CPA INSIDER

5 key steps for digital transformation during a crisis

Major changes can be difficult to implement at any time but especially during a pandemic. Here are some lessons learned from a successful system implementation.
By Joseph Radigan and Sarah Ovaska

Implementing a major system upgrade in the middle of a global pandemic is no small feat, but one Pennsylvania's Department of Revenue (DOR) took up when it overhauled its suite of dozen-plus tax systems into one modernized system.

The nearly realized goal is to implement the Pennsylvania Tax Hub (PATH), a system that will merge at least a dozen legacy systems, some of them on 40-year-old mainframe equipment. That way the department leaders can more easily reconcile more than $40 billion worth of revenue streams from various taxes into the state's accounting systems. The department is on track to finish the almost-five-year project on time.

"It was a very large coordination effort," said John Kaschak, CPA, CGMA, Pennsylvania's executive deputy secretary for revenue. "Everything needed to move in sync to make sure that we were still able to provide certain services on an ongoing basis while continuing to modernize. That effort to coordinate was massive."

The benefits to both consumers and the agency are enormous. The project gives Pennsylvanians a unified view of the personal and business taxes they owe, while reducing annual mainframe maintenance costs by $500,000.

Kaschak and Allison Morgan, the revenue department's project manager who is overseeing the process, offer lessons learned and best practices when embarking on modernization projects of this scale.  

Get buy-in on shared principles. The first step was developing guiding principles to focus the overall project goals. That included buy-in from the DOR staff managing the project. 

The ultimate principles that the group agreed upon were:

  • Leverage out-of-the-box functionality.
  • Replacement of existing functionality takes priority over enhancements.
  • All employees are project contributors to some degree.
  • DOR will make and support the best decision with the time and information available.
  • Decisions must weigh long-term benefits against short-term discomfort.

Having those guiding principles in place allowed the project team and the agency to focus on outcomes without getting sidetracked by the inevitable conflicts or challenges that pop up in projects of this size, Morgan said.

Choose the product and vendor carefully. In a prior modernization project, the department went with a vendor who implemented a system built by a third party. That ended up being problematic because it meant the vendor didn't have the necessary in-depth product knowledge and flexibility.

Another downside was that the previous project didn't focus on the end-user experience, an eventual regret for the department. So, going into this most recent project, Kaschak said they knew they wanted to have a vendor that was not only familiar with but had also built the new system. It was also important to be able to see past successes, even if the Pennsylvania project was likely to be larger in scope.

Crafting a precise request for proposal attracted quality, knowledgeable vendors during the bidding process. The agency included requirements about the post-implementation relationship to assure that the vendors would continue working with in-house support staff to keep things running smoothly.

"We ended choosing a vendor who's had great success," with more than 30 implementations in the United States, Kaschak said. "They have always been on time and always been on budget."

Adjust to new challenges. With any large-scale modernization project, things will go wrong, so flexibility is key. That was certainly the case with the arrival of the COVID-19 pandemic. Some 700 DOR employees were sent home to work remotely in mid-March 2020, presenting an unprecedented challenge.

"When we shut down, we didn't have enough laptops for everyone to work remotely," Kaschak said. "Some 200 laptops had to be borrowed from other state offices. Employees were sent home with cheat sheets for logging in to the department's virtual private network."

A shipment of 400 laptops that arrived in July and August helped keep the project on schedule to meet the November 2020 deadline for the third rollout, out of five, of the modernization initiative.

Users were trained remotely for the two rollouts completed since telework began, Morgan said.

In addition, when the lockdown began, much work remained to configure the new system.

"Not only did we have to train those people, but coming up to it, we had to continue to configure the system remotely and also have people test the system," Kaschak said. "Before you can train on it, you have to do the testing — make sure everything processes the way it's expected to."

It was more complicated than initially conceived, but the flexibility shown by leaders allowed for the project to stay on track even as the global pandemic upended work life in the United States.

Recognize improved results. Though the project isn't complete, the department is already seeing the results of its hard work, including more automation in many processes and greater analytics.

Though Morgan said it is too early to provide detailed measurements about the project's efficiency improvements, each phase of the project has brought additional benefits to taxpayers through enhanced or new electronic services. One benefit has been that taxpayers who had never been able to file or make payments online can now make them electronically.

"The feedback internally and externally has been very good in terms of how much it's an improvement," she said. "There's even more potential, so we are still trying to keep reminding people that it will continue to improve, we just have a strict timeline, and a lot of our bigger improvements have to wait until those timelines are met."

Encourage engagement. Change can be difficult for people to embrace, and the DOR's leaders have worked to emphasize that the pain of learning new processes now will lead to a much more efficient, and less stressful, work environment.

Having all the tax systems merged into one platform has helped the DOR's leadership manage staff and keep employees more engaged with their jobs, Kaschak said.

"If everything's in one system, it's way easier to train and cross-train people, and it's way easier to shift people where you need extra resources," he said. "Now it's all the same system, so now you can cross-train people, and say, 'Well, that might be a different tax type, but it all works the same.'"

Kaschak also said DOR employees will likely realize that the PATH upgrade gives them more career advancement opportunities. Employees may gain the confidence to apply for promotions that they may have felt unsure about pursuing with the cumbersome old systems.  

For example, an employee from the call center where they field taxpayer phone calls may now have the confidence to apply for a promotion with a different team in the department as exposure to the new modern system increases.

"It opens more opportunities for them," Kaschak said.

Finance officials embarking on big projects can look at this project for reassurance that developing a plan at the start that's laser-focused on the results will lead to success, he said.

"It is a very business-driven project," Kaschak said. "That is what has helped make it successful from an end-user standpoint as well, both internal and external, because we have the business side driving it."

Joseph Radigan is a financial writer based in New York. Sarah Ovaska is a freelance writer based in North Carolina. To comment on this article or to suggest an idea for another article, contact Drew Adamek at Andrew.Adamek@aicpa-cima.com.

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