Famous HCM Failures: 3 Failed Implementations (and Lessons Learned)
blog/famous-hcm-failures-3-failed-implementations-and-lessons-learned
2025-02-28
Human Capital Management (HCM) systems are critical for streamlining HR processes, improving workforce management, and ensuring compliance.
However, when implementation is rushed, poorly planned, or misaligned with business needs, the results can be disastrous.
Below are three famous HCM failures, analyzing:
What went wrong
The consequences
The lessons learned for organizations pursuing a similar project
1. The U.S. Department of Defense’s HR System Failure
The U.S. Department of Defense (DoD) attempted to modernize its HR operations with the Defense Integrated Military Human Resources System (DIMHRS), which was intended to unify personnel and payroll functions across all military branches. However, after a decade and over $1 billion spent, the project was scrapped before it could be fully implemented.
What Went Wrong
Overly ambitious scope: The project aimed to consolidate HR and payroll functions for over 3 million personnel across multiple military branches, creating immense complexity.
Poor stakeholder alignment: The needs of different military branches were not properly integrated, leading to resistance and functional misalignment.
Technology challenges: The system was built on outdated frameworks that could not handle the required scale and flexibility.
Consequences
Over $1 billion was wasted without any working system in place.
Military HR functions remained fragmented, requiring further investment in new solutions.
The failure highlighted systemic issues in government IT projects, including bureaucratic inefficiencies and lack of accountability.
Lessons Learned
Clearly define the scope and ensure it is manageable.
Engage stakeholders early to align requirements across all user groups.
Select scalable, modern technology that meets current and future business needs.
See More: Famous ERP Failures: 3 Unsuccessful Implementations (and Lessons Learned)
2. The Queensland Health Payroll Project Failure
Queensland Health, Australia’s public healthcare system, attempted to replace its outdated payroll system with an SAP-based solution in partnership with IBM. The project, originally budgeted at AUD $6 million, spiraled into a disaster that ultimately cost over AUD $1.2 billion.
What Went Wrong
Inadequate requirements gathering: The system failed to account for the complex payroll rules governing thousands of healthcare workers.
Rushed implementation: Despite known issues, the system was launched prematurely under political pressure.
Vendor and client misalignment: IBM and Queensland Health had conflicting views on project scope and responsibility, leading to disputes and blame-shifting.
Consequences
More than 80,000 employees experienced payroll errors, including underpayments and overpayments.
Cost overruns reached AUD $1.2 billion, making it one of the most expensive IT failures in Australian history.
The Queensland government faced political backlash, legal battles, and loss of public trust.
Lessons Learned
Conduct thorough requirements gathering before selecting and configuring a system.
Avoid launching a system without rigorous testing, especially for critical functions like payroll.
Establish clear vendor-client responsibilities to prevent miscommunication and legal disputes.
See More: How to Maintain Enterprise Systems
3. The Los Angeles Unified School District’s Payroll Failure
The Los Angeles Unified School District (LAUSD) implemented a new payroll system using SAP software, intending to streamline HR and payroll for over 100,000 employees. However, severe payroll errors plagued the system upon launch, leading to lawsuits and financial turmoil.
What Went Wrong
Inadequate training: End-users were not properly trained on the new system, leading to widespread errors.
Insufficient testing: The system was deployed without resolving critical payroll bugs.
Project mismanagement: Lack of clear accountability and rushed decision-making contributed to the failure.
Consequences
Thousands of teachers and staff were underpaid, overpaid, or received no payment at all.
LAUSD spent over $37 million in additional fixes, legal fees, and damage control.
Employee morale suffered, with unions taking legal action against the district.
Lessons Learned
Ensure end-users receive proper training before go-live.
Conduct rigorous testing to identify and fix critical issues before deployment.
Assign clear project leadership to ensure accountability and oversight.
See More: Everything You Need to Know About Dayforce Copilot
Key Takeaway
HCM failures, and other implementation projects, are often caused by a combination of poor planning, lack of stakeholder alignment, and rushed execution.
The lessons from these high-profile failures highlight the importance of proper requirements gathering, rigorous testing, and clear project governance.
Organizations that take a strategic approach to HCM implementations can avoid these costly mistakes and ensure long-term success.
