Tax ManBy CIOinsight | Posted 03-05-2005
By Charles O. Rossotti
Harvard Business School Press, Jan. 2005
352 pages, $26.95
Just how big a mess was the Internal Revenue Service when Charles Rossotti took over in 1997? How about the organization chart that looked like a bowl of spaghetti, or the inability of the help desk to answer simple tax questions, or the routine abuse by IRS agents who would hound peoplemany of them innocentinto bankruptcy?
But as awful as all that was, here's all you really need to know: In telling the story of his five years running the tax agency, Commissioner Rossotti, cofounder of American Management Systems and now a senior adviser for the Carlyle Group, doesn't begin talking about how he was able to start improving things at the IRS until page 165.
Perhaps not surprisingly, IT was a key part of the IRS's problems. In the late 1990s, the agency was using software written by IBM programmers in the 1960s, and the records of every taxpayer were stored on tapes that were updated once a week. Unfortunately, that's the good news.
"When we took inventory for the Year 2000 conversion, we found no fewer than 130 separate computer systems essential for the functioning of the tax system, running on 1,500 mainframe and midrange computers from 27 vendors , and comprising about 18,000 vendor-supplied software products," Rossotti writes. And this was three years after the failure of an earlier 11-year overhaul.
It would be wonderful for taxpayers to hear that by the time Rossotti left in late 2002, all the computer woes had been solved. They weren't. Indeed, the complete overhaul he envisioned has yet to be completed. Still, there is no doubt that IT at the IRS is in far better shape, and the steps that Rossotti followed to help turn things around could benefit CIOs everywhere, even if they are not responsible for 130 million tax returns a year:
Hold off spending money. By the time Rossotti was appointed commissioner, the IRS's IT problems were well-known, and both Congress and taxpayers were clamoring for an immediate fix. Rossotti stalled for as long as he could so his staff could clearly define the scope of the problem.
Figure out what you're trying to do. It would have been relatively simple to spend billions to make the existing system work better. But that would not get the agency where Rossotti wanted it to go. A key part of the IT overhaul was to make sure it would support the IRS's new goal of being "taxpayer-centric."
Figure out who is going to do what. Given the scope of the overhaul, it didn't take long for Rossotti to determine that an outside vendor should drive the project.
Start small. No matter how well you think you've planned, there will be problems you haven't thought of as you undertake a major initiative. Beginning with a less critical portion of the project gives you time to fix it before moving on to larger tasks.
The biggest take-away is this: There has to be continuous improvement in all phases of the operationincluding IT. Otherwise, someone else will inherit the mess.
Paul B. Brown is the author of numerous business books, including Publishing Confidential: The Insider's Guide to What It Really Takes to Land a Nonfiction Book Deal, published by Amacom.