IRS CTO's effort to improve software development bears fruit

Terry Millholland came to the IRS in 2008 to turn the agency’s IT operations from a “medieval guild shop” into a 21st century operation. To do that though, he has had to apply pressure and act patiently to convince employees that he was taking them on the right track.

Millholland, the IRS’ first CTO, found the agency had software engineers who ranged from merely competent to masters of the craft. Among them, he discovered, there was no uniform approach to programming. They each took their own favored approaches.

“Therefore, every application that would get done would get done differently,” he said.

Because of that, the IRS employees who used the software had to adapt to each distinctly designed project and program, he said.

IRS is a large operation, with about 7,000 employees and 400 systems that process the 200 million tax returns filed annually. Millholland came with a plan to improve the IRS operations through Capability Maturity Model Integration (CMMI), a process improvement approach. Using CMMI, which was developed at Carnegie-Mellon University, an organization assesses its strengths and weaknesses, and understanding them, begins transforming itself into a more efficiently run operation.

CMMI is intended to encourage a systematic approach to software development, standardized across and organization and documented so that the expectations are clear. Organizations can earn CMMI levels from 1 -- the chaotic starting point -- to 5, a tightly-organized approach with ongoing optimization and improvement built into the process.

“The net of this is to dramatically improve the processes so that the estimates for completion are far more accurate, the quality is far more accurate, and you have a lot less waste in your activities,” he said. Indeed, “you’ve expanded your capacity to do more.”

In September, the IRS IT group that develops applications was accredited by the Software Engineering Services Corp. as a CMMI level 3 organization. In October, Forrester Research accredited the IRS as an Information Technology Infrastructure Library (ITIL) level 3 organization. ITIL, which originated in the United Kingdom, is similar to CMMI but is centered on the management of IT services.

“We started out in the guild shop and over the last three years we’ve improved and now have it accredited by external agencies,” said Millholland, a former executive vice president and CTO at Visa International.

On Nov. 8, IRS Commissioner Doug Shulman congratulated Millholland and the IT employees for their work over the last several years. That marked a significant change from Millholland’s arrival four years ago. Then, he faced strong obstacles, including a history of here-today-gone-tomorrow leaders. IRS employees had seen many leaders arrive with grandiose ideas for fixing the agency’s processes, Millholland said, but those ideas often did not pan out, or, if they did, the improvements only helped a select few programs. Until he proved himself, they had no reason to think his ambitions were any more likely to succeed.

“They’ve been around the mulberry bush for a while,” he said of the employees. “When you say you’re going to do it, they look and say, ‘yeah, we’ve heard that before.’”

As he introduced the CMMI and ITIL ideas, his employees told Millholland they had already been through the CMMI and ITIL training, even though he could not find any examples of them employing what they learned. Nevertheless, the number of people who believed he was bringing nothing new to the table began to swell. He had to push back against that thinking and show the employees that, whatever training they might have had, he was aiming for a new target.

“That took a lot of conversations with folks,” he said.

The attempt to change the organization raised a number of other issues since it touched so many different groups. Along with a need to train more people in the new processes for developing applications, he had to deal with semantics across offices and programs since the IRS was using “every software under the sun.” Millholland decided on using Java as the standard. He also had to ensure the quality of the processes. And for each output, he said the customer needed to receive a quality product.

“The people-aspects of this were an important one,” as well as processes and technology, he said.

Another issue was sustained leadership. For the CMMI and ITIL levels, accreditation takes 18 months to two years. “Frankly speaking, I think most people wanted to know if I was going to stick around,” he said. “After the second year, they thought maybe he is going to stick around. He’s serious about it.”

Millholland said the IRS is going to take a year to assimilate to its new way of life. He plans to continue reviewing processes and analyzing the data to ensure the agency stays on the right course. After that, officials will decide whether they will head to level 4.

By reaching CMMI level 2, employees began recognizing the benefits to the process improvement technique.

“They could see they were doing less wasteful work, or less re-dos,” Millholland said.

It registered with the people, and the organization received its level 3 accreditation three month before Millholland anticipated it.

“They surprised me,” he said. “When I saw all the way back, I realized it didn’t need to be driven by me. They—the people who were doing the work—could see the value of this.”