The consulting company will pay millions of dollars for the mistakes made at implementation

Originally district Department of Education of Los Angeles (Los Angeles Unified School District, LAUSD) selected for implementation of the mySAP ERP HRM block including calculation and salary payment to employees,  95 million dollars. Implementation was entrusted to Deloitte company. Payroll system to teachers and other staff of department really difficult. Monthly the administration should write out  about 120,000 accounts for settlings with personnel.

Since  subsystem launch in commercial operation in January, 2007, there were serious problems caused by errors in  payrolls - to some employees a system added more, and some have less than real amount. Total amount of an overpayment was, on subcouples of administration,  about 53 million dollars. Despite requirements to return mistakenly paid means, still employees did not return  about 19 million dollars.

The administration  of the district selected in addition 37 million dollars for settlement of the matter and error correction in algorithms of payroll, however even by January, 2008, in a year after start of a system in operation, errors and failures were not completely eliminated.

Teachers and other staff  of Department of Education  of the district constantly expressed the perturbation of current situation. In the general opinion, responsible for a situation was the Deloitte company from which  it was necessary to collect the amount  about 30 million dollars.

However the management of department considered that in case of case referral to court of costs, including expenses on lawyers, would be  too big and therefore participants preferred  to develop conditions  of "peace agreement" independently. As a result of negotiations Deloitte agreed to pay 8.25 million dollars as penalties and "forgive" unpaid to it accounts for the amount to 10 million dollars.

Though temptation to shift all blame for the event on Deloitte company it is rather big, but perhaps, it will not be true. Usually at implementation of a new system  success or a failure of the project consists of three factors:  customer, contractor and software. According to the analysts commenting on a situation in spite of the fact that actions of Deloitte  led to the conflict the SAP company [1] (file) which is a supplier of the implemented software had to take more active measures for prevention of similar problems. Besides, you should not withdraw  insufficiently competent actions of the administration which did not pay due attention to testing of a new system from account. 

At the moment the ERP system implementation project which  is performed step by step is suspended. The third and its last phase providing automation of budgeting, purchasing activity,  payment under the received accounts  and implementation of the block of self-service of employees is postponed at least until  when it is possible to resolve all problems with calculations for the salary. Besides, the general unstable financial position forces administration to doubt that further works on system implementation will begin in the near future.