SAP payroll software woes plague electric utility for months

Confusion generated by Hurricane Sandy led to data-entry problems and incorrect pay for many National Grid workers

Electric utility National Grid is still trying to resolve problems with its recently implemented SAP payroll system that cropped up after Hurricane Sandy, the major storm that caused widespread damage on the U.S. East Coast and the Caribeean in late October.

The system problems caused many workers at the utility to receive incorrect pay and has resulted in lawsuits filed by employee unions, as well as a US$270,000 fine imposed on National Grid by Massachusetts' attorney general. An anonymous party even created a blog about the controversy, filling it with stinging criticisms of National Grid.

National Grid recently told employees that it would delay the distribution of W-2 forms, which workers will need to file their taxes, until Feb. 28.

"We're still working through individual employee issues," National Grid spokesman Patrick Stella said in an interview this week. "We're hoping to have these issues taken care of as soon as possible."

The W-2s were delayed for good reason, he added. "We wanted to make sure they were accurate."

National Grid's SAP project dates back a number of years and will provide a unified payroll system that replaces several legacy systems, according to Stella.

Installing SAP at a company like National Grid is "a challenging process to begin with," Stella said. That's because the business is spread over multiple states, each with different regulatory bodies and tax reporting requirements, he said.

The fact that Sandy hit the East Coast just as the project went live was another major issue, as employees were being shifted en masse out of their usual work jurisdictions in order to restore power, and racked up a lot of overtime, according to Stella. "There was a lot of complicated things going on with payroll," he said.

While utilities like National Grid also use contracted crews from out of state to boost manpower during serious outages, that wasn't a factor with Sandy and the SAP system woes, according to Stella. "Contractors will bill us after the fact."

National Grid is going to not only pay out whatever remaining monies are owed to workers, but also cover any personal costs the payroll issues may have occurred, such as bank late fees, Stella said.

He declined to comment on the ongoing litigation and how it may be resolved. Union officials couldn't be reached for comment.

But in a letter sent to National Grid executive director Thomas King in November, one union said the project's go-live date should have been delayed given the imminent arrival of Sandy. National Grid's actions represented a "gross error in judgment," International Brotherhood of Electrical Workers Local 97 president Ted Skerpon said in the letter.

The utility's SAP project had entered a final three-week phase that began on Oct. 1, Stella said. While delaying the go-live was "certainly something that we discussed," the system had been well-tested and National Grid believed that going ahead was the right course, he added.

In addition, "All the crew movement and abnormal and atypical hours" caused by the storm resulted in a combination of data-entry and software-related problems that would have been far less dire had Sandy never hit, Stella said.

National Grid worked mainly with SAP on the project, according to Stella.

"SAP and our partners are all working closely to support National Grid," SAP spokesman Andy Kendzie said this week. "All of us involved have committed the leadership and resources to resolve any issues as quickly as possible. Together we believe we are making solid progress."

This isn't the first SAP payroll project to generate negative headlines. One in 2011 resulted in a number of nurses in Nova Scotia receiving erroneous paychecks for six months.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

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Tags enterprise resource planningIT managementbusiness issuessoftwareapplicationsSAPFinancial / taxNational Grid

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Chris Kanaracus

IDG News Service
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