Canada’s IBM Payroll Plans Go Bust — Costing $1 Billion

Canada has spent CAD $1 billion (about $780 million) on a government payroll solution operated by IBM, but reports in Bloomberg on Thursday (March 1) said officials are nixing the project.

According to the publication, the Canadian government set out a decade ago to centralize federal payroll, awarding IBM the contract to install and run the Oracle Corp. software. It’s known as the Phoenix project, and while the tool went live in 2016, problems quickly arose, with some government employees not receiving their wages, while some were paid too much.

Reports added that federal agencies were overwhelmed by requests to fix payroll errors. Today, there are more than 260,000 government employees, and they remain concerned about ongoing payroll issues — like not getting paid at all, with some reportedly declining promotions or retirement because of those fears.

Bloomberg said there are 384,000 outstanding cases of payroll errors filed by government employees that remain in the backlog today.

In a statement, IBM said it is “fulfilling its obligations on the Phoenix contract, and the software is functioning as intended.”

It added that it “continues to work in partnership with the government’s efforts to resolve the project’s issues and remains committed to the project’s overall success.”

Bloomberg said Oracle declined to comment.

According to a government union president, Debi Daviau, senior government officials are to blame for the payroll mishaps because they pressed forward with its launch despite signs the system had some malfunctions.

“They should have known better,” Daviau told the publication, adding that IBM holds some of the blame because it also went forward with the payroll system’s launch.

“IBM got into a contract with the government that was very beneficial to IBM, which meant that the contract — despite non-delivery — could continue to be extended and IBM could continue to come back to the pot for money,” she said.