Department of Health awards £325m HR and Payroll Contract

The UK Department of Health (DH) has awarded a £325 million contract — the largest IT contract yet awarded within the NHS — for an integrated HR and payroll system for the NHS in England and Wales to a consortium led by US health IT firm McKesson.

The HR and Payroll contract, described as the ‘ Electronic Staff Record Project’ will affect all one million staff working within the NHS.

A consortium of McKesson, Oracle, PwC Consulting and IBM – first appointed as preferred supplier in June — will replace 29 different payroll and 38 different HR systems with a fully integrated payroll and HR system.

"This is the largest ever NHS IT project and impacts on all NHS employees," Mike Kingswood, UK managing director of McKesson told EHM.

The ten-year deal forms part of the NHS Shared Services Initiative launched in 1999 to make better use of NHS resources by introducing common administrative systems across the NHS.

A parallel shared services project of similar value is underway for a finance and e-commerce system, the Outline Business Case for which is now completed and awaiting approval from the Treasury.

The DH projects savings of £400m during the life of the contract, through better staff management, more effective pay and HR policies and reduced administration costs.

"The NHS is saving at least £400m, but the potential savings are much greater," said Kingswood.

Andrew Foster, NHS director of human resources said: "This is a fundamental building block for developing our most important asset – our staff, which in turn will realise more improved and effective patient care."

Christine Daws, deputy director of finance for the Department of Health, added: ‘The majority of existing systems used by the NHS are old and in desperate need of updating. They are unable to meet the challenges of the modern NHS.’

The deal includes the option of Internet technologies for e-recruitment, e-learning and employee self-rostering. NHS staff will eventually be able to access their pay and HR records, view documents such as appraisals, check work rosters and swap shifts on-line.

The test phase, which begins immediately, will last for seven months leading to testing at University Hospital Birmingham NHS Trust. The system will then be piloted for another six months at a further 16 NHS trusts across England and Wales, followed by a full deployment NHS-wide.

By late 2004 every NHS organisation will have Oracle’s HRMS (Human Resource Management System) running on IBM’s latest e-Servers.

‘The greatest benefits will come once all NHS organisations are users, so providing the platform for full shared services,’ said Paul Marriner of PwC Consulting, which is implementing the software and managing the major change management programme needed to introduce new HR and working practices.