Updated: Qld Govt blames IBM for health payroll bungle

Whole-of-government ICT arrangements under fire as State Government reconsiders risk management and contingency requirements

The Queensland Government has threatened to terminate the troubled SAP payroll contract between IBM and Queensland Health, citing a "breach of duty of care and breach of contract".

The threat follows the release of report from the Auditor-General, which found the payroll system implemented for Queensland Health employees was not properly tested and did not provide contingency plans in case of failure when it was rolled out on 24 March, despite warnings from the testing company contracted. The fault left thousands of workers incorrectly paid.

The Queensland Government said in a statement that IBM should be held responsible for the bungle, as it was tasked with choosing appropriate software, as well as project management, design, development and implementation duties. The government issued a notice to the company to remedy breaches on 12 May, but a lack of action has caused the government to threaten to terminate the contract.

"We have sought Crown Law advice in relation to options for terminating the payroll contract with IBM and it's only fair that we seek to reserve our legal rights," Bligh said. "The Government has issued IBM a Show Cause Notice as to why the contract should not be terminated."

A spokesperson for IBM told Computerworld Australia that the company defended its actions throughout the process with Queensland Health.

"We were not responsible for many key aspects of the systems implementation as confirmed in the Auditor General's report released today," the spokesperson said in a written statement. "We delivered within the governance structure established by Queensland Health and outlined in the Auditor General's report.

"IBM has relentlessly and consistently delivered above and beyond the scope of the contract to assist Queensland Health identify and address concerns with its payroll process. Our commitment to supporting the Queensland Government in its mission to provide quality services to employees remains unchanged."

Whole-of-government IT provider, CorpTech, has also been held accountable for the problems, and will no longer be the exclusive provider of corporate services across the State Government. A review into the workings of the provider and the government's shared services business model is to be conducted by PWC partner, Roger McComiskie, with the results expected in September.

The review into CorpTech occurs as the government moves towards Gershon-inspired policies, which see further IT consolidation between departments.

In responding to the Auditor-General's report, the Queensland Government committed to implement each of the seven recommendations, including the introduction of a localised payroll model for Queensland Health.

"I apologise sincerely to every one of those Queensland Health employees and their families who have been affected by the recent payroll problems," State Premier, Anna Bligh, said in a statement.

The new payroll system is expected to be operational by the end of September and will see each hospital linked to a payroll "hub" which looks after employment, rostering and payroll services. Consultancy Ernst & Young has been contracted to find the most appropriate software system for use at these hubs by Queensland Health.

The Auditor-General's report recommendations include:

  • Technological changes to payroll systems that are rigorously tested for stability
  • Simplification of award structures and pay rules as part of a reconsideration of the Queensland Health business model
  • A review of the role of departmental officers involved in the state's shard service initiative, including CorpTech
  • Formal documentation and management of key methodologies to prevent confusion in roles and responsibilities
  • Implementation of IT governance frameworks, practices and processes to achieve transparency of projects
  • Reconsideration of governance structures to gauge impact of decisions made in whole-of-government arrangements on agencies
  • Risk assessment and mitigation strategies made a requirement at the agency level for IT projects

Tags queensland healthgovernment

More about Ernst & YoungErnst & YoungIBM AustraliaIBM AustraliaOffice of the Auditor GeneralQueensland GovernmentQueensland HealthSAP Australia


Been There


But a payroll system is SO hard. There is a database, business rules, files of transactions and reports. Eeek ! Can't estimate when that might be working. No one agrees what it should do, so how could we test it.
These big corp, big gov, big vendor projects give me the nasty feeling that a third year Computer Science class, with the profs and PhD stars, would do a better job for $300K in a semester, than 3 years and $300M and 3000 meetings.

Done that


@ Been There:
Read the auditor general's report. With 13 awards systems, multiple industry agreements and over 200 different allowances, this was NOT a mickey mouse payroll system. I can guarantee you that the project would NOT have been straight forward and chances of some undergrads with no commercial experience getting it right would be zilch.

There were requests to simplify the payroll/award system and it was recommended to delay rolling the system out until a full test was done, but the board decided to push ahead anyway.

All in all, it just sounds like a project gone wrong, which happens more often than you hear about in the IT world... poorly defined specifications, bad resource management, unidentified stakeholders, unidentified risks, whatever... now they're just playing the blame game (typical).



I'm a retiree (since 1991), worked on a Payroll package used by IBM and it was a lemon, It was originally a very well designed package (although written in Cobol), designed in Sth Australia, but became a lemon, over time. In 1995 LBMS wrote a devastating account of the Legacy System in the USA, and worsening by 10%/year. Now 15 years on nothing has changed.
All (I mean ALL) IT Systems are lemons waiting to happen. The current RAD-IDE tools are not up to the challenge.
That is the way IT companies like it. Profit motivated.

Robin Barratt


The key paragraph (for me) from the Auditor General's report reads:

"During October 2008, detailed planning revealed that the size, complexity and scope of this phase of the program had been severely underestimated, with the consequence that its revised
implementation cost estimates significantly exceeded the original tender proposal"

What does this tell you? I've been in IT since 1974 and I've come to the conclusion that IT is the ONLY engineering industry that forces a fixed (read "tender") price mechanism on would-be system builders before they even know the scope of the object they are required to build. This form of tender process invites a "Lie now, litigate later" approach from suppliers as they need the work. How many, many times have I been there. The logical approach of doing the scope work on T & M and the build & install on a fixed price basis is NEVER followed, the worst offenders for these fixed-price debacles are invariably government departments. Tender, take the lowest bidder, b****r the consequences.

Peter Rudland


Govt continues to allow its Industrial relations departments to negotiate awards/agreements and neglect to reform them in order to simplify processes. Its the lazy option.
The payroll systems generally work ok but the flexibility in the award structure makes them almost impossible to program without major manual intervention. If you want to have so much flexibility in awards then pay the cost and staff your departments to operate effectively and pay the cost to test systems in all circumstances. Delivery time and attendance systems are usually interfaced into the payroll systems and often a source of problems.
The issues now being experienced would appear to have issues on both sides of the fence.
The pay staff are the good guys in this who know exactly what the problems are. You just have to ask them.



Search for IBM online. 90% of the stuff that says they're good comes from domains *.ibm.com. A lot of the other sites express exactly the concerns about IBM - they offer cheap solutions, which end up being expensive, cumbersome and often badly delivered solution, and the problem (as highlihgted by someone above) is that governments (and others) are all for cheap. Worse still, one of the first things IBM tries to do is to change infrastructure to make you into an IBM shop - then you find it more difficult to move to another vendor, and they can screw you as much as they want (it is sort of interesting that they screw client and employee alike). Not to mention, they'll agree to support contracts, and then when there's a failure, blame the infrastructure and insist that "boy do they have a deal for you" on new stuff. That's right you have to PAY them on top of the contract to fix the issues you thought they were contracted to fix. On the rare occasion that you get them on a breach of their agreement, they refund "Service Credits". What does this mean? You guessed it - that they can sell you MORE contracts.

Essentially, they are an unethical lot, who (in Australia at least) screw their employee so much that the talent leaves, and only the incompetent remain - but it doesn't matter, because their contracts are such that they'll dodge 'most every bullet.

Some other IT giants are also rotten, but I have to say IBM Australia is the most rotten I've seen, and I suspect they only survive on wining and dining senior staff in an organization, while enormous buckets of money are spent not just to pay these contracts (which magically change {eg License fee to begin with costs $100, and then the following year is suddenly $12K to renew}), but to keep enough competent staff on hand to manage to fix/avoid the problems being caused by the incompetent bastards

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