OVUM評論：Queensland Health woes provide valuable lessons on shared services

IT governance needs urgent attention

For many managers, IT governance is not the most exciting of their duties; however, the lack of appropriate governance appears to be at the heart of many project failures. The problem does not appear to be a lack of tools and methodologies – indeed, we appear to be awash with them. Instead, the problem appears to be in applying them to meet the needs of contemporary IT issues.

Traditional IT projects can still be deceptively difficult, even in the 21st century

For more than 40 years, payroll has been one of the key processes targeted for automation. There is certainly no shortage now of robust packaged software solutions aimed at the HR/finance market sector. However, while generic solutions are abundant, there are still hidden challenges in delivering solutions that meet specific business requirements. Scope creep can become the deadly enemy of such projects, particularly where there are complex employment conditions to consider. This was certainly the case for Queensland Health’s payroll system.

Queensland Health is a diverse and complex government agency. It provides both metropolitan and remote health services to Australian citizens, across a land mass three quarters of the size of Western Europe. It has 13 different industrial awards and multiple industrial agreements, providing over 200 different allowances to its employees. It is the combined effect of this that really creates the problems. The current award structure leads to more than 24,000 different pay combinations to be calculated.

Queensland’s Auditor General found the project had suffered significant scope creep. Prime contractor IBM submitted over 47 contract change requests. The auditor found that these were mainly due to the business requirements not being clearly articulated and agreed to at the outset of the project. This in turn led to significant problems during development and system testing.

Shared services can add an extra layer of complexity

Shared services is certainly the flavor of the moment across Australian governments. This is a sensible step given the significant potential savings in management and infrastructure costs, as well as the extra benefits in delivering coordinated services across agencies.

However, things can go disastrously wrong if additional governance arrangements are not put in place to deal with the new leadership dynamic. Competing interests need to be managed between new stakeholder groups.

These include:

• the shared service provider that needs to consider whole-of-government issues and the combined needs of many government agencies
• the client agency that is still ultimately responsible for government outcomes in its own portfolio
• third-party outsourced providers that are concerned with satisfying competing customer needs while at the same time delivering a solution that meets their own commercial objectives.

By the time a large shared services project is under way, it may be too late to make substantial changes to governance arrangements. This is because governance negotiations now impact multiple corporate players and at multiple levels of hierarchy. Organizations can be captive to their own existing management dynamics. Governance changes along the way are very likely to just add to the confusion and management complexity.

Indeed, Queensland’s auditor found changes to governance arrangements were not effective in dealing with difficult issues as they arose throughout the project. While attempts were made to remedy the problems, the changed arrangements themselves became part of the problem. He found that “when questioned by audit about the governance structure and changes to the structure over the life of the project, different versions of the documentation were found to exist,” and when questions were asked about the operation of government arrangements, “different responses were provided by each stakeholder.”