Getting Tax Systems Modernization Back on Track

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Getting Tax Systems Modernization Back on Track

By John Gioia

Contributing Writer

The tax systems modernization, undertaken by the Internal Revenue Service in 1988 to overhaul its outdated and disparate information technology systems, is once again in the news. The $4 billion program has been essentially pronounced dead - at least in its present form. Assistant Commissioner Arthur Gross, appointed in 1996 to rescue the modernization effort, recently announced the agency's intent to abandon its "big bang" attempt at integrating all systems at once in favor of a more gradual approach.

Late last year, the Senate Committee on Governmental Affairs, in search of solutions to the cost overruns and management problems experienced by the IRS during that eight-year period, invited me to testify. My testimony addressed several issues central to the modernization program, and the recommendations I made at the time can be applied to the current situation.

There are three major reasons why the modernization became enmeshed in problems, lost millions of dollars and (as Mr. Gross declared in his announcement) resulted in the development of computer systems that "do not work in the real world." Achieving desired outcomes with complex infotech programs demands not only technical expertise, but also independent governance, strong program management and a structured control process. These key elements have proven successful for other government organizations such as the Patent and Trademark Office, the Michigan Department of Transportation and the U.S. Air Force, and they can make a vast difference in the outcome of the next IRS modernization effort.

An Independent Board of Directors

A governing board of directors should be created, to include representatives of various stakeholders - system users and major contractors - as well as IRS and related agency representatives. Although the agency currently maintains several adjunct boards, none has the focus or authority to direct the mission. The kind of board I recommend would be chartered by Congress or by the agency, with a clear, pragmatic statement of mission, responsibility and authority.

An independent board of both internal and external members would provide a management mechanism with all the checks and balances essential for success. Its role would be to oversee the program, resolve disputes and provide "big picture" objectivity - free of political, bureaucratic and time-sensitive pressures. To ensure that objectivity is sustained, the board chairmanship should go to a knowledgeable manager with no ties either to the government or to the contractors performing the work.

A Strong Project Management Office

The infrastructure below the board level should be a professional program management office led by a strong, focused program manager with streamlined reporting and access to the level of management that controls the required government resources to accomplish the mission.

The program management office should operate like an independent, small business - controlling schedules, costs and resources by tailoring its processes to collect detailed data and turning that data into decision support factors. Today, there are automated tools for collecting and manipulating data for analysis and evaluation, as well as experienced program management office professionals with the expertise to structure an executive information system that provides excellent ways to foresee problems, detect variances and determine the impact of proposed changes before a program can fall into trouble.

This combination of a board of directors, an experienced program management office and a strong program manager would provide the IRS program with long-term stability, reduce micromanagement, promote more open communications among all concerned and simplify reporting by providing a single voice of accountability.

A Structured Control Process

Ineffective program control is one of the major causes of program failure. A program-control process provides the infrastructure needed to measure progress against the plan and to handle change.

Change is an inevitable part of any complex program. Formulating a standardized process with which to measure the impact of any proposed changes, on both the business and technical sides, is a basic principle of program management. Any change that affects the baseline must be formally evaluated and approved, even when that change comes from a higher authority.

Once the goals, schedules and budgets have been approved by the board, the program management office is the only entity permitted to redraw baseline program parameters and interface with resource providers. Before the program management office can form another baseline, all changes must be priced within the program envelope (cost, schedule and performance) and approved by senior management or the board of directors.

When a program control process is not implemented, that most notorious killer of programs - scope creep - ensues, generating schedule and cost overruns. By adhering to a program control process, the program management office can effectively manage risk and perform the business office role for the entire program.

Obviously, the IRS cannot afford to abandon its modernization initiative. The agency's new strategy to pursue operational improvements in smaller, more manageable increments is a sensible first step. If the IRS follows by installing a governing board of directors, a program management office and a structured control process, it would then be able to create an implementation environment that better manages risk, ensures that costs are controlled and performance targets are met. Achieving these goals typically spells program success.

John Gioia is CEO of Robbins-Gioia Inc., an Alexandria, Va., program management services firm specializing in program control and process improvement for government agencies and Fortune 500 companies.


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