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FTA FTA TechnologyTechnology ConferenceConference

Tax Systems IntegrationTax Systems Integration

Impact of Implementation on UsersImpact of Implementation on Users

North Carolina Department of Revenue

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Introduction of SpeakersIntroduction of Speakers

Charlie Helms, Manager, Field Charlie Helms, Manager, Field Operations Administrative SectionOperations Administrative Section

Mary Johnson, Director, Business Mary Johnson, Director, Business Systems Development & Support Systems Development & Support DivisionDivision

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ObjectivesObjectives Discuss North Carolina's reasons for Discuss North Carolina's reasons for

implementing an implementing an Integrated Tax Integrated Tax Administration SystemAdministration System (ITAS) (ITAS)

Review implementation and resulting Review implementation and resulting impact to basic business processesimpact to basic business processes

Present “lessons learned” that North Present “lessons learned” that North Carolina is applying to current projectsCarolina is applying to current projects

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NC Department of RevenueNC Department of Revenue 1243 employees 1243 employees (fiscal year 1998-99)(fiscal year 1998-99)

– 39 field collection offices39 field collection offices– 14 in-state field audit offices14 in-state field audit offices– 26 interstate field audit offices26 interstate field audit offices

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NC Department of RevenueNC Department of Revenue

Michael HannahAssistant Secretary

Legal and Financial Svcs.

Margaret (Randy) BarnesAssistant Secretary

Planning, Development &Technology

B. W. ThomasAssistant Secretary

Tax Compliance

D. N. SandersAssistant Secretary

Field Operations

Michael S. HodgesDeputy Secretary

Sabra FairesAssistant SecretaryTax Administration

Muriel K. OffermanSecretary

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Why Go Why Go to All the to All the Trouble?Trouble?

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We Are AWe Are A

CUSTOMERCUSTOMERSERVICE SERVICE

FocusedFocusedOrganizationOrganization

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Functional ReorganizationFunctional Reorganization

Prior to functional reorganization each Prior to functional reorganization each tax schedule was administered by a self tax schedule was administered by a self sufficient divisionsufficient division

This created duplications of efforts and This created duplications of efforts and multiple hand-offsmultiple hand-offs

After the reorganization, like functions After the reorganization, like functions were grouped togetherwere grouped together

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Y2KY2K Legacy systems Legacy systems

on IBM 4381 on IBM 4381 mainframe mainframe became extinct became extinct on June 30, 1999on June 30, 1999

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Y2KY2K

Yes !Yes ! ITAS is Y2K compliantITAS is Y2K compliant

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Through audit selection and data cross Through audit selection and data cross referencingreferencing

Track work assignments using an integrated Track work assignments using an integrated case management systemcase management system

Allow for automation of processesAllow for automation of processes– NoticingNoticing

– Interface programs Interface programs » IRS CP 2000 matching program IRS CP 2000 matching program

» Wage matching for garnishmentsWage matching for garnishments

Improve ComplianceImprove Compliance

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Enhance Customer ServiceEnhance Customer Service We wanted to provide faster response time We wanted to provide faster response time

to taxpayer inquiries to questions to taxpayer inquiries to questions concerning refunds, payments and other concerning refunds, payments and other account related informationaccount related information

The new system should enable personnel The new system should enable personnel to resolve taxpayer identified problems to resolve taxpayer identified problems quickly from any locationquickly from any location

The system should allow for registration of The system should allow for registration of business taxpayers from local field officesbusiness taxpayers from local field offices

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ImplementationImplementation

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

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Implementation ProcessImplementation Process

A team of functional representatives led A team of functional representatives led the implementationthe implementation– Reported to the Executive CouncilReported to the Executive Council– Empowered to make decisions and Empowered to make decisions and

procure resourcesprocure resources– Team members were chosen by assistant Team members were chosen by assistant

secretariessecretaries

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Implementation ProcessImplementation Process Vendor selection and involvementVendor selection and involvement

– Andersen Consulting’s (AC) “TAS” systemAndersen Consulting’s (AC) “TAS” system– AC staff onsite - worked with functional users AC staff onsite - worked with functional users

to implement initial tax schedulesto implement initial tax schedules

DOR applications staff involvementDOR applications staff involvement– Conversion from existing systems to ITASConversion from existing systems to ITAS– Transition of support to DOR applications Transition of support to DOR applications

development staff after implementationdevelopment staff after implementation– Responsible for developing interface Responsible for developing interface

programsprograms

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Implementation ProcessImplementation Process

Computer equipment roll-outComputer equipment roll-out– A PC network was established for the 40 + A PC network was established for the 40 +

field offices over a 9 month periodfield offices over a 9 month period– Equipment and communications links were Equipment and communications links were

ordered and rolled out state-wideordered and rolled out state-wide– Users were trained on use of the new Users were trained on use of the new

equipmentequipment

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Implementation ProcessImplementation Process A training management team (TMT) was A training management team (TMT) was

formed by the Executive Councilformed by the Executive Council– Trainers were identified from each functional Trainers were identified from each functional

areaarea– A train-the-trainer philosophy was utilizedA train-the-trainer philosophy was utilized– Functional trainers were able convey how the Functional trainers were able convey how the

material should be applied in the work-placematerial should be applied in the work-place– User-guides and other training materials were User-guides and other training materials were

developed by trainers and TMT membersdeveloped by trainers and TMT members– A A just-in-timejust-in-time training philosophy was utilized training philosophy was utilized

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Initial Implementation IssuesInitial Implementation Issues We were given an aggressive We were given an aggressive

implementation scheduleimplementation schedule

We had problems with converted dataWe had problems with converted data– Data purificationData purification– Data mappingData mapping

Users had to learn and un-learn manual Users had to learn and un-learn manual “work-arounds”“work-arounds”

We were confronted with unintended We were confronted with unintended results of system changesresults of system changes

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Initial Implementation IssuesInitial Implementation Issues

A number of resource issues challenged A number of resource issues challenged usus

Some of our employees were resistant Some of our employees were resistant to changeto change

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Overcoming Employee Overcoming Employee ResistanceResistance

Train - Train - TrainTrain - Train - Train ITAS User GuideITAS User Guide Key user networkKey user network Electronic shared directories Electronic shared directories

for communicating ITAS for communicating ITAS issues & proceduresissues & procedures

Departmental e-mail network Departmental e-mail network for “hot” issuesfor “hot” issues

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ResultsResults

(or, we did it, didn’t we?!)

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Business Processing: Business Processing: ImprovementsImprovements

Case management function is integratedCase management function is integrated

Business registrations and adjustments Business registrations and adjustments can be performed by field staffcan be performed by field staff

Interfaces between ITAS and other Interfaces between ITAS and other agencies are automatedagencies are automated

Taxpayer account information is available Taxpayer account information is available online, real-time to authorized usersonline, real-time to authorized users

Noticing function is automatedNoticing function is automated

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Business Processing:Business Processing:Added BonusesAdded Bonuses

DOR gained a PC network through-out DOR gained a PC network through-out the state that is now multi-purposethe state that is now multi-purpose

All DOR staff gained an increased All DOR staff gained an increased awareness of the importance of training awareness of the importance of training and communication and communication

Many processes and procedures were re-Many processes and procedures were re-engineered to provide greater efficiency engineered to provide greater efficiency

Y2K problems were resolved!Y2K problems were resolved!

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Business Processing:Business Processing:Impacts to StaffImpacts to Staff

20+ years of process and system 20+ years of process and system familiarity were impacted overnightfamiliarity were impacted overnight

Related procedures needed to be changedRelated procedures needed to be changed

A majority of the work force quickly A majority of the work force quickly needed education and trainingneeded education and training

Methods to rapidly communicate changes Methods to rapidly communicate changes to all employees needed to be developedto all employees needed to be developed

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Business Processing:Business Processing:New ChallengesNew Challenges

Processing Development RequestsProcessing Development Requests– Priorities and schedules must consider Priorities and schedules must consider

needs across tax schedulesneeds across tax schedules– Changes for one tax schedule may impact Changes for one tax schedule may impact

another, so increased design and testing another, so increased design and testing time is required to ensure overall qualitytime is required to ensure overall quality

– Legislative changes continue to require Legislative changes continue to require short lead timesshort lead times

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Business Processing:Business Processing:New ChallengesNew Challenges

More Resources RequiredMore Resources Required– Capture of higher number of data elements Capture of higher number of data elements

requires more data entry personnelrequires more data entry personnel– Since more data is captured, the cost of Since more data is captured, the cost of

storing and processing data has increasedstoring and processing data has increased– Using the increased information to improve Using the increased information to improve

compliance, manage more efficiently, and compliance, manage more efficiently, and increase revenue requires more trained staffincrease revenue requires more trained staff

– Equipment maintenance is more costlyEquipment maintenance is more costly

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Largest Schedules on ITAS: Largest Schedules on ITAS: Implementation Implementation

TAX SCHEDULE PRODUCTION

Individual Income October, 1994Employer Withholding August, 1995Corporate October, 1995Sales and Use February, 1996Privilege License March, 1999Motor Fuels ETC 10/99

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Largest Schedules on ITAS: Largest Schedules on ITAS: Production Volumes Production Volumes

TAX SCHEDULE ACTIVEACCOUNTS

ANNUALRETURNS

Individual Income 3,500,000 3,500,000Employer Withholding 185,000 1,735,000Corporate 294,000 306,000Sales and Use 184,000 1,825,000Privilege License 79,000 79,000

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ITAS Production VolumesITAS Production Volumes(January 1, 1998 - December 31, 1998)(January 1, 1998 - December 31, 1998)

10 Million Total Batch Transactions 1,091,500 Assessments 460,000 Delinquent Filing Notices 76,500 New Business Registrations Individual Income Tax

– 2,424,500 Refunds Issued– 600,000+ ELF Returns

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Where Where Do We Do We

Go From Go From Here?Here?

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Applying Lessons Learned: Applying Lessons Learned: Business PlanningBusiness Planning

ITAS Planning Team ITAS Planning Team – Set strategic direction for ITAS Set strategic direction for ITAS

operationsoperations– Prioritize and schedule Prioritize and schedule

development requests development requests – Facilitate continuous business Facilitate continuous business

process improvementprocess improvement– Manage consistent use of ITASManage consistent use of ITAS

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Applying Lessons Learned: Applying Lessons Learned: Change ControlChange Control

ITAS “Releases”ITAS “Releases”– With an integrated system, migrating single With an integrated system, migrating single

changes to production that were not tested changes to production that were not tested independently caused unpredictable resultsindependently caused unpredictable results

– A “release” is a group of changes that are A “release” is a group of changes that are designed, developed, tested, and migrated designed, developed, tested, and migrated to production as a unitto production as a unit

– We have increased the overall quality of We have increased the overall quality of our implementations and greatly improved our implementations and greatly improved development efficiencydevelopment efficiency

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Applying Lessons Learned: Applying Lessons Learned: Support StaffSupport Staff

Business LiaisonBusiness Liaison– Created a new division in I/T to ensure Created a new division in I/T to ensure

overall system integrityoverall system integrity– Division coordinates development and Division coordinates development and

acceptance testing with functional users acceptance testing with functional users

Applications DevelopmentApplications Development– Reorganize from tax schedule to function Reorganize from tax schedule to function

(similar to business re-organization)(similar to business re-organization)– Additional contractor staff requiredAdditional contractor staff required

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Applying Lessons Learned: Applying Lessons Learned: Future DevelopmentFuture Development

JETS (Java-Enabled Tax System)JETS (Java-Enabled Tax System)

– Don’t reinvent the wheel with design and Don’t reinvent the wheel with design and data structuresdata structures

– When developing in-house, be sure to bring When developing in-house, be sure to bring in expertise where neededin expertise where needed

– Provide adequate training for IT staffProvide adequate training for IT staff

– Identify and involve key users early in the Identify and involve key users early in the processprocess

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Applying Lessons Learned: Applying Lessons Learned: Future DevelopmentFuture Development

Data Capture ProjectData Capture Project – DOR worked closely with IBM to develop a DOR worked closely with IBM to develop a

project plan, and is managing the project project plan, and is managing the project using that planusing that plan

– Key functional users and DOR technical staff Key functional users and DOR technical staff have been involved in all activities since the have been involved in all activities since the beginning of the project beginning of the project

– A variety of communication is regularly A variety of communication is regularly distributed to promote employee acceptance distributed to promote employee acceptance

– A formal training plan is under wayA formal training plan is under way

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Additional Questions:Additional Questions:

Charlie Helms:Charlie Helms: helmsdor@ncdial.nethelmsdor@ncdial.net(919) 733-3510 (919) 733-3510

Mary Johnson:Mary Johnson: mgjdor@ncdial.netmgjdor@ncdial.net(919) 715-9884(919) 715-9884

Website: http://www.state.nc.us/dorWebsite: http://www.state.nc.us/dor