Tax agencies arent exactly known for staying ahead of the technological curve, but the State of Florida Department of Revenue has implemented an ambitious CRM initiative that has influenced the way tax agencies worldwide provide customer service.
In the early 1990s, after years of relying on disparate legacy systems for tax administration, the FDOR conducted an internal audit of its customer service strategy. The verdict: The agencys customer relationship management was woefully lacking.
Bogged down by paperwork, confusing tax laws and red tape, businesses were paying only a percentage of what they owed the state of Florida. Customer service agents scrambled to handle taxpayer inquiries by querying almost a dozen systems. A static Web page that listed different tax laws was horribly out-of-date.
In short, the FDOR, based in Tallahassee, had become exactly what officials feared—a government bureaucracy that taxpayers loathed working with.
Today, however, using the FDORs SUNTAX (System for Unified Taxation) system, businesses tax files are accessible to FDOR agents as soon as they begin speaking with an organizations tax agent. When a taxpayer calls the FDOR to register to pay sales tax, an agent query of the SUNTAX system will automatically register the business for all applicable taxes based on its profile. And FDOR agents can leverage a single view of each taxpayer across the organization, allowing the agents to answer questions faster and more effectively.
In addition, taxpayers who prefer self-service can now register, pay their bills, check the status of their refunds, file a return, make a change of address and obtain tax information by accessing the FDOR portal at www.myflorida. com/dor.
The FDORs SUNTAX project has been so successful, in fact, that it has served as a model for tax agencies across the globe: Since the FDOR launched SUNTAX, the agency has hosted events for 24 countries, from Zimbabwe to Mexico, to demonstrate the benefits tax agencies can gain by providing quality customer service.
The agencys decision to kick-start a CRM strategy came as it confronted the promise of the Internet and the state of Floridas e-government initiatives. From the beginning, the FDORs CRM approach was clear: Focus on the customer experience the agency wanted to deliver, not on the technology being deployed.
“We had to tackle whats really unique about the tax and revenue business: You have these universal taxpayers, and youre not sure how much money they owe you at any given time or how much theyre planning to pay you,” said Jim Evers, director of the FDOR General Tax Administration Program. “You are also charged with making it as easy as possible for a taxpayer to meet the burden of their tax payments.”
The FDOR manages about 1.2 million business taxpayers (the state has no personal income tax), collecting a total of about $30 billion a year. This means processing more than 800,000 returns monthly.
The FDORs move toward CRM began in 1992, when it commissioned a study from Andersen Consulting (which later became Accenture Ltd.) to justify legislative funding for an integrated tax system. The feasibility study found that an integrated tax system could generate a return of $250,000 per year, at a total cost of $60 million.
At the time, the FDOR was running several stand-alone, homegrown tax systems on a Unisys 2200 mainframe. As many as 10 systems performed billing, collection and auditing for 56 tax and fee categories.
The FDOR considered building a general ledger accounting system but decided to wait on the project. In 1996, the FDOR gained approval from the state Legislature to move forward. However, the agency shifted its project focus from accounting to ERP (enterprise resource planning), a technology the FDOR would customize and use as a launchpad for its CRM strategy.
The project, called SUNTAX, was designed by FDOR staff and consultants to integrate tax systems using client/server system architecture, and it included initiatives intended to make the FDOR as accessible as possible to taxpayers.
Vendors bid on the
The FDOR decided to build SUNTAX using off-the-shelf software, something it had not done in the past. In 1998, the agency issued an invitation to negotiate to PeopleSoft Inc., Oracle Corp. and SAP America Inc. The FDOR gave the vendors 32 pages of scripting to run, to prove that their respective solutions could handle the FDORs specific tax and accounting needs. (PeopleSoft is now owned by Oracle.)
The FDOR ultimately chose to base SUNTAX on SAP AGs R/3 ERP solution, which Evers said was selected for both price and functionality—specifically, for its ability to be customized to handle tax accounting. “In order to provide the kind of customer service we were aiming for, we needed a system to support tax account information, to track receivables and also to ensure that we could provide timely reimbursement to the taxpayer,” he said.
By using R/3 to establish a single account across multiple tax types and by having a single view of a taxpayers history in the collection process, the FDOR estimated that it could increase voluntary compliance, reduce taxpayer burden and improve the performance of the agencys 35 service centers. And by integrating various communications systems—including telephone, snail mail, fax and the Internet—into the same deployment, the FDOR could also provide a single point of contact for its taxpayers.
The FDOR decided to build SUNTAX in phases, with SUNTAX Project Manager Louis Panebianco leading the charge. The phases called for deploying R/3, developing business processes that would allow the FDOR to streamline the auditing and tax payment process, gradually moving tax systems off the mainframe and onto the new client/ server architecture, and rolling out CRM and business warehouse software.
In 1999, the SUNTAX team, along with Deloitte Consulting LLP, began the deployment of R/3 on Hewlett-Packard Co.s Itanium-based HP Integrity servers running HP-UX 11i. The FDOR also deployed Oracles Oracle9i database in conjunction with R/3.
At that time, the FDOR moved its second-largest tax system, the corporate income tax system, along with several small taxes in its registration system, from the mainframe system and onto R/3. That tax system went live in the first half of 2001 and was followed by the launch of a new Communications Services Tax in October of that year. The Communications Services Tax was the first FDOR tax type with online filing. Internet-based registration was also offered in 2001.
The deployment didnt occur without some growing pains. FDOR employees had to learn new Internet technologies and adjust to the demands of overseeing what was effectively an e-commerce site that had to run 24 hours a day while working inside FDORs existing technology infrastructure. This meant retraining staff and redesigning FDORs business processes to support customer service through www.myflorida. com. The agency has 2,412 employees in the tax administration program, and about 2,100 of them have access to SUNTAX.
With 140 agents active in the agencys call centers and 700 statewide collectors, the FDOR wanted a way for employees to log on to an application and access all of a taxpayers records, including those still on the mainframe; transfer a phone call; log on to the tax law library; and conduct analysis for auditing purposes.
In 2002, the agency deployed MySAP Customer Relationship Management to improve its call center. It also deployed SAP Business Intelligence for trend analysis of taxpayer data.
While agents previously had to log on to five or six tax systems to determine which taxes a corporation needed to pay, agents now have businesses tax files accessible to them as soon as they begin speaking with a tax agent. SAP portal technology within MySAP delivers to taxpayers the same type of complete view, as well as self-service capabilities, via www.myflorida.com.
The FDOR is able to leverage SAP Business Intelligence to determine which companies are potential high-risk accounts, allowing the agency to prioritize its collection efforts. By providing customer service agents with all the information they may need when speaking with a taxpayer, the FDOR is able to increase the likelihood that a tax will be paid.
All this information has to be stored somewhere, however, and storage was indeed a consideration for the FDOR.
Analysts at AMR Research Inc., in Boston, estimate that a move to MySAP can increase required storage on a server by 30 to 50 percent over SAPs R/3. The FDOR didnt reach numbers as high as these, but now that the agency has access to images for every transaction conducted by a taxpayer, archiving has become a top priority.
The FDOR currently is using EMC Corp.s Clariion CX and Symmetrix DMX-based SAN (storage area network) to house taxpayer data and to support high-transaction applications. Two HP StorageWorks xp512 disk array systems and a VA7400 Virtual Disk Array also were deployed to guarantee uptime.
Experts claim that at least 35 percent of CRM implementations fail and may never provide any return on investment. The FDOR has proved that CRM can pay off, and the agencys Evers said the keys to its success were focusing on a customer-centric strategy; redesigning workflow and information flow to implement new strategies; providing training and support; and setting clear, measurable goals.
In fact, the success of the FDORs CRM strategy has been sizable and, unlike many CRM deployments, can be substantiated.
From 1998 to 2004, the FDOR spent $60 million on the project. In return, the agency saw $320 million in increased revenue through 2004, according to Evers. The project also enabled the agency to save $45 million in administrative costs (due to position cuts), with an estimated $15 million this year alone, he added.
It has become obvious that even small efficiencies in the FDORs ability to handle customer inquiries boost the amount of tax revenue the agency can bring in and make the entire auditing process that much more effective, Evers said.
The agencys collections are now running at three times what they were in 1999. Before embarking on its CRM project, the agency saw $250 million in bills and delinquencies collections. This year, the agency saw $700 million in those same collections. In addition, an amnesty program administered after the deployment of SAP R/3 has generated in excess of $46 million.
“The system has more than paid for itself,” Evers said. “Its great for us, but not necessarily as good for businesses that now owe more taxes.”
Today, the majority of the 36 taxes administered by the FDOR are accessible via SUNTAX. Evers expects all taxes to be made accessible through SUNTAX by the end of this year.
“Its a lot easier to deal with the department now,” said Panebianco. “A lot of businesses dont like that theyre paying more taxes, but now that were completely integrated, were able to expedite tasks and get to customers faster.”
Panebianco said that of the $30 billion collected in taxes, the agency currently has $28 billion running through SUNTAX. The FDOR is now expanding upon its business warehouse tools to help the agency find better candidates for audits.
Today, 89 percent of Floridas tax revenue is paid electronically, by 20 percent of taxpayers. State law requires electronic payment for businesses paying taxes in excess of $30,000, allowing the agency to move about $26 billion electronically. As SUNTAX gains momentum, Evers hopes to increase that number significantly.
This month, the agency will begin to roll out a discovery case management system that will help FDOR agents procuring $866 million in receivables a year to prioritize the agencys collection efforts, a move that Evers said will allow the FDOR to reap even more return from SUNTAX.
Evers said the agency will continue its efforts to make taxpayer self-service easier. The state outsources about $5 million in transactions to enable taxpayers to initiate a debit or credit transaction through their banks. Evers said he would like to use the SAP system to enable a taxpayer to log on to www. myflorida.com/dor, enter account information, and have SAP automatically debit the taxpayers account without using a third party.
Evers is more than satisfied, however, with SUNTAXs progress thus far.
“In our initial study, Andersen suggested that integrating different systems would increase compliance, but we didnt think it would happen as quickly as it has,” Evers said. “While we used to have one or two people working on one specific tax, an integrated tax system means every agent can resolve any issue brought by the taxpayer.”
SUNTAX Implementation at the Florida Department of Revenue
An initial study is commissioned from Andersen Consulting (now Accenture) to determine the feasibility of an integrated tax system
Legislative funding for SUNTAX is requested
Approval to build SUNTAX is granted. FDOR begins building a custom solution, moving from Unisys mainframe to client/server environment
FDOR sends invitation to negotiate a contract to SAP, Oracle and PeopleSoft
Contract is awarded to SAP; development begins
FDOR agrees to serve as SAPs MySAP Public Sector beta customer
SUNTAX goes live with corporate tax system and several smaller taxes in its registration system; Communications Services Tax goes live with online filing; registration system goes live via the Web (www.myflorida.com)
FDOR deploys MySAP Customer Relationship Management to improve call center SAP Business Intelligence is deployed for performance metrics
FDOR integrates sales and use tax, solid-waste fees and lemon laws into the R/3 system; agency deploys audit case management system and MySAP CRM Customer Interaction Center
Gross receipt taxes and documentary stamp taxes are integrated into R/3 system; FDOR expands business warehouse for discovery cases and performance standards for accounts receivable and audit cases
Bankruptcy case management system is deployed; discovery case management system is added; motor fuel taxes and severance taxes are integrated
Plans are in place to enable more online transactions
Financial reporting, accounting and controlling: SAPs R/3 serves as the platform for FDORs tax and accounting system
Relational database: Oracles 9i serves as the data repository for tax information
Operating system: Hewlett-Packards HP-UX 11i used to run R/3
Tax and revenue management: SAPs Public Sector customized to handle tax and revenue management
Online customer interaction and analytics: SAPs MySAP Customer Relationship Management deployed to deliver better customer service
Data warehousing and audit analysis: SAPs Business Intelligence deployed to analyze taxpayer data
Collaboration and employee access to applications: SAPs ePortals 6.0 deployed to build portals for taxpayer services
Data processing: • Hewlett-Packards Integrity servers deployed to support R/3 in a client/server architecture • Unisys 2200 mainframe
Data storage: • EMCs Symmetrix DMX and Clariion CX • Hewlett-Packards HP Storage-Works xp512 Disk Array and HP VA7400 Virtual Disk Array
SUNTAX by the numbers
SUNTAX BY THE NUMBERS
35 Revenue sources
2,100 SUNTAX users
140 Call center agents
800,000 Bills ANNUALLY
172,000 Collection cases
$30B Tax collections
$26B Electronic Filings
1M ANNUAL Delinquency notices
9M Financial Transactions
800,000 returns per month
$60m Spent on the project
$45m Saved in administration costs
$320m Increase in REVENUE
$250m delinquency collections in 1999
$700m Estimated 2005 collection
The Suntax system allows Florida taxpayers to access account information online.
Senior Writer Anne Chen can be reached at [email protected] .
Check out eWEEK.coms for the latest news, reviews and analysis about customer relationship management solutions.