Dozens of states must grapple with budget deficits, and government faces increased pressure to improve services to citizens at lower costs. As a result, state CIOs look to replace costly, antiquated legacy systems with modern IT systems that promise dramatic business results.

But too often, CIOs searching for solutions simply apply today’s technology to old business processes and management structures. The failure to redesign business work flow before choosing an IT solution introduces major risks to any transformation effort, even before a contract is signed. Common problems include scope creep, unnecessary customization, cost overruns and delayed deployment.

For example, the Florida Department of Revenue faced significant IT problems in the late 1990s. The agency collected $21 billion per year. However, the organization’s legacy tax systems were fragmented, outdated and difficult to maintain. Rather than slap on a new interface, Florida re-engineered its revenue-collection business processes using enterprise resource planning (ERP) technology.

The resulting $110 million SUNTAX (System for Unified Taxation) integrated tax-administration system won national recognition and helped pave the way for two more major projects in the area of child-support enforcement: the CSE Automated Management System (CAMS) I, an $86 million child-support enforcement collection system that automated CSE’s enforcement tools in an ERP; and CAMS II, an ongoing $110 million electronic case-management system.

Put Business Owners in the Driver’s Seat

The Florida projects entailed a large, multiyear transformation. The Department of Revenue intensively managed the projects’ vision and re-engineered business-process design before selecting an ERP solution. Program directors and business owners led each project and managed the entire lifecycle.

The SUNTAX team soon recognized that tax collection was similar to the business processes of major financial institutions such as banks and credit card companies, which used ERP systems to treat customers as a single entity across multiple businesses. The group re-engineered its legacy systems using three fundamental approaches:

• Integrated tax administration: Replace segregated legacy systems with an integrated tax system that treats the taxpayer as a single entity, eliminates redundant processes, and provides the taxpayer one-stop service and the tax administrator one-stop enforcement.
• E-business: Embrace the full range of e-business solutions, including intelligent forms processing (optical character recognition/intelligent character recognition and 2D barcoding), electronic funds and data transfer (EFD/EDI) and working websites with fully functional call centers (customer relationship management).
• ERP: Many large financial institutions have implemented ERP to provide integrated banking services to their customers.

Change the Law Before, Not After

In public organizations, re-engineering may require an additional step. Public-sector business processes are often embedded in federal and state laws. Always change the law before choosing an IT solution, not after.

For example, Congress granted sweeping changes and broad enforcement tools to state child-support enforcement programs. Enforcers could identify and intercept income; locate and freeze assets; and suspend public privileges for noncompliance. These were the re-engineering catalysts for CAMS I.

State law changes were critical to the CAMS II design. When the CAMS team mapped its existing business processes and benchmarked them against best practices, they saw that major changes in the law could accommodate e-business and streamline paternity and support establishment through administrative processes.

Policymakers and taxpayers want results from public IT transformation. In Florida’s case, the results were impressive. Florida’s SUNTAX transformation took 10 years and cost more than $110 million — but during this decade, the revenue agency’s tax-administration operating budget was flat. The organization reduced its workforce by 28 percent over 13 years. Meanwhile, enforced collections increased by an average of $186 million per year for the next five years.

James Zingale was executive director of the Florida Department of Revenue, where he managed the SUNTAX initiative. He now works as a state government industry adviser to Deloitte.