Technology projects, and the complexity around successfully implementing major technology projects in the public and private sectors, continue to feature. Here is one recent example:
The NSW Audit Office issued its 2017 report on the law and order, and emergency services agencies to Parliament on 28 November 2017. The report focuses on key observations and findings from the most recent audits of agencies in the Justice cluster. No qualified audit opinions were issued on Justice agencies' financial statements. However, agencies that used the Department of Justice as their service provider experienced difficulties finalising their accounts - due to issues with the Department implementing a new financial accounting and reporting system and the continued establishment of its Business Support Centre.
The report identified one high risk financial control deficiency, resulting from two major technology projects:
- During the year, the Department:
- Completed implementing a new finance system (Justice SAP) throughout the Department (except for Corrective Services NSW), and across the justice cluster.
- Continued establishing the Business Support Centre (BSC), which centrally processes finance and human resource operations.
- Significant payroll and finance-related issues resulted from simultaneously implementing the Justice SAP and establishing the BSC. These included:
- the inability of staff to complete bank reconciliations, resulting in a significant number of uncleared reconciling items
- roles and responsibilities in the SAP system not being appropriately assigned. This meant that system workflows did not operate as intended
- the absence of management and payroll reporting, which reduced the effectiveness of oversight controls
- concerns over the accuracy of leave balances
- concerns over the accuracy of inter-company transactions and balances
- general concerns over the integrity and accuracy of financial data and reporting.
- The lack of recognition of the inter-dependency between the BSC and Justice SAP projects was a commonly cited contributor to the issues. Other general project management deficiencies were also identified as contributing to the issues, including:
- No formal assessment of the relevant skills/experience of key project personnel before project commencement
- No effective on-going project risk identification and management process, including a 'living' risk register that captured inter-dependent risks across both projects
- The 'go live' decision for each Justice SAP wave by those charged with governance was not informed by a full understanding of the project or BSC's readiness, and the risks of going live at that point
- Insufficient focus on stakeholder engagement and change management
- Insufficient independent quality management over the project, together with contract and performance management. The report acknowledged that this could have highlighted risks and issues at an earlier point and allowed for greater control and management.
- The Department addressed the financial reporting impacts by setting up a dedicated Finance/BSC/Project team, and engaging external firms to investigate and resolve issues. This work was costly. The report noted management's advice that they spent an unbudgeted $2.0 million in 2016–17 addressing implementation issues to a stage that allowed presentation of materially correct financial statements, that the Department expects to spend a further $21.0 million in 2017–18, and that the cost to fully address and rectify implementation issues and reinstate proper internal controls could be up to $23.0 million.
The report recommended that the Department should:
- reinstate controls over financial information as soon as possible, and
- capture and apply lessons learned from recent project implementations, including LifeLink, Justice SAP and the Business Support Centre establishment, in any relevant future implementations.
It's a consistent message. Successfully implementing a major technology project (in the public or private sector) requires more than great planning, robust sourcing and a strongly negotiated contract (and commercials). It is a collaborative exercise, and requires both from the customer and the vendor):
- a specialist team with continuity
- deep business and technology knowledge, applied with insight
- ongoing project and risk identification and management
- actively engaging (and managing) stakeholders, the business, and change
- a desire to crystallise and deliver the value contemplated by the project.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.