Why SAP HR/Payroll Projects Fail

Two SAP HR/Payroll project failures have been in the news recently - Queensland Health and Marin County. That reminded me of a couple earlier failures that were reported in the news - LA Unified School District and State of California. Now, one can argue if these are really failures; employees are getting paid in three of the four cases after intense work to get things corrected. I count it a failure if a project gets public press time for not working out, and all four of these qualify on that measure.

On the one hand, I am puzzled by these failures. SAP HR/Payroll has been implemented thousands of times, at many firms that are larger and more complex. On the other hand, I'm not surprised at all. Successful SAP HR/Payroll projects are complex and require a lot of detailed work. And it is very interesting that all four of these examples are in public sector organizations. For-profit and private-sector implementations have, I'm sure, failed now and then. But the last one I remember is at Hershey Foods in 2002. Is this a public sector problem, a consulting problem, a software problem?

SAP HR/Payroll has been implemented at other public sector organizations - universities, cities, Federal agencies, school districts, and so on. The first one I know of went live in 1998 and is still going strong.

Although the SAP HR/Payroll software has certainly had its growing pains, it does work. It's not the easiest or most intuitive software around, yet it does work for thousands of SAP customers around the world.

In my opinion, project failures start and end with the consulting firm. We can say all we want to about customers not doing their fair share or not being ready for or agreeable to change. We can point to software defects and shortcomings, which are real. However, if consultants 'give professional advice' then it is our responsibility to call attention to issues that affect our client's success. If the software has critical errors or functional gaps, then maybe that software isn't right, or ready, for our client. If our client isn't ready for the amount of change that a new software package will bring to their organization, then maybe the scope of the change needs to be narrowed to what can be handled. If our client is not willing to pay for qualified and experienced implementation resources - or we are not willing to staff the project with such resources - then perhaps expectations need to be managed to line up with capabilities.

One of the biggest obstacles for implementation projects, regardless of the software package or industry, is the conflict between the consulting firm's goals for giving good advice vs. making a profit. There are tensions between those two: when the good advice is to cut scope, spend more on implementation resources, or invest more in change management then it is likely that profit will decrease.

Most times, experienced consulting firms know how to plan a project so that they can both provide good advice and make a profit. However, as the four cases mentioned at the beginning illustrate, that is not always the case.

Comments

Re: Why SAP HR/Payroll Projects Fail

This is an excellent article and having been part of 9 very large successfull SAP Payroll implementions I couldnt agree more that the blame of poor projects more often than not is the consultants/consulting partners fault.

I know first hand that the City of Portland which was not mentioned and a disaster (http://tinyurl.com/3655zh2) had an intial consulting partner that never had done a HCM let alone Payroll project.  I was a on a few calls early on and I could tell the project was headed down the wrong path. It was the economics that couldnt afford to have me take a spot consulting role though if they could turn back the clock they would do it in a heartbeat.

The LAUSD had a PA consultant that I had worked with leading the payroll team.  He was a good consultant but it was a his first payroll project (though that is not how he was sold to the client). It was the economics that caused the SI to provide a team of jr consultants to the project.

The SAP US Payroll product is as good as any product in the marketplace and the software works.  When you see SAP Payroll and failure/lawsuit in the same sentence it is never SAP's fault bottomline.  US Payroll has some complexities and you have to ensure your consulting partner provides individuals that have been on multiple project and is very detailed.  When you are dealing with employee paychecks and money there is no room for error.

My advice for clients is to do a detailed technical interview to ensure you are getting the right person.  To give you perspective I interview about 20-25 payroll consultants a year and about 20 of them are not in my opinion qualifed to be working on a payroll project.  There are enough good people out there with a great track record, references, deep understanding of SAP as well as the payroll laws of the country that there shouldnt be any "disaster" SAP payroll projects. 

Re: Why SAP HR/Payroll Projects Fail

Great points, as always, Jarret. Somehow I had missed hearing about Portland.

Re: Why SAP HR/Payroll Projects Fail

Having been involved in SAP projects including payroll projects as a team member, project manager, client QA/review resource, Steve's observations are accurate. What appears to be a common characteristic of integration and consulting firms, particularly from larger firms in my experience, is the use of very talented strong consulting resources to sell a project and then inexperienced and junior resources actually implementing. I think the public sector also sets itself up for failure as the budgeting and procurement processes are often, but not always, prices focused first and process/performance focused second. In the end low budget firms that fail to insure the clients understand that low cost fixed price projects can only deliver results in all conditions are present for success. One recalcitrant client participant can cause delays and derail a project as easily as inexperienced or inept consultants. It is the integration and consulting firm’s responsibility to insure that the client is fully aware of this limitation.

Re: Why SAP HR/Payroll Projects Fail

Greg, you certainly do have a lot of experience and it's good to get your feedback on this - thanks! Good insight on low-priced fixed-bid contracts - all the stars have to align, everything has to go right to make them successful. And, how often does that happen? Most every project has some surprises.

Re: Why SAP HR/Payroll Projects Fail

Great article and words from a good SAP HCM/Payroll consultant's heart.

You are absolutely correct - the message to clients selecting their SAP implementation partner could not be clearer.

Unfortunately many (we know who) implementation companies and self claimed SAP HR/payroll consultants are out on the market - who are experts in hiding behind thousands of pages of blueprint documents, making millions of dollars before the clients wake up during the system integration test phase- only  to realize that by the time they plan to go-live, that they have nothing other than outdated project documents - but no working SAP system...

Re: Why SAP HR/Payroll Projects Fail

Thanks for that feedback Dirk - I appreciate and respect your views on this.

What continues to surprise me is that we - the consulting industry & clients - have been implementing SAP HR since the mid 1990's in the US (longer elsewhere, some places shorter), and we still manage to miss the mark to such an extent. In the 90's when ERP and integrated HR were relatively new, it was more understandable to see failures like that; and I would think the collective wisdom of clients & partners would make this very rare now.

Re: Why SAP HR/Payroll Projects Fail

Steve- The collective wisdom is more like dissonant wisdom. The spin consulting organizations put on basic process and supporting system configuration amazes me. Being able to pierce some of the spin is what good networks of peers can do as well as conferences like SAPHR which focused on actual delivery and not the packaged sales information.

Re: Why SAP HR/Payroll Projects Fail

 

Key Findings
 
- Auditor General's report identifies "while accountability for payment of staff within Queensland Health lies with the Director-General, Queensland Health, the Director-General, Department of Public Works manages the shared services agency which implemented the payroll project". This "limits Queensland Health's ability to influence some of the decisions affecting the outcome of the project".
 
- The payroll has complex award structures [pay scales]. 13 Awards, with multiple industrial agreements with 200 different allowances, and excess of 24,000 combinations of calculation groups and rules. These were done manually in the old system
 
- System testing did not identify a number of significant implementation risks, potential impact was not understood.
 
- Changes to payroll administration practices introduced at the time of the release of the SAP HR and WorkBrain system such as deployment of a new fax server and a re-allocation of processing duties within the Queensland Health Shared Services Provider.
 
The real and unasked question  is whether there is sufficient payoff in automatic something so complex and so fickle that the next round of wage negotiations will require a rewrite of rules again.
 

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