Plan or be damned, warns expert on PPARS

5 Oct 2005

While the Government still reels from the fallout of the €150m Personnel, Payroll and Related Systems (PPARS) IT suspension, a leading academic has warned that a lack of understanding of organisational change and a tendency by government and businesses to invest in so-called change management systems is contributing to the ever rising spate of IT blunders.

It emerged yesterday that Brendan Drumm, chief executive of the Health Services Executive (HSE), is to recommend to the HSE board of management that the system rollout be suspended. The PPARS rollout was intended to revolutionise the ancient payroll system within the health services when it was commissioned in 1999 but instead has been mired in controversy amid accusations of poor performance and manageability. In one notorious incident, a health service employee was overpaid by €1m as part of an electronic funds transfer error.

Dr Joe McDonagh, a senior lecturer in business studies at Trinity College Dublin, whose work focuses on leading large-scale change in complex organisations, particularly change enabled by modern ICT systems, told that IT disasters, such as the PPARS rollout, also occur frequently in the private sector.

“It’s not just the government sector. The issues with large-scale change are no different, the only difference is the private sector can hide an IT failure with greater ease,” he said.

The PPARS system is intended to manage the payroll, time scheduling and personnel records of Ireland’s 120,000 health workers. Health sector salaries and wages account for €7bn or 70pc of the annual spend on health. The system uses SAP human resources software, while IBM hosts the system centrally on behalf of the Irish health agencies under a managed service agreement. The project rollout has been managed by consulting firm Deloitte. It is reported Deloitte has been paid €50m in consulting fees. An undisclosed proportion of the remaining €50m of the project cost is believed to have gone to SAP in software licence fees. A spokesman for IBM has told that IBM was brought in during the past year to help repair and make the system operational and for this was paid a consulting fee of over €3m.

The Government has been roundly criticised by the Opposition over the infamous IT blunder. Labour spokesman on health Liz McManus TD said the €150m lost on the system could build a medium-sized hospital or provide an extra 150,000 medical cards. Fine Gael leader Enda Kenny TD said PPARS was originally allocated €8.8m in 1998. Since then €150m, he said, has been spent on a system that doesn’t work.

McDonagh told that the blunder now ranks among other high-profile failures such as the Credit Union IT project in the late Nineties and the €60m lost on the e-voting system.

McDonagh said there is a tendency in the IT industry to portray the conduct of major IT programmes as “change management”. He said that increasingly what happens is over-emphasis on the technological dimension and a tendency not to look at change from a “people point of view”.

“The general tapestry is to overplay change and concentrate solely on technology. When it becomes apparent to government bodies or private businesses that there’s more to rolling out a new system than just the technology the current fad is to bring in advisers and consultants and that’s where money gets swallowed up with no guarantee that the project would be a success.

“Often the type of advisers businesses and government bodies bring in don’t have the expertise they are looking for. In the end, projects become bogged down in technology with little buy-in from the workers.”

This situation was borne out in July when the PPARS debacle came to light when it was revealed that there was little evidence that various stakeholder in the health services bought into the project at a senior management level.

“The €150m lost on the health system — you don’t have to look far in this country to see figures higher than that being lost in failed projects in large financial services firms.”

McDonagh said that in future, businesses and government bodies planning major IT investments in Ireland should look at the UK Government’s push for better standards and results from IT investments. The UK Government is no stranger to IT failures – last year a failed IT upgrade paralysed the UK’s Department of Works and Pensions, causing 80,000 civil servants to resort to writing out giro cheques to some 800,000 pensioners.

“The UK Government has adopted a view of reflecting on IT successes and failures, and codifying them so that people can follow the correct policy in the future. Today, the UK Government advises that any major IT spend should be 25pc on technology and 75pc on organisational change. That’s the ground rule it has set.”

McDonagh argued that the over-reliance on technology and not people is a symptom of how technology is sold today by vendors and consultants. “There are powerful forces at work to make sure what people see is the technology but they don’t see the rest of the picture. I am not implying bad behaviour or vested interests, but there are people on the technology side of the game who push systems and solutions but little else. Their business is product development, not transforming your business.

“There are huge successes in the IT world, unfortunately the failures make the headlines,” McDonagh said.

By John Kennedy