Chapter 14. Implementing information and communication technology projects in tax administrations

ICT as a Strategic Tool to Leapfrog the Efficiency of Tax Administrations

Project management is a necessary discipline for adoption or improvement when it comes to successfully implementing disruptive technologies. Innovative organizations, where technology development is highly prioritized, creating or strengthening technical competencies in project management among its staff, is an extremely relevant effort. Innovators in several industries prioritize the development of project management technical skills and create different resources for their employees to increase their knowledge.

As is mentioned in the PULSE of the PROFESSION “Success in Disruptive Times,” 9.9% of every dollar invested is lost due to poor project management performance. The root causes associated with this statistic are, among others:

• The failure to bridge the gap between the strategy designed and its implementation.

• The executives fail to recognize that strategies are implemented through project execution.

The last statements are an invitation to strive to achieve the most efficient use of resources and ensure a set of skills that enable process transformations in the highly dynamic environment ushered in by the digital era.

The tax administrations, the field we work for, is not far from this necessity of improving their capabilities in project management. According to the latest data from the International Survey on Revenue Administration, 78% of the tax administration respondents stated they either use innovative technologies or are planning to do so.

The strategic plan is a significant effort of any organization to define the big lines of how to achieve its mission and vision. Still, it is only paper if we do not execute activities to fulfill what is established. Significant transformations, like the Apple 1, known for being a computer with all the input devices that could be used at home, became a reality thanks to a project directed by Steve Jobs.

As directors or mid-managers of an institution, we must understand that not all the proposals could be executed at the same time because we have limited resources. That’s the reason the organizations have implemented portfolio management processes that help select and authorize the project the organizations need to do in a fixed period.

The project portfolio initiation phase, the stage where selection, and prioritization criteria are established, is of utmost importance with a view to the tax administration’s achievement of results in the implementation of their institutional strategy. This is mainly since, in this phase, work is done on the objective criteria to select the highest value initiatives according to current capacities and environmental conditions.

On the other hand, the main value of the planning phase of the project portfolio is that it defines a combination of the “right” programs and projects within the portfolio, i.e., a selection of prioritized initiatives that lead to fulfilling the organizational strategy, while being technically feasible, posing an acceptable level of risk for implementation purposes and whose cost is justified relative to the benefits they may deliver for taxpayers and the government alike.

To reach the objectives of the portfolio, that we can say are the same as the strategic plan of an organization, corporate governance is needed. For this reason, some organizations implemented 70 years ago a business function commonly called the project management office (PMO), dedicated to:

• Define the organization’s project portfolio through prioritizing projects.

• Establish methodologies to create a toolkit for project managers and team members.

• Provide support and advice to the Project Manager in the different project stages. This is made with services like coaching or mentoring.

• Monitoring project implementation to ensure resource allocation and take preventive or corrective actions.

To implement a PMO in the tax administration, I recommend to follow these steps:

• Gain support from management. Show facts as I showed before with data inside and outside the organization and train executives about project management.

• Define a mission and vision. As the tax administration, define why the PMO exists and the future state of this business unit in a timeframe.

• Establish a roadmap to drive the PMO to its vision splitting it in one, three, and five years. In other words, manage this implementation as a project with a plan.

• Identify the services you will perform in level 1 of maturity. I suggest starting small by providing training, adapting methodologies, and monitoring projects.

• Include the PMO in the organizational function’s manual. This is useful to clearly identify competencies for audit processes.

• As stated before, one main function in maturity level 1 is to provide training. Design the programs adapted to stakeholders’ groups, for example, executives, project managers, team members, and so on.

• A good way to show benefits is with results, and a pilot is a good methodology. Select a short duration project with low risk to start using the methodology. This will be useful because you will learn in the process and make adjustments quickly.

• Evaluate the actual state of the process after finalizing the pilot. Then update the roadmap and start to execute this new version of the plan.

Until now, we know it is important to identify the right projects and to create governance inside the organizations. Still, also we must understand execution has to be on track to ensure waste reduction, and this is achievable with the application of a series of tools and techniques (like the Project Management Institute standards) and gain knowledge of the experience from others. For this reason, I would like to share key aspects about the implementation of ICT projects in tax administrations:

• The executive directors. They are commonly the sponsors in charge of assuring the provision of resources to execute the project. Their role is crucial to ensure success because their involvement correlates with the quality of big decisions, and with their influence, the people inside the tax administration will be supportive (or not) to the project team. The experience says it is important to have a good sponsor; for this reason, the work we have as project managers involve not only having a good relationship with the sponsor but also helping all executive directors to understand a little bit about project management, and the benefits of using specialized tools.

• Project definition. Success in a project does not start having a good plan or a great team. It is related to feasibility and the capability of the support processes inside the tax administrations to execute. What I have learned in practice is that tax administrations need to allocate more time in the initial design of a project and propose them in short stages, to reduce complexity.

• Project plan. Although it is not possible to anticipate all risks and issues we will face during project execution, having plan is an essential activity. This is a process that happens from the start to the end of the project on a weekly basis. What I learned is project teams want to start executing without planning, which later becomes a change of the role of a project manager to firefighter.

• Professionalization and capabilities. As I mentioned before, project management is essential knowledge for all industries. I believe it is always crucial to find improvements in the core processes, but we need to be capable of implementing it with the projects we create to do that. Training and experience in this field is probably a “debt” we have inside our organizations.

• Organizational change management. It is a valuable tool to ensure the use of the information systems we will deploy through project execution. Managing stakeholders and the natural resistance of people to change is an activity we need to tackle since the beginning of the project, we cannot wait until the deployment of the services when probably all efforts could be insufficient.

COVID-19 changed the world, and nothing will be the same in the future. Tax administration is facing a scenario were taxpayers demand new services or the currently available needs to be modified to have it online. Besides, our institutions have to solve issues quickly, for example, enabling technology services for its staff to allow them to work from home, with all the changes in cybersecurity it involves.

For sure, it will demand the deployment of new capabilities, and I believe it is a perfect scenario to start or to improve our knowledge and competences in this topic due to we will need projects to face the new normal. I invite you to learn more reading chapter 14 of the book ICT as a Strategic Tool to Leapfrog the Efficiency of Tax Administrations and reviewing the webinar from CIAT called “strategy deployment through project management and organizational change management.”

We have to plan, we have to execute, and we have to be agile.

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