Published on the 09/06/2015 | Written by Donovan Jackson
IRD inks open ended deal with Fast Enterprises…
With its selection of little-known vendor Fast Enterprises (Fast) as the preferred supplier to design and supply New Zealand’s new tax and social policy administration system, Inland Revenue is setting off on a journey which it forecasts will take the better part of a decade and cost anywhere in the range of $1.3 to $1.9 billion dollars. And, while name recognition doesn’t present any particular cause for concern, the magnitude of the project has triggered concerns, particularly in light of recent government IT project blowouts.
That’s according to Paul Matthews, CEO of the Institute of IT Professionals. “Size of vendor is no guarantee of its ability to deliver and sometimes the inverse applies. While unknown in New Zealand, Fast has a good track record in delivering tax systems around the world.”
What does worry Matthews is the sheer scope and cost of the project. “Fast has implemented systems in other countries for a fraction of the cost we’re talking about here; $200 or $300 million, far removed from the billions involved in this case. There’s definitely a question mark on the levels of expenditure. We simply don’t need to spend that much and make [the system] as complex as that.”
The IRD has in the past attributed additional complexity to the inclusion of student loans, Kiwisaver payments and welfare entitlements in the project scope.
Colorado-based Fast beat out better known names including Oracle and SAP to win the deal and, while the IRD is describing the value of the contract as ‘commercially sensitive’, the total project has been budgeted to fall within the $1.3 and $1.9 billion range over a period of 8 to 10 years.
Fast is a comparative (to Oracle and SAP) minnow, employing some 700 people and with clients at the city, state/provincial, and federal levels in North America, and national tax administration clients in Malaysia, Laos, Finland, Poland, and the Caribbean.
Matthews questioned the approach of ‘one large project’. “An ongoing study of IT success and failure [The Standish Group’s Chaos Report] has found that by far, larger projects are more likely to fail; they have a 1 or 2 percent success rate. In IT circles, it is recognised that it is best to break big initiatives into a series of smaller ones, which reduces risk.”
Matthews added that a good by-product of such an approach is that the smaller projects become more suitable for the local technology sector. “We will see how it goes; all in all, however, we don’t see the project as a negative or bad thing.”
Inland Revenue’s Deputy Commissioner Change, Greg James, said the project is a significant step towards a simpler, more effective tax system that would make paying taxes easier, reduce compliance costs and effort, and make introducing policy changes easier and more cost-effective for Government.
“Modernising New Zealand’s tax system is high on the Government’s business growth agenda [and] will allow us to link our systems across government and the private sector, fit revenue processes seamlessly into customers’ lives, and use information more intelligently,” he said.
“Ultimately, the new system will run the core tax and social policy administration [and] progressively replace our existing FIRST system.”
Read more on the IRD Transformation project and see IRD seeks industry feedback on digital services
