Published on the 06/04/2016 | Written by Clare Coulson

The IRD’s business transformation project could have been a poisoned chalice but instead it’s slashed a third of its budget and will soon offer one-click tax returns…

In May this year the IRD will release to its wider customer base the results of a pilot project it has been running with Xero and MYOB. The pilot enabled business customers to submit their tax return digitally via their accounting software, cutting out the need for double handling on data. Feedback from the pilot users at MYOB and Xero has been very positive and in May this functionality will be made available to more industry players and approximately 150,000 SME customers.

This is part one of a two part project which

When IRD announced its business transformation project, the country was still smarting from the Novopay fiasco, and a much-talked about budget of $1.5 billion to revamp the IRD’s systems, even when spread over 10 years, was eye-watering. There was even talk of it reaching as much as $1.8 at one point. In a chat with iStart this week, Greg James, deputy commissioner for change at Inland Revenue NZ, advised that the budget, and the official business case it supports, was down to ‘just’ one billion dollars.

“The budget is looking good – even as we go in to this first stage, we are tracking below budget. The business case confirms that the net Crown funding required is roughly around the billion dollar-mark which is less than originally identified.”

Less indeed. iStart asked how that could be? Is the IRD cutting corners? “No” said, James admitting it was a good question. The reason, he said, is that the project was originally planned to be a design-build project, but about 18 months ago the strategic decision was made to go with off-the-shelf product Fast Enterprises from the US. Because it is predominantly pre-configured IRD has been able to accelerate the programme and reduce costs significantly, he said. It was a big change but James was at pains to point out that all the projects IRD has implemented or is implementing so far have only served to prove it was the right decision. Ninety percent of the functionality thus far has been out-of-the-box and the other ten percent has been easily achieved.

In terms of governance, Cabinet has “agreed that we will report back to them twice annually with status updates, on the basis that we keep achieving,” James said.

Learning a lesson or two from the notorious Novopay project failure, the IRD has opted to run a tight ship in terms of management and governance. With such a big project and so many moving parts, it would be easy for slip-ups to occur, but the IRD meets with its partners once a month to go over their performance. “We score them and address any issues. They have the opportunity to give feedback,” James explained, saying that apart from the odd teething issue he has been very pleased with the performance of the ICT partners, which include Fast Enterprises, Accenture, Assurity, Deloitte, Asparona, Optimation and Tenzing.

“It’s a very open, very transparent process, which is working particularly well.”

The IRD project has already started delivering for customers and “things are moving apace,” according to James.

In May this year the IRD will release to its wider customer base the results of a pilot project it has been running with Xero and MYOB. The pilot enabled business customers to submit their tax return digitally via their accounting software, cutting out the need for double handling on data. Feedback from the pilot users at MYOB and Xero has been very positive and in May this functionality will be made available to more industry players and approximately 150,000 SME customers.

This is part one of a two part project which will eventually allow businesses to submit their tax return and pay their GST with one click of a button. Greg James, deputy commissioner for change at Inland Revenue NZ said he expects that the second phase of the project will be available “no later than September this year”.

“We think that’s pretty exciting – that will truly get it to a one-step process for our customer base and it will take out a lot of the errors,” he said.

James also told iStart that the IRD is on target with, and about a third of the way through, its J2FM project to replace its middleware layer with an Oracle system. This is a crucial piece of the transformation project puzzle. “It’s the stuff that moves everything around the system – the data exchange that sits behind everything,” James explained.

When asked about the SAP portion of the project, James said SAP provides the IRD enterprise support system – accounts payable, GL and ERP – and that’s not part of the IRD’s core focus. Indeed it won’t be looked at “until stage three”.

The stages James is talking about refer to the business case that Inland Revenue submitted to Cabinet last November, and which it made available on its website a week ago. This paper outlined four stages and accompanying budget which Cabinet signed off, including agreeing the funding timeline.

The IRD has opted to run multiple micro-projects in order to achieve its goals and James said there are still opportunities out there. It is currently in the market for an information and knowledge management system and said that he expects this to be filled by a consortium with a high proportion of local businesses in the mix.

will eventually allow businesses to submit their tax return and pay their GST with one click of a button. Greg James, deputy commissioner for change at Inland Revenue NZ said he expects that the second phase of the project will be available “no later than September this year”.

“We think that’s pretty exciting – that will truly get it to a one-step process for our customer base and it will take out a lot of the errors,” he said. “We have started delivering to customers and things are moving apace.”

James also told iStart that the IRD is on target with, and about a third of the way through, its J2FM project to replace its middleware layer with an Oracle system. This is a crucial piece of the transformation project puzzle. “It’s the stuff that moves everything around the system – the data exchange that sits behind everything,” James explained.

When asked about the SAP portion of the project, James said SAP provides the IRD enterprise support system – accounts payable, GL and ERP – and that’s not part of the IRD’s core focus. Indeed it won’t be looked at “until stage three”.

The stages James is talking about refer to the business case that Inland Revenue submitted to Cabinet last November, and which it made available on its website a week ago. This paper outlined four stages and accompanying budget which Cabinet signed off, including agreeing the funding timeline.

Asked how that budget was looking James said: “The budget is looking good – even as we go in to this first stage, we are tracking below budget. The business case confirms that the net Crown funding required is roughly around the billion dollar-mark which is less than originally identified.”

Depending on which estimate you take, that is half a billion to almost one billion dollars less than original estimates. iStart asked how that could be? Is the IRD cutting corners? “No” said, James admitting that it’s a good question. The reason, he said, is that the project was originally planned to be a design-build project, but about 18 months ago the strategic decision was made to go with off-the-shelf product Fast Enterprises from the US. Because it is predominantly pre-configured IRD has been able to accelerate the programme and reduce costs significantly, he said. It was a big change but James was at pains to point out that all the projects IRD has implemented or is implementing so far have only served to prove it was the right decision. Ninety percent of the functionality thus far has been out-of-the-box and the other ten percent has been easily achieved.

In terms of governance, Cabinet has “agreed that we will report back to them twice annually with status updates, on the basis that we keep achieving,” James said.

Learning a lesson or two from the notorious Novopay project failure, the IRD has opted to run a tight ship in terms of management and governance. With such a big project and so many moving parts, it would be easy for slip-ups to occur, but the IRD meets with its partners once a month to go over their performance. “We score them and address any issues. They have the opportunity to give feedback,” James explained, saying that apart from the odd teething issue he has been very pleased with the performance of the ICT partners, which include Fast Enterprises, Accenture, Assurity, Deloitte, Asparona, Optimation and Tenzing.

“It’s a very open, very transparent process, which is working particularly well.”

James adds that the IRD is currently in the market for an information and knowledge management system and said that he expects this to be filled by a consortium with a high proportion of local businesses in the mix.