Reprieve for Talent2 as education payroll stays with Novopay
by Pattrick Smellie
May 7 (BusinessDesk) - Australian payroll provider Talent2 will keep its $105 million 10 year contract to to provide New
Zealand's public education payroll service after the government decided switching to the old provider, Datacom, simply
exchanged one set of risks for another.
Minister Responsible for Novopay Steven Joyce announced the Talent2 contract will "remain under review", but the
decision effectively leaves Talent2 in place as New Zealand-owned Datacom loses an identified time to implement an
alternative between June and September this year.
Datacom's plan, also released, signalled strong school support for a return to the "old system" and that pricing would
have remained the same as when Datacom bid for and lost the contract to Talent2 in 2008.
But Joyce said the Cabinet concluded Talent2 was starting to get on top of the Novopay bugs and "it wouldn’t be sensible
to make a change at this point", with error rates running at less than 0.5 percent in the three of the last four pay
periods.
The government's independent technical reviewers regarded that as "a reasonable error rate for a stable system."
"Making a change now would increase the work for payroll administrators in the short-term during the cut-over from where
we stand today, not decrease it."
Datacom is understood always to have experienced a small number of errors in each pay run, in part because the pay
schedules for school staff are unusually complex and individualised.
Its proposal for replacing Novopay would have involved a short term return to a version of its old system, with a new
system to be implemented in 2016.
While parts of Datacom's plan are blacked out, the company apparently had little faith that it would easily reconcile
Novopay data for use in its own systems. While it quoted firmly for the implementation job, it said from the limited
information seen, reconciliation would take "a very long time" and would not give even a "guesstimate" at the cost.
Documentation referred to how Datacom's "reputational risks" would be managed if it took over the botched project from
Talent2, which implemented Novopay late in the middle of last year despite evidence it was not working well.
A slower than targeted clearance rate remains one of the areas of "frustration" with Novopay, said Joyce.
The next key milestones are the Novopay Ministerial Inquiry, which is due to be presented at the end of this month, and
the review of progress in the remediation plan at the end of June.
Joyce said education payroll simplification was a medium term issue to be addressed.
The Novopay contract saw Talent2 paid $29.4 million to build the system and $12.5 million a year to run it until 2018.
Penalty clauses in its contract are likely to be invoked to compensate for the botched implementation, and Talent2 has
already committed significant unplanned resource to try and placate angry educational workers.
(BusinessDesk)