Project management lessons from the Phoenix HR/payroll system fiasco

COMMENTARY

By Yogi Schulz

Calgary, Alberta, Canada

The long-running story of the ailing Phoenix payment system is a critical case study for project managers assigned to overhaul complex applications in the portfolio of systems supporting their organization. Phoenix started with good intentions to update the Canadian federal civil servants’ HR/payroll system and save operating costs.

Here’s a synopsis of the circumstances that led to the fiasco. These events occur too often in most organizations and lead to similar devastating debacles.

How complicated can this be?

Often, organizations only have a superficial understanding of the complexities an information technology project will encounter at the beginning when the project is green-lighted. This lack of scope and issue knowledge leads to underfunded and under-resourced projects.

Projects typically encounter issues rarely listed in the project charter document that describes the basis for project approval. The surprise issues include:

Unexpected business process changes.
Much more effort for people change management.
Difficulties with vendor management.
Significant gaps in data quality.
Unanticipated complexity in integrating the new system with other systems in the portfolio.

The Phoenix project appears to have been surprised by the appearance of all these issues.

The better way for project managers to proceed is to:

Allocate more effort to detailed planning.
Consider a prototype or test rollout before committing to implementing the new system.
Query the state of data quality in data sources.
Stage the rollout of the new system by department or region.
Always avoid a single organization-wide rollout.

The business case proved to be a mirage.

In many organizations, information technology projects require a significant or astounding business case to achieve approval. This expectation leads to an overestimation of benefits and an underestimation of costs in project charters.

The Phoenix project was no exception. The business case included the following:

Significant reduction in HR/payroll staff required to operate the system.
More modern information technology to reduce software maintenance costs and better support HR/payroll business requirements.
Improved timeliness and accuracy in paying civil servants.

The Phoenix project achieved none of these business case objectives. Costs increased, and the timeliness and accuracy of civil servant pay decreased.

The better way for project managers to proceed is to:

More…

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How to cite this article: Schulz, Y. (2024). Project management lessons from the Phoenix HR/payroll system fiasco, commentary, PM World Journal, Vol. XIII, Issue IV, April. Available online at https://pmworldlibrary.net/wp-content/uploads/2024/04/pmwj140-Apr2024-Schulz-PM-lessons-learned-from-phoenix-hr-payroll-system-fiasco.pdf

About the Author

Yogi Schulz

Calgary, Alberta, Canada

Yogi Schulz has over 40 years of Information Technology experience in various industries. Yogi works extensively in the petroleum industry to select and implement financial, production revenue accounting, land & contracts and geotechnical systems. He manages projects that arise from changes in business requirements, from the need to leverage technology opportunities and from mergers. His specialties include IT strategy, web strategy and systems project management.

Mr. Schulz regularly speaks to industry groups and writes a regular column for IT World Canada and for Engineering.com. He has written for Microsoft.com and the Calgary Herald. His writing focuses on project management and IT developments of interest to management. Mr. Schulz served as a member of the Board of Directors of the PPDM Association for twenty years until 2015. Learn more at https://www.corvelle.com/. He can be contacted at yogischulz@corvelle.com

His new book, co-authored by Jocelyn Schulz Lapointe, is “A Project Sponsor’s Warp-Speed Guide: Improving Project Performance.”