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9486 in the collection
The payroll mess: It didn't have to be this way
Thousands of Los Angeles public school teachers have been victimized by errors in LAUSD's new, expensive, and dysfunctional payroll system. Since January, teachers have been getting wrong paychecks--gross errors in the amount they're paid, in their STRS credit, and--in several cases--no pay at all. Every month LAUSD and their high-paid system consultants, Deloitte Consulting LLP, promise to get it right. But instead, the bugs keep multiplying. Each payday, teachers must drive through rush hour traffic and then wait in queues for up to five hours--just to report the problem. This has become the number one immediate issue for UTLA (the LA teachers' union), UTLA asked Jack Gerson to look into the problem. Here is his account. There is considerable background information on this fiasco at http://www.utla.net.
This is the business model of education in action. Also: NCLB in action--across the country, these large and error-prone data systems are being installed to try to fulfill NCLB data reporting requirements for monitoring teacher performance and accountability, in the process draining hundreds of millions of dollars that ought to be going to kids, classrooms, educational programs and resources.
By Jack Gerson
Wrong pay. No pay. Trekking
downtown to wait for hours at the
LAUSD Payroll Service Center.
System errors multiplying month
after month after month.
It didn't have to be this way.
� The consultants, Deloitte
Consulting LLP, were paid a fortune
($55 million) to deliver, customize,
and install an ERP software package
from SAP USA. Their huge fees
are supposed to be based on competency.
It's supposed to be their
business to know how to get it right
the first time.
� LAUSD administration should
have set deadlines and performance
criteria, with penalties for failure
to comply. That's supposed to be their
business. But instead, they want to
pay Deloitte another $9.6 million to do
what they've already been paid to do:
get the system to work.
� The old system should have been
replaced slowly and modularly. New
modules ought to have been thoroughly
specified, tested, and validated before
going online. The newly replaced piece
of the old system ought to have been
kept on standby should problems arise
following the new module's rollout.
The opposite was done, with disastrous
results.
No one should be surprised. This is,
after all, an ERP (enterprise resource
planning) system. What's that? It's an
attempt to integrate all of an organization's
data and processes into one
gigantic unified system. ERP systems
typically:
� are outrageously expensive.
� take many years to install.
� require major changes in jobs,
workflow, and organization: "These
implementations require profound
changes in the way the organization
conducts business," according to Andy
Kendzie, spokesperson for SAP USA.
� are riddled with bugs.
Big systems are buggier when rushed
into production in business areas unfamiliar
to the software consultants (such
as education). The buggier the system,
the more likely the consultants will
demand millions of dollars to fix the
system they were already (over)paid
to install.
Did LAUSD management do due
diligence before signing up with SAP?
If so, they should have known that:
� In 1995, the Irish Health Service
hired Deloitte & Touche LLP for an
SAP ERP system expected to take three
years to install and cost $10.7 million.
Ten years later, the cost had risen
to $180 million and the project has
been abandoned. Critics in Ireland's
Parliament called it "a case study in
how not to run a project."
� In 2001, the city of San Antonio
paid $89 million for an SAP ERP system
to be installed by Deloitte Consulting.
The system was rolled out in 2003.
In 2005 the San Antonio police union
complained that paychecks were still
inaccurate.
� In 1999, W.L. Gore & Associates
sued PeopleSoft Inc., Deloitte & Touche
LLP and Deloitte Consulting, alleging
they did a poor job on an expensive
ERP software installation. Among the
complaints was the claim that Deloitte
sent "less experienced" consultants to
the job as a way of training them.
� According to the Daily News,
SAP ERP systems installed in the San
Bernardino and Minneapolis school
districts were problem-ridden.
Was LAUSD administration ignorant
of the above track record? Or did they
willfully ignore it?
� Chuck Burbridge, then LAUSD
chief financial officer, told the Daily
News: "We thought we were aware of
the challenges, and we were hopeful
we'd have a better experience than
these other school districts." Hope
springs eternal, but this is wishful
thinking.
� Speaking of wishful thinking:
LAUSD Interim Chief Operating
Officer David Holmquist told Education
Week, "I'm a bit of an optimist. The
experience in other places, from what
I've been able to gather, is that it takes
often about two years to start reaping
the benefits [of an ERP]; but then the
organization gets through the pain."
We suggest Holmquist indulge himself
in the pleasures this system has
afforded tens of thousands of District
employees: Each month for the next
two years he should receive an inaccurate
paycheck, be forced to drive crosstown
in rush hour traffic, and wait for
several hours.
� On a more sobering note: LAUSD
chose SAP's ERP system although SAP
was not the lowest bidder. LAUSD
could bypass the lowest bid because
of legislation passed in Sacramento a
few hours before SAP was awarded
the contract. LAUSD pressed hard for
that legislation through its lobbying
firm, Rose & Kindel. Perhaps not coincidentally,
Rose & Kindel is also SAP's
lobbyist.
Regardless of whether SAP and
Deloitte were chosen out of ignorance,
out of cronyism, or in the belief they
would deliver a working system on
schedule, what can be done to clean
up the mess?
LAUSD Superintendent David L.
Brewer proposes deferring Phase III
installation from July 1 to October
1. That's a step in the right direction.
But Brewer also proposes paying
Deloitte an additional $9.6 million to
fix the problems they've created, and
to increase the overall project budget
by $37 million (to $132 million), and
that's a bad idea.
Here's what should be done:
� First, Deloitte must honor its
agreement to deliver a usable system
at no additional cost. Deloitte consultants
have been paid well. It was their
responsibility to attain a concrete and
specific understanding of the client's
needs and to provide a system that fulfilled
these needs�fully accurate pay,
STRS credit, and so on. Now they must
dispatch a team of senior analysts with
specific knowledge of how large school
districts run. This team must rewind
the clock and redesign as much of the
system as necessary to get things right.
Simply fixing bugs rapidly will likely
lead to new bugs and more of them,
as has already been seen here (and
elsewhere).
� Second, Deloitte should back out
defective modules and replace them
with working modules from the previous
system that will remain in production
until usable new modules are
thoroughly tested and validated. If
Deloitte cannot restore working modules
from the old system, they need to
provide a detailed technical justification
and an alternative plan for making
sure LAUSD employees are paid
promptly and properly while their system
is being appropriately respecified
and redesigned.
� Third, this process should be done
deliberately, with realistic, reachable
metrics and deadlines, rolling out
small- to medium-sized pieces over
time.
This isn't novel advice. Here's similar
advice from an industry leader on
the installation of large educational
systems: "States need to break projects
into smaller pieces or shorter phases
for them to succeed." That remark was
made by Philip Benowitz, director of
Deloitte Consulting, in the January
2006 issue of Washington Technology.
Deloitte should have followed its
director's advice. Now is not too soon
to start.
Jack Gerson, an Oakland teacher
and union activist, worked in software
analysis, design, and algorithms for
20 years.
— Jack Gerson
United Teacher LA
2007-07-20
INDEX OF OUTRAGES
Pages: 380
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