One, the Canadian government’s Phoenix payroll system, was intended to make the payroll process more efficient for federal public service employees. Since it first launched, it’s had a number of problems from day one. Launched in April 2016, the CA $310 million system faced a crisis from the start. Once it went live it became “supercritical” almost immediately. Unfortunately, as of March 2025, more than 349,000 unresolved errors remain. Over half of these problems have been stuck for more than a year. Yet, this unprecedented situation begs the question how well the current system overall is being managed, and the decisions being made during its transition.
This wasn’t the first go round for the Canadian government in efforts to modernize its payroll systems. That last attempt, which started in 1995, went up in flames as supporters discovered they did not fully appreciate the intricacies of the process. Despite this history, project managers for Phoenix ignored the lessons learned and believed they could successfully implement a modernized payroll solution.
A Troubled Launch
The short-lived and disastrous Phoenix payroll system was based on a highly customized installation of PeopleSoft’s generic, off-the-shelf payroll package. It sought to fit a huge amount of complication. This was in addition to negotiated control of 80,000 pay rules over 105 collective agreements with federal public-service unions. The scope of this project was overwhelming. Yet even with these challenges, executives were still optimistic that a reliable system could still be delivered.
Almost immediately after it launched, issues started to emerge. The system was unable to realize accurate, timely, and targeted payments, creating chaos and frustration for all federal employees. As a result, millions of workers experienced disruptions to their paychecks or received the wrong total entirely, imposing serious economic harm on impacted employees.
“Anyone can make a mistake, but only an idiot persists in his error.” – Marcus Tullius Cicero
Yet this initial idealism about Phoenix soon dissipated once the government began to confront its failures. By March 2025, officials were staring down the barrel of hundreds of thousands of lingering mistakes. This beacon backlog highlighted a critical need, leading the UK government to pledge to clear this backlog by June 2026.
Ignoring History
The collapse of the first payroll system replacement effort back in 1995 is a horror story that ought to have been a beacon warning against past mistakes. Phoenix project managers buried their heads in the sand and missed almost all of those well-documented causes for that prior failure. In doing so, they miscalculated the challenges of rolling out a new payroll system and ignored lessons learned from prior attempts.
With an eye toward modernization, executives achieved that goal by focusing foremost on simplicity. They missed the critical headwinds that are inherent in the complexity of delivering a large, complicated project. The project leaders were confident that they could produce a usable payroll system. It’s their failure to learn from those mistakes that led to a monumental misstep.
“To Engineer Is Human: The Role of Failure in Successful Design” – Henry Petroski
It’s these miscalculations that further illustrate the importance of organizations learning from their past experiences. To see what happens when we ignore history and repeat the same mistakes, take a look at the current ongoing trainwreck that is the Phoenix payroll system.
Looking Forward
Though the opposition remains just as fierce, there are signs of hope for things to come. The Canadian government has repeated its commitment to addressing the backlog created by the disastrous Phoenix payroll system. They absolutely want to deliver on everything still outstanding in the near future. Officials aim to significantly reduce the number of errors by June 2026, with renewed focus on accountability and effective management practices.
The road ahead will take persistent scrutiny and a zeal for avoiding the mistakes of history. Work is already well underway to address the current issues in Phoenix. It’s very important that we come away from this experience committed to ensuring that it won’t happen again on similar large projects.
“Why worry about something that isn’t going to happen?” – KGB Chairman Charkov
As the Canadian government continues to work its way through this complicated environment, it is ever-important that stakeholders stay focused and engaged. The legacy of Phoenix is a powerful, ongoing example of why careful planning is so important. It raises the real challenge of truly delivering on big, bold, technological solutions at scale.
