Systems and Projects? Why can’t companies like KPMG just stick to their knitting? Audit the books at the end of the year, give tax advice if required, provide consulting expertise on accounting procedures, but stay out of reviewing things that are outside the core competency.
Also, the big accounting firms are SO LARGE and across so many things, that their conflicts (perceived or real and is there a difference) are virtually insurmountable. Imagine a scenario where KPMG comes out an hammers the government department and senior bureaucrats for their failed management of the project. Or what if they said that the product itself provided by SAP was incapable of being adequately delivered on time and on budget as per the requirements of Queensland Health? Think about the ramification for the Partners involved and future work! If you think that doesn’t drive much of the thinking at these organisations you’re a fool.
The bottom line is, if your toilet overflows you call an emergency plumber and he tells you what’s wrong and how to fix your toilet.
I have the same problem with KPMG … I know they have *some* degree of IT capability and like to make trophy IT hires — for example, the author of this report looks to be the former Australian MD of BearingPoint … but they just don’t seem to have the kind of deep technological experience that other consulting firms are known for.
They don’t really specialise in this area, and while, from what I have seen, they do a competent job (another example would be the National Broadband Network), I haven’t seen them really engage in the technological space to the degree they could have in Australia. If you look at the “what we do” overview on their website, it doesn’t even mention technology.
Take this report — they clearly understand project management, and discuss the matter a fair bit in its pages … but from my perspective the real issue here is what is going on with the technology — that’s where the pointy end of the stick is, not who is being kept up to date on each “workstream” is doing and so on.
As for the conflicts of interest … I think it would be fascinating one day to do a case study into that subject, with a stack of deep background sources. I’m not personally alleging anything here about anyone, but I have no doubt there would be some interesting stories ;)
Often times with the large accounting firms, they build their CVs in areas off the back of audit. So they do the audit for your end of year financials and then they suggest to the CFO that they review the IT systems that underpin the financials just so they can “ensure the end-to-end integrity”. The CFO always says yes because of the pressures on them. Then you have junior accountants doing DR/BCP reviews of your financial systems despite having no experience whatsoever. I’m not alleging anything, that is exactly what happens.
With regards to conflicts, my comments were certainly not directly alleging anything with the individuals or the companies involved with this report – I don’t know anyone involved. However, the big accounting firms all have a history that shouldn’t be ignored. That history of “professional services” vs “audit services” was one of the main reasons why there was a BearingPoint and why PwC sold their consulting business to IBM.
The issue with reports not looking at the pointy end of technology problems has become endemic in Australia. Technology is hard and we technocrats are sometimes not the best communicators. As a result, senior executives hire “non-technical” people to do technical tasks so that they at least get something back they can understand. I question whether or not what they are getting back is actually technically accurate. Too many CIOs are “non-technical” and too many non-technical people are being asked to write reports on technology issues. Banks don’t let plumbers run their M&A deals, Engineering firms don’t let hairdressers manage $100m construction jobs and your auditor doesn’t let their in house chef do your audit, but there doesn’t seem to be the same respect for technology projects.
It sounds to me like the famous Peter Principle in action here (http://en.wikipedia.org/wiki/Peter_Principle). In short, there aren’t enough people out there who understand technology and can communicate well about it — and when there are, they will tend to rise through the ranks quite quickly, until they reach a level where they are no longer competent. That is, they reach their limit.
Meanwhile, underneath them the non-competent people also rise through the ranks underneath them … and you get people who don’t actually understand things talking to CEOs and so on.
I know what you mean about the junior people doing audits etc — when I was at uni I was studying IT at UNSW with a bunch of people who were all on scholarships that involved work experience placements (six months at a time) at places like PWC. It was crazy the sorts of senior work that some of my classmates were getting handed … and of course, a second year uni student really knows not much.
SAP and KPMG Consulting Form Alliance to Introduce NewSAP R/3 Joint Venture Accounting Component…
The introduction of Sarbanes-Oxley led to opportunities as well as constraints for professional services firms. In KPMG’s case, it led to an opening to build a global Transaction Services relationship with IBM.
Do KPMG do a mountain of work for the Queensland Government? – you bet!
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