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Novopay gets the academic treatment

Sarah Putt, Contributor. 19 July 2018, 4:39 pm

The Ministry of Education's payroll system Novopay has become a byword for troubled IT projects - it ran over budget, was poorly implemented, and caused huge disruption to the sector. Following the flawed "go live" in August 2012, it became the subject of intense media scrutiny and earned its own ministerial portfolio - given to the National Government's Minister for Economic Development Steven Joyce.

Such was the intense public interest at the time that on Friday 1 February 2013, the Government published a huge amount of Novopay-related data on the Ministry of Education website (that's one way to manage multiple official information requests!). This included reports, paper and correspondence that revealed the extent of the project's failings.

The data dump - 375 PDF files - has provided the basis for a PhD thesis by Bilal Raza from the Auckland University of Technology, called Understanding the Transition Process in a Public-Private Partnership Outsourcing Context: An Information Systems Case Study.

"This was a transition-related project centred on the payroll system of the Ministry of Education in New Zealand, which had been outsourced to a New Zealand-based vendor, Datacom since 1985. In 2005, the Ministry of Education decided to transition this system and contracted Talent2, an Australian-based vendor, to develop a new payroll system and take over operations from Datacom," Raza writes by way of introducing the project.

In his thesis he highlights several areas where the transition hit road bumps, discusses why these occurred, and then provides a series of the recommendations for those undertaking the transitional projects today.

These reference not only technical issues, but also of end-user behaviour because one of the big issues with Novopay was that school staff initially found the online mode difficult and reverted to manual processes. "Service centres could not cope with the large number of manual transactions and it created a vicious cycle," Raza writes.

He recommends that multiple training methods be used, especially in public sector projects where end-user capability is mixed. "Significance of their training is of upmost importance. Therefore, as the new vendors may overlook the diverse needs of end-users… training for transition should be managed by the client or carefully followed up with vendors."

Raza also looks at the issue of determining vendor capability during the bidding process, and suggests that clients may contribute to some of the costs associated with responding to a bid. "Sharing bidding costs by clients may increase their interest, and in order to evaluate new vendors' capabilities for carrying out customisations new innovative means can be employed, such as developing prototypes in the bidding process. This can also increase collaboration with vendors."

Data migration can become a fraught and contentious area as "outgoing and incoming vendors might be reluctant to share knowledge about their respective systems." Raza writes that it is critical that responsibility for data migration, and transformation of data, is negotiated and settled upfront. "An intermediary format for data management, acceptable to both parties, could be considered."

Finally, a key area for discussion in the thesis is COTS (Commercial Off The Shelf) based systems versus bespoke. While the former is generally preferred because deployment across multiple sites results in lower ongoing maintenance costs, this can change due to customisations. "COTS based systems may become bespoke-like, if complex and unique business processes are not simplified prior to transition," Raza warns.

At over 320 pages, Raza's thesis is a thorough dissection of what went wrong with Novopay and while it is written for academia, there is much to interest a wider audience of IT professionals.


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Dean Johnson 20 July 2018, 5:56 pm


Wish I had the opportunity to give input. I was involved in 2009 and it was obvious there were major problems but the Ministry was in spite of the evidence. I left early doors because no one was listening.

Happy to add colour if anyone is interested.

Dean Johnson.

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