Review says Novopay can be fixed, Joyce dishes out $6m to schools

Steven Joyce, the minister in charge of Novopay, has announced a $6 million compensation package for schools to “go some way to meeting the costs of additional work caused by the Novopay system.”

RAW DATA: Read the full review (PDF)

The one-off payment across the sector is calculated on a formula of $105 per full-time teacher, plus a $500 payment per school. That means a school with 5 full-time equivalents will receive $1025, while a school with 120 full-time equivalents will receive $13,100.

The money comes on top of a $5 million top-up for Novopay devloper and operator Talent2, and takes the total spent on the dysfunctional teacher payroll system to somewhere north of $41 million.

Technical review: Novopay can be fixed
This afternoon also saw the release of the technical review into Novopay, whose purpose was to establish whether Novopay can be "stabilised", or made to work properly.

The review says it can be stablised (a separate ministerial inquiry is looking into broader Novopay issues and is due to report  in May).

The report was carried out by Deloitte. Its three key findings:

• Novopay core software platforms are not currently stable for delivery of the school payroll. This is driven by the backlog of systems issues largely relating to the high degree of customisation
   
• Novopay can be made stable to deliver the school payroll for the next eight to 10 years provided there is greater effort by and capability of both the Ministry of Education and Talent2
   
• Inadequate quality assurance processes have not adequately prevented incorrect data from being entered, and contributed to issues experienced by schools and their staff

On March 10, Mr Joyce pledged schools payroll workloads would return to their pre-Novopay debacle levels in three months.

Mr Joyce says a switch to former payroll provider Datacom is not out of the question.

“That’s certainly possible…I’m not ruling it in or out. But on the balance of risks, it would not be responsible to make that call now.”

Working with Datacom
Mr Joyce says Datacom has been working with his staff and has done a good job to put together a backup plan, but he says he will not be making any decisions for six to eight weeks, after closely monitoring Novopay’s progress.

“There’s no love lost for either option. Truly you shouldn’t underestimate the challenges involved in winding back. All the advice I’ve received is the Datacom backup will need further development.”

However he has left the exact timing of the decision up for negotiation, saying he could make the decision in a shorter time period if needed.

Mr Joyce says it has been a trying time, one which has been widely acknowledged in the IT industry.

“A senior IT person in the industry said to me the other day - ‘the reality is most companies think about changing their payroll provider, and then never do, and there’s a reason for that.”

But Mr Joyce has ruled out completely re-tendering the system, saying it could take at least another two years to put brand new systems into place.

The technical review, written by Deloitte NZ chairman Murray Jack, says found Novopay can be made a stable payroll platform for the next eight to ten years, but it first requires a “materially elevated and sustained effort and capability by both the ministry and Talent2.”

The review outlines what course of action should be taken in the next three months:

• The number of business issues being experienced needs to be reduced to a consistent level below 1% of staff reporting issues in any pay period, where extra errors are largely predictable in nature and managed through defined workarounds.
   
• Outstanding defects, particularly in high severity categories, need to be reduced, for example to no ‘fatal’ defects and no more than 10 ‘very serious’ defects. As at March 7, there were no ‘fatal’ and 44 ‘very serious defects.’

But Mr Joyce has already flagged possible problems with pay period one – the first of the new financial year in April.

The technical review also wants an increase in Talent2 staffing levels, including a doubling of business consultants, to manage a resolution.

Deloitte also wants some immediate action to be taken:

• Strengthen the current remediation programme to incorporate Deloitte’s recommendations, then finalise and execute the plan.
   
• Establish robust performance management processes and checkpoints to monitor remediation progress.
   
• Establish a dedicated team, with clear leadership accountability to manage resolution end-to-end.

bcunningham@nbr.co.nz