IRS looks for IT improvements

The Internal Revenue Service plans to set a new direction for its information technology operations by the end of the year, the tax agency's chief information officer said this morning.

Business systems modernization initiatives at the IRS have drawn the most IT resources — more than $429 million in fiscal 2004 — and the most criticism for the organization. Projects have been over budget, behind schedule and nothing seems to have helped either situation, said Todd Grams, the IRS' CIO, speaking at a breakfast sponsored by Federal Sources Inc.

However, modernization problems are not the only IT issues the agency faces. IRS officials have already decided that the technology budget will not go up and that employee satisfaction with IT service must improve, Grams said. Agency officials commissioned several outside firms to study its practices and plans. Once those results come in at the end of this month, some serious decisions will be made, he said.

Studies under way for the IRS include:

* The Software Engineering Institute at Carnegie Mellon University is taking a look at the Customer Account Data Engine, the center of the Business Systems Modernization program.

* Acquisition Solutions Inc. is examining technology procurement processes, particularly how the agency balances financial risk among itself and its contractors.

* Gartner Inc. is performing a benchmarking study on the entire modernization program to determine how IRS efforts compare to similar projects in the private sector.

* The Meta Group Inc. is studying the IT organization's ability to invest in technology to support the agency's business units.

"There will be changes...without changes, we're going to keep doing what we're doing," Grams said. "We're looking to set the new direction and where we are going by the end of the year."

A new official in the IRS hierarchy — John Dalrymple, deputy commissioner for operations support — is already critical to bringing the IT organization and the business units closer together, but in the end, a lot of the CIO office's decisions will come down to what is really necessary to get the IRS at peak performance, Grams said. Among other things, officials will be developing a mechanism to distinguish between what general upgrades are absolutely critical to the agency and which would "just be nice to have," he said.

"'Nice to have,' we can't afford to be doing," he said. "I've got to really make sure that I've wrung every dollar out of the IT budget that I can."