5 Lessons Learned from the IRS’s Modernization Follies

Find multiple champions. As the chief executive, IRS Commissioner Charles Rossotti was an important advocate for change, but his efforts failed to percolate down to the rank and file. Critics say the agency didn’t have enough of its managers engaged in its modernization project early on. This created a disconnect between the people designing the new system and the people who would ultimately use it.

Don’t embark on projects without the people to run them. The IRS allowed projects to move ahead even though it didn’t have enough qualified people to manage them. Inexperienced, overwhelmed project managers made bad decisions and failed to notice problems until they became acute. Now the agency is reducing its project portfolio to better match its management capability.

Distribute accountability beyond I.S. The IRS did not hold business leaders accountable for the projects that affected their domain, and decisions often emerged from huge committees. As a result, the agency ended up giving conflicting instructions to its own staff and to its vendors, which contributed to delays and cost overruns.

Follow your own procedures. Although the IRS and its contractor, Computer Sciences Corp. (CSC), established procedures for its modernization projects, they weren’t always followed. Either managers didn’t understand them or thought it expedient to ignore them. The IRS paid for these lapses when it had to fix the problems that cropped up as a result.

Don’t let problems fester. It was clear early on that the original concept of completely outsourcing systems development to CSC wasn’t working, but the IRS didn’t put on the brakes until its vendor missed a major deadline and millions of dollars had been spent. -E.V.