‘It’s not our fault’:
IBM blames Govt for payroll disaster



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.”


  1. “When the system went live it was hindered primarily through business process and data migration issues outside of IBM’s contractual, and practical, control.””

    If the body charged with building a system does not understand the system, how can it build it?
    That’s why IT companies employ Systems Analysts.

    If the body building the new system isn’t responsible for porting the data over to it from the old one, who is?

    • You can give someone a car, an drivers manual, and even personal lessons. But that still doesn’t stop that new owner from making their own decisions and then backing the car off a cliff.

      There are a lot of minions operating in the QLD Health a combined services that had their own agendas underway.

      From what I can understand, IBMs fault with regards to the proposed solution was that the subcontracted products didn’t fit with their contracts approach and the operating environment were definitely under powered at all levels – with no redundancy.

      But then again, in regards to the software provided, it might have matched the requirements at the time of tender. Those internal minions would then have cut in and “meeting’d” their way to a whole new level of “utopia” with the project’s implementation.

      • Read the report it is quite clear as to the issues with IBM. QH is certainly at fault but so is IBM which was acting like a dodgy car dealer to follow the car analogy, with unethical procurement practices (in the report) and poor quality control (in the report). In this scenario it takes two to party and party they did with a $1B hangover.

  2. As far as I am aware, almost all of the massive errors were actually operator errors (like entering someone’s birthday as their start date for a fortnight pay run, causing a payment of 36 years) and most of the trivial errors were process related. The fact that the system had no checks and balances (e.g. “error: maximum hours pre fortnight are 160” which would have prevented the most major mistakes) is a pretty major cock up though, from a programming perspective. The biggest problem was that when they discovered there was this major meltdown occurring in the payroll system, the Qld Health payroll bank account was nearly empty

    And as far as the story goes, the findings basically say that IBM didn’t play entirely by the rules (naughty boys) but didn’t actually find that the delivered system was faulty.

    I’ll have to side with IBM on this one; not everyone always crosses every T and dots every I, but in the total scheme of things the actual work done by them on the system was only a fraction of what the Government IT department did in total, and as far as it seems, there bit did what it was designed to do – it was just fed dud data.

  3. My first real-world project after uni was helping to build a system for the Queensland Government. Without going into too much detail, I remember spending hours in meeting going over the smallest trivial detail, but little time allocated to discussing important things, at least from my perspective. And then all those things changed anyway!

    At least my system wasn’t business critical like a payroll system.

  4. IBM does have a responsibility here.

    I have no doubt the government goal posts kept moving and the project was mismanaged. But really all that does to me is suggest that IBM should have been watching every move and documenting every damn change in scope/lack of clarification to the Nth degree.

    You cover your arse in this situation. You make sure you ask every question preferably repeatedly, until you get a sold answer, or you can prove that you made a clear effort to identify and resolve potential issues.

    Process problems and operator errors are a copout. Yes they would have added to the issues, but the system should have been robust enough to handle mistakes, or clear enough that the mistakes are avoided in the first place. A good UI assists operators in avoiding mistakes. Process can break things, but the system can reduce that potential.

    • As per normal my Guess is the PCB decided the way the business operated needed to change rather than to accept early on that the software package proposed was not fit for purpose. This is normally how these things start to go off the rails. for reference see camel

  5. Fair call, the report does go into some detail on the Workbrain product suitability but there is a lot of context about an award engine. Not sure about redundancy as the solution was dual sited with fail over, that would not have helped given the application software defects that were the issue. Business continuity is a different matter.

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