OPM claims victory in huge e-payroll system consolidation

Merging 26 networks, some as old as 50 years, into four will save agencies more than $1 billion during the next decade.

The federal government has completed a lengthy consolidation of its payroll systems, a move that should save agencies more than $1 billion during the next 10 years, according to the Office of Personnel Management.

The migration from 26 payroll systems to four shared-service centers took seven years and involved personnel from almost every agency and level of federal government.

Speaking at OPM's headquarters in Washington on Wednesday, Director John Berry called the migration a significant success for federal employees. "So many times people see the civil government as less than successful, but what a success," Berry said. "It's not often we get to [breathe deeply] and say, 'It's done.' This one is done and you did it well."

Consolidating the federal government's payroll systems has been under discussion since the Clinton administration, but the project gathered steam under President George W. Bush's management agenda with its emphasis on the Human Resources Line of Business. Four shared-service centers now will process the majority of the government's payroll: the Agriculture Department's National Finance Center, the Pentagon's Defense Finance and Accounting Service, the Interior Department's National Business Center, and the General Service Administration's National Payroll Branch.

Reginald Brown, director of the Office of Modernization and the HR Line of Business at OPM, said agencies expect to save a total of $1.1 billion during the next decade by consolidating the systems. This will be achieved primarily through economies of scale, because agencies will no longer have to maintain and update their own payroll systems, some of which were more than 50 years old. Another benefit of the new technology will be better controls to ensure payroll errors are identified and corrected rapidly.

"We've gone from 1950s and '60s to 1997," Brown said. "The next step is modernization and bringing that technology to the 21st century."

Joseph Campbell, a shared-service coordinator for the HR Line of Business before recently retiring, said the biggest challenge from OPM's standpoint was the poor data quality found in agencies' aging payroll systems. "The data was not as good and clean as it should have been," he said.

"At [the Veterans Affairs Department], we had a very old legacy system that dates back to the 1960s," said Linda Pena, associate deputy assistant secretary at VA. "People were incredibly creative in working through the system, doing things it was probably best not to do, but, by God, they got things through."

Pena said VA had its skeptics and some employees hoped the project would fail. Brown said changing the mind-set of employees by convincing them to trust the shared-service providers and let go of control over a system was crucial to the project's success.

"The status quo is oftentimes very comfortable," Pena said. "Succeeding in this means we have to change what we do and how we do things."

The transition went so smoothly that most VA employees didn't realize it had taken place until they saw a different name on their paychecks, she added. "Not one payroll issue reached the assistant secretary or secretary level. That's wonderful, especially when we're talking about 300,000 people."