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Botched software project plagues city payroll

The city of Oakland is the latest victim of a bumpy transition to new software, as scores of payroll checks are printed incorrectly.

The city of Oakland is the latest victim of what one municipal executive describes as a "nightmare" caused by a bungled transition to new software.

Oakland, which has invested about $21 million on replacing payroll software, new PCs, support and training since 1997, went live at the end of October with Oracle payroll software, implemented by the company's consultants.

Chaos ensued as scores of payroll checks for city employees were printed incorrectly--many for a penny or 8 cents, for example, according to assistant city manager Dolores Blanchard. She said the city, which is now facing a union grievance over nonpayment issues, is still trying to get the system to print reports required for cross-checking the payroll for accuracy.

Oracle could not be reached for comment.

Oakland's problem is among a growing list of troubles customers have with enterprise resource planning (ERP) software implementations that have gone wrong for different reasons. Oakland's Blanchard blames the city's woes largely on data entry mistakes made by city employees who, though trained, were unfamiliar with the software.

In recent months, customers ranging from Whirlpool to Hershey Foods, the makers of Gore-Tex and the University of Utah have all run into snags as they made the transition from aging, often homegrown software applications to complex, new applications designed to automate key functions such as financials, general ledger, human resources and order entry.

Analysts say large-scale problems, though rare, typically aren't caused by the software, in which customers generally invest millions. Instead, they say fouled-up projects are caused by consultants who walk off the job or are unqualified, bad planning on the customers' part, poor project management, inadequate training or even basic human mistakes.

Janet Gould, a vice president of market research at Plantwide Research, said Oakland's situation isn't rare. German software giant SAP, for example, came under the microscope recently as both Hershey Foods and Whirlpool reported that problems with their new software systems were messing up their order entry and delivery--and in Hershey's case, hurting profits. SAP has said Whirlpool went live with the software before adequately testing it and Hershey tried to get its system up and running too fast, and was also using other companies' software that complicated its transition.

"The software can be the issue but it is rarely the issue," Gould said. "[Oracle] is not beta testing on the consumer."

Oakland's payroll problems started Oct. 30, when the city used the new software to process 5,100 checks, 1,200 of which had to be adjusted after they fell into the hands of confused city employees who were underpaid or not paid at all.

"The payroll run was very nightmarish," Blanchard said. "[Paychecks] are critical. It's people's livelihood."

A second payroll run last weekend had a paycheck error percentage of about 3 percent, which is about the same as expected from the city's old system, Blanchard said.

"As with any new system, there's bugs, there's tweaks," she said.

Blanchard blames the initial payroll mistakes on human error--caused by employee data entered incorrectly by payroll clerks--and that many payroll employees simply ran out of time to enter information into the system before the deadline to print the checks.

"Garbage in, garbage out," said Joshua Greenbaum, analyst at Enterprise Applications Consulting. Oakland's problems, he said, "play to the vulnerabilities of enterprise software, whereby the best software, if it's poorly implemented and poorly maintained, is a disaster."

While the city can now produce a payroll, employees can't print reports or post payroll information to their general ledger. And the city is left to face a lot of angry employees who are questioning why there was no backup when the city went live with the new payroll system.

"The system is working," Blanchard said. "Is it working at its optimum? No."