Charting the Novopay debacle
- 12 February, 2013 20:12
The Novopay saga began in 2005 when Australian human resources and outsourcing provider Talent2 outbid 10 other potential providers to win a deal to replace the Ministry of Education's payroll system.
Datacom, which was among the unsuccessful tenderers, had provided the service since 1996. It had developed a bespoke system when it took over the ministry's in-house service.
The ministry group manager for the payroll system at the time, Kevin Wilson, said the new service would deliver greater efficiencies, reduce technical risk and provide schools with a future-proofed service.
"The new system allows us to focus on managing the schools' payroll to oversee financial value, quality of service and risk," he said.
Talent2 was to provide the payroll service from 2010 with a new service desk, pay clerking service, technology systems and management processes. It would train school staff in the new system and provide on-going support.
"In the meantime, in the lead up to 2010, we are working with the current provider, Datacom, to increase the quality of the current service and to meet new needs," Wilson said. "Enhancements are being actively pursued in two key areas: website information and online entry of payroll data by schools."
Computerworld reported in April 2010 that the transition to the new payroll system had been delayed. The new system was due to be operational in the South Island by the middle of the year, and in the North Island toward the end of the year.
Wilson said the delays meant that implementation rates were being reviewed.
"The key reason for this is to allow sufficient time for testing to take place," he said.
"Testing has always been part of the transition project plan. A significant testing phase had been planned."
Wilson said the ministry expected the cost of the project to remain within the funding envelope allocated by the government.
The original contract, negotiated under the Labour government, was signed in 2008. It was subsequently renegotiated twice by the National government.
In 2011, the ministry advertised for a programme director and the go-live date was revised, Computerworld reported.
"Early in 2011, the go-live date was revised to July 2012 to provide more time to complete customising the payroll system," said Fiona McTavish, group manager Education Workforce.
"System testing has begun but is not due to be completed until the end of this year."
Computerworld noted that the project was on the government's list of high-risk projects.
The programme director role went to David Miller, who resigned as director of information delivery and operations at the National Health Board. Miller was a director of a newly formed management consulting company, ForeConsulting.
For a time, the ministry's CIO, Leanne Gibson, moved from her role to look after the roll-out of Novopay.
Computerworld spoke to the Post Primary Teachers Association and the New Secondary Principals' Council after the first, flawed pay run of Novopay.
"We are concerned that the Novopay system has been unable to meet most of its service targets," said PPTA president Robin Duff.
Allan Vester, chairman of the NZ Secondary Principals' Council, said the issues tended to be around the fringes . . . "situations around leave calculation and relief teachers".
Other education sources said one of the most frustrating things was that the ministry and Novopay had been insisting throughout that there would be no problems.
Computerworld reported on November 15, 2012 that the ministry would end up spending more than $100 million on Novopay.
A ministry contract register showed that the contract with Talent2 extended to September 2015 and was worth $80 million.
The ministry subsequently said the contract didn't take into account the delay to the implementation of Novopay and the resulting contract variations.
According to the ministry, the total Novopay costs were:
" Development and implementation - $29.4 million;
" Long-run cost - $12.5 million a year until 2018;
" Assurity Consulting was paid $350,000 for an initial testing contract. Subsequent contracts took the invoiced total to $842,000.
Novopay business owner for the ministry, Rebecca Elvey said Talent2 was being held to account for delivering the services levels the ministry and schools required.
In the wake of the Computerworld story of November 15, 2012, outlining the true cost of Novopay, there were 62 online responses from readers. Many questioned the testing regime. Computerworld asked the ministry the following questions:
" Before user acceptance testing, how many defects, broken down by their severity, were found and how many were fixed?
" After user acceptance testing, how many defects, broken down by severity, were found and how many were fixed?
" After go live, how many defects, broken down by severity, were in functional areas covered by the pre go-live testing (sometimes this is expressed as a percentage)?
We pointed out that other questions raised by respondents included a suggestion that user acceptance testing, in terms of resourcing with full time equivalents, was cut by the programme board, who felt a much smaller amount of resource was needed. We asked if this were so.
Other respondents had questioned whether some of the data was corrupt. We also asked if this were so.
The ministry chose to treat Computerworld's questions as an Official Information Act inquiry. After the mandatory 20-day period, it wrote to us delaying its response until January 31, under Section 15 of the Act.
The ministry says its answers are contained in the data dump released on February 1.
What those documents revealed was that 147 software defects had been identified when cabinet ministers Bill English, Hekia Parata and Craig Foss signed off Novopay and allowed the system to go live in August last year.
Economic Development Minster Steven Joyce has now been appointed the minister responsible for Novopay and has ordered a technical review and a ministerial inquiry in to the troubled payroll system.
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