Time is running out on IRS modernization.
I have had the opportunity to read many articles and reports lately by soothsayers and critics who have a variety of perspectives regarding the Internal Revenue Service's business systems "modernization." But this, I believe, is the first piece written by someone who actually sat in the chair and had the responsibility to make the program work.
Business systems modernization at the IRS must be achieved this time. There is simply no going back because time is running out on the life cycles of the existing systems. And more importantly, Congress may not be willing to fund yet another systems modernization program if this one fails.
With the IRS' modernization, there are some fundamental truths.
The modernization of the IRS' operational support systems must be accomplished — and quickly. Crucial to that achievement are two fundamental enabling capabilities, including the creation of a secure taxpayer/practitioner/employee-facing infrastructure and the creation of a true taxpayer database.
The infrastructure is basically in place today, but the database — the Customer Account Data Engine (CADE) — represents a much bigger challenge and one that will take much more work.
The true barriers to success at the IRS — and at other agencies, for that matter — are enormous and more onerous than I have observed anywhere in my 43-year career in implementing information technology programs in the private sector.
Even though the dimensions of IRS' Business Systems Modernization program are complex and of a scale beyond the comprehension of most experienced IT professionals, the basics of the program can be accomplished. Yet they can only be achieved if the IRS' senior managers continue their strong leadership and if a number of more realistic and less restrictive practices are adopted.
My purpose here is not to be a cheerleader for the program or for the tax agency. My goal is constructive criticism from one who is personally and professionally knowledgeable of the job that needs to be done and from someone who is well-versed in the difficulties this program faces.
Why is modernization so critical to the IRS? Existing tax administration systems and, in large measure, their basic operating processes were designed and implemented in 1963. Although there have been improvements over the years, the systems at their core remain the same.
Despite many attempts during the past 40 years, little has been done to change that Kennedy-era architecture or replace the ancient systems that process tax returns.
For four decades, the program code used to process returns and update taxpayer account records has been doing yeoman duty. But those systems are written in languages and with technologies that have long since been abandoned. Those systems continue to be limited by the rules, capabilities and lack of flexibility characteristic of their antiquated software.
Taxpayer data is also intermixed with this program code, adding yet another degree of difficulty when instituting changes.
Overlaying that is the nearly impossible task of finding individuals knowledgeable about these long obsolete languages and program design approaches and who understand how the IRS' systems were implemented originally so they can modify them effectively.
Therefore, the systems that currently process returns and provide taxpayer services are in large measure limited to the capabilities available with that old technology. Adding significant new functionality or enhancing the efficacy by which taxpayers are served by the IRS requires replacing these arcane systems.
Nonetheless, as demands arose from new and changed tax laws and calls increased to provide better services to taxpayers, those improvements have been finessed into the old programs. That has increased the complexity of those systems, making them even more difficult to maintain.
Fortunately for the government and taxpayers, the IRS has made it through tax-filing seasons thus far thanks to the hard work and creativity of the systems development team.
But the clock is running out. The day is coming when these dedicated people will not be able to keep the systems running.
There are clear benefits to the IRS' modernization. Increasingly, large taxpayers who have their own highly automated and sophisticated electronic systems want to simplify the connections and facilitate access between their systems and the IRS' so they can minimize staffing and costs.
Individuals want more direct access to their accounts and filing status, similar to other services that are available via the Internet. The IRS also needs modernized systems if the agency is going to be able to actively participate in the e-government initiatives on the President's Management Agenda.
Given this clear need for modernized systems and a general consensus that we must complete this critical mission, why do there seem to be so many barriers to success? The answers are not easy.
This is a large, complex and expensive program whose development is expected to cost multiple billions of dollars and take 10 or more years to complete. So it would draw a great deal of oversight even if it were the IRS' first attempt, which it isn't. (This is at least the third major try, depending on how you define systems modernization.)
The service's track record of failing to deliver adds significant overhead to the program in the form of fear.
Within the agency, there is a fear that funds will be turned off, a fear of going over cost estimates, a fear of trying new or unaccepted approaches no matter how promising and a fear of failure when everyone engaged in the effort is fully aware that it must succeed this time, no matter what.
Then there is the program's unprecedented size. By my own experience and measure, this is the biggest business systems redesign and transition ever attempted.
The program is fraught with potentially showstopping risks typical of projects of this scale and magnitude that include both human and technical errors.
But despite all of these obstacles and the threat of yet another failed attempt, I am confident that the basics of modernization at the IRS will be achieved. The reasons are simple. The time has come to complete the mission even if the level of investment is reduced because so much has already been accomplished. And the leadership and staff already are in place and dedicated to making the Business Systems Modernization program a reality.
Nevertheless, some changes are necessary. Among them, IRS leaders must:
Ensure a commitment throughout the IRS to completing the modernization effort.
Acknowledge that migration to a fully modernized system is a multiyear journey and invest in levels sufficient to sustain the viability of the existing system.
Make governing bodies full participants in the success of the project.
Set priorities that including implementing CADE Release 1 and an enterprise architecture.
Strengthen program management with seasoned practitioners and stabilize overall leadership.
In truth, only the dogged determination and willingness of executive leaders, along with the support of IRS professionals, have ensured the best possible results from each step of each project as the program moves forward.
As former IRS commissioner Charles Rossotti used to remind us, "Business systems modernization of this scale and magnitude is not simple to accomplish. There is no silver bullet. Modernization is not a sprint, but rather it is a marathon."
And like a marathon, winning at business systems modernization will require the IRS' extraordinary dedication to finishing the race, together with the dogged endurance to keep moving steadily toward the finish line while making whatever adjustments prove necessary to stay on the course.
Reece served as chief information officer at the IRS from March 2001 to April 2003. He now heads John C. Reece & Associates LLC, a Washington, D.C., consulting firm.
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