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Review says Novopay can be fixed, Joyce dishes out $6m to schools

Steven Joyce, the minister in charge of Novopay, has announced a $6 million compensation package for schools to “go some way to meeting the costs of additional work caused by the Novopay system.”

RAW DATA: Read the full review (PDF)

The one-off payment across the sector is calculated on a formula of $105 per full-time teacher, plus a $500 payment per school. That means a school with 5 full-time equivalents will receive $1025, while a school with 120 full-time equivalents will receive $13,100.

The money comes on top of a $5 million top-up for Novopay devloper and operator Talent2, and takes the total spent on the dysfunctional teacher payroll system to somewhere north of $41 million.

Technical review: Novopay can be fixed
This afternoon also saw the release of the technical review into Novopay, whose purpose was to establish whether Novopay can be "stabilised", or made to work properly.

The review says it can be stablised (a separate ministerial inquiry is looking into broader Novopay issues and is due to report  in May).

The report was carried out by Deloitte. Its three key findings:

  • Novopay core software platforms are not currently stable for delivery of the school payroll. This is driven by the backlog of systems issues largely relating to the high degree of customisation
     
  • Novopay can be made stable to deliver the school payroll for the next eight to 10 years provided there is greater effort by and capability of both the Ministry of Education and Talent2
     
  • Inadequate quality assurance processes have not adequately prevented incorrect data from being entered, and contributed to issues experienced by schools and their staff

On March 10, Mr Joyce pledged schools payroll workloads would return to their pre-Novopay debacle levels in three months.

Mr Joyce says a switch to former payroll provider Datacom is not out of the question.

“That’s certainly possible…I’m not ruling it in or out. But on the balance of risks, it would not be responsible to make that call now.”

Working with Datacom
Mr Joyce says Datacom has been working with his staff and has done a good job to put together a backup plan, but he says he will not be making any decisions for six to eight weeks, after closely monitoring Novopay’s progress.

“There’s no love lost for either option. Truly you shouldn’t underestimate the challenges involved in winding back. All the advice I’ve received is the Datacom backup will need further development.”

However he has left the exact timing of the decision up for negotiation, saying he could make the decision in a shorter time period if needed.

Mr Joyce says it has been a trying time, one which has been widely acknowledged in the IT industry.

“A senior IT person in the industry said to me the other day - ‘the reality is most companies think about changing their payroll provider, and then never do, and there’s a reason for that.”

But Mr Joyce has ruled out completely re-tendering the system, saying it could take at least another two years to put brand new systems into place.

The technical review, written by Deloitte NZ chairman Murray Jack, says found Novopay can be made a stable payroll platform for the next eight to ten years, but it first requires a “materially elevated and sustained effort and capability by both the ministry and Talent2.”

The review outlines what course of action should be taken in the next three months:

  • The number of business issues being experienced needs to be reduced to a consistent level below 1% of staff reporting issues in any pay period, where extra errors are largely predictable in nature and managed through defined workarounds.
     
  • Outstanding defects, particularly in high severity categories, need to be reduced, for example to no ‘fatal’ defects and no more than 10 ‘very serious’ defects. As at March 7, there were no ‘fatal’ and 44 ‘very serious defects.’

But Mr Joyce has already flagged possible problems with pay period one – the first of the new financial year in April.

The technical review also wants an increase in Talent2 staffing levels, including a doubling of business consultants, to manage a resolution.

Deloitte also wants some immediate action to be taken:

  • Strengthen the current remediation programme to incorporate Deloitte’s recommendations, then finalise and execute the plan.
     
  • Establish robust performance management processes and checkpoints to monitor remediation progress.
     
  • Establish a dedicated team, with clear leadership accountability to manage resolution end-to-end.

bcunningham@nbr.co.nz

More by Blair Cunningham and NBR staff

Comments and questions
21

I find this whole debacle mind-boggling. Where is the accountability? What is Talent 2 (a misnomer if I ever heard one, unless it is the first part of a saying like 'they have a talent 2 f*** up', or perhaps in future 'this is almost as big as a talent 2 f*** up') contributing to the resolution process? If more money is to be paid to them, it should be conditional on the fixes working. And the additional consultants, what rate per hour is Talent 2 being paid for their work? There should be no margin.

Ministry officials/consultants signed off the spec and user acceptance testing. They are as culpable as T2.

As I have always said, why not terminate the contract?

Because then no-one would get paid until you could reimplement it.

That's a valid point. And it's one of the risks of going live with software that is fundamentally still at a Beta testing stage. I'm having difficulty believing assurances that it can be fixed to the standard they are stating, because of previous assurances that didn't get fulfilled. And because bugs of that magnitude spell a failure by programming teams to check code at a module level and to have clear parameters for functionality. And the bigger the project the more programmers and the more likely the variance in coding styles. We can only hope that the audit by Deloittes included a thorough code check that revealed a sound structure.

Page 22 of the report is damning. How any senior manager or politician could sign off on going live given the parlous state of the project is beyond me.

The check pages 61-62. The rate of defects vs fixed defects is increasing!

All that this does is indicate that the chickens have well and truly come home to roost in terms of the sloppy due diligence conducted and the appalling sign-off procedures. Heads really need to roll...

Come on, Mr Joyce. do the right thing and stop fluffin' around.

So what do you think is the right thing?

If you think one single thing will fix this then you definitely don't understand it.

Where is the real minister of education, Hekia Perata, and why does she not front up on any issue at all now? Perata signed off on Novopay despite knowing that it was bug-ridden, but it is left to Joyce to try to make something out of the mess.

She is way out of her depth on this as would be 90% of politicians. Their job is to set policy, not manage system implementations. Obviously there have been disastrous management incompetencies in the Department. No doubt this is not the only debacle they have caused, just the most public one.

Agree, MPs are out of their depth. Their job is to hire good people, set them objectives and hold them to account. Take responsibility if it goes wrong. They pay good money for success and fire for failure. Who got fired?

Typical, called passing the buck.

I still haven't heard a good reason for Datacom's system being dumped. Is it a case of running before crawling?

Apparently, it was 25 years old, hence process for tender of new payroll system. Doesn't excuse govt being taken in by a fast-talking recruitment company which sold itself as a development company.

I'd like to see some kind of technical review of the software architecture and procedures made available to the public. These government IT stuff-ups are only too frequent, as the chap on Seven Sharp pointed out last night.

110,000 teachers, 2500 schools (some teachers employed at multpiple schools), 15 collective agreements. Gosh, what could possibly go wrong?! Wouldn't bulk funding be an easier option?

Can see any reason why theMOE doesn't back out the contract fee it pays to T2 for non-teaching staff as part of the main contract and reallocate that to schools to let them choose their opwn payroll provided. At least that way teh non-teaching staff at least will get paid propoerly. Cant see any solution to T2/Novopay - its a dog.

Agree with John Holly above, the project was poorly governed. The specification was inadequate, the level of customisation inappropriate, the level of defects too high and testing inadequate. They should not have gone live.

T2 may or may not have sold a pup, but the ministry bought it and then failed to govern the project appropriately. They are at least equally responsible.

No point blaming ministers, who is the CIO? Who was project director? Kristine Kilkelly, time for a career change?

PS: for those who missed it, the Deloitte report is linked in the article above.

(a) The number of collective agreements and their character cannot have come as a surprise to Talent2; they're public record. So are the NZ tax laws. Why the whining about complexity now? Dealing with that is precisely what they were paid to do.
(b) Deloittes apparently believe that Brooks' Law has been repealed. The timeline in figure 4 expects major improvements in about 2.5 months (they say 3, but setup will be 2-3 weeks). Point 3 on page 42 says "probably double the team size". If software engineering tells us anything, it is that a major change to the team size and structure will be a major disruption, which is likely to slow down the rate of defect correction for a couple of months.
(c) The report is desperately short on technical detail. We are, for example, told total numbers of defects, but not given examples.
We aren't told how much code there is and how much of it is custom, so we cannot compare defect rates/code volume with industry norms. This leads to me next point.
(d) "architecture documentation was requested but not provided" (p31).
"process documentation was requested but not provided, including reports such as defect management reports" (p31) "We requested more recent data but this has not ... been provided" (p60). This was highly relevant material and the failure to provide it is troubling. If it comes to that, why did the contract between the ministry and Talent2 not guarantee such access to the ministry as of right?

These are valid points to you and it makes perfect sense to me. Since this information was not provided one can only assume that either it didn't exist or existed in a form that would give confidence or is being deliberately hidden. Which only leaves comments in the code or the programmers' heads. Architecture and process documents for management purposes are as important to software projects of this scale as are architect's and builder's plans are to a building.

Which also means Deloittes audit was not actually an audit. Audits of any type always involves accessing the rawest data possible, even if it is spot checks. Imagine doing a financial audit but never looking at bank account transactions or accounting system entries.

Sounds very much the blind leading the blind and then audited by the blind.