Irish agency halts work on two SAP application projects

Troubled health department payroll system nearly $170M over budget

The halting of two controversial SAP AG ERP system rollouts -- valued at more than $380 million -- this month has ignited a political firestorm in Ireland.

The Irish Health Service Executive (HSE), an oversight committee for the national health department, suspended work on the Personnel, Payroll and Related Systems (PPARS) project, which was started 10 years ago to handle payroll functions for the unit's 120,000 employees.

Work on the project was halted Oct. 6 after numerous problems were found in the first four regional installations in operations that together employ 37,000 department workers.

The committee also ceased work on another, unrelated health department project, the Financial Information Systems Project (FISP).

The government hired New York-based consulting firm Deloitte & Touche LLP to implement both systems, which are based on SAP's R/3 ERP software.

A Textbook Example

Critics in Parliament and elsewhere have called both projects examples of mismanagement and waste. "It's like a case study in how not to run a project," said a spokesman for Enda Kenny, the leader of Irish opposition party Fine Gael. "It's appalling stuff."

Officials have described the PPARS application, which was further along than FISP, as the most complex human resources, time management and payroll system ever implemented in Ireland. After being launched around 1995, the project was budgeted at $10.7 million and was expected to take three years. After 10 years, the expected price tag has rocketed to $180 million.

For this price, Kenny said earlier this month, the agency could have built a "brand new 600-bed hospital." He said the system has made widespread payroll errors -- for example, one staffer was accidentally paid $1.2 million. The major pilot site for the program -- St. James Hospital in Dublin -- also has had numerous payroll problems caused by the software, he said.

Faced with such opposition and problems, the HSE decided to halt work on the PPARS project until it is assured that any future investments will result in a system that works as advertised.

The FISP project aimed to build a single financial and materials management system that supports current best practices. The system, expected to cost about $203 million, would replace a mishmash of legacy systems and processes. About $36 million has been spent so far on the project, which is considered on time and on budget. "Nevertheless, it is important that the HSE is completely satisfied that all such systems are adequate to its future needs," said a spokeswoman for the HSE.

Ireland's health agency payroll project has become a point of contention in Parliament.
Ireland's health agency payroll project has become a point of contention in Parliament.
The committee has yet to complete its evaluation and determine the precise cause of the problems with the PPARS application. However, it has been suggested that the complexity of the project -- and of the system it was replacing -- was a definite factor.

In a statement issued earlier this month, Irish Minister of Health Mary Harney, to whom HSE reports, said her agency hadn't realized the complexity of the older payroll system, which included "over 2,500 variations in payment arrangements across the entire health system," until the PPARS project was well under way.

"The extent of the incoherence was not known before PPARS implementation work commenced," she said.

For its part, SAP wouldn't comment directly on the project but said in a statement that "the HSE is a highly valued customer of SAP Ireland." A spokesman for Deloitte's Irish branch declined to comment on the projects.

Copyright © 2005 IDG Communications, Inc.

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