Data quality a 'key risk' for IRD's $1.5b transformation

New Zealand's Inland Revenue Department is getting its data in order ahead of a complete systems revamp.
Written by Rob O'Neill, Contributor

New Zealand's Inland Revenue Department is seeking data specialists to help prepare its data for migration ahead of the tax office's NZ$1.5 billion, 10-year transformation.

A tender released this week says successful delivery of each of the four stages of IRD's transformation will rely on having the appropriate data available to support new technology systems.

"Successful migration of data from existing systems to the new solutions will be critical to the success of Transformation, as well being one of the key risks that will need to be addressed," the document says.

The first stage, now in planning, is enabling secure digital services and includes boosting self-service and cutting the required number of customer contacts and processing. 

"A critical component of any successful data migration effort is a comprehensive preparatory effort that will examine and clean likely required data structures. This will minimise errors and churn for future system migration" the tender says.

Last week, Revenue Minister Todd McClay told the 21st Century Tax Administration Conference in Wellington that New Zealand's tax administration is dated and "still largely paper based".

"It reflects its history, shows the scars of a series of changes and additions as it evolved from purely tax to one which also oversees various non-tax initiatives such as KiwiSaver and Child Support," he said.

"It has served us well, and continues to do so, but the world and the economy are changing quickly and our tax administration needs to catch up."

Emphasising the changes are about more than technology, McClay said progress had been made outside of the transformation programme.

Examples include one million people using Voice ID to verify their identity and access automated tax self-services and more than 1.7 million people registering for myIR, an online service that allows people to check their tax details, some social security accounts and KiwiSaver superannuation accounts, and to submit tax returns online.

"Back in the 1980s when mobile phones were first conceived, no one dreamed they would have consequences for the tax system," McClay said.

"Today even the most technologically illiterate amongst us use mobile apps each and every day."

That means people expect to do more of their transactions online – including their tax affairs.

"For most people, using paper channels is no longer the most cost effective or convenient method for any of their transactions, including the tax department."

That puts pressure on tax systems and failing to keep up with customer expectations can see levels of compliance drop, McClay said.

"After all, if people can conduct all their other business and personal activities easily, grocery shopping, buying a home or getting approval for a mortgage or planning an overseas trip for instance, using new and increasing changing technology, by clinging to a paper-based model we risk becoming out-of-step with a modern economy, instead making it more difficult not less for taxpayers to meet their obligation."

McClay said New Zealand's existing "broad based, low rate" tax system (BBLR) will need to be "BBLR-C", broad based, low rate, and convenient.

The data migration process, like the broader transformation, will be delivered in four steps, the tender says:

First is detailed data analysis to form a baseline for analysis in data profiling; second is profiling and system analysis preparation, which will entail producing and then overseeing the implementation of a data profiling solution; third is data preparation and profiling; and fourth is delivering a data migration strategy.

Inland Revenue anticipates the work will require resources including a data analyst, data analyst lead, data profiling lead, data management lead and a data solutions architect.

As part of the project, a data preparation and profiling strategy, delivered just last month, will be revisited and subsumed into the first draft of the future migration strategy, scheduled to be delivered at the end of 2014.

"The current work is focussed on commencement of data preparation and profiling as quickly as possible, using extract, staging and analysis infrastructure available through the existing enterprise data warehouse (EDW)."

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