How to commence the IT Modernization Process? Tony Lester August 2011

Purpose of Presentation. In this presentation, we will discuss: 1. Options and design of appropriate computerization strategies, 2. What implementation steps are involved, 3. International and Regional IT trends for tax administrations.

Introduction. Adoption of modern “business” processes supported by IT: improves efficiency, improves effectiveness and, improves public transparency of modern tax administrations. Improving IT capacity and capability is a critical strategic goal for tax administrations. Tax administrations recognise IT spend may need to increase.

How best to modernize IT? Create a “ Business” led rather than a technology driven culture. Support this culture by creating a Business Strategy. Identify what business processes need to be re-engineered. Identify appropriate “ Change Champion” to lead future development.

Preparing for the Cost of Modernisation Start thinking about funding early Cost of implementation Cost of support and maintenance, sustaining the technology Donors will not fund ongoing costs. Communication, change management Cost of peripheral (non-core software) licensing Disaster recovery (may double your costs) Staff training in how to use the new systems.

Pre-Requisite Skills Project Management expertise at least for core project team The more the merrier Procurement and Contract Management skills are essential for the PM team Change management, communication Business analysis, particularly for Business people involved with the project Technical documentation skills Clearly defined system specifications.

Project Governance Leadership with business? A fairly new trend; build ownership within the business units IT should not own / control the direction the systems should take Must engage Senior Executives, must be involved in implementation planning and execution control There will most likely be a need to change the organisation structure

How best to modernize IT (contd) Governance is key: -- Project Office -- Program approach -- Business led -- Allocate key resources -- Risk management -- Ensure clear scope -- Timeframe/milestones -- Strong Steering Committees. Be prepared to cancel/ delay Project if necessary !

Options and design of appropriate computerization strategies Two main approaches adopted: Custom Build Application software, Purchase of the Shelf ( COTS) products. Most administrations moving towards COTS solutions vs Custom Development. Critical that approach is supported by an IT Strategic Plan (ITSP). .

To buy or develop in-house Consider the following Ability to create an internal IT capability Are the skills available in your countries and can you compete to recruit / train / retain them? Does your Administration warrant its own IT capability? Cost to establish, but just as important ongoing costs to maintain.

Creating an Information Technology Strategic Plan (ITSP). A successful ITSP ensures IT is aligned with “Business” needs. An ITSP establishes an integrated set of architecture views for: -- Business -- Information -- Applications & -- Technology Results in a multi year planning and investment roadmap and, Establishes the correct IT acquisition approach.

Components of an IT Strategic Plan. There are 5 steps to a successful ITSP: Business Context and Architecture Vision, A Current State report, A Future State report, A Transition Plan and An ongoing Maintenance Plan. Underpinning these 5 steps will be some agreed key Business Architecture Principles.

How do you complete an IT Strategic Plan? Needs to be a component of an overall organization “ Business” Plan. Organization needs to set future “Vision” Most likely will require 3rd Party technical assistance. proven track record of 3rd Party is key. Must be a joint Business/ IT initiative. Business buy in critical. It will take time– 6 to 9 months?

How do you complete an IT Strategic Plan? (contd) Needs to be supported by a complete Change Management program: “Change Champion” role, Clear communications to stakeholders, Skill transfer from 3rd party to internal staff, Recognises that significant training will be required to support future IT environment.

Outcome of an IT Strategic Plan. Organizations will establish: a “Business” led IT roadmap for the future, key implementation priorities, future resource requirements; People capacity, Network capacity, Hardware capacity, Disaster Recovery etc. indicative cost / benefits will be understood.

Outcome of an IT Strategic Plan. (contd) When supported by an accepted Change Management Plan, the whole organization is involved. Will answer the “ Build Vs Buy” question. For some countries, the ITSP can establish a specific direction, e.g. Upgrade / Buy Off-the-Shelf Product etc.

So what are the International and Regional Trends? International trends are fairly consistent. OECD is leading work on the establishment of a “Common Tax Reference Model”. There are common technology solutions to Tax administration functions. Leading Tax Administrations aim to leverage “Legacy” information and systems. Leverage occurring via use of COTS solutions.

So what are the International and Regional Trends? (contd) Most commons COTS solutions are: Oracle and IBM for business solutions, SAS mainly used in reporting requirements. Success of these developments rely heavily on “Business” involvement.

So what are the International and Regional Trends? (contd) Pressure to implement cross functional or enterprise systems (e.g. Tax + Customs) Client pressure for improved service Desire for uniform functionality across tax types Economies of scale Managing support contracts easier (minimal number of vendors to manage) Opportunities for government to implement “Shared Services”

So what are the International and Regional Trends? (contd) Limited COTS products available that suit Pacific Region. Entry level expenditure for ORACLE, IBM etc. products too high Use of mobile telephony to enhance service Significant effort required to review Tax Legislation for the advent of E Services. Greater collaboration occurring in a number of countries.

Summary IT is the cornerstone for modernizing Business Processes. IT Capacity & Capability critical goals for all. Needs to be “Business”, not IT driven. Governance is critical. Develop an ITSP to establish how to modernize. Buy vs Build seems to be the strategic view. Create a successful Change management program to help success.