One of American corporations listed on FORTUNE500 decided to outsource their payroll operations to global provider and a global leader in those services.
In Payroll department there was only one payroll clerk working before that and due to operational duties, she could only dedicate limited amount of time to the project.
That was one of the key drivers for a decision to fully outsource payroll as well as implementation project to provider consultants. When business requirements were gathered and signed-off, consultants have configured the system accordingly and tested it by their own (have to mention that is was not very thorough testing). They reassured Company X that everything will work well. Have to mention that also consultants were changes on the way, some due to lack of experience with such a complicated payroll setup and some due to personal reasons.
Client had signed-off the product (not even seeing real test results, nor proof that it was done according to the methodology). Company X decided to go-live. Next big task to be completed before go-live was migrating all the necessary payroll data. Also here, nobody really look close enough at quality assurance, as it seemed pretty routine task. Consultants will manage it.
Bad quality costs
After 6 months from project kick-off an important day is approaching – first payroll run in a new system. And what happens? Taxes and social insurance were not calculated correctly. In some cases they were doubles or tripled. This affects the company location where top management and expats are hired.
Investigation starts: what has been calculated wrongly, how much did we overpay, how much was underpaid, how many employees are affected, what legal possibilities we have to get overpaid amounts back. 12 additional months of analysis, stress, engagement of many people, and in the end huge additional costs that were never planned in a project budget. Someone called those costs once: bad quality costs.
What went wrong, what could have been done better?
It would be great to involve additional resources that know business requirements and ERP application that is being implemented. Test Leader would be able to work directly with an implementation consultant and then assist with data migration (very important aspect that often creates issues with payroll go-lives). All the additional costs, brand and reputation damage on local market (among institutions, public offices, candidates to work and employees) were just too high risk to be ignored. This is the lesson learned for future.