1. 1 FTA Technology Conference Tax Systems Integration Impact of Implementation on Users North Carolina Department of Revenue

2. 2 Introduction of Speakers Charlie Helms, Manager, Field Operations Administrative Section Mary Johnson, Director, Business Systems Development & Support Division

3. 3 Objectives n Discuss North Carolina's reasons for implementing an Integrated Tax Administration System (ITAS) n Review implementation and resulting impact to basic business processes n Present “lessons learned” that North Carolina is applying to current projects

4. 4 NC Department of Revenue n 1243 employees (fiscal year 1998-99) –39 field collection offices –14 in-state field audit offices –26 interstate field audit offices

5. 5 NC Department of Revenue

6. 6 Why Go to All the Trouble?

7. 7 We Are A CUSTOMER SERVICE Focused Organization

8. 8 Functional Reorganization n Prior to functional reorganization each tax schedule was administered by a self sufficient division n This created duplications of efforts and multiple hand-offs n After the reorganization, like functions were grouped together

9. 9 Y2K n Legacy systems on IBM 4381 mainframe became extinct on June 30, 1999

10. 10 Y2K Yes ! ITAS is Y2K compliant

11. 11 n Through audit selection and data cross referencing n Track work assignments using an integrated case management system n Allow for automation of processes –Noticing –Interface programs »IRS CP 2000 matching program »Wage matching for garnishments Improve Compliance

12. 12 Enhance Customer Service n We wanted to provide faster response time to taxpayer inquiries to questions concerning refunds, payments and other account related information n The new system should enable personnel to resolve taxpayer identified problems quickly from any location n The system should allow for registration of business taxpayers from local field offices

13. 13 Implementation (or, how did we get here from there?!)

14. 14 Implementation Process n A team of functional representatives led the implementation –Reported to the Executive Council –Empowered to make decisions and procure resources –Team members were chosen by assistant secretaries

15. 15 Implementation Process n Vendor selection and involvement –Andersen Consulting’s (AC) “TAS” system –AC staff onsite - worked with functional users to implement initial tax schedules n DOR applications staff involvement –Conversion from existing systems to ITAS –Transition of support to DOR applications development staff after implementation –Responsible for developing interface programs

16. 16 Implementation Process n Computer equipment roll-out –A PC network was established for the 40 + field offices over a 9 month period –Equipment and communications links were ordered and rolled out state-wide –Users were trained on use of the new equipment

17. 17 Implementation Process n A training management team (TMT) was formed by the Executive Council –Trainers were identified from each functional area –A train-the-trainer philosophy was utilized –Functional trainers were able convey how the material should be applied in the work-place –User-guides and other training materials were developed by trainers and TMT members –A just-in-time training philosophy was utilized

18. 18 Initial Implementation Issues n We were given an aggressive implementation schedule n We had problems with converted data –Data purification –Data mapping n Users had to learn and un-learn manual “work-arounds” n We were confronted with unintended results of system changes

19. 19 Initial Implementation Issues n A number of resource issues challenged us n Some of our employees were resistant to change

20. 20 Overcoming Employee Resistance n Train - Train - Train n ITAS User Guide n Key user network n Electronic shared directories for communicating ITAS issues & procedures n Departmental e-mail network for “hot” issues

21. 21 Results (or, we did it, didn’t we?!)

22. 22 Business Processing: Improvements Business Processing: Improvements n Case management function is integrated n Business registrations and adjustments can be performed by field staff n Interfaces between ITAS and other agencies are automated n Taxpayer account information is available online, real-time to authorized users n Noticing function is automated

23. 23 Business Processing: Added Bonuses n DOR gained a PC network through-out the state that is now multi-purpose n All DOR staff gained an increased awareness of the importance of training and communication n Many processes and procedures were re- engineered to provide greater efficiency n Y2K problems were resolved!

24. 24 Business Processing: Impacts to Staff n 20+ years of process and system familiarity were impacted overnight n Related procedures needed to be changed n A majority of the work force quickly needed education and training n Methods to rapidly communicate changes to all employees needed to be developed

25. 25 Business Processing: New Challenges n Processing Development Requests –Priorities and schedules must consider needs across tax schedules –Changes for one tax schedule may impact another, so increased design and testing time is required to ensure overall quality –Legislative changes continue to require short lead times

26. 26 Business Processing: New Challenges n More Resources Required –Capture of higher number of data elements requires more data entry personnel –Since more data is captured, the cost of storing and processing data has increased –Using the increased information to improve compliance, manage more efficiently, and increase revenue requires more trained staff –Equipment maintenance is more costly

27. 27 Largest Schedules on ITAS: Implementation

28. 28 Largest Schedules on ITAS: Production Volumes

29. 29 ITAS Production Volumes (January 1, 1998 - December 31, 1998) n n 10 Million Total Batch Transactions n n 1,091,500 Assessments n n 460,000 Delinquent Filing Notices n n 76,500 New Business Registrations n n Individual Income Tax – –2,424,500 Refunds Issued – –600,000+ ELF Returns

30. 30 Where Do We Go From Here?

31. 31 Applying Lessons Learned: Business Planning n ITAS Planning Team –Set strategic direction for ITAS operations –Prioritize and schedule development requests –Facilitate continuous business process improvement –Manage consistent use of ITAS

32. 32 Applying Lessons Learned: Change Control n ITAS “Releases” –With an integrated system, migrating single changes to production that were not tested independently caused unpredictable results –A “release” is a group of changes that are designed, developed, tested, and migrated to production as a unit –We have increased the overall quality of our implementations and greatly improved development efficiency

33. 33 Applying Lessons Learned: Support Staff n Business Liaison –Created a new division in I/T to ensure overall system integrity –Division coordinates development and acceptance testing with functional users n Applications Development –Reorganize from tax schedule to function (similar to business re-organization) –Additional contractor staff required

34. 34 Applying Lessons Learned: Future Development n JETS (Java-Enabled Tax System) –Don’t reinvent the wheel with design and data structures –When developing in-house, be sure to bring in expertise where needed –Provide adequate training for IT staff –Identify and involve key users early in the process

35. 35 Applying Lessons Learned: Future Development n Data Capture Project –DOR worked closely with IBM to develop a project plan, and is managing the project using that plan –Key functional users and DOR technical staff have been involved in all activities since the beginning of the project –A variety of communication is regularly distributed to promote employee acceptance –A formal training plan is under way

36. 36 Additional Questions: Charlie Helms: helmsdor@ncdial.net (919) 733-3510 Mary Johnson: mgjdor@ncdial.net (919) 715-9884 Website: http://www.state.nc.us/dor