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Protect Your Revenue Streams: Big Data & Analytics in Tax

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The game has changed since the onset of the financial crisis. Governments aiming to reduce budget deficits can only deliver so much through spending cuts. It is now even more vital that tax agencies …

The game has changed since the onset of the financial crisis. Governments aiming to reduce budget deficits can only deliver so much through spending cuts. It is now even more vital that tax agencies ensure individuals and businesses pay the tax they owe, and that welfare fraud and error are minimised. Pretty will explain how he helps tax and welfare agencies tackle noncompliance, evasion and error. He will share client stories where billions of euros were saved, generating a return of at least 25 times the original investment.

By Ian Pretty,
Vice President, Global Tax & Welfare Leader

More in: Technology , Business
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  • 1. Protect Your Revenue Streams Big Data & Analytics in Tax Ian Pretty Vice President, Global Tax & Welfare Leader
  • 2. 2 Business Analytics Copyright © 2013 Capgemini. All rights reserved. Enter ‘Title’ here AREAS TO BE COVERED TODAY  The challenges facing Tax Agencies  Evasion, Fraud & Error: Our Point of View  Evasion, Fraud & Error: Our Approach  Case study: HMRC Connect
  • 3. 3 Business Analytics Copyright © 2013 Capgemini. All rights reserved. Enter ‘Title’ here But first a short animation on Capgemini’s solution
  • 4. 4 Business Analytics Copyright © 2013 Capgemini. All rights reserved. Enter ‘Title’ here growing fiscal deficits new & more datanew compliance strategies growing demand for public services Why does Fraud Management matter today? growing use of digital shorter reaction timesindustrialization of Fraud new modelling tools & techniques internal Fraud growing complexity identity theft
  • 5. 5 Business Analytics Copyright © 2013 Capgemini. All rights reserved. Enter ‘Title’ here What Governments are saying about Evasion, Fraud & Error Selected examples
  • 6. 6 Business Analytics Copyright © 2013 Capgemini. All rights reserved. Enter ‘Title’ here We believe that the answer rests in bringing Big Data and Analytics into a Digital Framework ITERATIVE TRANSFORMATION ROADMAP DIGITALENGAGEMENT DIGITALGOVERNANCE TRANSFORMATIVE DIGITAL VISION & OUTCOMES DIGITAL BUILDING BLOCKS Customer Insight E Operational Process E New Business Model Customer understanding Customer touch points Improved compliance Worker enablement Performance management Process digitisation Global collaboration New outsourcing/ partner models Digitally modified business Digital Capabilities TAX INVESTIGATORS CHANNELS TAX POLICY PROCESS INNOVATION CUSTOMER KNOWLEDGE CULTURE PARTNERSHIP NETWORK BRAND STRATEGIC ASSETS DIGITAL INVESTMENT SKILLS INITIATIVES TRANSFORMATIVE DIGITAL VISION Source: Capgemini Consulting-MIT Analysis – Digital Transformation: A roadmap for billion-dollar organisations (c) 2011 Using cross- government & third party data sources Digital by default – intervention by exception Mobile access to data & tools Near real time dashboards Use of new analytical capabilities & tools Real time identify verification and data validation Bilateral and multilateral exchange of data
  • 7. 7 Business Analytics Copyright © 2013 Capgemini. All rights reserved. Enter ‘Title’ here Customer Insight: Compliance Strategies need to understand customer behaviours so that Evasion and Fraud processes respond effective to those behaviours Compliant Make it simple to get tax right Value at risk Riskofnon-compliance Low Low High Casual avoiders Risk based campaigns to recover and deter High Deliberate evaders Full enquiries to recover & deter Criminals Investigate & prosecute or disrupt Large Businesses & HNWI Relationship based monitoring to protect
  • 8. 8 Business Analytics Copyright © 2013 Capgemini. All rights reserved. Enter ‘Title’ here Operational process: And this means a new enterprise tax compliance model based on upstream near real-time risking, analytics & intervention Information Management Business Intelligence Investigation Channel Management Operational Management Common Capabilities
  • 9. 9 Business Analytics Copyright © 2013 Capgemini. All rights reserved. Enter ‘Title’ here New Business Model: how do tax agencies embed wider collaboration & data exchange into their business as usual? Fraud Prevention Analytics From doing everything… …to doing some things? Fraud Prevention Core Compliance capability Analytics As a Service? As a Managed Service? Core Compliance capability
  • 10. 10 Business Analytics Copyright © 2013 Capgemini. All rights reserved. Enter ‘Title’ here Our approach: taking it step by step to develop the full capability set Pilot Phase (6m) High latency Single tax Regime or segment Phase 1 Release (6-12m) Build core capability – DWH, social network analysis, anomaly detection, case management Phase 2 Release (6-12 m) Reduce latency More data sources, storage etc Improved models Phase 3 Release (12m) Upstream predictive analytics Ability to work with unstructured data Text mining Sentiment analysis Benefit Investment & time Increasing capability Learn the new tools Develop new rules Test levels of fraud Strengthen b-case New teams established Automated bulk risking Trialling campaigns Initial case mgt system Extended risk rules 60%+ cases come from risk engine Campaign driven Feedback governance Restructured risk unit Upstream check process in place 80%+ cases from risk engine Illustrative road map Value discovery & operating model Shared Vision & Strategy
  • 11. 11 Business Analytics Copyright © 2013 Capgemini. All rights reserved. Enter ‘Title’ here Each client has a different starting point Client Situation Client Concerns Method I need to do something  Requirement identified but there is no clearly articulated vision or high level design  Value Discovery I have a Vision  Vision and High Level design exist – unsure of where to start and in what order  Target Operating Model and detailed Roadmap Am I on the right track?  Concerns remain about clarity and progress  Business Assurance Show me it works  Will it work at all and if so will it be scalable  Proof of Concept / Pilot I get it. When can we start?  Desire to start to build initial components quickly  Design & Build Fraud Management System
  • 12. 12 Business Analytics Copyright © 2013 Capgemini. All rights reserved. Enter ‘Title’ here Case Study: HMRC’s Risking tool - Connect • Capgemini supported UK Tax Agency (HMRC) to design, build and deploy their strategic risking tool - Connect • Takes information from 30 different data sources • Cross-matches one billion internal and third party data items • Uncover hidden relationships across organisations, customers and their associated data links (bank interest, lifestyle indicators and stated tax liability) • Connect analytical and ‘spider diagram’ visualisation tools • HMRC analysts produce target profiles and models to risk assess transactions and generate campaigns and cases for investigation. • Automated feeds into HMRC’s case management system In total HMRC has recovered £1.4bn additional tax yield to date, through the use of Connect
  • 13. 13 Business Analytics Copyright © 2013 Capgemini. All rights reserved. Enter ‘Title’ here Case study – State of Maharashtra project in progress  Capgemini has been selected in 2012 by the Maharashtra Sales Tax Department (MSTD) in India to implement a Business Intelligence and Data Warehouse solution  Solution will enable MSTD to: • analyze economic parameters to set targets for revenue collection • help the department to expand its existing taxpayer base • prevent revenue loss through tax evasion • provide decision support across divisions of the MSTD  These initiatives will result in significant optimization of resources, time and effort, thus bringing in considerable business benefits to the department.  Our industry experience from HMRC and strategic partnership with SAS was key for winning this project SAS Enterprise Business Intelligence Planned Internal Sources Current Internal Sources File Landing area Enterprise Data Warehouse Staging Area SAS Enterprise Data Integration, SASData QualityData Sources eAnnexure Border Check Post MAHAVIKAS MAHAVAT External Sources of Data Analytical Reporting •Dealer Profiles •Risk rating Dashboards •MIS •Metric Track Web based Reporting •Advisory Visits •Audit Findings Ad-hoc Analysis •Dealer Category Trend Analysis Performance Management •Score Carding Native Connectivity Integrated Data Quality Data Transformation Sybase IQ AMO Outlook Integration Project Governance – Standard BI Processes and Methodologies Application Security Integrated Metadata Management Data Analytical and Reporting Data Marts •Multi dimensional marts for Reports and Analytics •Data Mining Models •Forecasting E miner + ETS HPDL 380 G7 4Core, 40 GB RAM HPDL 180 G6 4Core, 16 GB RAM Load Balancer Rack 1 Rack 2 Non Production Deployment Production Deployment Linux Cluster Suite SAN – 27 TB (Data Warehouse) 16 TB (Clone for BackUp) HP EVA 6400 Storage Array HPMSL 8096 Tape Library, 4xLTO5FC tape drives Backup Server DL380 G7 4Core, 32 GB RAM DMZ Internal Firewall Internal Firewall External Firewall App Tier DB Tier Web Application Services Node2 HPDL 380 G7 4Core, 32 GB RAM Web Application Services Node1 HPDL 380 G7 4Core, 32 GB RAM Web Server Farm SAS Compute Server1 HPDL 580 G7 12Core, 96 GB RAM HPDL 380 G7 6Core 48 GB RAM SAS Compute Server2 SAS Modeling Server HPDL 380 G7 12Core 96 GB RAM HA Node HPDL 380 G7 4Core, 32 GB RAM SybaseIQ Writer Server HPDL 580 G7 28Core, 224 GB RAM SybaseIQ Reader Server HPDL 380 G7 12Core, 128 GB RAM HA Node SAN Switch SAN Switch App Tier Linux Cluster Suite HPDL 180 G6 2Core, 16 GB RAM SybaseIQ – Dev & Test Sybase ASE-SBE Non Prod HPDL 180 G6 4Core, 16 GB RAM Sybase ASE-SBE Prod Infrastructure Servers FC Network EMS Server DL 180 G6 2Core, 8GB RAM SMS Gateway HPDL 180 G6, 4 Core HPDL 180 G6 2Core, 16 GB RAM SAS Dev & Test
  • 14. 14 Business Analytics Copyright © 2013 Capgemini. All rights reserved. Enter ‘Title’ here Our capabilities  Strategic global partnership with SAS on Fraud management solutions  BIM Centre of Excellence in India  Business & Solution Architects  Local footprint Delivery capability  Proven success stories in UK, Netherlands and in the Financial Services Sector  £1.3bn additional tax yield to date for HM Revenue & Customs Proven value  No. 1 system integrator in Tax & Welfare globally  Understanding of the Tax business process  Compliance Framework  End to End solution  World’s foremost provider of Business Information Management (BIM) services Domain expertise Register /Change of Details Process Application /Return Establish Liability /Benefit Manage Payments In/out Reconcile Investigation /Audit/ Enforcement Receive Customer Submission Enforcement /Debt collection /criminal proceedings Prevent Protect Uncover Resolve Feedback Prove An integrated approach takes a holistic approach on which to base a business strategy that develops and deploys common capabilities actively managed to deliver the best business outcome. Prevent transmission of incorrectinformation – either error or fraud Protect againstincorrect /repayments/repayments through the identification and management of risks Identify that fraudulentor non-compliantactivity has taken place Provide evidence to prove the case so that the authority can take remedial action Successful resolution through recovering the monies or securing criminal prosecution Infrastructure Data Sources Data Preparation Data Linking/Networking Creation Analytical Environment Network Visualisation Risk Model Management Analytical Capability Execution Ability Investigative Capability Case Management Enterprise Compliance Capabilities SAS CoE  Dedicated lab for all SAS products  High performance servers installed  Hands on experience for building proof of concepts  Build better knowledge infrastructure to share and learn SAS  Premium partnership agreement with SAS Report generation & delivery Predictive models, scorecards, segmentation, decision trees, web analytics Forecasting optimization, social media, solutions Value Proposition Skills  Analytical consultants  Business analysts  Statisticians  Tools experts  BI architects  Data architects  MDM experts  Change experts  Quality experts  Process leads  Domains Analytics Maturity Assessment Specialized skill pool Cloud based offering Analytics CoE to support the known requirements of today and the unanticipated needs of the future Easy to use and relevant scorecards and reports that enable greater visibility into operating and financial metrics Ad-hoc sales, marketing and functional reporting for a streamlined, integrated and automated operation Solution Social Media Analytics Marketing Campaign Analytics Big Data Analytics KnowledgeIntensive ResourceIntensive
  • 15. 15 Business Analytics Copyright © 2013 Capgemini. All rights reserved. Enter ‘Title’ here
  • 16. The information contained in this presentation is proprietary. © 2013 Capgemini. All rights reserved. Rightshore® is a trademark belonging to Capgemini. www.capgemini.com About Capgemini With more than 120,000 people in 40 countries, Capgemini is one of the world's foremost providers of consulting, technology and outsourcing services. The Group reported 2011 global revenues of EUR 9.7 billion. Together with its clients, Capgemini creates and delivers business and technology solutions that fit their needs and drive the results they want. A deeply multicultural organization, Capgemini has developed its own way of working, the Collaborative Business Experience™, and draws on Rightshore®, its worldwide delivery model.