There’s a wide variance for what it might cost – anywhere from $107 million to nearly $200 million – to pay a system integrator (SI) to complete California’s statewide payroll system called MyCalPays, a recent analysis has found.
The calculation is complicated, in part, because “there are existing 21st-century [project] products (both software and written documents) that could be leveraged by a future SI,” says the final analysis, completed and published Nov. 13 by Grant Thornton for the state of California.
The state could start from scratch or use some components that were already complete before the previous system integration contract with SAP was canceled in 2013, the report says. The system integrator also would conduct a phased rollout to California’s 170 state agencies and departments.
Read the full report from Grant Thornton here (.pdf download).
The $107 million to $200 million estimate is just a ballpark figure. There are other factors that could also affect the final cost. Among them are:
1. The MyCalPays project is seen as risky: “Given that a resumed 21st Century Project would be the third time that an SI had been engaged to implement MyCalPAYS, the project would naturally be seen as risky by any potential bidder. Based on an appreciation of the risk management practices of the types of firms likely to take on the role of a future SI, the assessment team estimates that a future SI would likely add a risk premium to the above cost of between 10% to 25% of the total estimated cost.”
2. Inherent cost variance in large projects: “Studies have shown that actual costs for large, complex IT projects vary by an average of 30 percent from their budgeted cost.”
3. The estimate only includes costs to the system integrator: “The estimates presented in this report are only for the systems integration costs that the state will be charged by a future SI vendor to complete the MyCalPAYS system. It does not include other state costs such as licensing of SAP software, hardware, state staff salaries, administration costs, and other expenses.”
The State Controller’s Office continues to weigh its options for a new payroll system that would serve the state’s 240,000 public employees. Earlier this month, the SCO hired former Secretary of State CIO Chris Maio as chief of information systems in the State Controller Office’s Personnel and Payroll Services Division. In his duties, he will serve as director and “oversee the successful deployment of a statewide payroll system and strategies” the controller’s office said.
