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Novopay Inquiry: Where does the blame lie?

As much as the payroll provider, Talent2, has received constant public scrutiny and condemnation, the latest Novopay Ministerial Inquiry implies that Talent2 is not the main villain in the Novopay situation after all.

The Novopay Ministerial Inquiry “probably provides a more balanced view of what’s actually occurred because there was a tendency to treat Talent2 as the sole villain,”concedes Mr Joyce. “It’s not a one-way street as has been suggested by some, that basically just Talent2 should pay and pay and pay, because obviously the Ministry has done some things here which have set the relationship up in a way that hasn’t worked, and also they’ve signed off certain things which in hindsight they shouldn’t have signed off.” (, 5-6-2013)While Peter Hughes, the Acting Secretary for Education further commented, “the ministry did not have the capacity – skills, processes and governance – for a project of this scale and complexity. There was not enough oversight from the leadership.” (, 4-6-2013)

Right from the start there was the maligned procurement process – that resulted in an Australian firm, Talent2, as the winning vendor. The inquiry specifically investigated the assertions of bias around the procurement process. But the findings showed that the procurement process was not inappropriate, and this was endorsed by an earlier PricewaterhouseCoopers (PwC) evaluation that the process was “consistent, fair, well constructed and compliant with the evaluation plan and relevant guidelines.” (Novopay Ministerial Inquiry)

Paul Ramsay, co-chair from the digital technology industry group, NZRise, commented that a particularly concerning aspect of the Novopay situation was the apparent failure to take into account lessons from previous large-scale public projects that had gone wrong in similar ways. Mr Ramsay highlighted that projects like Novopay are not just technology projects, but they are also organisational change projects. “Novopay represented a radical decentralisation of payroll processing into the schools. The Ministry of Education failed to equip the schools to deal with this major change and ‘grossly underestimated the support requirement’”, he said. (, 6-6-2013)“There was no clear approach to providing the HR and award-related support that Datacom had provided. The Novopay service was never intended to provide this support, and as a result calls of this nature could not be resolved by the Service Centre.” (Novopay Ministerial Inquiry)

The Novopay Ministerial Inquiry also identified the failure of the Ministry to involve users appropriately and the Ministry’s inability to define accurate and detailed requirements as key weaknesses throughout the scoping and development processes. As the Ministry controlled access (and therefore information) from Datacom and the schools, Talent2 had very little engagement with these important sources of knowledge. The Ministry provided its own staff as subject matter experts (SMEs) to liaise with Talent2, but this resulted in large knowledge gaps which caused major issues as the project developed. It must be asked, how could the Novopay project succeed without the right specifications and requirements from the onset?

The inquiry identified that key Novopay milestone approvals, such as the pivotal decision to go live in August 2012, were based on flawed information provided by Ministry advisors. “Reporting to ministers was inconsistent, and at times unduly optimistic, and sometimes misrepresented the situation.” (Novopay Ministerial Inquiry)The adherence to the August go-live date would of course have major ramifications ­– the Service Centre was overloaded with a flood of enquiries; a mass of manual requests had to be processed because of low Novopay online function uptake; system defects climbed because testing had not been completed – all leading to a vicious cycle of additional work, stress, frustration and mistakes to all parties involved. The project should never have gone live at this time, and had the true lack of project readiness been reflected in the Ministry’s advice to the Novopay project team, better decisions would have ensued.

The recent resignation of two senior staff members of the Ministry (including the Deputy Secretary of Education, Anne Jackson) are direct casualties from an investigation resulting from theNovopay Ministerial Inquiry. Ms Jackson said that the inquiry identified shortcomings in areas that she had been responsible for as the deputy secretary, schooling at the time. (The Dominion Post,, 11-6-2013) But should the blame be totally shouldered by just two senior staffers?

In essence, the inquiry reported that the Ministry did not establish the quality of governance that a complex project such as Novopay warranted. A major failing was the lack of discussion by the Novopay Project Board to ensure adherence to the Cabinet-mandated Guidelines for Managing and Monitoring Major IT Projects. There was a lack of engagement regarding the project by the Ministry’s Leadership Team with the Audit and Assurance Committee, and the Novopay Project Board. This disconnect augmented confusion around role responsibilities – especially because there was no Program Director with overall reporting accountability; and similarly, there was no overall accountability for Independent Quality Assurance. “We found no evidence of the sustained and focused attention on the project from the Ministry’s leaders that we would have expected. The Leadership Team did not clarify its own role in relation to the project.” (Novopay Ministerial Inquiry)

The State Services Commissioner, Iain Rennie, also admitted that the commission should have provided ministers with better advice about the teachers’ payroll system. “We should have been providing ministers I think with not just snapshots of where the project was at, but more targeted advice to ministers about how they could appropriately intervene and shift that project forward.” (, 12-6-2013)

Regardless of the Ministry’s internal investigations, the good news is that the future does seem much brighter going forward for Novopay. The inquiry concluded that despite the problems, there is now a strong commitment from the Ministry of Education and Talent2 to deliver a successful project. “The future of the schools’ payroll system now looks more positive. We are confident that there is scope to address the weaknesses that we have found.” (Novopay Ministerial Inquiry)

This is supported by comments from the school sector. “I’ve got a bit of faith in the ‘fix-it minister’ [Steven Joyce] and I’m glad he’s in charge because he gives you the feeling he’ll do the right thing,” Hunterville School Principal Stephen Lewis said. Mr Lewis said he and his staff were becoming more comfortable with Novopay. “We’re slowly getting used to it and its little idiosyncrasies, sticking with it is probably far better than scrapping it.” ( 6-6-2013)

So it now seems that the Ministry of Education has the right people responsible for Novopay, making informed decisions, based on accurate and reliable information. And go figure – the flow-on effect is that the Novopay system is starting to provide the sort of payroll service that was originally intended.

About Emma Gilbert

Working in the marketing industry since 2002. This blog is one of my hobbies.

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