Update: Los Angeles schools' payroll problems "stabilized"

Update: Los Angeles schools' payroll problems "stabilized"

Summary: The Los Angeles Unified School District (LAUSD) seems to have ended it's year-long payroll system failure. For most of the last year, many teachers have faced incorrect paychecks resulting from problems during the implementation of an SAP system.

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The Los Angeles Unified School District (LAUSD) seems to have ended it's year-long payroll system failure. For most of the last year, many teachers have faced incorrect paychecks resulting from problems during the implementation of an SAP system.

According to the Daily News in Los Angeles:

Errors due to defects in the system were below 1 percent based on Thursday's payroll numbers, meaning 99.2 percent of the district's employees were paid accurately, said Dave Holmquist, LAUSD's interim chief operating officer.

That's down from a 1.27 percent error rate in December and 2.97 percent in November.

Also, the number of people coming in to the payroll center with paycheck problems has dropped substantially - to 119 so far this month compared with 759 in November and 237 in December.

"We're under 1 percent ... which was one of the goals we had ... and we're hoping to improve upon this," Holmquist said. "The goal was three consecutive, improving, reliable payrolls, and we believe we've reached a place of stability in our payroll.

"We're nearing an end to our crisis."

The human toll on teachers has been extreme, so I'm glad system errors have finally come down to a manageable level. I believe the problem was rooted in a combination of arcane union work rules together with poor project management by Deloitte & Touche, the implementation firm:

"We're hoping to get this resolved through a negotiated settlement," Holmquist said. "We don't want to have to sue. We're not sure it's the best way to spend tax dollars."

But Assemblyman Kevin de Leon, D-Los Angeles, who introduced legislation Monday prompted by the LAUSD payroll fiasco, has said he will push the district to recover lost money from Deloitte through a lawsuit or negotiated settlement.

Both sides were most likely at fault here. Still, the project is estimated to be almost $40 million over-budget (original plan: $95 million). That's far too much and Deloitte should demonstrate it's own skin in the game, by giving up some of its "ill-gotten" profit.

Note to LAUSD: I suggest you push Deloitte hard on this. Dig deep into actual costs they incurred, but watch out for "Hollywood accounting," where they bring overhead into real costs, reducing apparent profitability. However, remember your folks also played a role creating the problems, so be fair and reasonable with Deloitte while you dig into their finances. Deloitte is hardly blameless, but LAUSD's program management also fell short of the mark.

Topics: Banking, Enterprise Software

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6 comments
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  • Payroll systems are "implemented", not "designed".

    Maybe I'm being naive ... but it seems that there is no way that a payroll system should be "designed" by any consultant, anywhere, anytime. Maybe in 1970 or 1980 but not in 2008.

    Payroll systems are established technologies and apart from the cost of implementing, training, and configuring, Deloitte should never have written a single line of code nor should LA have paid for same.
    John Jay
    • It's more complex

      The payroll system is SAP. However, there was consolidation of many silo legacy systems. I suspect complex and conflicting work rules from the old systems caused problems during the consolidation.
      mkrigsman
      • Funny...

        that we never heard about those "complex and conflicting" rules from the old system when they were actually using the old system. Migrating to SAP is a 2-3 year implementation when done correctly, where literally everything including payroll is tested extensively. The implementation partner, in this case Deloitte, seems to have dropped the ball here. That the problem took more than a couple of weeks to address once identified just shows how much differently business partners with the government react than business partners with corporate America. There is no sense of urgency because there is a sense that government will just bend over and take it. Accountability in government projects is a joke.
        jasonp9
    • Rules

      Whenever you try to convert a legacy system to an ERP system (SAP or otherwise) the generally convoluted set of rules and legacy implimented solutions make the conversion a process re-engineering which most businesses are loath to do and consulting firms wish to avoid....
      rhonin
      • Wishes...

        don't get the job done. I've been involved directly with a few dozen ERP implmentations. There have been a number of things I wished to avoid, but when push comes to shove you do what you have to do to make things work. If evidence comes to light which shows Deloitte gave advice which was ignored and this problem resulted, I'll be more than happy to give Deloitte a pass. From past experience, Deloitte is a CPA firm that offers IT services and not the other way around. They don't exactly have a stellar track record with SAP implementations.
        jasonp9
        • SAP Not A Good Choice

          Speaking as an ERP Consultant of 12 years, SAP is just not well-suited to the Public Sector. They are late-comers to Encumbrance Accounting-based systems, which is why only a minority of K-12 custoemrs use them.
          rascalif