Digital is the flow of data to enable services to occur
Inland Revenue is in the midst of transforming its business in one of the largest and most ambitious programmes in the Southern Hemisphere.
“It is a once in a generation opportunity to modernise tax administration in New Zealand,” explains its chief technology officer, Gary Baird.
The multi-stage business transformation programme is reshaping the way Inland Revenue serves New Zealanders, says Baird.
Speaking at the Gartner Symposium/ITxpo at the Gold Coast, he describes critical components of the transformation: Simplifying policy and legislative settings; proactively ensuring that customers get it right from the start; fitting revenue processes seamlessly into people’s lives; and creating an organisation that works together better by making more intelligent use of information to improve outcomes for customers.
He explains how the programme is carefully planned into multiple releases and managed business changes to minimise change impacts for customers,while maintaining Inland Revenue’s revenue collection functions without disruption and importantly, delivering significant value with each release.
“Transformation for us is holistic business transformation,” he says.
Baird provides the context for the environment that will cover this change.
Inland Revenue has 5200 staff across 26 locations in 17 cities, and 7.5 million customers. Over the past year, it collected $73 billion, or 80 per cent of the Crown revenue.
He says delivering the programme in stages helps Inland Revenue to “learn and adapt”.
According to Baird, the first release, which was completed last year, enabled seamless digital services for GST.
This was a significant advance as GST accounts for a quarter of the revenue Inland Revenue collects.
The second release went live in April this year, and they successfully migrated a number of existing tax products to the new START platform (Withholding Tax, Gaming Machine Duty, Fringe Benefit Tax).
Previously, Inland Revenue received payroll data once a year.
“We have increased the frequency of getting that information,” he says, as employers now give them the information per payday.
He further explains, “That means we have real-time information from a tax administration perspective. And for social policy products, we can administer social policy in real-time.”
The third release is scheduled for next year.
It will include provisions for the first social policy products and how financial institutions, companies, and Maori authorities can report investment income and deductions more efficiently. Tax bills are also currently before Parliament to simplify the tax system for individuals.
The change needs to be led by the CEO. It is very hard to change the business from the CIO or CTO position
He says over the next four years, further releases will streamline all remaining tax services, as well as the remaining social policy services such as student loans, child support, and KiwiSaver.
Baird explains the technology foundations for the business transformation were laid down in 2015 and 2016.
These include new data centres, network, infrastructure, and security systems that can sustain the entire change programme - all utilising all of government IT common capabilities.
He shares initial three major learnings from the programme, which can apply beyond the public sector.
First, he says, is “to be absolutely crystal clear on your vision” of change. People in the organisation need to know what is happening.”
Second, the change needs to be led by the chief executive officer. “It is very hard to change the business from the CIO or CTO position. You need equal players in the executive table.”
Third is to “be a learning organisation”. He says while it is absolutely critical to have the best vision in the world, the organisation needs to be able to learn from the execution of the programme.
Baird then reveals a characteristic that public sector agencies have that may not be true in the corporate arena: “We have each other.”
He discloses that the government agencies in New Zealand and tax administrators in other parts of the world are “fantastic in sharing their experiences.”
According to him, the agency has guaranteed funding for six years of the transformation programme.
From the investment of $1.6 billion on the transformation programme, financial benefits leading to 2023 and 2024 include customer savings of up to $2.2 billion, additional revenue of up to $6.1 billion, and administration savings of up to $580 million, he says.
“We are heading into simplicity. We want to get it right for customers the first time, not only for enterprises, but also for those in social policy.”
“Technology is a huge enabler of what we are doing. Our strategy is to go to commercial off the shelf products, shared services and deliver through the cloud. Simplify what you are doing, understand what you are doing."
Baird also discloses that Inland Revenue is also changing the way they work as an organisation. The move to Office 365, for instance, provides the staff more flexibility and ways to collaborate.
He ends with a potted summary of what organisations should know before starting their business transformation.
These are across three areas: customers, people, and technology.
Lesson one: On the customer front
“Get your customers involved in what you are doing,” Baird advises.
“Make sure you understand how they will use your systems. You will get answers that might surprise you.”
This was reflected on their first stage of release, when they went live on a GST services online.
Tax agents are an important client base for them as they represent a magnitude of their end customers. “Their feedback on the new system was not as great as we thought it was,” he shares.
They were using parts of the system in a way inside their business that we have not foreseen, he says. Thus they made some changes based on this feedback.
Baird says they also seconded some of these tax agents, paying them the government rate, into the core team for the second stage of release.
“You have to bring customers into the design of the systems early,” he says.
“It is not just about the customer experience through the app or the portal but the way they are processing the information and the value it will deliver to them.”
“Make it easy for your customers to transact with you,” he says and stresses, “Keep connecting with them, you can’t do enough engagement.”
“Customers will also want to prepare for change, so help them do that.”
Lesson two: Take care of your people
Baird emphasises the need to value people over process.
“Involve them in the design of your future organisation.”
He points out leaders who directly manage the staff are key enablers to lead and transfer the change. “Make sure they understand the vision and what are the things you want them to do.”
Baird also notes that, “They are your best change ambassadors. Make sure they have the tools, skills and information to help their people.”
Lesson three: Technology imperatives
Simplify and don’t reinvent, reuse services, and solutions, he advises.
“Use the solutions that are already there,” he says. These range from COTS (commercial off the shelf technologies), software as a service, and the cloud.
He also calls for “shifting the digital border. ”
“Design solutions into your provider’s software ecosystem,” he stresses.
“This is about engaging and opening up our ecosystem to join into our organisation.”
Look for opportunities to simplify and use existing data.
Consider the “butterfly effect,” he says, “Or how small amounts of data can provide massive business value if used properly.”
“Really, what we are doing with digital transformation is connecting the data that already exists in the ecosystem so our data can flow from other organisations to our organisation.”
“If you were to ask me what digital is, it is the flow of data to enable services to occur,” he concludes.
Join the CIO New Zealand group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.