TREASURY
INSPECTOR GENERAL FOR TAX ADMINISTRATION
Continued Improvements Are Needed for the Development and Operations of the New Enterprise Services Organization
April 27, 2007
Reference Number: 2007-20-073
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.
Phone Number |
202-927-7037
Email Address | Bonnie.Heald@tigta.treas.gov
Web Site |
http://www.tigta.gov
April 27, 2007
MEMORANDUM FOR CHIEF INFORMATION OFFICER
FROM: Michael R. Phillips /s/ Michael R. Phillips
Deputy Inspector General for Audit
SUBJECT: Final
Audit Report – Continued Improvements Are Needed for the Development and
Operations of the New
This
report presents the results of our review of the Enterprise Services
organization (the Organization). The overall objective of this review was to
determine whether internal controls
were in place to ensure the Organization was achieving its mission efficiently
and effectively. This review was part of the Treasury Inspector General for Tax
Administration’s Fiscal Year 2006 Information Systems Programs audit plan for
reviews on the adequacy and security of Internal Revenue Service (IRS) technology.
Impact on the Taxpayer
The Organization has a Fiscal Year 2007 estimated budget of
$85.9 million and had 784 employees as of May 2006. The Organization needs to further define its
missions and goals, validate staffing assignments, and create performance measures.
Until this work is complete, neither we
nor the IRS will be able to objectively determine
whether the Organization is
operating efficiently or effectively and whether taxpayer funds are being spent
wisely.
Synopsis
The Modernization and Information Technology Services organization supports tax administration within the IRS by delivering information technology services and solutions. In 2004, the IRS began investigating industry best practices[1] for organizing certain information technology services common to all projects under development. As a result, the Modernization and Information Technology Services organization began consolidating several existing functions and offices to form the new Organization under a newly appointed Associate Chief Information Officer, in an effort to improve services provided to internal customers.
During the consolidation, individual offices within the two Organization
functions (Business Integration and Systems Integration) have continued to
perform prior operations, such as providing infrastructure support and managing
demand for information technology services, while incorporating new roles and
responsibilities as part of the Organization.
Many of the offices have gone even farther by developing individual
concepts of operations; defining specific visions, priorities, and plans; and
performing detailed work assessment studies.
Also, the Organization completed several Highest Priority Initiatives
and individual offices completed significant activities during Fiscal Year 2006.
For example, the Organization assisted with more than 40 projects in
developing high-level cost estimates to help the IRS create its overall
portfolio of systems development projects.
The
Organization needs to further define its missions and goals, validate staffing
assignments, and create performance measures.
Developing an organization to incorporate operations and
services at an enterprisewide level is a complex effort. The
IRS created the Organization structure based on recommendations from the MITRE
Corporation, IBM, and key IRS executives; developed preliminary staffing
estimates; and used the Highest Priority Initiatives process to ensure
significant activities were accomplished as the Organization was founded. The IRS stated it had initially documented
high-level commitments for Organization senior managers; however, IRS
executives believed directors and managers would need to gain operational
experience within the new Organization before developing individual goals and
missions within their respective functions and offices. In May 2006, the Organization documented the
missions and goals of its subordinate offices.
As we were completing our audit, the validation of these missions and
goals was ongoing at many levels of the Organization, and work was underway to
define short-term and long-term (transformational) plans, validate staffing
assignments, and measure performance. Because
this work is in process, we were unable to objectively determine the level of
efficiency or effectiveness of the individual offices or the overall Organization.
Recommendations
To ensure the continued orderly evolution of the Organization, we recommended the Associate Chief Information Officer, Enterprise Services, complete the work necessary to validate and document missions and goals and to develop and document short-term and long-term transformational plans. To ensure resource staffing assignments are commensurate with the work being conducted, we recommended the Associate Chief Information Officer, Enterprise Services, track individual work assignments when applicable, revise the Single Entry Time Reporting system codes, and reevaluate staffing needs based on current and future workloads. To ensure performance is defined and measured, we recommended the Associate Chief Information Officer, Enterprise Services, complete the current performance measures pilot, identify performance measures for offices not included in the current pilot, and identify key performance measures for the entire Organization based on goals and missions as well as short-term and long-term plans.
Response
The Chief Information Officer agreed with our recommendations and stated the IRS will document the mission and goals for the Organization, complete the current performance measures pilot, and identify performance measures for the Organization. The Chief Information Officer also stated the IRS will construct a high-level approach to develop short-term and long-term transformation plans and create an implementation plan to establish new Single Entry Time Reporting codes and processes to validate staffing needs. In the interim, the Organization management team will meet regularly to refine priorities and work with the Single Entry Time Reporting administrator to establish new codes and develop reports for more accurate tracking of staff and activities. Management’s complete response to the draft report is included as Appendix VII.
Copies of this report are also being sent to
the IRS managers affected by the report recommendations. Please contact me at (202) 622-6510 if you
have questions or Margaret E. Begg, Assistant Inspector General for Audit
(Information Systems Programs), at (202) 622-8510.
Appendices
Appendix
I – Detailed Objective, Scope, and Methodology
Appendix
II – Major Contributors to This Report
Appendix
III – Report Distribution List
Appendix IV
– Glossary of Terms
Appendix
V – Enterprise Services Organization Accomplishments
Appendix
VI – Enterprise Services Organization Structure
Appendix
VII – Management’s Response to the Draft Report
Abbreviations
|
IRS |
Internal Revenue Service |
The Modernization and Information Technology Services
organization supports tax administration within the Internal Revenue Service
(IRS) by delivering information technology services and solutions. In
2004, the IRS began investigating industry best practices[2]
for organizing certain information technology services common to all projects
under development. As a result, the Modernization and
Information Technology Services organization began consolidating several existing
functions and offices to form the new Enterprise Services organization (the
Organization) under a newly appointed Associate Chief Information Officer, in
an effort to improve services provided to internal customers.
With a Fiscal Year 2007 estimated budget of $85.9 million,
the Organization is structured into two functions: Business Integration and Systems
Integration. This major restructuring of
multiple Modernization and Information Technology Services organization functions
into the Organization included 784 IRS employees as of May 2006.
This review was performed at the Modernization and
Information Technology Services organization office in New Carrollton,
Maryland, during the period September 2006 through January 2007. The audit 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.
Organization Offices Have Continued to Perform Prior Operations While Managing New Roles and Responsibilities
The consolidation of existing Modernization and Information
Technology Services organization functions and offices into the new Organization
affected the duties and responsibilities of 522 IRS employees within the Business
Integration function and 262 employees within the Systems Integration function. During the consolidation, individual offices
within the two Organization functions have continued to perform prior operations,
such as providing infrastructure support and managing demand for information
technology services, while incorporating new roles and responsibilities as part
of the Organization.
Many of the offices have
gone even farther by developing individual concepts of operations; defining specific
visions, priorities, and plans; and
performing detailed work assessment studies. Also, the Organization
completed several Highest Priority Initiatives and individual offices completed significant activities during Fiscal Year 2006. For example, the Organization implemented
a system to centrally manage change requests and requests for information
services. Previously, the IRS had used multiple processes to request information systems
support, which had led to resource shortages and cost overruns. In addition, the Organization
assisted over 40 projects in developing high-level cost estimates to help the
IRS create its overall portfolio of systems development projects.[3]
The Organization Needs to Further Define Its Missions and Goals, Validate Staffing Assignments, and Create Performance Measures
Developing an organization to incorporate operations and
services at an enterprisewide level is a complex effort. Thus, the IRS has formed
the Organization incrementally. In early 2005, several offices from the
previous Business Systems Modernization Office and two other Modernization and
Information Technology Services organizations became the first offices to
migrate to the Organization. In September 2005, the IRS moved most of the remaining
Business Integration and Systems Integration functions from the previous
Business Systems Modernization Office into the Organization. Other offices within the Modernization and
Information Technology Services organization became part of the Organization in
the summer of 2006, and as we
were concluding our audit work, the IRS and the Organization were considering
additional changes to the Organization structure. Figure 1 provides a
timeline for the formation of the Organization.[4]
Figure 1: Organization Timeline
|
Date |
Milestone |
|
January 2005 |
Appointment of a new
Associate Chief Information Officer for the Organization. |
|
March 2005 |
Initial standup of the Organization
with four offices. |
|
September 2005 |
Formation of the Business
Integration and Systems Integration functions within the Organization. |
|
May 2006 |
Approved organizational
change for the Organization. |
Source: Internal IRS documentation.
“It’s important to set clear goals and to set
priorities for the dollars we spend, and once a goal is set, a goal that
everyone can understand, it’s important to make sure we measure to determine
whether or not we’re achieving the results.”
George
W. Bush at the President’s Management Council Meeting held October 13, 2006
The IRS created the
Organization structure based on recommendations from the MITRE Corporation,
IBM, and key IRS executives; developed preliminary staffing estimates; and used the Highest Priority Initiatives process to ensure significant
activities were accomplished as the Organization was founded. The IRS stated it had initially
documented high-level commitments for Organization senior managers; however, IRS
executives believed directors and managers would need to gain operational
experience within the new Organization before developing individual goals and
missions within their respective functions and offices. In May 2006, the Organization documented the
missions and goals of its subordinate offices.
As we were
completing our review, the validation of these missions and goals was ongoing
at many levels of the Organization,
and work was underway to define
short-term and long-term (transformational) plans, validate staffing assignments, and measure
performance. Because
this work is in process, we were unable to objectively determine the level of
efficiency or effectiveness of the individual offices or the overall Organization.
During the Organization’s first full fiscal year of
operations, management focused on
ensuring ongoing work was completed and support was provided to ongoing projects. As the organizational structure begins to
stabilize, we believe it is time to further define missions and goals and make the
Organization more mature.
The Organization needs to define and validate its missions
and goals
The Government Performance and Results Act of 1993[5]
was established to improve Federal Government programs and initiate reforms to
set program goals, measure performance against those goals, and publicly report
progress. More specifically, the Act calls for strategic
plans containing a comprehensive mission statement with descriptions of how goals
and objectives are to be achieved by Federal Government agencies. Using the principles outlined in the
Government Performance and Results Act of 1993, the IRS developed the Manager’s Guide to the IRS Strategic
Planning, Budgeting and Performance Management Processes (the Guide).[6] The
Guide states organizational units (such
as the Organization) should create business plans and action plans “that
articulate what tactical actions, applied resources, and performance milestones
will be implemented to drive day-to-day operations.” In addition, in a
memorandum dated December 21, 2006, to all Modernization and Information
Technology Services organization employees, the Chief Information Officer committed
to developing and incorporating tactical transition plans so organizations could
operate using best practices.
The overall
mission, purpose, and goals for the Organization need to be defined at a more
detailed level.
We determined the overall mission, purpose, and goals of the Organization at the program level need to be defined and detailed to provide the necessary direction and oversight to Organization functions and their offices. The Organization has not created detailed short-term and long-term (transformational) plans. Several offices within the Organization, however, have developed short-term plans. Until plans are created at the organization level, it is unclear whether the individual offices’ plans will align with the overall short-term and long-term goals of the Organization, once defined.
As mentioned previously, the IRS stated it had initially documented high-level commitments for Organization senior managers; however, the IRS believed the organization needed operational experience before developing goals and missions. Without clearly defined short-term or long-term plans tied to missions and goals, neither we nor the IRS can measure objectively whether the Organization is operating effectively or efficiently.
Management
Actions: The IRS has initiated a Highest
Priority Initiative to clarify the mission and operating model for the Organization
by March 31, 2007. In addition,
individual offices are in the process of revalidating existing missions and
goals, conducting workload studies, and developing roles and responsibilities.
Recommendations
To ensure the continued orderly evolution of the Organization, the
Associate Chief Information Officer, Enterprise Services, should:
Recommendation 1: Complete the work necessary to appropriately identify, document, and validate missions and goals at all levels, functions, and offices of the new Organization.
Management’s Response: The Chief Information Officer agreed with the recommendation and stated the IRS will document the mission and goals for the Organization. These missions and goals will be validated and updated as the Organization completes its iterative planning cycle.
Recommendation 2: Develop and
document short-term and long-term transformational plans tied to missions,
goals, and strategic plans of the Modernization and Information Technology
Services organization and the IRS.
Management’s Response: The Chief Information Officer agreed with the recommendation and stated the IRS will construct a high-level approach for refining the Organization’s strategic plans. This approach will address an iterative planning process for developing short-term and long-term transition plans for the Organization. In the interim, the Organization management team will meet regularly to refine priorities and integrate planning approaches with products and services already in-flight. In addition, the IRS will select priorities based on management and stakeholder feedback and participate in strategic plan initiatives.
Office of Audit Comment: The IRS indicated the high-level approach for refining the Organization’s strategic plans will be completed by February 1, 2008. While we concur with the IRS plans to create an iterative approach to ensure short-term and long-term planning is not a one-time event, the IRS did not state when short-term and long-term plans would be developed and documented. We would hope plans are developed as soon as possible to provide a method for objectively measuring whether the Organization is operating effectively and efficiently.
The Organization needs to validate its staffing assignments
The Guide states organizational units should develop plans that outline how resources will be allocated to accomplish strategies and programs. The resource plans should reflect the established strategic direction of the organizational unit. Throughout the fiscal year, analyses should be performed to determine whether all the allocated resources were used as planned. Afterwards, resource plans should be adjusted based on unexpected events, to improve upon future plans.
As goals
and missions are refined, staffing levels will need to be revalidated.
The IRS created preliminary staffing estimates for each Organization office. Since the preliminary estimates were created, the offices have defined and are currently validating their goals and missions. As the goals and missions are refined, staffing levels will need to be revalidated to determine whether resources are adequate. Once the staffing levels are revalidated, it will be important to track the progress of work activities and products. However, we determined offices within the Organization currently do not always identify, assign, and track work activities and products at a detailed level. Also, the Single Entry Time Reporting system used by employees to track time spent on particular types of work does not include detailed codes reflecting current activities.
Without a current staffing analysis and processes for identifying, assigning, and tracking work, neither we nor the IRS can objectively determine whether the staffing levels in the Organization are commensurate with the work being conducted. We believe determining adequate staffing for the Organization has been difficult to accomplish because its missions, goals, and plans have yet to be defined at a detailed level.
Management
Actions: Several offices within the Organization
are reviewing their work requirements and performing individual staffing
analyses. In addition, the Organization
is in the process of reviewing the Single Entry Time Reporting system codes.
Recommendation
Recommendation 3: To ensure resource staffing assignments are commensurate with the work being conducted, the Associate Chief Information Officer, Enterprise Services, should:
· Track individual assignments and work products, when applicable.
· Revise Single Entry Time Reporting system codes to provide a more accurate and detailed accounting of staffing and activities.
· Reevaluate staffing needs based upon current and future workloads to help prioritize and allocate resources. Once workload and resource plans are developed, this information should be used in developing business and action plans for each Organization office.
Management’s Response: The Chief Information Officer agreed with our recommendation and stated the Organization would conduct an initiative aimed at reevaluating and improving existing Single Entry Time Reporting codes and define modifications to the code structure. In addition, the IRS will create an implementation plan to establish new Single Entry Time Reporting codes and processes to iteratively validate staffing needs based on defined missions and goals. In the interim, the Organization management team will work with the Single Entry Time Reporting administrator to determine existing capabilities, determine internal requirements to better monitor assignments and work products, establish new codes, and develop reports for more accurate tracking of staff and activities.
Office of Audit Comment: The IRS indicated the implementation plan for establishing new codes and informing the organization will be completed by April 1, 2008. While we concur with IRS plans to create an implementation plan, the IRS did not state when the new codes will begin to be used or when the staffing analysis will be completed. We would hope that implementing the new codes; conducting staffing analyses; and identifying, assigning, and tracking work would be completed as soon as possible to allow the IRS to objectively determine whether the staffing levels in the Organization are commensurate with the work being conducted.
The Organization needs to define performance measures
A purpose of the Government Performance and Results Act of 1993 is to improve on holding Federal Government agencies accountable for achieving program results. One way to achieve this accountability is through the development of performance plans with established performance goals that are objective, quantifiable, and measurable. The Guide states IRS organizations must define and validate metrics to measure and report their performance against plans and expectations.
Performance
measures are not being captured for the overall Organization.
We determined performance measures are not being captured or reported for the overall Organization, and there are few measures being reported and tracked by its functions or offices. Without measures, the IRS can not objectively determine how well the Organization, or its individual functions and offices, are performing. Also, the IRS can not measure the Organization’s ability to meet Modernization and Information Technology Services organization and IRS goals. We believe performance measurement has been difficult to accomplish because Organization missions, goals, and plans have yet to be defined at a detailed level to provide the foundation for the development and use of performance measures. In addition, the Organization was not required to provide measures during its initial operations.
Management
Actions: Individual offices within the Organization
are developing internal performance measures and metrics, and one office is
developing and initiating customer satisfaction surveys. Currently, several offices within the Business
Integration function are participating in a performance measures pilot.
Recommendation
Recommendation 4: To ensure performance is defined and measured, the Associate Chief Information Officer, Enterprise Services, should:
· Complete the current performance measures pilot.
· Identify performance measures for offices not included in the performance measures pilot.
·
Identify key performance measures for the entire
Organization, based on goals and missions as well as short-term and long-term
plans.
Management’s Response: The Chief Information Officer agreed with our recommendation and stated the IRS would complete the current performance measures pilot and identify performance measures for offices not included in the pilot as well as the Organization.
Appendix I
Detailed Objective, Scope, and Methodology
The overall
objective of this audit was to determine whether internal controls were in
place to ensure the Organization was achieving its mission efficiently and
effectively. To accomplish this
objective, we:
I. Determined whether staffing levels were appropriately assigned and tracked to deliver results within the Business Integration and Systems Integration functions of the Organization.
A. Selected and reviewed a judgmental sample of 5 (approximately 33 percent) of 15 subordinate offices from the Business Integration and Systems Integration functions. We used judgmental sampling because we did not plan to project our sample results.
B. Identified and verified documented goals, missions, and priorities of the sampled offices.
C. Determined whether Single Entry Time Reporting[7] system reports matched the work performed in Fiscal Year 2006.
II. Determined whether the design and structure of the Organization supported the goals and mission of the IRS and the Modernization and Information Technology Services organization.
A. Determined short-term and long-term goals for the Modernization and Information Technology Services organization and the Organization.
B. Determined whether the Organization’s goals and design met the IRS’ needs.
III. Determined the processes established for measuring the Organization’s overall performance.
Appendix II
Major Contributors to This Report
Margaret
E. Begg, Assistant Inspector General for Audit (Information Systems Programs)
Gary
Hinkle, Director
Troy
Paterson, Audit Manager
Phung-Son
Nguyen, Lead Auditor
Perrin
Gleaton, Auditor
Linda
Screws, Auditor
Appendix III
Commissioner C
Office of the Commissioner – Attn:
Chief of Staff C
Deputy Commissioner for Operations Support OS
Associate Chief Information
Officer,
Director, Stakeholder Management
OS:CIO:SM
Chief Counsel CC
National Taxpayer Advocate TA
Director, Office of Legislative Affairs CL:LA
Director, Office of Program Evaluation and Risk
Analysis RAS:O
Office of Internal Control
OS:CFO:CPIC:IC
Audit Liaisons:
Associate Chief Information Officer, Enterprise Services OS:CIO:ES
Manager, Program Oversight Office OS:CIO:SM:PO
Appendix IV
|
Term |
Definition |
|
Best Practice |
A best practice is a technique or methodology that, through experience and research, has proven to reliably lead to a desired result. |
|
Business Rule |
A business rule is a statement that defines or
constrains some aspect of the business. |
|
Change Request |
A change request is the medium for requesting approval
to change a baselined product or other controlled item. |
|
Concept of Operations |
The Concept of Operations is a framework
that includes a defined vision, strategic goals, operational themes, and
program capabilities. It identifies
key organizational concepts required to achieve the organization’s vision. |
|
Configuration Management |
Configuration management involves establishing proper
control over approved project documentation, hardware, and software and
assuring changes are authorized, controlled, and tracked. |
|
Highest Priority Initiatives |
Highest Priority Initiatives are a program of continual process improvement with executive-level oversight. IRS executives identify the highest priority programs every 6 months and appoint an IRS executive and senior manager to oversee the execution of each Highest Priority Initiative. |
|
Human Resource Capacity Management
Directive |
This Human Resource Capacity Management
Directive provides direction for implementing and complying with the Human
Resource Capacity Management Model requirements. The Human Resource Capacity Management
Model provides IRS personnel with the means to better estimate the human
resources needed to support a project. |
|
Information Technology Modernization
Vision and Strategy |
Information
Technology Modernization Vision and Strategy establishes a 5-year plan that
drives investment decisions; addresses the priorities around modernizing
front-line tax administration and supporting technical capabilities; and
leverages existing systems (where possible) and new development (where
necessary) to optimize capacity, manage program costs, and deliver business
value on a more incremental and frequent basis. |
|
Infrastructure |
Infrastructure is the fundamental structure of a system or organization. The basic, fundamental architecture of any system (electronic, mechanical, social, political, etc.) determines how it functions and how flexible it is to meet future requirements. |
|
Metric |
A metric is a standard of measurement. |
|
MITRE Corporation |
The MITRE Corporation was hired by the IRS as a Federally Funded
Research and Development Center to assist with the IRS’ systems modernization
effort. |
|
Request for Information Services |
A Request for Information Services is a
formal memorandum requesting organization support for changes to current or
planned programming, corporate hardware, commercial |
|
Single Entry Time Reporting |
The Single Entry Time Reporting system is
designed to accumulate time and attendance information for employees. |
|
Unified Work Request Initiative |
The Unified Work Request Initiative is an
effort focused on consolidating the existing methods of requesting work from
the Modernization and Information Technology Services organization into a single system using a
common set of processes. |
Appendix V
Enterprise Services Organization Accomplishments
The consolidation of existing Modernization and Information Technology Services organization functions and offices into the new Organization affected the duties and responsibilities of 522 IRS employees within the Business Integration function and 262 employees within the Systems Integration function. During the consolidation, individual offices within the two Organization functions have continued to perform prior operations while managing new roles and responsibilities. Some of the major accomplishments provided by the Organization in Fiscal Year 2006 are listed in Table 1.
Table 1: Examples of Organization Fiscal Year 2006
Accomplishments
|
Completed solutions, concepts, and support for over 40 projects. |
|
Completed Information Technology Modernization Vision and Strategy planning and recommendations. |
|
Initiated a pilot program for performance measures. |
|
Completed a Human Resource Capacity Directive and management processes for use by projects. |
|
Completed and deployed the Unified Work Request Initiative processes. |
|
Completed the rollout of an instant messaging system. |
|
Completed seven engineering alternative analyses. |
|
Developed a Business Rules and Requirements Management Concept of Operations. |
|
Developed a Draft Unified Work Request Concept of Operations. |
|
Conducted a customer satisfaction survey with the IRS Office of Chief Counsel. |
|
Mapped alternative business analysis systems to Department of the Treasurywide systems and common business processes. |
Source: IRS Managers within the Organization.
Appendix VI
Enterprise Services Organization Structure
Developing an organization to incorporate operations and services at an enterprisewide level is a complex effort. Thus, the IRS has formed the Organization incrementally. Figure 1 provides a detailed timeline concerning the formation of the Organization.
Figure 1: Detailed Organization Timeline
Figure 1 was removed due to its size. To see Figure 1, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
Figure 2 shows the Organization is comprised of two functions (Business Integration and Systems Integration).
Figure 2: High Level Organization Structure
Figure 2 was removed due to its size. To see Figure 2, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
Figure 3 provides the organizational structures of the Business
Integration and Systems Integration functions within the Organization.
Figure 3: Business Integration and Systems Integration Function
Structures
Figure 3 was removed due to its size. To see Figure 3, please go to the Adobe PDF
version of the report on the TIGTA Public Web Page.
Appendix VII
Management’s Response to the Draft Report
The response was
removed due to its size. To see the
response, please go to the Adobe PDF version of the report on the TIGTA Public
Web Page.
[1] Appendix IV provides a glossary of terms.
[2] Appendix IV provides a glossary of terms.
[3] Appendix V provides a list of some of the major Organization accomplishments completed in Fiscal Year 2006.
[4] Appendix VI provides a detailed timeline for the formation of the Organization.
[5] Pub. L. No. 103-62, 107 Stat. 285 (codified as amended in scattered sections of 5 U.S.C., 31 U.S.C., and 39 U.S.C.).
[6] Dated September 29, 2000.
[7] Appendix IV provides a glossary of terms.