The Internal Revenue Service (IRS) reorganized Information Systems (IS) in 1996 to better manage contracts and improve systems development oversight. The reorganization was in response to problems encountered with Tax Systems Modernization (TSM). The congress and the General Accounting Office have had concerns over the ability of the IRS to oversee systems modernization projects.

The IRS also made a commitment to dramatically improve telephone service to taxpayers. Part of the improved service will be achieved by implementing a call routing system that allows calls to be routed to the next available customer service representative anywhere in the country. The customer Service call Router (cScR) project is one of the first IS projects to be managed after the IS reorganization. The use of modern call routing technology is necessary to improve customer service.

The objective of the audit was to assess the effectiveness of the cScR project. Specific objectives were to determine if the cScR project met the business needs of customer Service and whether the project was in conformance with prescribed project management procedures.

While the cScR project did show that the call router technology was adaptable to the IRS, the project management process needs improvement to ensure that business needs are met in accordance with stated performance, cost, and schedule goals. The overall cost of the cScR project will likely be significantly higher than originally budgeted, and the contractor’s pilot evaluation report indicates that the desired improvements in customer service may not be fully achieved.

The IRS has made significant efforts within IS to develop the organizational structure, policies, and Systems Life cycles (SLc) to better manage development projects. However, we have two concerns with IRS’ overall project management process based on our review of the cScR pilot.

Industry best practices require that a business case for an information technology investment be continuously updated to reflect changed conditions. Apparently, the first business case for the cScR project was used only to receive funding. It does not address:

• Using a prototype.
• changing costs/benefits.
• changing schedules.

IS management needs to ensure that the business case is used as a guiding document to ensure business needs are met in accordance with cost, schedule, and performance plans.

The Government Program Management Office is the organization within IS that is responsible for ensuring that systems development projects meet business needs. However, our audit determined that some of customer Service’s performance measures were not included in the tests of the cScR project.

The IRS can improve its project management process by taking actions that will ensure that business needs are met in accordance with cost, schedule and performance goals. These actions should include better use of the business case as a guidance document and ensuring that project offices follow prescribed guidelines.

IS management agrees with the facts cited in the report and is taking appropriate corrective actions. They are completing a plan of action relative to the development of the Systems Life cycle. In addition, an updated approach to project management is being developed in partnership with the Prime Systems Integration Services contractor (PRIME). Management's complete response to the draft report is included as Appendix IV.