IRS CIO says systems reorganization is a must

Consolidating data processing
will save money and manpower, the IRS’ Paul Cosgrave says.

The IRS must re-engineer its systems and plan new systems that are in sync with the
agency’s reorganization of its business units, IRS chief information officer Paul J.
Cosgrave said.

Cosgrave outlined his plans to reorganize the service’s systems at an Association
for Federal for IRM luncheon this month in Washington.

The IRS is reorganizing its operations into four business units that serve four kinds
of taxpayers. The new units are the Wage and Investment Income Group, Small Business
Group, Middle Market and Large Corporate Group, and Exempt Organizations Group.

The IRS has for many years organized operations geographically.

“The problem with that is that one IRS person working in Topeka, Kan., just to use
an example, would have to be an expert in how to deal with any businesses in Topeka, any
large businesses, any small businesses, any nonprofits. They have to deal with individual
taxpayers, with partnerships,” Cosgrave said.

Changing the IRS systems infrastructure to fit the new organization will be tricky, he

“We clearly have the chicken-and-egg situation,” Cosgrave said.

“We want to go to the new business unit structure, but we know the systems
don’t support it,” he said. “We don’t want to let the system hold us
up from going to the new structure. The way we move to the new structure involves
identifying the minimal number of changes that can be made to the existing systems, get
the changes in place and then move forward with a new system.”

Cosgrave plans to reduce the number of mainframes and consolidate 12 data centers into
three. The consolidation will save about $80 million and free up 800 IRS employees,
Cosgrave said.

He said he also wants to put Pentium II PCs running Microsoft Windows NT on every
desktop. That would let information technology workers manage and provide upgrades
remotely, without having to go to each desk to make changes or help users, Cosgrave said.

The new CIO also said he plans to do things a bit differently than his predecessor,
Arthur A. Gross, who left the IRS in April.

“My predecessor came to town with the strategy of outsourcing an awful lot of IRS
work as a way to solve its problem. It’s just not going to happen,” Cosgrave
said. “You can’t be successful here without having the union folks working with

One problem that Cosgrave has yet to solve, he said, is how to make systems
improvements in time for the coming tax season.

“I had no appreciation for this until I arrived that people live and die by
this,” Cosgrave said. “If we can’t fit something into that structure, we
can’t implement it. Well guess what, no wonder modernization failed in the past
because modernization efforts, which are major programs that in many cases take two or
three years, can’t be fit into a six-month filing cycle.”

Somehow, the IT staff and the tax processing staffs must find a way to weave
modernization together with the tax structure, he said.

Cosgrave said his office will be the leader for IT decision-making. When he became CIO
last month, Cosgrave said he found a decentralized IT organization.

“Only about 45 percent [of the organization] was directly managed by the
CIO,” he said.

Under his aegis, the office will manage 75 percent of the resources and 100 percent of
the budget for systems work, Cosgrave said.

“Going forward, every one of our projects will go through a rigorous investment
analysis phase,” Cosgrave said. But, he said, projects will not be sent to the
commissioner or to Treasury Department management for approval until the lead user of the
system agrees with the plans.

A dozen teams will spearhead the modernization. John D. LaFaver, recently named deputy
commissioner for modernization, will be in charge of the restructuring.   


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