Delivering Public Service for the Future

The Future of Applications for Revenue Agencies Find out how new application strategies can help revenue agencies address the speed of technology change

Revenue agencies recognize the need to embrace digital—and do it fast— but find themselves thwarted. Old legacy systems and applications are hampering efforts to transform. At the same time, the pace of change and rising complexity has become daunting, requiring them to track more technologies than ever before. Rather than being the driver of business change, IT is putting on the brakes.

Highly risk averse and cost constrained, more than most organizations, revenue agencies face challenges in the race to go digital. As a result, CIOs today find themselves under pressure, caught between competing demands for speed and caution.

What’s needed is a new approach to applications: one that can help agencies address demands for greater agility. A single application strategy might not be enough. Only through a combination of multiple application strategies—which Accenture defines as liquid, intelligent and connected—will agencies be able to deliver technology at the pace that business demands today.

The Future of Applications1 describes how these strategies can enable organizations to build new software faster, better manage the growing complexity and volume of applications, and more easily connect applications across the ecosystem.

As well as developing new strategies, revenue agencies face an additional challenge: how to implement them without putting their reputation at risk.

LIQUIDA fundamentally new way to build software

INTELLIGENTWhen applications comprehend, act and learn

CONNECTEDExtending revenue agency boundaries through software

WHY To compete with agility and speed, revenue agencies can no longer afford massive, multi-year system implementations.

To manage growing volume, velocity and complexity, and to increase the business value of internal and external data, revenue agencies need to harness software intelligence.

To help increase taxpayer compliance, revenue agencies must open new dimensions of application connectivity.

WHAT Liquid applications are assembled leveraging modular architectures, next-generation integration techniques and a cloud-first, mobile-first mindset.

Intelligent applications offer three critical capabilities—intelligent automation, integrated analytics and self-governance.

Connected applications provide revenue agencies with the technical means to interface with partner and taxpayer ecosystems, and with the Internet of Things.

HOW Adopt new development approaches that incorporate smaller, reusable components to continuously deliver software.

Embed intelligence everywhere to automate routine tasks, improve business processes through integrated analytics and teach applications to act.

Rewire for “zero-touch” taxation systems by introducing new ecosystem strategies, designing applications for resiliency, and integrating information and operational technologies.

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Liquid Applications: Increase Agile Application Development

Accelerating application development is not easy for a revenue agency. They are understandably highly risk averse—the potential damage to an agency’s reputation caused by a new technology failing, for example one that facilitates online tax returns, requires a high degree of caution. This means a software development implementation may take years, rather than the weeks or months that may be possible in some private sector organizations.

Secondly, most agencies have a very large number of legacy applications. The cost of replacing such applications will be too great for many given their cost constraints and the amount of budget devoted to maintaining existing applications. Application maintenance is particularly onerous for revenue agencies as the legislative framework can change annually.

However, this need not mean that revenue agencies should ignore liquid applications strategies. Instead, they need to be selective where they apply this approach to their application architecture—areas where the need for agility is high but where the reputational risk is not as high.

Customer-facing mobile and desktop apps that provide information to taxpayers are one area that would benefit from liquid application development. Here there is a real necessity for speed—to meet increasing demand from taxpayers for more digital interaction—but the reputation risk is lower than for applications used in accounting functions.

Other opportunities could be in internal-facing applications where again speed is important and reputational risk is lower.

Intelligent Applications: Generate More Value from Data

It’s hard for any organization to keep up with the volume and complexity of data now being generated internally and externally. By embedding software intelligence in their applications and processes—made possible by increased processing power—revenue agencies can better manage the proliferation in Big Data and gain insights and generate more value from their data.

Building intelligence into applications can help revenue agencies improve their knowledge of taxpayer preferences to provide them with a more personalized customer experience. On the tax collection side, it helps agencies increase efficiency in compliance by enabling them to better target their enforcement activities.

The Irish Office of the Revenue Commissioners implemented a predictive analytics model2 that can detect fraudulent behavior and erroneous claims at an early stage, avoiding the expense of recovering moneys after credits are issued.

Connected Applications: Toward a “Zero-Touch” Taxation System

Connected applications enable agencies to gather more information from partners faster. This supports a strategic goal of agencies: to reduce to a minimum the requirement for taxpayers to provide the information themselves—a “zero-touch” taxation system—and, in doing so, help to increase taxpayer compliance. The key question for agencies is with whom to build their ecosystem of applications to help create a zero-touch taxation system.

In the UK, Her Majesty’s Revenue & Customs (HMRC)3 requires employers and payroll providers to report PAYE tax and National Insurance information in real time, after every payroll run. While in Portugal, as part of new measures against tax evasion, businesses are required to submit electronic invoices for all VAT taxable transactions to the tax authority. To encourage compliance, the government has introduced unusual incentives: individual customers who ask for a VAT receipt receive a tax benefit (15% refund of VAT paid, up to €250 per household) and for each €10 of purchases they qualify for entry into a weekly lottery for a car.4

The key issue for agencies is to take advantage of increased data availability to simplify and ease the taxpayers experience and to improve compliance.

Toward a software-driven organization

To keep pace with digital evolution, revenue agencies not only need to rethink their application strategies. To evolve toward a software-driven organization, they also need to consider creating new roles to deliver liquid, intelligent and connected applications:

• Platform Directors to take responsibility for the software platform and translate user needs to the developers

• Intelligence Architects to identify and curate data sources and design intelligent capabilities for applications

• Ecosystem Builders to establish an environment where the agency can collaborate with partners and suppliers

• Citizen Developers outside the IT organization who can help drive agile development

New strategies and operating models are needed that can meet the demand for agility while not compromising on security and risk. Agencies that can adapt quickly will be better placed to meet the growing expectations of taxpayers for new, personalized services that will help to increase compliance, improve revenue collection and close the tax gap—delivering public service for the future.

Building a successful connected ecosystem requires three key elements:

• Developing an ecosystem strategy

• Starting with internal developers and business functions; proactively designing for resilience

• Managing security across the extended ecosystem; and integrating information and operational technologies.

References1 “The Future of Applications: Three Strategies for the High-Velocity, Software-Driven Business,” Accenture Technology Point of View, 2014

2 “Risk scoring in real time leverages analytics and accelerates Irish Revenue’s journey to high performance,” Accenture, 2013

3 “What payroll information to report to HMRC,” www.gov.uk, 14 October, 2014

4 “Improving VAT compliance: random awards for tax compliance,” European Commission, Taxation Paper, Working Paper No 51 - 2014

Contact

David ReganManaging Director – Health & Public Service, Revenue Industry Leaddavid.regan@accenture.com

Connect with us to learn more on delivering public service for the future on Twitter @AccenturePubSvc

About Delivering Public Service for the Future

What does it take to deliver public service for the future? Public service leaders must embrace four structural shifts—advancing toward personalised services, insight-driven operations, a public entrepreneurship mindset and a cross-agency commitment to mission productivity. By making these shifts, leaders can support flourishing societies, safe, secure nations and economic vitality for taxpayers in a digital world— delivering public service for the future.

About Accenture

Accenture is a global management consulting, technology services and outsourcing company, with approximately 319,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$30.0 billion for the fiscal year ended Aug. 31, 2014. Its home page is www.accenture.com.

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