Inland Revenue’s previous investment in becoming a digitally enabled workplace positioned them well to keep business running, manage customer demand and support the government’s response during COVID-19.
Case study background
This Inland Revenue (IR) case study is 1 of 4 in the 2020 report ‘Digital insights from the public service response to COVID-19’.
The report shares insights on digital capabilities required during the COVID-19 response, and what’s required to progress a unified digital public service.
The case studies are interviews with 4 different organisations to understand their challenges and successes in response to COVID-19 lockdowns in NZ.
Case study insights
The IR insights from COVID-19 cover 2 main areas of capability.
1. A digitally enabled product for the customer
- A shared data portal can give the right people the information they need to serve the customer.
- By redeploying resources, IR was able to keep the business running.
- To design for digital by default, understand the customer and keep it simple.
- Multidisciplinary teams that focus on solving clearly defined problems are critical to success.
- Interoperable digital platforms allow agency collaboration across agencies to deliver services.
2. A digitally enabled workforce
- Investments in remote working capability enabled business continuity and planned product launches to proceed.
- IR’s ability to sustain remote working enabled the next release in its transformation to go-live as planned and new initiatives to be stood up quickly.
- Digital tools enabled collaboration across IR.
- Supporting the development of people’s digital capabilities is important for a digital future.
- The COVID-19 experience has enhanced IR’s confidence in using digital tools.
- A cultural shift occurring where digital work is the expectation and the norm.
The following people from IR were interviewed in this case study:
- Naomi Fergusson — Chief Executive
- Gary Baird — Deputy Commissioner Enterprise Services
- Ron Grindle — Principal Transformation Director.
They describe how IR leveraged its digital capability and its focus on the customer to respond to new demands as follows.
Investing in business transformation for digital capability
Over the last 4 years, IR has been transforming towards a digitally enabled workplace. Tax and social policy products have been moved to a new core system and changes have been made to policy, legislation and business processes, as well as the design and structure of the organisation.
Thanks to the investment made, IR was well placed to deal with the challenges of COVID-19. The department was able to keep running its business during lockdown as well as go-live as planned with ‘Release 4’ of its transformation in April 2020.
Continuing service delivery
The first challenge was continuing to deliver core services — helping people pay their tax and receive their social policy entitlements. IR was able to achieve this because the digital revenue system part of the transformation was largely in place.
Many customer engagement points were already digital. For example, approximately 90% of employer returns come in digitally and 99% of payments in and out are digital.
Continuing internal plans and programmes
The second challenge was a major release in IR’s transformation in early 2020. Two weeks into lockdown, KiwiSaver and student loans moved from old to new systems and processes. This release also included the creation of a single employer account.
The release was implemented as planned, and IR was able to run the cutover remotely with about 8 or 10 people on site at any time.
Workplace technology has been progressively replaced and most staff now have mobile devices, either laptops or tablets. The adoption of Microsoft 365 and Oracle Cloud for back office processes enabled most staff to work at home relatively easily.
Developing a shared data portal across agencies
Supporting the government’s response to COVID-19 was the third challenge.
IR worked with the Ministry of Social Development (MSD), the Ministry of Business, Innovation, and Employment (MBIE), and The Treasury to set up the wage subsidy and the Small Business Cashflow (Loan) Scheme, as well as implementing a range of tax changes.
When the wage subsidy was extended, IR created a portal enabling MSD staff to access the information they needed directly from IR systems with appropriate security permissions in place. IR and MSD were able to deliver a joint customer experience by sharing information digitally with the right people, at the right time and with the right security. IR supported MSD to deliver $15 billion in wage subsidies.
By early June 2020, 12 weeks after wage subsidy applications opened, IR had answered more than 353,000 calls from MSD. Once the portal was in place, MSD staff were able to handle most of these queries themselves, which provided certainty to customers sooner. Calls to IR dropped significantly as a result.
IR also implemented the cash flow loan scheme. In less than a month, IR had received more than 77,000 loan applications and approved loans worth approximately $1.2 billion.
Redeploying resources using digital workflow and channels
IR’s new core system and workflow tools provided flexibility to move work across the country to different people. For example, when Auckland was at Level 3 and the rest of the country at Level 2, IR’s Auckland offices were closed, and workers responded to customers’ web messages from home. Customer calls were directed to other parts of the country.
To help manage customer demand during the first lockdown and provide support to those who most needed it, IR decided where it would prioritise its efforts. As a result, some phone lines were closed, including the dedicated line for tax agents. IR provided support to tax agents during this period through web-based messaging.
Connecting and collaborating with digital tools
One of the most useful discoveries during COVID-19 for IR was using digital tools to collaborate. Microsoft Teams in particular enabled people to stay connected as well as work together.
Senior leaders in IR hosted Teams sessions with particular teams or locations. Live sessions were recorded and made available to everyone in IR, or videos were recorded and posted on internal news channels.
Leaders focused on the wellbeing of their people by, for example, bringing their teams together digitally. People created their own communities and groups through tools such as Yammer, with the most popular Yammer group sharing pictures of their pets.
Learnings from the past
This way of working wasn’t always the norm for IR. At the time of the Kaikōura earthquake in November 2016, IR wasn’t set up to respond to disruption — few people had mobile devices and even fewer could connect to systems at any one time. The operating model had been people in a room with a whiteboard.
By contrast, during the COVID-19 lockdown, IR held virtual design meetings every day with people in at least 3 agencies, as new services and products were designed and implemented to support the government’s response.
IR recently ran its People Leaders Forum via Zoom for 600 participants in a mix of physical and virtual spaces. IR’s staff are now acclimatised to this way of working. They appreciate not having to ‘fly to Wellington to do something’ and are enjoying a better work life balance with less travel and fewer long days.
Digital design — understand the customer and keep it simple
Applications for the small business loan scheme have been 99.7% online. Because the scheme was designed purely for a digital interface, IR has received around 50 phone calls out of approximately 100,000 loans.
Over the last few years, IR has applied the fundamental insight that designing for digital by default requires an excellent understanding of the customer base and the problem that needs to be solved.
Solutions need to be kept simple to drive uptake of digital channels. A simple system means that exceptions and complexities are not built into the design. As soon as a solution caters for exceptions, a high percentage of people will make contact as the solution cannot handle that exceptional case. Building in exceptions makes it complex for everybody.
Multidisciplinary teams solving defined problems
Policy agility was one of the major benefits sought in return for the government’s investment in transformation. This means agility in a broad sense, end-to-end, all the way from idea to implementation and customer outcome.
During 2020, while IR delivered 3 or 4 big COVID-19 response initiatives and worked on 50 others, the fundamental question the department returned to was: What is the problem that needs to be solved? There was a rigorous commitment to not starting work until the problem was well understood.
A key aspect of the response was creating a multidisciplinary team that talked in real time about everything from policy intent through to implementation, execution and operations. This approach meant that decisions about what was doable, what was not, and what would solve the problem were made quickly.
Because of past transformation work to streamline tax policy and legislation, IR was fortunate to already have a group of people who knew how to work together to achieve a customer outcome. A small leadership team, including policy, tax policy analysts and operational managers, came together to design, guide and direct the work.
Developing people’s digital capabilities
Over the past 4 years, IR has transformed from a department that had a web presence and some e-services to operating a truly digital system — with changes to policy, people’s capabilities and processes. Some of the key shifts have been towards agile thinking and customer centricity.
IR has included expectations around digital comfort and literacy in the design of roles in its new operating model. Two primary operational delivery units are organised around the customer and a deputy commissioner is accountable for information, insights and data.
Digital capability is not just about the technology, it’s about the capability of your people and the way an organisation thinks about its customers, the problems that need to be solved and the outcomes to be delivered.
Interoperable digital platforms allow agency collaboration
As part of its transformation, IR has set up its systems in a way that enables other agencies to leverage their use. This provides opportunities for agencies to work together in new ways to deliver services. For example, the MSD portal has meant that data held by one agency (IR) can be accessed by another agency (MSD) to deliver an end-to-end service.
IR’s data and analytical platforms are cloud-based, making opportunities for other agencies to be able to work in that space. There is also an opportunity in back office interoperability. IR has moved to Oracle Cloud, and other agencies are using the same services configured in the same way. This provides a greater degree of resilience — if one agency loses its ability to operate, another could step in and run their back office services.
IR’s new systems were also a key factor in setting up the cashflow loan scheme. The new core system is modular, so the components of a loan scheme could be put together before the details had been fully worked through. As the details of the scheme became more defined, they were worked into the solution.
Enhanced confidence in using digital tools
Remote working during COVID-19 helped IR’s people build their confidence in using digital tools. The department’s business leaders are now more confident in using these new tools — workflow, integrity and analytical tools — to manage the business differently.
For example, through transformation, the big end-of-year tax activity has moved to a completely ‘push model’. IR uses the information it holds to calculate a person’s tax position without them having to put in a return if they’re in the employment system. The first year this was led out of the transformation programme. The second year it was led out of the business supported by the transformation programme, with a runtime that was 3 weeks shorter. This year, IR is aiming to do it even more quickly.