Turnaround strategy for Los Angeles school district payroll failure

Turnaround strategy for Los Angeles school district payroll failure

Summary: Payroll problems on the Los Angeles Unified School District's (LAUSD) SAP implementation have been ongoing since February and continue to the present. This troubled project vividly illustrates how implementation failures can affect real people, in this case teachers who've suffered for months with incorrect paychecks.

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Payroll problems on the Los Angeles Unified School District's (LAUSD) SAP implementation have been ongoing since February and continue to the present. This troubled project vividly illustrates how implementation failures can affect real people, in this case teachers who've suffered for months with incorrect paychecks.

The obvious human toll has contributed to increased tension between the union and school district. Malcolm Woodfield, who runs SAP's higher education business unit on a global basis, told me, "It's impossible to avoid taking this personally. I live in Los Angeles, and hear every day about what the teachers are going through."

Given the severity of the situation, this blog post proposes a turnaround strategy for the project. According to Forrester Research, the first step toward turning around a troubled project is to conduct a project "reset". This involves three key components:

  • Communicating candidly to stakeholders
  • Buying time to plan
  • Defining the root cause of failure, and aligning the team to solve it

COMMUNICATING CANDIDLY TO STAKEHOLDERS

I believe the district should immediately and publicly take full ownership and responsibility for the problem. Superintendent David Brewer, I'm afraid this means you.

The LA Times raised questions regarding Superintendent Brewer's leadership:

Touted as an outsider who could tame the district bureaucracy, Brewer missed an opportunity to demonstrate his leadership abilities with his early handling of a poorly functioning new payroll system. To some, Brewer did not quickly grasp the scope of the problem, which has resulted in overpayment or underpayment to tens of thousands of teachers and other employees.

Dude, it's time to become directly and personally involved, or the problem will not get solved anytime soon. I'm sure you've delegated to top management, but that strategy hasn't worked, and it's time for a change.

Why hasn't the district found a better way to assist the teachers? Superintendent Brewer, I urge you to waste no time in setting aside some small part of your $7.5 billion budget for this purpose. If you think your current efforts are sufficient, perhaps call the union to ask their opinion.

BUYING TIME TO PLAN

With tensions running high, there's great pressure to solve the problem quickly. However, the situation was not created overnight, and planning is needed to fix it properly. Last thing you need is a quick fix that ends up making matters worse.

If the district does a better job helping affected teachers, maybe the union will give the administration some breathing room. I suggest the union tone down its rhetoric right now to help lower tensions. This might be a good time for the union head to meet with Superintendent Brewer, to discuss their shared payroll problem.

Regardless of the obstacles and complexity, taking time to develop a strategic analysis and plan is absolutely essential right now. Thorough and complete project management is the answer.

DEFINING THE ROOT CAUSE OF FAILURE, AND ALIGNING THE TEAM TO SOLVE IT

The direct causes of the payroll failure must be understood in order to fix the problem. I haven't seen details explaining why the paychecks are wrong, so can only speculate on possible factors:

University payroll is inherently complex. Aside from the usual procedural and administrative issues, schools must deal with concurrent employment, which is described in an SAP brochure:

The most important concepts are as follows:

  • Each employee can have multiple personnel assignments.
  • A permanent record of personal information, including the person’s name and address, is kept independent of the individual assignments.
  • Each personnel assignment is linked to the person.
  • A personnel assignment describes the work that the person needs to do, when the work is to be done, and how that work is to be paid, among other characteristics.

Some commentators have suggested that SAP software offers weak support for concurrent employment, which therefore caused the problems. To check this assertion, I spoke with Malcolm Woodfield, SAP's higher education executive, who said:

Concurrent employment is complicated, but it's a non-issue technically for SAP. We've worked closely with specialized user groups, such as the ASUG K-12 community, which has specific requirements in this area, and our concurrent employment works well.

Given SAP's experience in the market, it's simply not credible to assert the problems are due to technical limitations in the SAP software. Disagree if you like, but that's my considered opinion.

Roll out and testing were likely flawed. I spoke with Marla Eby, Director of Communications for the union, who commented:

Teacher payroll is complex, however, the old system did work. The system was rolled out too quickly, and without sufficient testing. The union requested that the system be run in parallel prior to full roll out, to ensure these problems would not occur. The school district chose not to follow this advice for budget reasons, which is ironic given all the cost overruns now.

The union work rules may be overly-complicated. Although payroll system changes are often accompanied by pain and discomfort, this situation is extreme. The LAUSD has a current budget of $7.5 billion, which puts the district firmly in the middle of the Fortune 500, based on revenues. One wonders about the work rules that must exist in such a large school system.

I wonder whether specific jobs, payroll, and scheduling rules may be self-contradictory, yielding different results depending on the method of calculation. If so, then the union and administration must work together to simplify the rules. ERP implementations are intended to expose how an organization operates, which helps streamline and standardize processes. Sometimes, however, the business transformation effort highlights complicated and inefficient processes that may have evolved over decades. If that's a factor here, then district and union leadership face a major, business-oriented simplification challenge that has little to do with software.

I suspect Deloitte has pussy-footed the issue, to avoid pissing off this big client. Deloitte, you're paid handsomely to get this stuff done and you are now failing. If the LAUSD isn't supplying information needed to fully configure and test the system (which I strongly suspect is part of the problem), then take stronger steps. If your paychecks were on the line, you'd call the president of the United States, if that's what it took. So, arrange a meeting between the CEO of Deloitte and Superintendent Brewer. Here's another idea: maybe you shouldn't get paid until the teachers get their checks. Hmmm, I especially like that idea...

SAP hasn't taken a sufficiently proactive role. Although SAP supplied the software, this is a Deloitte project, meaning SAP has had limited involvement to date. [Note: If you don't work in the enterprise software business, this arrangement probably makes little sense, but there are historical reasons for it. In the future, I'll write a blog post explaining the issue in more detail.]

SAP, although you haven't been directly involved on this project, something has gone very wrong and you're the ultimate experts. It's high time you crossed some boundaries and pushed Deloitte harder.

[Thanks to Mike Prosceno, SAP’s Vice President of Communications, for arranging and facilitating the interview with Malcolm Woodfield.]

Topics: Banking, CXO, Enterprise Software, SAP

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11 comments
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  • Union Rules

    The union rules are likely a big part of the problem. The reason is that union contracts are negotiated to reach agreement, not to implement good business practices. Yes, they should work together to fix the problems in their rules, but the district has blown any trust they had with the union.
    brian.kennedy@...
    • Union rules and trust

      If the rules can lead to different results, depending on the calculations, then it would explain incorrect paychecks. Regarding trust, I made the point that this is a shared problem -- and requires a shared solution. Otherwise, the teachers get used as pawns and remain the ones who suffer.
      mkrigsman@...
    • interesting...

      I wonder if the mandated switch from using SSN had anything to do with it...

      I would recommend a call to Oracle... I'm sure that type of publicity would equal a huge discount. They could have them migrated and tested and online in less than 90 days. But that would also depend on how much of their budget they already chewed up on a horrible system like SAP.
      i8thecat
      • I find interesting your blaming SAP here...

        Based on the information above it looks like a typical consultant/accounting firm installation. A bunch of sweat shopped (guessing here of course) "talent" that was brought in to install SAP, and made a fiasco of the situation. Be it Oracle/IBM/MS it wouldn't matter with the consultant talent pool, these firms tend to hire. However, I'm willing to bet on one thing. I'm sure the project has a room full of documentation and binders to support their project methodology that cost a lot of money to type all of that up! And from what I've personally have seen Oracle a huge piece of patch work that is still in the making. Do you use SAP ERP software where you are? Do you have experience with any of the modules if so which ones? Just curious since you were so quick to blame SAP.
        ItsTheBottomLine
        • Oh if your wondering...

          I have experience where I am with SAP software - ERP, SCM, BI, CRM, SEM. We have had two project with Account firms/consultants that were worth millions of dollars. Both left us with rems of documentation. Their "talent" they brought in "experts" with this software. Were guys right off the boat who knew how to read white-papers and help. At 3 figures an hour. We knew more about the software then they did. They would take a problem and say "I will get back with you" THen go back to their little network and get help, and come back with the "solution that I figure out". We are no longer using Acct Firm/Consultants. They are waste and provide little more than legs and hands...how companies are so gullable (us at one time) blows my mind. We personally tech everyone coming in. The current project (kicked out the consultants) I have teched 15 BI engineers - we kept 1...the rest were crap.
          ItsTheBottomLine
      • 90 days...

        Can you honestly believe that the problem is so simple that a switch to Oracle and 90 days will fix it? I will bet you LAUSDs $7.5B budget that isn't possible.
        Turntwo
        • I wonder if they have used SAP software...

          probably not, if so I want to know what modules. If they know SAP they will know what this means.
          ItsTheBottomLine
      • How did you draw this conclusion?

        Certainly not from anything in the story.

        The issues most likely lie in the complicated work rules, as I suggested in the post. Secondarily, Deloitte is most likely not forcing the issue as they should.

        This doesn't appear to be an SAP at all. Rather it's an internal LAUSD issue, compounded the consultants not forcing definition onto the project, to avoid angering LAUSD, their client.
        mkrigsman@...
        • Exactly...thank you.

          The comments and lack of a comment tells me the person reads about SAP, but really has never used the tool.
          ItsTheBottomLine
  • You're joking right?

    This is so far away from being rocket science it's not funny. Concurrent employment, hard rules who cares? - this is a payroll program - the sort of software that first time programmers get to cut their teeth on.

    If it doesn't work, then it's a problem with the code, the design or implementation, but please don't try and convince me that it's difficult.

    Worse still it's SAP, which is running on a good proportion of the large business enterprises in the world so there really is no excuse.
    tonymcs@...
  • RE: Turnaround strategy for Los Angeles school district payroll failure

    SAP software is a "pig with a wig," and a very expensive pig too. There has to be something better.
    starpilot1