Causes of Novopay Project Failure - Case Study Example

Rеаl Рrоjесt Аnаlysis Rероrt Оf Рrоjесt Маnаgеmеnt Student’s name Code & Course Professor’s name University City Date The Novopay project failure Novopay is a payroll system for both state and integrated schools of New Zealand. Bought by the New Zealand government, it was finally implemented after seven years of planning by the human resources company Talent2. Straight from the beginning, the project ram into serious problems, receiving almost daily negative press which culminated in the firing of top ministry officials. New Zealand has not had a particularly rosy past with regards to projects. According to KPMG, the average expenditure on projects in New Zealand in 2010 was approximately 15 million NZ dollars. Of these, about two thirds of organizations have experienced project failures (KPMG, 2013). This was only the tip of the iceberg, with surveys revealing that many projects in New Zealand organizations were not aligned to organizational strategy, did not have their returns measured and did not achieve the intended results. This painted a general picture of a country where projects were generally leaps of faith (KPMG, 2013). A history of the ministry of education in New Zealand and its dealings with payroll projects can perhaps put the project into a clearer perspective. New Zealand experienced an embarrassing project failure twenty years or so before the implementation of the Novopay system. A new computerized payroll system failed to have teachers paid on the first day of pay after the implementation of the project, on 8th February 1989. By June, though, the ministry stated that the system was now fully operational. It was announced publicly that the payroll system was on course to meet the objectives set by the government and save it a lot of money in the form of reduced interests. Despite this positivity, the payroll system was done away with six months after (Clear, et al., 2013). Stakeholder analysis Information systems projects can only be considered successful when the stakeholders and other observers consider it successful (Myers, 1995). This statement makes the definition of stakeholders important for such an information systems project. This is especially important considering the different views regarding the success or failure of the historical 1989 project on payroll. Whose stakeholders are the most important? Whose views should be taken most seriously and at which stage of the project do these views become salient? (McLeod , et al., 2012). In a computer system, the stakeholders are those who will be affected significantly, or those who have material interests in the running and nature of the computerized system (Clear, et al., 2013). This might seem like a broad view of stakeholders, but it is important. In fact, according to some researchers, the narrow minded view of the project team and the customer as the only stakeholders is one of the reasons why the 1989 and perhaps the Novopay project failed. A positioning of stakeholders according to their relative power might be helpful in encompassing all the needs of every stakeholder involved. For instance, the director of management services could be considered the dominant stakeholder, with the push for the savings business case, the teachers as the dependent stakeholder, expecting better payroll services, the government as the dormant stakeholder, though they eventually acted to effect changes and moved to the position of the definitive stakeholder (Clear, et al., 2013). Other stakeholders include financial organizations, educators, the press, payroll staff, teachers’ unions and both national and regional government departments. Project description The Novopay project began in 2005 when talent2, the Australian human resources company outbid the other ten competitors for the project (Jackson, 2013). The payroll service was initially being run by Datacom, a New Zealand company that had also been among the bidders. The payroll system was to start operations in 2010, with Talent2 providing a new pay clerking service, service desk, technology and management systems. However, in April 2010, there was a reported delay in the implementation of the project, with news coming that the system would be operational in the south in the middle of the year, and in the Northern island parts at the end of the year. However, the delays meant changes to allow for the review of implementation dates and enough time for testing. Consequently, there was a renegotiation of the original deal which was made under the labor docket. After the advertisement of a program director, the go-live date was reset and later announced in 2011 as July 2012. The project went live with a highly publicized launch in August 2012 (Cashmore, 2012). The project was on the government lists of the most risky projects, and soon after its launch, various stakeholders reported that it was not sufficiently covering all its payroll tasks. After the first flawed run of Novopay, there were complaints from the Post Primary Teachers association representatives from the New Secondary Principals Council. Surveys later revealed that the total expenditure on Novopay was to be much more than 100 million New Zealand Dollars. Later, relevant documents showed that up to 147 software defects had been discovered after the signing off of cabinet leaders and ten project work stream leaders. This was just before the project was allowed to go live in August of 2012. Why Novopay failed The education ministry in New Zealand provides payroll services to over a hundred thousand teachers and support staff. They provide services to employees of state or state integrated schools in the country. In 2003, after the cabinet secretary agreed to upgrade an ailing patrol system, a bidding system saw Talent2 start the development of a new centralized system. After an extended period of development and testing, the new replacement system went into effect on the 20th of August 2012. However, the first round of payment saw over 5,000 people go underpaid and up to 15 people not receiving any pay at all. Since that time, there have been a lot of problems with the pay system. Majority of the problems have been solved, but a significant minority still continue to cause problems. The problems caused stress in the education sector, and diverted attention from teaching and administrative tasks (Ministerial Inquiry Into the Novopay Project, 2013). Several reasons contributed to the overall failure of the project. In terms of project management, the ministry did not establish the right quality of governance required for a project of this magnitude. There was generally no proper discussion within the project board about the guidelines for management and monitoring of such huge IT projects. Another significant problem was the large turnover of leaders at key positions, a fact which undermined the benefits of continuity. Additionally, there was no program director with overall accountability, meaning the reporting was at different levels. Also, it was found that the ministry did not have the right commercial capability to handle projects of such magnitude. The relationship between the vendor Talent2 and the government did not foster transparency with regards to the risks involved in the project. Talent2’s inability to deliver on certain parameters also resulted in a general loss of trust between the two on its ability to deliver the solution. There were also issues with quality assurance aspects of the project. For instance, there were several quality assurance activities across various portions of the project. However, there were no overall quality assurance systems for the whole project. The major stakeholders, ministers and central agencies, placed undue confidence in the quality assurance methods available. Task allocation was another major problem for the project. Specifically, the role division between price waterhouse coopers, the SRO and the business owners was not clearly defined, a fact which affected the quality assurance processes of the project. For instance, PwC expected the content of their meetings with the SRO and business owner to be communicated to the secretary. However, the ministers often assumed that PwC offered quality assurance services across the project. Documents defining the engagement of PwC were clear, but there were elements of conflict of interest on the part of PwC were not managed well (Ministerial Inquiry Into the Novopay Project, 2013). The Novopay project ended up costing more than budgeted (Mann, 2013). Finally, the government had to come in and assume a more active role in its management and execution after the minister calling the software a dog (Reid, 2014). Several issues have been raised to try to explain the failure of the project, including price based tendering processes being responsible for the choice of a seemingly incapable Talent2 (Rusk, 2013). However, it is the control mechanisms during the project that once again prevented the proper alignment of project objectives with the needs and demands of all the stakeholders. Reference list Cashmore, D., 2012. Novopay Chronology. [Online] Available at: http://www.minedu.govt.nz/~/media/MinEdu/Files/TheMinistry/NovopayProject/Background/MemoNovopayChronology.pdf [Accessed 10 September 2015]. Clear, T., Raza, B. & macDonell, S. G., 2013. A Critical Evaluation of Failure in a Nearshore Outsourcing Project, Auckland: School of Computing & Mathematical Sciences, Auckland University of Technology. Jackson, R., 2013. Charting the Novopay Debacle. [Online] Available at: http://computerworld.co.nz/news.nsf/news/charting-thenovopay-debacle [Accessed 10 September 2015]. KPMG, 2013. Project Management Survey Report 2013. [Online] Available at: https://www.kpmg.com/NZ/en/IssuesAndInsights/ArticlesPublications/Documents/KPMG-Project-Management-Survey-2013.pdf [Accessed 10 September 2015]. Mann, C., 2013. Novopay costs $8m in overtime. [Online] Available at: http://www.stuff.co.nz/national/education/8289856/Novopay-costs-8m-in-overtime [Accessed 10 September 2015]. McLeod , L., Doolin, B. & MacDonell, S. G., 2012. A Perspective-Based Understanding of Project Success. Project Management Journal, 43(5), pp. 68- 86. Ministerial Inquiry Into the Novopay Project, 2013. Report of the Ministerial Inquiry Into the Novopay Project, Wellington: New Zealand Government. Myers, M., 1995. Dialectical Hermeneutics: a Theoretical Framework for the Implementation of Information Systems. Information Systems Journal, Volume 5, pp. 51-70. Reid, N., 2014. Where to from here for Novopay?. The National Business Review, 1 August, p. 23. Rusk, J., 2013. Price-based Tendering to Blame for Novopay?. [Online] Available at: http://www.iitp.org.nz/newsletter/article/416?utm_source [Accessed 10 September 2015]. Read More