IRD business transformation "cannot fail", auditor says

IRD business transformation "cannot fail", auditor says

By Paul McBeth

June 3 (BusinessDesk) - The Inland Revenue Department's $1 billion-plus project to update its ageing information technology system is too important to fail, and while the initial governance structures put in place seem appropriate, it's too early to say whether value for money is being achieved, the Office of the Auditor General says.

Performance audit manager David Press at the Office of the Auditor General told Parliament's finance and expenditure committee the project is vital to Inland Revenue, though it's too early in the design stage to assess whether it's achieving value for money. The Auditor General investigated the governance of the project, finding it provided clear direction and supported decision-making, but that the tax department has to carefully manage the risks associated with the programme.

"Ultimately this is a programme that cannot fail because there's so much dependent on it," Press said. "A key building block of effective programmes is good governance."

The tax department's business transformation project to replace its 30-year-old FIRST IT system aims to protect the agency's ability to collect Crown revenue, while allowing it to deal with a raft of new responsibilities tacked on to the network over the past 15 years, such as overseeing KiwiSaver payments, student loans and welfare entitlements. Initial scoping on the project estimates it will cost between $1.3 billion and $1.9 billion over eight-to-10 years, a bill that's attracted criticism from the likes of Xero's Rod Drury.

IRD currently spends about $100 million maintaining the current FIRST system.

Press said previous examples of major IT projects stressed the importance of good governance and the Office of the Auditor General will be looking at what benefits are being achieved in future work.

Cabinet has signed off on $193 million of spending on the project, which is currently in the design phase. The project will be staggered, where the department will have to get government sign-off on each new phase of spending.

The tax department is currently working on a new estimate for the programme, and Greg James, deputy commissioner change at IRD, told the committee he expected the cost will likely be at the lower end of the $1.3 billion to $1.9 billion range, and would be delivered in eight years.

James said the core system of record will be one of nine available off-the-shelf commercial products, but that the tax department is looking at adopting open source options in end-user mobile elements.

(BusinessDesk)

© Scoop Media