Inside the Novopay debacle

01:40, Feb 07 2013

So another half million is going to be spent "reviewing" the Novopay disaster.

The findings of Steven Joyce’s review team will confirm what school principals had been predicting for two years: the Novopay model is a dog, a lemon, a fatally flawed experiment.

Four years ago, principals knew the old system was beginning to fail.

Datacom had the contract, and its server and software had reached the end of their useful lives for a payroll of more than 90,000 employees.

The new specs looked for a 22nd century solution, including the direct inputting of data from school offices to the payroll computer.

What was overlooked? The human factor.In attempting to bypass the process of a payroll specialist to check and correctly input the data, the designers also factored out the ability for a human to fix things when they went wrong.


Local secretaries in schools were expected to upskill to become payroll experts (and in the large number of New Zealand’s smaller schools, that job fell to already overloaded principals dealing with property, finance and personnel issues, along with the ever changing National Standards reporting).

Blame the original designers, those who specified the programming and the technical requirements to reduce hands-on involvement in the process.

That was more than four years ago, and the resulting shambles of the last six months can be traced back to those early decisions.

From the initial sign-off, the implementation programme has lurched its way to today’s situation, and any fix-up will take time and millions more dollars.

The initial plan included ‘‘business as usual’’, so a parallel payroll could run while the new one could be trialled.

There were no trials. There were many delays, rewrites and new requirements along the way.

School staff were assured, in positive-speak ministry releases, that all was progressing well.

Australian company Talent2 won the contract, against bids from Datacom and others.

It is likely that Datacom’s bid included a new server and software, while Talent2 relied on their existing facilities.

Assurances were given that Talent2 was a successful operator, accustomed to dealing with large company and government payrolls.

Inevitably, Datacom shed staff during the phase-out period, losing many of its experienced people, and no doubt morale suffered as a result of the lost contract.

How helpful would they be to the new kids on the payroll block? The word-spinners engaged by Talent2 and the Ministry coined the name Novopay to convey an optimistic message of a new way forward for school wages.

The phased implementation was delayed, and delayed again.

The initial plan to start with all South Island schools was ditched, and the Ministry hoped that Talent2 would ‘‘get it right’’ in time for the full rollout. The rest is history.

Where does a school stand legally if it instructs its payroll provider to process salaries and wages, and it fails to deliver?

The dilemma for school principals since last September is that they are taking the big hits, and dealing with the fortnightly disasters of unpaid staff.

Here’s how it works:

* Schools send information to the payroll provider of all pay changes for the fortnight. These include the day relievers brought in for staff absences (mainly for sickness and attendance at courses). School payrolls are complex, with many part-timers, fixed term, and additional payments for seniority and responsibility.

* These notifications are done using forms with prescribed templates, and can be scanned and emailed or faxed. Original plans for a totally online process proved unreliable, and the ‘‘form’’ process was developed.

* Schools receive an interim ‘‘SUE’’ report (Staffing Usage & Expenditure), four days prior to the actual payday, and there is a four to five-hour window of opportunity to make changes and corrections.

* Payday in the education sector is midnight on the following Tuesday.

In the ‘‘old days’’, even earlier than the Datacom contract, there were payroll centres based in the regions.School principals and office staff knew their contact person, and there was a high level of personal contact.

Mistakes were noted early and fix-ups were straightforward.

Communications were direct, and any alterations or queries could be dealt with quickly, easily and accurately.

Yes, there were early problems with the Datacom process when those changes were made, but things settled down and school staff found they could work well with the contact people.

No-one was impressed with the new model as proposed and specified by the Ministry.

In factoring out the human element, they have also removed the ability to fix things when they go wrong.

And they have gone horribly wrong from before day one.

The training process was never going to work. Online training is fraught with problems , and when the model is unfriendly, any reluctance and resistance is understandable.

Delays and errors with passwords, and principals were already frustrated, occurred months before the rollout of Novopay.

No-one in New Zealand’s schools was surprised that the first pay in the Novopay era was a disaster. The signs were there from the start.

Interim SUE reports indicated major flaws, and then came the first of the headaches that have persisted throughout the following five months.

There is no real capacity to remedy things. Office staff in schools have spent many thousands of hours trying to have errors corrected.

That process is also a disaster, and as school secretaries and principals have tried to fix things, they have multiplied.

Electronic messages, machine responses and non-human processes mean that corrections are not made.

Each message is assigned a ‘‘case number’’, and when a fortnight passes without the error being fixed, another message is sent and another case number assigned.

At the time of writing, we note that the case numbers have reached 214,000. No wonder the system is not coping.

Out in schools, the levels of frustration are epidemic.Novopay has become a sick joke, and the stresses are taking their toll.

School secretaries and administrators have had enough.The problems are systemic, and the fix also needs to be system-wide.

The public, the ministry and the Government needs to be aware of the immense amount of goodwill that has existed in New Zealand schools for over a century.

People work in schools because they want to help children.

Many thousands of hours were spent in the October holidays, trying to correct the myriad of errors in the new payroll.

Work was assigned to other staff so office people could focus on payroll.Other work was simply not done, as payroll became the focus.

The law requires that staff must be paid correctly and on time.

The public has no idea of the time that Novopay has taken, and the real cost of this to schools.A conservative estimate, based on hours put in across all schools, is at least 10 million  in time.

When Steven Joyce weighs the cost of the fix-up, in whatever form that takes, he and his advisers should also factor in some realistic recognition of the cost to schools.

Goodwill is not enough. The ongoing effects of this disaster are extensive and expensive.Principals and office staff have had enough of Novopay.

They want to get on with the important work of student learning and achievement.

Payroll should be straightforward and hassle-free.

The fix? Go back to what worked well. Reinstate regional/local payroll officers working under a national payroll provider who knows and understands the New Zealand scene.

Computer systems are here to stay, but like any system, they need human support. Have trained operators available to help, humans who have a relationship with their clients, not ‘‘Rent-a-Temp’’ workers who have no idea.

New Zealand is a small country with so much going for it.It does not need to adopt impersonal practices of the multinational companies.

When things go wrong, it needs a system of help rather than of blame.

The Ministry owes its schools millions in compensation for this fiasco, and it needs to have them back on board if any fix-up has any chance of working.

*Geoff Lovegrove is principal of Lytton Street School in Feilding, and a former president and treasurer of the New Zealand Principals’ Federation.  He represented principals on the original payroll reference group in 2009-10.

Manawatu Standard