Federal government chooses made-in-Canada software to begin replacing failing Phoenix payroll system

Ceridian HCM Holding Inc., which is based in Minneapolis but run from Toronto by chief executive David Ossip, has been awarded an eight-year, $ 16.9 million contract to begin replacing Ottawa’s failing Phoenix payroll system.

Galit Rodan / For the Globe and Mail

The federal government has awarded a key contract to begin replacing Ottawa’s failing payroll system, Phoenix, to a major maker of human resources software developed in Canada.

Ceridian HCM Holding Inc., which is based in Minneapolis but run from Toronto by chief executive David Ossip, said under the eight-year, $ 16.9 million contract it will lead a pilot project to relocate four ministries. , starting with Canadian Heritage. , to its cloud-based human resources software platform known as Dayforce.

After that, “other departments are expected to follow suit” by moving their payroll processing to the Dayforce system, Ossip said in an interview. He described the contract as part of “a decades-long partnership and collaborative effort” with the government. “Obviously, we expect to be very successful and resolve the Government of Canada’s compensation issues, because that is what we are doing. “

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The move is the latest attempt to correct federal public service payroll, which exploded with the botched implementation of the Phoenix system in 2016. Phoenix, one of the largest internal public procurement contracts for information technology , led to the overpayment of thousands of civil servants, underpaid or not paid at all, and forced many of them into heavy debt.

The problems with the system persist. According to the most recent figures from the Public Service Pay Center, as of August 18, there was a backlog of 115,000 pay transactions in excess of the normal workload that needed to be processed.

New contract for Ceridian is an important victory for Mr. Ossip, a Canadian software veteran born in South Africa who started building Dayforce as a Toronto-based startup in 2009, and sold it to Ceridian three years more late. At the time, the buyer was an outdated technology that began life as an IBM unit in 1932 and was purchased by US private equity giant Thomas H. Lee Partners in 2007. Part of the agreement was that Mr. Ossip would become. CEO of Ceridian.

He went on to build Ceridian’s efficient head office and management team in Toronto, where much of the development work takes place. Mr. Ossip redirected Ceridian to expanding Dayforce, which offers payroll and other human resources services, including employee benefits and workforce administration and talent management on one platform. Ceridian’s Dayforce Wallet service allows shift workers to be paid on demand; 600 employers have signed up to the innovative offer.

Ceridian went public on the Toronto and New York stock exchanges in 2018 at US $ 22 per share. The share price has since quintupled, giving the company a market cap of nearly US $ 16 billion.

In 2018, Mr. Ossip led a campaign for Ceridian to help Ottawa move beyond the botched Phoenix implementation.

Public service unions have made replacing Phoenix a high priority. Debi Daviau, President of the Professional Institute of the Public Service of Canada, welcomed the new contract with Ceridian. “We are moving away from how Phoenix was deployed and towards a system that will work ‘as advertised’ because it will be fully tested before it reaches officials,” she said in a statement.

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The outlook for Ceridian was bright from the start, as the government sought offers from software companies, not systems integrators like IBM. Ceridian has launched a public affairs campaign, pressuring the government to consider Ceridian rather than the established tech giants who had won Ottawa’s business for years.

Ceridian said it has hired hundreds of employees in Canada and that Dayforce is the kind of national innovation governments like to champion. Mr. Ossip also argued that Canadian governments could stimulate the global expansion efforts of local innovators by serving as key referral customers.

“The best way for the government to support its innovation agenda is to help innovative Canadian businesses,” said Mr. Ossip. “Getting help with procurement has always been a challenge. I would like all governments in Canada, like other countries, to allocate a percentage of their budget to innovative Canadian companies. If they did, you would create many billion dollar organizations of Canada. “

The charm offensive worked. In June 2019, the federal government announced that Ceridian and foreign giants SAP SE and Workday Inc. had been shortlisted to replace Phoenix. A month later, Ceridian hired Gianluca Cairo, chief of staff to then Minister of Innovation, Science and Economic Development Navdeep Bains, to oversee a new division to expand its offerings to customers in the industry. audience around the world. Ceridian now has hundreds of its 5,160+ customers.

Mr. Cairo accepted the post after being cleared by Federal Ethics Commissioner Mario Dion. Ceridian said in a statement that Mr. Cairo “has always met his post-employment obligations related to his service to the federal government. He has no involvement in matters he worked on while in public office.

Ceridian has known for weeks that it won the tender, but the news has been subject to “election blackouts,” Ossip said. He said the government “did not want this to be seen as something that could be influenced by the election” and added that the timing and attribution “had nothing to do with the political environment.”

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Shared Services Canada, the government’s central IT department, said in an email that it looks forward to working with Ceridian in the next phase of the payroll project. He said the decision on the contract was made by the department, not by the Liberal ministers.

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