The Hardware Refreshment Program Is Generally Effective, But
Improvements Can Be Made
September 2002
Reference Number: 2002-20-160
This report has cleared the Treasury
Inspector General for Tax Administration disclosure review process and
information determined to be restricted from public release has been redacted
from this document.
September 11, 2002
MEMORANDUM
FOR DEPUTY COMMISSIONER FOR MODERNIZATION &
CHIEF INFORMATION OFFICER
FROM: Pamela J. Gardiner /s/ Pamela J. Gardiner
Acting Inspector General
SUBJECT: Final Audit Report - The Hardware
Refreshment Program Is Generally Effective, But Improvements Can Be Made (Audit
# 200220040)
This
report presents the results of our review of the effectiveness of the Hardware
Refreshment Program (HRP).
In summary, by the end of
Fiscal Year (FY) 2003, the Internal Revenue Service (IRS) expects to have
replaced its aging inventory of 150,000 personal computers with approximately
107,000 new (refreshed) personal computers.
The Hardware Refreshment Program Office (HRPO) of the End User Equipment
and Services Division is responsible for coordinating and overseeing the
planning and implementation of the HRP.
In FY 2001, the IRS
allocated approximately $97 million to replace 63,139 personal computers. On May 14, 2001, the IRS held a reverse
auction to purchase the replacement computers with installation beginning in FY
2002. The IRS reported that the reverse
auction resulted in government savings of 49 percent. The new computers were targeted to replace existing low-end
computers with processor speeds less than 400 megahertz. As of June 6, 2002, the IRS had replaced
36,423 (25,875 desktops and 10,548 laptops) of the 63,139 personal computers
and plans to replace the remaining computers before the end of FY 2002. For FYs 2002 and 2003, the IRS budgeted
$86.4 million to purchase and install an additional 45,560 computers by the end
of FY 2003.
Overall, the HRPO has done
an effective job controlling the hardware replacement process. The HRPO
successfully implemented several program management activities such as
preparing key program management documents, educating employees, and providing
training. However, the
HRPO could improve the hardware replacement process by identifying,
documenting, and communicating lessons learned.
For example, at one of the
sites we visited that began the rollout of its new computers in February 2002,
several employees in two business units were negatively affected by the
computer replacement. The new computers
significantly reduced the employees’ Internet research capabilities, thus
affecting their ability to effectively complete required duties. A similar situation was reported to IRS
executives in December 2001, but it was not communicated to the site before
computer replacement occurred.
The
Deputy Commissioner for Modernization & Chief Information Officer should
ensure post-installation conference
calls are held to identify lessons learned during site installations and that
lessons learned are formally documented and effectively communicated to future
computer replacement sites.
Copies of this
report are also being sent to the IRS managers who are affected by the report
recommendations. Please contact me at
(202) 622-6510 if you have questions or Scott E. Wilson, Assistant Inspector
General for Audit (Information Systems Programs), at (202) 622-8510.
Appendix I – Detailed Objective, Scope, and Methodology
Appendix II – Major Contributors to This Report
Appendix III – Report Distribution List
Appendix IV – Management’s Response to the Draft Report
One of the Internal Revenue Service’s (IRS) major strategies
contained in the IRS Strategic Plan Fiscal Years (FY) 2000 – 2005 is to
provide high quality, efficient, and responsive information services to
internal customers. As part of this
strategy, the Modernization, Information Technology, and Security Services
(MITS Services) FY 2002-2003 Program Plan established that an infrastructure be
provided that is sufficiently flexible to adapt to evolving business needs and
can be efficiently managed, specifically establishing enterprise-wide
technology refreshment (i.e., routine replacement of low-end computer
workstations) as an operational priority.
The Hardware Refreshment Program Office (HRPO) of the End
User Equipment and Services (EUES) Division is responsible for coordinating and
overseeing the planning and implementation of the Hardware Refreshment Program
(HRP). The HRP involves the IRS-wide
initiative to routinely replace aging personal computers (desktop and laptop
computers) with state of the market equipment on a continuing refreshment cycle
(currently, 3 years) while reducing the
personal computer inventory in the IRS to a ratio of 1 computer per
employee. By the end of FY 2003, the
IRS expects to have replaced its aging inventory of 150,000 personal computers
with approximately 107,000 new (refreshed) personal computers.
In FY 2001, the IRS allocated approximately $97 million to
replace 63,139 personal computers. On
May 14, 2001, the IRS held a reverse
auction to purchase the replacement computers with installation beginning in FY
2002. The IRS reported that the reverse
auction resulted in government savings of 49 percent. The new computers were targeted to replace existing low-end
computers with processor speeds less than 400 megahertz. As of June 6, 2002, the IRS had replaced
36,423 (25,875 desktops and 10,548 laptops) of the 63,139 personal computers and
plans to replace the remaining computers before the end of FY 2002. For
FYs 2002 and 2003, the IRS budgeted $86.4 million to purchase and install an
additional 45,560 computers by the end of FY 2003.
Audit work was conducted in the Information Technology Services
(ITS) National Headquarters, the
Memphis IRS Campus, the Tennessee Computing Center, and the Denver and
Indianapolis Area Offices during the period February through June
2002. This audit was initiated at the request of the Deputy
Commissioner for Modernization & Chief Information Officer and was
conducted in accordance with Government
Auditing Standards. Detailed information on our audit objective,
scope, and methodology is presented in Appendix I. Major contributors to the report are listed in Appendix II.
The Office of Management and Budget (OMB) Circular A-130, Management
of Federal Information Resources, requires the head of each federal agency
to effectively and efficiently manage agency information and information
technology and to develop policies and procedures that provide for timely
acquisition of required information technology.
Overall, the HRPO has done an effective job controlling the
hardware replacement process. Program
management activities successfully implemented by the HRPO included developing
key program management documents, effectively educating affected employees
about the HRP, and ensuring that any requested training was provided. The local ITS support personnel were also
very supportive of the replacement effort and assisted the HRPO by coordinating
site rollout activities and validating the personal computer inventory. As a result, the users at sites visited
during the audit were generally satisfied with the overall hardware replacement
process.
Key program management documents
The HRPO developed a comprehensive Hardware Refreshment
Program Management Plan to provide structure in planning, organizing,
directing, and controlling hardware replacement activities. Although not formally approved, this Plan
provides extensive guidance regarding the implementation of a continuous
hardware replacement process. The Plan
also identifies risks to be considered throughout the replacement process and
details the roles and responsibilities of the EUES Division, HRPO, contractor,
and local ITS support personnel at the individual IRS sites.
The HRPO also developed a Work Breakdown Structure to
identify the major tasks to be performed and to track the status and completion
of those tasks. A hardware replacement
schedule was also prepared to track and monitor replacement activities at each
site. The schedule identifies the
computer replacement dates by site and the quantity of desktop and laptop
computers to be replaced. The schedule
is updated weekly based on information obtained from the installation sites
during hardware replacement status meetings and conference calls. For example, the HRPO conducted regular
coordination meetings with ITS support and business unit personnel at each site
to discuss replacement activities prior to delivery of replacement
hardware. In addition, the HRPO
conducted daily conference calls with ITS support personnel at each site to
confirm the schedule, workspace readiness, and delivery of equipment.
The HRPO also prepared a cost/benefit analysis for the
replacement process. The analysis
information presented to the OMB compared hardware refreshment scenarios of 3,
4, and 5 years. Based on industry “best
practices” and the results of the cost/benefit analysis, IRS management
selected the 3-year computer replacement scenario. Lengthening the replacement process to 4 or 5 years was shown to
have significant cost impacts. For
example, the additional tangible costs for repairs and upgrades were projected
to exceed $74 million under the 4-year scenario and $100 million under the
5-year scenario. Additional impacts of
lengthening the replacement process, which are difficult to quantify, included
a delay in implementing improvement projects across the IRS and an increase in
user downtime.
The HRPO also documented planned benefits, which included
providing current technology and standardized software applications IRS-wide
and minimizing costs through bulk hardware purchases.
Employee education
The HRPO developed and implemented an extensive
Communications Plan that provided for the development and distribution of
various internal communication vehicles to educate IRS employees about the
HRP. The communication vehicles include
web sites, newsletters, brochures, and posters. The local ITS support personnel also communicated the HRP message
to the appropriate site management to facilitate educating site employees. At the sites we visited, managers held group
meetings to provide HRP information to employees. As a result, employees generally stated that the information they
received regarding local HRP activities was adequate and timely communicated.
Training
At the four sites we visited, the desktop computers were
replaced with no new functionality or additional applications; therefore,
minimal or no training was required by the personnel receiving the new
computers. The laptop computers
contained new features and the HRPO designated the local ITS support personnel
as responsible for providing informal training on the hardware when requested
by employees. This training was accomplished through a combination of classroom
training, group sessions, and/or one-on-one assistance. Overall, users were satisfied with the
training or assistance they received on their new computers.
The OMB Circular A-130 requires each federal agency to
document lessons learned to ensure that agencies manage information technology
in an effective and efficient manner.
While several program management activities were implemented to control
the hardware replacement process, the HRPO did not identify and formally
document and communicate lessons learned to ensure the most efficient and
effective use of resources.
HRPO management indicated that, at the time of installation,
they conduct daily telephone calls to discuss the status of computer
replacement at the sites. However,
planned post-installation conference calls were not held to identify and track
issues and ensure that lessons learned were documented and communicated to
offices scheduled to go through the hardware replacement process.
At one of the sites we visited that began the rollout of its
new computers in February 2002, several employees in two business units were
negatively affected by the computer replacement. The new computers significantly reduced the employees’ Internet
research capabilities due to the configuration of the Microsoft Internet
Explorer software, thus affecting their ability to effectively complete
required duties. Representatives of 1
of the business units stated that as many as 300 of the business unit’s users nationwide
could have been affected by the Internet-related access limitations. Due to the computer replacement limiting the
employees’ research capabilities, the employees resorted to using their home
computers to conduct their work. A
similar situation was reported to IRS executives in December 2001, but it was
not communicated to the site before computer replacement occurred. An updated configuration of the Microsoft
Internet Explorer software that was being tested as of June 3, 2002, is
expected to address Internet-related access problems encountered during the
hardware replacement process.
By not identifying, documenting, and communicating lessons
learned during the computer replacement process, the HRPO risks negatively
affecting additional employees at sites scheduled to receive replacement
computers. The HRPO stated that it had
not formally documented lessons learned because HRPO personnel were informally
documenting them through manual notes, but management was unable to provide us
a copy of the notes. The HRPO has
commented that it plans to begin documenting lessons learned for use in future
refreshment hardware rollouts. The HRPO
cited that another lesson learned that has not yet been documented is to
increase upfront communication and obtain earlier business unit involvement at
each site in deciding who needs a new computer and whether it should be a
desktop or laptop.
The Deputy Commissioner for Modernization & Chief
Information Officer should ensure:
1.
Post-installation conference calls are held to identify
lessons learned during site installations.
Management’s Response: After each refreshment deployment, the HRPO will ensure offices
hold post-implementation conference calls to officially close the
deployment. The HRPO will also create a
log to record its post-installation conference calls.
2.
Lessons learned are formally documented and effectively
communicated to future computer replacement sites.
Management’s Response: The HRPO will update the Lessons Learned document with issues
that may affect future site installations and ensure the document is available
to MITS Services employees and customers on the Hardware Refreshment web page
for information. The HRPO will also
record in the log when members of its staff update the Lessons Learned
document.
Appendix I
Detailed Objective, Scope, and Methodology
The overall objective of this audit was to evaluate the
effectiveness of the Hardware Refreshment Program (HRP). To accomplish this objective:
I.
We interviewed Hardware Refreshment Program Office (HRPO)
staff. We also obtained and reviewed
program management documentation including meeting minutes, the Management
Plan, Business Performance Reviews, business case information, the Work
Breakdown Structure, and the Deployment (Hardware Refreshment) Schedule. We determined the extent of any documented
and communicated lessons learned from post-implementation reviews. We determined whether there was a
methodology in place to measure and quantify HRP benefits. We obtained and reviewed budget information
and documentation.
II.
We reviewed
the HRPO’s Deployment (Hardware Refreshment) Schedule and a Projected
Refreshment Summary detailing the business units at each site and judgmentally
selected 4 of 28 sites to visit. We
selected the four sites because they had recently completed or were in the
process of completing computer replacement activities. In our site selection, we also considered
the number and variety of business units projected to receive replacement
computers. At each site, we interviewed
business unit employees to evaluate the effectiveness of the HRPO’s activities
related to educating personnel about the computer replacement process and
training on the new computers. Finally,
we evaluated the effectiveness of the rollout of the new computers and
accompanying software in meeting business unit requirements and user needs.
Appendix II
Major Contributors to This Report
Scott E. Wilson, Assistant Inspector General
for Audit (Information Systems Programs)
Gary Hinkle, Director
Danny
Verneuille, Audit Manager
Myron Gulley, Senior Auditor
Mark Carder, Auditor
Linda Screws, Auditor
Tina Wong, Auditor
Appendix III
Commissioner N:C
Deputy
Commissioner N:DC
Commissioner,
Large and Mid-Size Business Division LM
Commissioner,
Small Business/Self-Employed Division S
Commissioner, Tax
Exempt and Government Entities Division
T
Commissioner,
Wage and Investment Division W
Chief,
Information Technology Services M:I
Director, End User
Equipment and Services M:I:EU
Chief
Counsel CC
National
Taxpayer Advocate TA
Director,
Legislative Affairs CL:LA
Director,
Office of Program Evaluation and Risk Analysis
N:ADC:R:O
Office of
Management Controls N:CFO:F:M
Audit
Liaisons:
Deputy Commissioner for
Modernization & Chief Information Officer
M
Chief, Information Technology Services
M:I
Director, End User Equipment and Services M:I:EU
Office of Program Oversight and Coordination M:R:PM:PO
Appendix IV
The response was removed due to its size. To see the complete response, please go to the Adobe PDF version of the report on the TIGTA Public Web Page.