August 13, 2013

California state payroll system project 'doomed,' says report


The beleaguered project to bring state government's payroll computer system into the modern era suffered a death by a thousand cuts, says a new and scathing state report.

"The project suffered from lapses in due diligence, a failure to resolve core issues raised early and often, chronic turnover in leadership and what may have been unrealistic expectations," concludes the report from the state Senate Office of Oversight and Outcomes.

That project -- a ten year quest to replace a 1970s state employee payroll system with a modern piece of computing software -- has been on hold since February, when Controller John Chiang pulled the plug after a price tag to date of $274 million.

The report will be the focus of an August 15 state Senate hearing.

"The public certainly has a right to make sure that when we spend public money, we do it efficiently and effectively," says Sen. Richard Roth, D-Riverside, whose budget subcommittee will convene to examine the debacle that is known as MyCalPAYS.

Virtually no player in the project that began in 2003 is without blame in the Senate investigation.  Most notable seems to be a lack of consistent leadership, from project managers to three successive state controllers.  The report also focuses on the decision to use an 'off the shelf' private sector for a state that pays 240,000 employees in 160 separate departments.

The report's authors say they found "broad agreement that the more a client attempts to modify commercial off-the-shelf software, the greater the degree of difficulty and likelihood of failure."

The state controller's office criticized the new report late Monday afternoon, saying it's "a misunderstanding or oversimplifies some of the key issues involved" in the history of the failed computer project.

Nonetheless, the report -- written by two former Capitol journalists -- includes some troubling observations about the process to replace a system that's so old that few are left who know how to program it.

"I think everyone knows that at some point, that payroll system is going to blow up for good," Vince Brown, a top aide to a former controller, told the investigators.

The effort to design a new system hit what the Senate investigators say was its 'Waterloo' moment on June 11, 2012 -- a live test of 1,300 employee paychecks that ended with 'hundreds' of errors.

A preliminary report on the project's woes by the state controller's office, offered today in response to a request for comment and dated August 12, places the lion's share of the blame on the vendor chosen for the system, SAP.

"SAP delivered an unstable payroll system that is plagued with material errors," says the controller's report.

Not surprisingly, the international business software corporation points the finger in the other direction and argues the Senate report concurs.

"Today's report bears out what SAP has said in previous statements on this issue: We stand behind our software and our actions on this project," said spokesman Andy Kendzie in an email.

Regardless, the project is now dead in the water after years of work and hundreds of millions of dollars.  Senator Roth, who will lead this week's hearing, says the quest must begin again... somehow.

"We need to make sure that system is updated," he says, "and that when we do the update, we get it right."


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