PUBLIC SECTOR IT PROJECTS:
UP IN SMOKE
Madhuparna Das Munish Kumar
Ritesh Ranjan Piyush Audichya
Sandeep Bharihoke Mohamme...
Agenda
Examining IT failures in Public Sector
Case in Point: Case 1 – IRS
Case in Point: Case 2 – Maine Medicaid
The Bridg...
Agenda
Examining IT failures in Public Sector
Case in Point: Case 1 – IRS
Case in Point: Case 2 – Maine Medicaid
The Bridg...
IT Project Success-Failure
Rates
1. 68% of IT projects that are initiated, result in
being over budget or over the time es...
Challenging Times
0
10
20
30
40
50
60
2000 2002 2004 2006 2008
Challenged
Failed
Source – Standish Group CHAOS Summary 201...
Public Sector IT Projects
1. Consists of all IT projects undertaken by
Government and Public sector bodies of a
country.
2...
Difference Between Public & Private Sector IT
Projects
Source – Government IT Projects – Parliamentary office of science &...
Impact of Public Sector IT Project
Failures
1. Monetary Impact - $63 Billion was the
amount of tax payer money spent on IT...
Reasons for Public Sector IT Failures
Integration Scale
Technology &
Business
Disconnect
Procurement
Process
Multiple
Stak...
Agenda
Examining IT failures in Public Sector
Case in Point: Case 1 – IRS
Case in Point: Case 2 – Maine Medicaid
The Bridg...
IRS Master File – An Impending Disaster
System still
runs code from
1962
Ever expanding
legacy system
of 227 million
indiv...
TSM – Project Objectives
Upgrade IRS‟s IT
infrastructure and
more than 100
business
applications.
Replace the legacy
syste...
TSM - Implementation Woes
Source: „At I.R.S., a Systems Update Gone Awry‟ – NY Times December
2003
13
Storm in a Tea Cup - Root causes
Lack of
Procedures Approach Integration
Scoping Leadership
Project
Management
Outsourcing...
TSM – In a State of Flux
15
Lessons Learned – Saving the Project
Master Plan
Requirements
Elicitation
Systems
Development
Framework
Leadership‟s
Commi...
Lessons Learned – Saving the Project
Synergy
creation
Engaging
Experts
Technology
Management
Group
Training
Talent
Acquisi...
Agenda
Examining IT failures in Public Sector
Case in Point: Case 1 – IRS
Case in Point: Case 2 – Maine Medicaid
The Bridg...
Maine Medicaid - IT Re-engineering
gone WRONG
COMPLIANCE LACK OF
SUPPORT
COSTLY TO
MAINTAIN
NEW
TECHNOLOGY SECURITY EFFICI...
Maine Medicaid - IT Reengineering gone
WRONG
Re-
engineer
Complete
System
Seamless
transfer to
new system
without any
chan...
Maine Medicaid - IT Re-engineering
gone WRONG
VENDOR
SELECTION
PROCESS
LACK OF
EXPERTS
SKIPPING
PROJECT
MANAGEME
NT BASICS...
Maine Medicaid - IT Re-engineering gone
WRONG
FLASH
IN THE
PAN
CLAIMS
IN LIMBO
FLOODED
CALL
CENTERS
FINANCI
ALTROU
BLE FOR...
Maine Medicaid - IT Re-engineering
gone WRONG
CLEARLY
DEFINED
GOALS
SUFFICIENT
RESOURCE
ALLOCATION
PROPOSAL
EVALUATION
TRO...
Agenda
Examining IT failures in Public Sector
Case in Point: Case 1 – IRS
Case in Point: Case 2 – Maine Medicaid
The Bridg...
Public Sector IT Projects – The Silver
Lining
1. Not constrained to make profit, although
value for money is important
2. ...
Success Stories
1. “Tell us once” project by the Department of
work and Pensions, USA
2. “Care for hemophilia” project by ...
The Bridge to Success
Greater general
awareness
• Greater
awareness
among civil
servants of the
context in which
IT is imp...
28
Contributions
29
Name Title
Slide
No.
Sandeep Bharihoke
IT Success failure rates 4
Challenging Times 5
Public Sector IT Pr...
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MIT Maine Medicaid

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Class presentation on IT systems disaster at Maine Medicaid

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  • IRS – A government agency that deals with massive amount of data related to tax payers.Data is a collective information about the tax payer’s identity within the context of a tax collection system. It contains information about every transaction between the tax payer and IRS over the past 40 years.Ever increasing volume of data with increase in number of taxpayers. More tax payers mean more tax returns.Frequent changes in tax laws and evolving tax payer behavior is increasing the complexity of the entire process.Limitations of the legacy system -Complex computer system that used outdated database, system architecture and code language. The Master Files which maintained all taxpayers’ records were developed in 1960s. Legacy system had 50 databases across several platforms.Data security – Privacy of taxpayers data was a concern and IRS had to improve its ability to detect threats and protect the system and data from unauthorized access.The impending disaster –Coders who have worked in IRS fro decades added new code to the Master File to reflect new tax rules passed by the government. Hence the Master file was in a fragile state. If the Master file crashed, the government would lose all information about tax paid, tax evaders and the amount of revenue.The IRS depends in the computer system to collect more than $2 trillion every year in revenue. If the system or Master file crashed the entire revenue generation system would fail and consequently the government will fail to make any expenditure for the benefit of the country. The whole system will come to a halt.
  • Upgrade IRS’s IT infrastructure and business applications – IRS employees and CSRs(Customer Service Representatives) depended on IT products and services to do their jobs better.Functions like applications hosting, data storage and distribution, local and wide area network services, and workstations needed to be done more efficiently. Data flow between the Master file and IDRS (Integrated Data Retrieval System) and multiple other computer sub systems that support the ever expanding business and limitations of IDRS and Master files, demanded more efficient and optimal IT infrastructure. Constantly changing technology and aging of infrastructure components were significant challenges in this process. CADE(Customer Account Data Engine) – CADE is one of the four pillars of the modern centralized database system of IRS. It will eventually replace the IMF (Individual Master Files) and IDRS.The objective of CADE is to enable processing of more complex account information with increased business functionality.Along with the AMS (Account Management Services) CADE will enable CSRs to provide more accurate and faster issue resolutions, accept validated refunds and perform complete refund process.Better Service to taxpayers –IRS CSRs worked with outdated technologies and business processes which reduced their productivity and access to comprehensive timely information.The objective of this project was to reduce the response time of customer inquiries by speeding up the process of accessing and updating up-to-date information.
  • Time and Cost Overruns-The first software release planned as a part of Business Systems Modernization was Delayed by nearly 3 years and $36.8 million over estimated budget.Eight other major projects missed deadlines by 3 months and crossed estimated budget by $200million.Past failures – In late 970s President preempted a project that was meant for improving data privacy of IMF. In 1995, another modernization project was stopped after IRS spent 10 years and $2 billion on it. The project, which was expected to cost $8 billion when completed, has spent less than $1 billion so far, but it is already 40 percent over budget for what it has done, according to the I.R.S. Oversight Board, an independent watchdog body that Congress created in 1998. Source: NY Times Problems with the vendor(s) - Poor vendor client relationship. Veterans at IRS undermined IT executives.CSC did not understand the complexity of the tax collection business.IRS also failed to give CSC clear directions about the procedures for developing the new systems.CSC started working on the project even before the scope and requirements were clearly defined.CSC failed to estimate project costs, assess and mitigate risks and follow procedures.Dealing with Change – New law passed to reform IRS Management and raising salaries of IRS Managers.IRS Reform and Restructuring Act.Three CIOs in seven years.Internal Problems – Resentment between IRS mid level managers and CSC regarding project related decisions.Managers handling old systems at IRS were not included during discussions on new systems.Increasing rift between IRS and CSC resulted lack of communication and eventually missed requirements during system design phase.There was a lack of accountability among IRS executives. Lack of leadership in CSC, who understood the tax administration business. Last minute business requirements resulted in hasty implementations and deployments without proper smoke testing.Lack of communication between CSC, Bizmo team and IRS data center.Hiring outsiders who had done complex and larger projects for overseeing Prime was not well accepted in IRS. Some of the positions were filled with less competent insiders.
  • Due to an incomplete TSM Master Plan the Automation projects had been in a State of Flux.
  • Master Plan : A Master Plan with complete list of individual projects and a clearly laid out integration plan should have been formulated beforehand.Requirements Elicitation : Increased role in requirements definition and transition planning by the IRS. Not to leave this task at the behest of the vendors.Systems Development Framework : Adopt a proven framework as a guidance on how to improve Systems Development, e.g.. Software Acquisition - Capability Maturity Model (SA-CMM).Leadership’s Commitment : Both the CIO and IRS commissioner to have a cross-functional understanding of Tax systems and Information systems respectively. They should jointly partner the control over both modernization initiative and operations to create synergies.Accountability :Create techno-functional expert positions at important levels and hold them accountable for requirement elicitation, Detailed design, implementation, co-ordination and resolution of synergy issues between different systems communicating with each other.Performance measurement : Set high performance metrics for the Vendors.
  • Synergy creation : Collocate more IRS staff with Prime staff to improve teamwork.Concerted efforts to involve interested parties outside IRS in modernization initiative and decision-making and to forge a partnership between its business and technical units.Engaging Experts : At all levels and different types of experts according to the job requirement.Technology Management Group : Setting up of a new organizational structure for technology management.Talent Acquisition : Hire more project managers with experience in building big, complicated systems. Need for people with understanding of the other side in all Prime,Bizmo and IRS.Training : Creation of programs to impart training to IRS executives on the new Information systems and to recruit seasoned information systems managers.
  • The immediate aim of a public sector IT project is not to earn profit, rather it is an improvement in a system to make it more effective and efficient. So, there is no direct pressure on the management to justify the return on investment of the IT initiative, based on the profitability. Rather, the effectiveness of outcome is emphasized. This gives a certain degree of freedom in designing the project.The top management usually consists of civil servants and other highly accomplished professionals who have experience of handling large public sector projects. Thus they have a top level perspective and strong ideas about what and how can be done.As the public sector firms are usually large established organizations, they command high negotiating power with the vendors, and can negotiate better services at the same price.
  • Project # 1:The “tell us once” project makes it easier for the residents to inform government about a birth, death or any other major event. Before the implementation of this program such events had to be informed multiple times to various authorities. But the system eliminated all redundancies. On 1 March 2010, the service has had a 100% success rate. About 16,500 people contacted the 14 participating local authorities to inform them of a birth or death for the notification of relevant services, and none had to repeat the task. Key factor attributed for project success, in words of project manager – “It's notable that the programme is being rolled out incrementally rather than as a big bang, and it's significant that McDonald said there is no timeframe for universal take-up. If her team pulls this off they could provide a valuable lesson in how to make a big project work.”2. Project# 2: A national IT strategy was launched by NHS to help the patients suffering from hemophilia. The IT initiative allowed easy, nationwide comparison of treatments. The new systems have also made it possible for patients to enter their own treatment data and to have clotting factors delivered to their homes instead of having to collect them from hospital. Annual savings for NHS – 70 million pound. Key factor attributed for project success, as quoted by NHS – “‘The biggest factor contributing to the success was the contribution of all the stakeholders. It’s not just about a system, but everyone supporting it.”Project#3:This project shifted the Network Rail’s approach from a ‘find and fix’ to ‘predict and prevent’ approach by monitoring the infrastructure. Estimated annual savings for NHS – 7 million pound. Key factor attributed for project success by Network Rail – “Good collaboration between different parts of Network Rail was essential for the programme’s success. The programme crossed lots of departments: maintenance, operations, engineering and IT, so a significant amount of stakeholder management was needed”4. Project#4:The CBO created a central IT platform for recording and analyzing all census data. Key factor attributed to project success by Central Bureau Office – “CBO's program management office collaborated extensively with stakeholders and the vendor to develop contract requirements.Program management office personnel, contractor staff, and the stakeholders all worked together to analyze the requirements in order to ensure they were understood, unique, and verifiable."
  • As indicated in the slide, the changes need to be made not only at the IT implementation level, but much before that. These changes include the changes in the domains right from greater general awareness to improvement in the work culture – all of which affects the way IT initiative is actually implemented. Then comes the business program and the IT deployment.Greater General Awareness: The civil servants should become aware of the context in which the IT is implemented. The context influences the way system is developed.Improvement in work culture: Effective partnerships between departments and suppliers has been pointed out as a key point leading to success by the managers of successful projects. This parameter is a part of organizational culture and can not be attained immediately while implementing the IT project. So, there needs to be an improvement in the organizational culture, which would be helpful in successful implementation of the IT project.Another point worth noting here is the ability and willingness of the organization to learn from the reviews of success and failure of projects carried out by other organizations. The GAO (Government Accountability Office) publishes such reports which can be used by the organizations to avoid mistakes already done by other organizations in the past.More effective business Program: Senior management should take ownership and responsibility of the program and specify program objectives and their measurement. A business program manager should be appointedA business program manager should be able to control changes to the project and to keep it on track.Risk management procedures should be adopted at the outset of the projectEffective partnership has also been emphasized by various successful projects.Smoother IT deploymentA well led and united team of experts should be deployed by the clientCustomer and supplier should coordinate throughout the project phases and ensure that the project is business led and not technology ledThe customer and supplier should agree on a joint project communication strategy so that both sides are fully informed about the project progress and can intervene whenever a corrective action is required.
  • MIT Maine Medicaid

    1. 1. PUBLIC SECTOR IT PROJECTS: UP IN SMOKE Madhuparna Das Munish Kumar Ritesh Ranjan Piyush Audichya Sandeep Bharihoke Mohammed Farhan Khan Vijay Aggarwal Prepared By - 1
    2. 2. Agenda Examining IT failures in Public Sector Case in Point: Case 1 – IRS Case in Point: Case 2 – Maine Medicaid The Bridge to Success 2
    3. 3. Agenda Examining IT failures in Public Sector Case in Point: Case 1 – IRS Case in Point: Case 2 – Maine Medicaid The Bridge to Success 3
    4. 4. IT Project Success-Failure Rates 1. 68% of IT projects that are initiated, result in being over budget or over the time estimate or cancelled. 2. Nearly 1 in 4 Projects are outright failures, up from 1 in 5 before recession. Source – Standish Group & CIO Insight(URL:http://www.cioinsight.com/c/a/IT-Management/Why-IT-Projects- Fail-762340/) IT Project Resolution Rate - 2008 Successful Challenged Failed 32 44 24 4
    5. 5. Challenging Times 0 10 20 30 40 50 60 2000 2002 2004 2006 2008 Challenged Failed Source – Standish Group CHAOS Summary 2010 5
    6. 6. Public Sector IT Projects 1. Consists of all IT projects undertaken by Government and Public sector bodies of a country. 2. According to a US study, in 2001, only 18% of Government IT projects were Successful. 3. This rate is far below the 32% success rate achieved overall for private and public sector projects Source – Standish Group 6
    7. 7. Difference Between Public & Private Sector IT Projects Source – Government IT Projects – Parliamentary office of science & technology Report 200, July 2003 Private Sector IT Projects Public Sector IT Projects Focussed on measurable financial and service outcomes Have multiple aims, so hard to measure success Business driven by competition Generally not in competition with other projects Often not visible to the public or shareholders Highly visible to the public and the media Less constrained by legislation and regulations Constrained by regulations Open to risk taking Managed in a risk averse culture 7
    8. 8. Impact of Public Sector IT Project Failures 1. Monetary Impact - $63 Billion was the amount of tax payer money spent on IT projects that failed in US(2010). 2. Social Impact - Unavailability of essential government services leads to people getting stressed, anxious & angry. Source – CIO Insight(URL:http://www.cioinsight.com/c/a/IT-Management/Why-IT-Projects-Fail-762340/) 8
    9. 9. Reasons for Public Sector IT Failures Integration Scale Technology & Business Disconnect Procurement Process Multiple Stakeholders Policy Swings & Scope Creep 9
    10. 10. Agenda Examining IT failures in Public Sector Case in Point: Case 1 – IRS Case in Point: Case 2 – Maine Medicaid The Bridge to Success 10
    11. 11. IRS Master File – An Impending Disaster System still runs code from 1962 Ever expanding legacy system of 227 million individuals and corporations System still runs code from 1962 A fatal crash could compromise government‟s ability to collect $2 trillion in revenue 11
    12. 12. TSM – Project Objectives Upgrade IRS‟s IT infrastructure and more than 100 business applications. Replace the legacy system by a centralized database called C.A.D.E. Increase the IRS‟s efficiency and productivity. Better Service to Taxpayers 12
    13. 13. TSM - Implementation Woes Source: „At I.R.S., a Systems Update Gone Awry‟ – NY Times December 2003 13
    14. 14. Storm in a Tea Cup - Root causes Lack of Procedures Approach Integration Scoping Leadership Project Management Outsourcing Key Functions 14
    15. 15. TSM – In a State of Flux 15
    16. 16. Lessons Learned – Saving the Project Master Plan Requirements Elicitation Systems Development Framework Leadership‟s Commitment Accountability Performance Measurement 16
    17. 17. Lessons Learned – Saving the Project Synergy creation Engaging Experts Technology Management Group Training Talent Acquisition 17
    18. 18. Agenda Examining IT failures in Public Sector Case in Point: Case 1 – IRS Case in Point: Case 2 – Maine Medicaid The Bridge to Success 18
    19. 19. Maine Medicaid - IT Re-engineering gone WRONG COMPLIANCE LACK OF SUPPORT COSTLY TO MAINTAIN NEW TECHNOLOGY SECURITY EFFICIENCY 19
    20. 20. Maine Medicaid - IT Reengineering gone WRONG Re- engineer Complete System Seamless transfer to new system without any chance of a failover 20
    21. 21. Maine Medicaid - IT Re-engineering gone WRONG VENDOR SELECTION PROCESS LACK OF EXPERTS SKIPPING PROJECT MANAGEME NT BASICS BIG BANG APPROACH 21
    22. 22. Maine Medicaid - IT Re-engineering gone WRONG FLASH IN THE PAN CLAIMS IN LIMBO FLOODED CALL CENTERS FINANCI ALTROU BLE FOR DOCTOR S SOCIAL AND POLITICA L IMPLICATI ONS COST OVER RUN NON COMPLI A-NCE TO HIPPA 22
    23. 23. Maine Medicaid - IT Re-engineering gone WRONG CLEARLY DEFINED GOALS SUFFICIENT RESOURCE ALLOCATION PROPOSAL EVALUATION TROUBLESHOOTI NG BACKUP PLAN TEST AND RE-TEST INVOLVE BUSINESS USERS 23
    24. 24. Agenda Examining IT failures in Public Sector Case in Point: Case 1 – IRS Case in Point: Case 2 – Maine Medicaid The Bridge to Success 24
    25. 25. Public Sector IT Projects – The Silver Lining 1. Not constrained to make profit, although value for money is important 2. Management with strong ideas 3. Massive buying power over vendors 25
    26. 26. Success Stories 1. “Tell us once” project by the Department of work and Pensions, USA 2. “Care for hemophilia” project by the National Health Service (NHS), UK 3. “Infrastructure monitoring centralized IT system” project by Network Rail, UK to predict and hence prevent failure of infrastructure in advance 4. “DRIS (Decennial Response Integration System” project by the Census Bureau office, USA 26
    27. 27. The Bridge to Success Greater general awareness • Greater awareness among civil servants of the context in which IT is implemented Improvement in government work culture • Effective partnering between departments and suppliers • Greater professionalism in project management • Gain value from review of past projects More effective business programme • Ownership of senior management • Application of effective change controls • Adoption of risk management procedures at the outset of projects • Collaboration between industry and government Smoother IT deployment • Qualified project team and programme manager • Cooperation between customer and supplier • Mutually agreed project communication strategy between customer and supplier 27
    28. 28. 28
    29. 29. Contributions 29 Name Title Slide No. Sandeep Bharihoke IT Success failure rates 4 Challenging Times 5 Public Sector IT Projects 6 Piyush Audichya Differences between Public Sector and Private Sector 7 Impact of Public Sector IT Failures 8 Reasons of Public Sector IT Failures 9 Madhuparna Das IRS Master File - An Impending Disaster 11 TSM - Project Objectives 12 TSM - Implementation Woes 13 Ritesh Ranjan Storm in a Tea Cup - Root Causes 14 TSM - In a State Of Flux 15 IRS - Lessons Learned 16 - 17 Munish Kumar The Challenge 20 The Whirlwind 21 Learning's 23 Mohammed Farhan Khan The Need 19 The Blues 22 Overall Collation and Formatting of the Presentation Vijay Aggarwal The Silver Lining 25 Success Stories 26 Bridge To Success 27

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