Novopay wins two-month reprieve

Datacom system not ready to take over, says Steven Joyce

Despite a wide range of faults identified in the current state of the Novopay school payroll system, Deloitte’s technical review says the system can be made stable to deliver payroll for the next eight to 10 years.

However this will depend on the Ministry of Education and developer Talent2 devoting enough resources to the effort. “Materially elevated and sustained effort” is needed to achieve stability, the review says.

Deloitte recommends sticking with the effort to put Novopay right for at least another six weeks to two months, though the responsible minister, Steven Joyce, reserves his right to take a different course sooner than this should he and his advisors deem it necessary.

The most likely alternative solution would be to revert to a system provided by Datacom, the provider of the previous payroll service, but despite a major effort by Datacom on developing a back-up plan, this is not at a workable stage yet, says Joyce.

“Datacom has done some very good work on their alternative proposal and I thank them for that, but switching to Datacom at this time would involve further substantial risks that would have to be borne by the ministry and schools,” he says.

Asked “if Datacom were ready now, would you ditch Novopay?” Joyce said he wasn't willing to deal in hypotheticals and says even if that were the case, it would not be a clear-cut decision.

The third choice, to re-tender the payroll project, would involve as much as two years’ further delay and considerable extra expense, he says.

The Technical Review points out that there are areas in which Novopay’s “system functionality does not adequately support the business processes”. Usability issues and a lack of input data validation contributes further to processing errors, Deloitte says. Reports generated by the system are “sometimes poorly presented or inconsistent”, detrimentally affecting visibility and control by schools.

However, the root causes of the problems have not been identified by the review, Joyce says; “that is not its function.” The question of root-cause diagnosis is one for the separate ministerial inquiry, he says.

Apportionment of fault and penalty payments is also a question that has been left largely in abeyance. People skilled enough to sort out who is to blame and in what proportion are a scarce resource and better employed remedying the faults, he says. Government has formed views on the question, as has Talent2, and those views are, as might be expected, different, Joyce says.

As of March 7, there were still 44 “very serious” defects in Novopay, Deloitte reports. This number needs to be reduced to no more than 10 over the next three months, its review recommends. There are in total 500 defects, down from 613 when the remediation programme started.

“Processes that support the [development] and management of workarounds [for these faults] need to be raised to a mature level”, says Deloitte. “The risk of poor data in the system through workarounds and point fixes needs to be mitigated through specific analysis and quality management plans.”

Deloitte lays out a number of recommended actions to be taken immediately; these include strengthening the remediation programme and establishing “a dedicated team with clear leadership accountability, to manage resolution end-to-end.” That unit is now being established within the Ministry of Education under the leadership of Cathy Magiannis, former CEO of Gareth Morgan Investments Group and former Inland Revenue deputy commissioner.

Meanwhile $6 million has been set aside by the government from its “between-Budgets contingency fund” towards meeting the costs of additional work that the Novopay faults have made necessary. This will be apportioned according to the number of full-time-equivalent staff at each school.

SEE: Novopay Technical Review (pdf 623 KB to download)

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