The health department of the state of Queensland in Australia

The health department of the state of Queensland in Australia (henceforth referred to as Queensland
Health) payroll system failure is said to be the most spectacular Information Systems (IS) implementation
failure in the Southern Hemisphere. It was 18 months behind schedule and 300% over budget.
Additionally, upon going live a large number of Queensland Health employees, including doctors and
nurses, were either incorrectly paid or not paid at all. The total project costs including implementation,
stabilization and maintenance is estimated to be approximately $1.25 billion AUD (KPMG 2012). There
were heavy casualties for the failure, including the resignation of the minister of health, industrial strike
action and in some cases, loss of staff members to other employers. The state government of Queensland
embarked upon the highest judicial form of enquiry in Australia (Royal Commission) to examine the
cause of the failure and to provide a series of recommendations to be applied to future large governmental
IS projects. Findings of the Auditor General and Royal Commission reports highlight issues pertaining to
project management and governance.
“Those causes were: unwarranted urgency and a lack of diligence on the part of State
officials. That lack of diligence manifested itself in the poor decisions which those officials
made in scoping the Interim Solution; in their governance of the Project; and in failing to
hold IBM to account to deliver a functional payroll system.”
The Honourable Richard N Chesterman (2013, p. 217), Commissioner
“Whilst the accountability for payment of staff within Queensland Health ultimately lies
with the Director-General, Queensland Health, I consider that the governance of the project
was unclear between his responsibilities and the responsibilities of the Director-General,
Department of Public Works as the Accountable Officer responsible for the management of
CorpTech and its responsibility for the implementation of the whole of government HR
solution.”
Glenn Poole (2010, p. 2), Auditor General
This teaching case further examines the reasons for the disastrous Queensland Health IS implementation
project. Included in this teaching case are: (1) an overview of the environmental and technological project
drivers; (2) the roles and responsibilities of the key stakeholders involved in the project; (3) the
implementation approach; (4) the outcome of the implementation project; and (5) a discussion into the
reasons for the implementation failure.
The Organization and its Systems
The Queensland Government consists of predominantly three types of organizations: (1) Government
agencies and departments; (2) Government owned corporations; and (3) General statutory bodies. All of
which report to both the Queensland State Treasury and their respective ministers in the Queensland
Parliament. With Queensland state government elections occurring every three years, ministers and
corporate goals ultimately change to be reflective of the strategies of the political party in power. Hence
government organizations are turbulent in nature due to the shifting power and embedded bureaucracy.
Queensland Health is the public sector health care provider for the Australian state of Queensland. It
provides dental, medical and aged-care facilities in Queensland, which has the most geographically
dispersed population of all Australian States. Therefore, Queensland Health needs to ensure that
1 Contact Rebekah Eden for a copy of the teaching notes.
Largest IT Failure in the Southern Hemisphere
Thirty Fifth International Conference on Information Systems, Auckland 2014 3
adequate healthcare services can be provided in the most remote areas of the state (Queensland Health
2013a). Everyday Queensland Health provides hospital services to approximately 40,000 people
throughout Queensland. Consequently, Queensland Health is responsible for approximately eighty-five
thousand employees (85,000) across 300 sites (Queensland Health 2013b). Furthermore, being a state
government department in the healthcare industry, Queensland Health is riddled with substantial layers
of bureaucracy (Dunbar et al. 2011), thus adding to the complexity and increasing the difficulties
associated with decision making, visibility and accountability. Due to the vast number of employees and
their diverse skill sets there are a substantial amount of complexities inherent in the payment of staff.
With, the existing payroll structures yielding more than 24,000 payroll calculation combinations (Poole
2010).
In order for Queensland Health to pay their employees, the disparate payroll system, LATTICE and the
ESP (Environment for Scheduling Personnel) rostering engine, was utilized. The LATTICE and ESP
solution was rolled out progressively over six years from 1996 to 2002. However, the LATTICE solution
required a substantial amount of manual interventions to accommodate the complex award and incentive
structures evident within Queensland Health (Poole 2010). Yet, in 2005, just three years after the
progressive rollout was completed, Queensland Health received notification from the LATTICE system
vendor, Talent2, that their existing LATTICE system was becoming obsolete and was no longer going to be
supported, with services and updates ceasing on the 30th June 2008 (Chesterman 2013). Consequently,
in order to continue paying their employees Queensland Health needed to consider appropriate software
to replace the obsolete LATTICE system.
Additionally, in 2003 the Queensland State government formally established a whole of government
Shared Services Initiative (SSI) mandating that all state government departments replace their existing
legacy system with a standardized software solution that incorporates SAP HR and SAP Finance
(Chesterman 2013). The overarching objective of the SSI was to consolidate technology and resources
through delivering a high quality solution with standardized business processes (Queensland Government
2006). The SSI was expected to deliver the following benefits: (1) increased opportunities through
enabling workforce mobility; (2) increased visibility into the cost of services; (3) reduced data duplication
through the consolidation of systems; (4) reduction in costs associated with licensing agreements; (5)
reduction of personnel; (6) achieve economies of scale; (7) enables the government organizations to focus
on their core competencies, thus increasing the standard of service; and (8) consistency of HR and finance
information across all government agencies (Chesterman 2013; Queensland Government 2006).
As part of the SSI the Queensland Government established CorpTech within the Queensland Treasury to
oversee the standardized implementation across all state government departments (Poole 2010).
Therefore CorpTech was responsible for overseeing the consultant selection process (Request for
Information, Request for Proposals, and Invitation to Offer) and managing the consultant organizations.
CorpTech sent out a Request for Information (i.e. document used to gather information and shortlist
potential consultant firms) on the 2nd of July 2007, in which four consultant firms responded, Accenture,
IBM, Logica, and SAP (Chesterman 2013). CorpTech then requested detailed proposals (i.e. document
used to determine the appropriateness of the consultant firm based on specific organizational
requirements) from the aforementioned consultant firms on the 25th of July 2007 (Chesterman 2013).
However, prior to the RFI being issued, CorpTech had managed the implementation of SAP HR at the
Department of Housing, and SAP Finance at the Department of Justice (Poole 2010). These
implementations proved to be quite costly as a substantial number of consultant firms and private
consultants had been utilized. Due to the large expense associated with the multiple consultant firms, the
consultant methodology for the SSI was changed to the prime contractor model on the 16th of August 2007
(Chesterman 2013). Subsequently, on the 12th of September 2007 CorpTech released an Invitation to Offer
(i.e. document used to gather bids from perspective consultant firms), where IBM, Accenture and Logica
responded. Ultimately on the 5th of December 2007 IBM officially signed the contract to be the prime
contractor of the SSI (Chesterman 2013).
During the tender process IBM put forth the use of “Workbrain” rostering system to be utilized to perform
the award interpretation and rostering of staff members (Chesterman 2013). Workbrain is a best-of-breed
solution for awards interpretation. If Workbrain was not utilized the awards would have needed to be
hardcoded into SAP using the ABAP programming language, which is a complex, time consuming, and
IS Curriculum and Education
4 Thirty Fifth International Conference on Information Systems, Auckland 2014
labour intensive process (Bloomfield 2013). Hence, future SSI projects were to utilize SAP HR, SAP
Finance and the “Workbrain” rostering system.
Whilst the government had formed the SSI prior to LATTICE notifying Queensland Health of the
discontinuation of support; the unsupported LATTICE system was the predominant project driver as
ongoing support was critical. Therefore to mitigate the risks inherent with an obsolete and unsupported
system, Queensland Health undertook the SSI, thus alongside CorpTech and IBM replaced their system
with SAP HR, SAP Finance, and the “Workbrain” rostering solution. Thus, the purpose of the WorkBrain
system was to process the timesheets and transport them to the SAP system. SAP was then used to further
process the timesheets into a format that was acceptable to the appropriate financial institutions, so that
employees could be paid. The focus of this case narrative is on the SAP HR and WorkBrain rostering
solution. The 85000 employees and the complex award structures within Queensland Health resulted in a
complex and challenging implementation project.