Teachers Give ERP Implementations Failing Grades
Neither SAP nor Peoplesoft suck. They might be expensive, complex, old-fashioned and suffer from having been around and tinkered with for a long time (especially true for SAP), but they do work and with them it is actually possible to implement a system with the required functionality that works in a reasonable amount of time. This is not something you could do with a custom-built system or any of the cheap COTS systems.
The problem is typically not the technology, it is the convoluted and almost impossible to understand business rules in the payroll area. This is especially true in the public sector and in other places with heavy union involvement. Over time you get more and more complex rules for how to calculate pay. The end result is that nobody understands their pay slips anymore and it is nigh impossible to implement and test a system that handles all the exceptional cases. Still, they try and fail instead of simplifying the rules and use the money saved in consultant fees in a way that would actually benefit their employees.