IRS expects ICP 2.0 to provide improved service to taxpayers. From 1986 through fiscal year 1995, IRS estimated that it had invested about $2.5 billion in TSM. Objectives, Scope, and Methodology

Our objectives were to (1) evaluate IRS’ assessment of ICP costs and benefits and obtain users’ perceptions on the system’s benefits, (2) analyze IRS’ testing of ICP, (3) assess IRS’ ongoing efforts to redesign its customer-service work processes to fully utilize ICP capabilities, and (4) assess IRS’ software development processes being used for ICP. Despite this sizable investment, ICP costs and benefits remain uncertain because the scheduled rollout of ICP and its capabilities continue to change. ICP Has Not Been Thoroughly Tested

The testing of ICP 1.5 was too limited and did not measure ICP’s impact on business operations. IRS officials recognized the limitations of the ICP 1.5 testing and told us that testing of ICP 2.0 would be more comprehensive. However, on July 31, 1996, in a memorandum to the Commissioner and Deputy Commissioner, the Associate Commissioner for Modernization cancelled the September 30, 1996, pilot start date on the recommendation of the Business Site Executive. IRS Is Developing and Deploying ICP Before Work Processes Have Been Determined and Before Desired Capabilities Are Known

According to IRS’ Customer Service Vision, ICP was expected to be the vehicle to provide CSRs access to the information they would need to answer all types of calls coming from taxpayers. Also, IRS planned to combine a phase of the collection process with customer service.However, according to IRS officials, after experimentation at the Nashville customer service center prototype, IRS is now reconsidering the extent to which CSRs will be able to answer the broad range of taxpayer questions, which are anticipated if IRS reduces the current level of employee specialization and combines the customer service and some of the collection functions. As a result, IRS has no assurance that the ICP software is being developed in a quality fashion and will perform as intended. However, the success of ICP may be at risk because IRS has made substantial investments in the system without having (1) validated the costs and benefits by thoroughly testing the ICP system, (2) finalized the redesign of work processes that ICP will support, and (3) achieved the software development maturity needed to successfully build the envisioned capabilities within planned cost and milestones. All projects use an approved, tailored version of the organization’s standard software process for developing and maintaining software.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed the Internal Revenue Service's (IRS) Integrated Case Processing (ICP) systems development effort, focusing on: (1) IRS' assessment of ICP costs and benefits and users' perceptions of the system's benefits; (2) IRS' testing of ICP; (3) IRS' ongoing efforts to redesign its customer service work processes to fully use ICP capabilities; and (4) the software development processes being used for ICP.

What GAO Found

GAO found that: (1) improving service to taxpayers is an important goal that IRS' Customer Service Vision shows promise in addressing, but the promise anticipated by the vision is unlikely to be fulfilled unless changes are made in the development and deployment of ICP; (2) IRS estimated that about $150 million was spent on ICP from 1993 to 1995 and that an additional $77 million will be spent through 1996; (3) overall, IRS plans to spend about $641 million on ICP through fiscal year 2000; (4) despite this sizable investment, costs and benefits remain uncertain because: (a) the scheduled rollout of ICP workstations continues to change; (b) the ICP capabilities have not been finalized; (c) certain benefits are still to be determined; and (d) the software is still being developed; (5) IRS planned that certain ICP capabilities being developed would be pilot tested beginning on September 30, 1996, but in a memorandum dated July 31, 1996, the Associate Commissioner for Modernization postponed the pilot test indefinitely; (6) IRS developed and initiated a limited deployment of the initial ICP version; (7) the test results provided little insight on the potential benefits of the system, because IRS did not adequately measure ICP's impact on business operations; (8) IRS officials recognized the limitations of the testing and told GAO that testing of the next software release would be more comprehensive; (9) it is unclear how this and future versions will support new work processes that are being designed; (10) according to IRS' Customer Service Vision, ICP was expected to be the vehicle to provide customer service representatives with access to information that would enable IRS to combine a phase of the tax collection process with customer service; (11) IRS is now reconsidering the extent to which the collection process can be combined with customer service and is reconsidering the range of tasks a customer service representative can be expected to perform; and (12) the software development processes in place at IRS organizations responsible for developing ICP software are extremely weak, making the likelihood of their producing quality ICP software on time and within budget very low.