The Internal Revenue Service’s (IRS) Year 2000 (Y2K) remediation efforts demanded extraordinary efforts from all areas of the organization. Although the Y2K conversion has been successfully completed, the IRS can still realize long-term benefits from this vast undertaking that cost approximately $1 billion. The IRS can preserve the resources, methodologies, and knowledge gained through the Y2K remediation efforts and deploy them in the future.

We contracted with PricewaterhouseCoopers (PWC) to provide technical assistance to our audits of the IRS’ Y2K conversion initiatives. At the completion of the Y2K audit work, we requested that PWC assist in identifying long-term organizational benefits that the IRS might derive from its experience in managing the Y2K conversion activities. This management advisory report presents suggestions to the IRS based on lessons learned through reviews of the IRS’ Y2K conversion activities. It also includes suggestions based on our assessment of the last phase of the IRS’ End-to-End Systems Integration Test.

There were a number of factors that contributed to the Y2K success, including effective project tracking, a standardized control structure, and the use of steering committees. The continued use of these management techniques can contribute significantly to the success of future IRS systems enhancement activities. We suggest that the Chief Information Officer use similar project management processes across all major systems initiatives, incorporate industry best practices into its asset management program, develop a standardized method for deploying changes and upgrades across the entire spectrum of the IRS’ systems and networks, and establish baselines and guidelines to enhance the efficiency and effectiveness of future systems integration tests.

Management's Response: The Commissioner agreed with the report and provided highlights of the IRS’ efforts to use various project management techniques, deploy information technology components, and conduct systems integration tests.

Management’s complete response is included as Appendix IV to this report.