Queensland Health bungle a lesson on shared services

Failed project shows need for proper governance structures before starting a project, Ovum says

Queensland Health’s well publicised payroll blunder should serve as a sage lesson to private and public sector organisations on the dangers of shared IT service implementations, according to Ovum.

According to the analyst house’s public sector research director, Kevin Noonan, the failure of Queensland Health’s SAP-based payroll system suggested that the proper application, rather than a lack of IT tools and methodologies, was at the heart of the project’s woes.

“Shared services is certainly the flavour of the moment across Australian governments,” Noonan said in a research statement. “This is a sensible step given the significant potential savings in management and infrastructure costs, as well as the extra benefits in delivering coordinated services across agencies.

“However, things can go disastrously wrong if additional governance arrangements are not put in place to deal with the new leadership dynamic. Competing interests need to be managed between new stakeholder groups.”

The proper application of tools and methodologies was required from the outset of a project. Noonan said, as by the time a large shared services project was under way, it was likely that it would be too late to make substantial changes to governance arrangements.

This was because governance negotiations now affected multiple corporate players and at multiple levels of hierarchy, Noonan said. Further, governance changes along the way were very likely to add to the confusion and management complexity.

“Indeed, Queensland’s auditor found changes to governance arrangements were not effective in dealing with difficult issues as they arose throughout the project,” he said. “While attempts were made to remedy the problems, the changed arrangements themselves became part of the problem.”

“He found that ‘when questioned by audit about the governance structure and changes to the structure over the life of the project, different versions of the documentation were found to exist,’ and when questions were asked about the operation of government arrangements, different responses were provided by each stakeholder’.”

Following the release of a report from the Auditor-General, the Queensland Government threatened to terminate the payroll contract between IBM and Queensland Health, citing a "breach of duty of care and breach of contract".

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.

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