Published on the 06/03/2025 | Written by Heather Wright

$30m down and nothing to show for it?…

Fire and Emergency NZ (FENZ) has spent more than $30 million and two years on a payroll and HR system, but so far has little to show for the work, with a new provider now taking on design work and money ebbing away in ongoing subscriptions for a system not used.

FENZ initially worked with New Zealand’s Datacom on a new payroll system, using the Datapay platform, but the HRIS and integration streams were ‘paused’ in 2023 with FENZ looking for an ‘alternate supplier’ for the payroll component.

“You have had to suspend your project to roll out a new payroll and HR system… after some two years of effort and project costs to date of more than $30m.”

Late last year it made a new purchase, this time going with US payroll and HR provider Dayforce, formerly Ceridian. The completed HR system however, remains in limbo, unable to be tested and implemented without payroll, which will take another 18 months to ready.

The project faced questioning from New Zealand Parliament’s Governance and Administration select committee, which noted the $30 million already spent against a budget of $59 million, with $1 million paid for licensing and a further $650,000 being paid per year for licensing costs for ‘the unusable HR system’.

It says the ‘failed payroll/HR project’ looks high risk and questioned the impact of the long delay on the un-tested HR system, including changing needs and build errors.

FENZ says integration with the existing HR system was a mandatory requirement during the new payroll system procurement, and the selected system has a globally available connector to the HRIS system, reducing the risk of significant changes to the existing build.

Testing of the solution design and data flows between the two systems is included in the design phase.

A request for an update on the expected total cost and go-live date saw no figures offered, with FENZ saying the total expected cost to complete and the go-live date are both dependent on completion of the design phase ‘and will be produced as a result of work undertaken in this phase’.

However questions from the Governance and Administration select committee on FENZ’s remediation work to address historical and existing non-compliance issues with the Holidays Act and underpayment of some KiwiSaver contributions – issues which are being addressed through the implementation of the ‘compliant’ HRIS/Payroll system and a payroll compliance project covering policy, process and historical remediation requirements – saw FENZ noting that the payroll replacement project has a vendor go-live date of June 2026, with a protection period to August 2026.

FENZ was one of thousands of organisations who were caught up in mass breaches of the convoluted Holidays Act. It spent $2.7 million fixing and reconfiguring its payroll and rostering systems after the issue came to light in 2016.

While the initial Holidays Act remediation, from 2016 to 2019, saw many staff paid, a further compliance review during the payroll system replacement highlighted other areas of non-compliance, some due to changes in case law and others not addressed during the first remediation.

An implementation business case for the HRIS/Payroll project, including revised estimated costs and completion date, is due to be presented to the Fire and Emergency board at its June 2025 meeting.

But FENZ says the $30 million spent to date ‘represents valuable investment in system design, HRIS build and integration work’.

“These expenditures remain directly applicable to the programme’s ongoing development and are not considered unrecoverable or wasted resources.”

On the issue of subscription costs, FENZ says software licensing for ERP systems typically begin during design and development, rather than at go-live.

“these licenses often do not allow for termination for convenience.

“As the HRIS system has been built and holds Fire and Emergency data, it remains under license and maintenance. When the payroll system goes live, the total licensing cost for the HRIS system while in a ‘to be tested’ state will be $1.2 million.

The project has undergone independent audits and assurance tests, with assurance reports shared quarterly with the board.

A Treasury Gateway Zero Review was completed last year with an associated Assurance of Action Plan follow-up and action plan completed and approved in January 2025.

Any further delays to the HRIS and payroll replacement work will extend further the timeline for achieving compliance with the Holidays Act 2003 and completing remediation payments, FENZ warns.