The cost of failed military HR and payroll software projects

The United States Department of Defense (DoD) was one of the first government departments to attempt to implement HR and payroll software back in the late 1990’s. It was a daunting project – to try and integrate almost 100 different systems into a single integrated solution. Hundreds of DoD employees and contractors collaborated on this system which was due to launch back in 2006. Finally, in 2010 (approximately a dozen years after the project began) it was finally scrapped at a cost of around $1Bn USD…

As an alternative, the DoD reverted to an pre-existing system (around 40 years old) which resulted in many payroll errors – some soldiers underpaid, others overpaid then having their pay cut to rectify errors.

One notable error caused the family of the U.S. Army Chief of Staff to receive a condolence letter – sadly, this was also found to happen to other live military staff…

But this is not a one-off example.

The French military had historically used bespoke HR and payroll software for each of its different branches. Around 2005 a decision was made to move to a single system. This project, originally due to complete in 2016, is already believed to have cost €0.5Bn+ without accounting for compensation for errors, overpayments, and unbudgeted maintenance and implementation fees. This was before the French Defence Minister was forced to publically recognise this failure and undertake to roll out an entirely new system by the end of 2015.

Industry experts have noted that both projects shared the following key problems:

  • Large numbers of paper based processes
  • Inefficient means of tracking employees
  • Hugely complex system rules (e.g. status types and pay levels)
  • Change resistance

So what can other organisations learn from these projects?

  • Reduce rule complexity
  • Beware of requirement creep
  • Move away from systems based on outmoded programming languages
  • Choose systems that allow for configuration rather than relying on customisation
  • Understand the importance of detailed project planning
  • Don’t replicate these same mistakes

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