THE DEPARTMENT of Defence’s troubled payroll system has exploded in spectacular fashion leaving the department exposed to a possible payout of $732 million.
THE DEPARTMENT of Defence’s troubled payroll system has exploded in spectacular fashion leaving the department exposed to a possible payout of $732 million. Reports in the Australian Financial Review indicated that the system, based on PeopleSoft’s HCM solution, is unable to resolve errors in the system regarding leave balances. Faced with this uncertainty, the department is reported to be left with no avenue to resolve the issue other than trawling through the paper records of 60,000 personnel.
According to senior defence officials, The Personnel Management Key Solution (PMKeyS) project was an outcome of the Defence Efficiency Review. The project, which started in September 1997, had the aim of providing a single, effective and efficient solution for personnel management. It was hoped to replace some 20 separate legacy systems that were performing that role.
It was to include the following functionality: organisational structures, personnel administration and leave, career management, workforce planning as well as recruitment and payroll.
However as long ago as June 2002 in a Defence Senate Committee hearing, the then Rear Admiral Russell Shalders indicated that the project was going to take a lot longer to implement than was originally budgeted. “When the project started back in September 1997, it had been our hope that we could complete it by June 2000. As I indicated, the last quarter of 2003 is now the expected completion date.”
When quizzed by Opposition Senator Chris Evans as to why this was the case, Shalders replied: “There have been delays which have been caused principally by our requirement to customise the standard package that we bought for this system.
“It is based on a PeopleSoft solution and we have had to do a degree of customisation to meet our requirements, which has caused some delays. Additionally there have been some delays created by the need to migrate data from those 20 legacy systems I spoke of to put them in a format which PeopleSoft can use.”
Originally estimated to cost $25 million, in 2002 Defence admitted that the project was going to end up costing in the order of $70 million.
Patrick Hannan, the then chief information officer, Department of Defence proffered the excuse that:
“The nature of the arrangements in allowances, salaries, rank structure and so forth is substantially more complex in the military system than it is in the civilian system. In the past we have never been able to acquire a bespoke off-the-shelf system for ADF payroll.
“It has been an in-house development. This one is to be developed in PeopleSoft but it is going to take some development.
“Essentially it was underestimated just how complex that was going to be – matters to do with retrospective adjustment to pay rather than in-arrears payment of allowances and the like.
“It is the nature of the military salary and allowance processes and systems that is substantially more complex than in the civilian world.”
A Defence spokesman was unable to confirm any of the information in the report for Human Resources at the time of going to print.
However, PeopleSoft appear to be quite proud of its work with Defence. Some members of the Defence force similarly appear to be quite happy with the failed system. Peter Lush, director-general personnel systems, Department of Defence, is billed to speak at the software provider’s annual conference where he will detail how “replacing over 20 legacy systems with PeopleSoft HCM has given the Defence Department a way to win the war on data integrity, significant return on investment and the ability to create ‘virtual’ organisations through fully automated work flow – this compelling presentation will open the portal to a new world of self service for your staff”.
PeopleSoft failed to return Human Resources’phone calls.
