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CLIENT CASE STUDY

Arizona department of revenue: Public service value model

Arizona's Revenue Department worked with Accenture to link performance improvements from its Business Reengineering/Integrated Tax System. 

Overview

The project used an analysis generated from the Accenture Public Service Value Model to help form a foundation for the agency's strategic planning process, performance measurement and performance management.

Opportunity
Arizona Department of Revenue's (AZ DOR) mission is to administer tax laws fairly and efficiently for the people of Arizona. The agency has an annual operating budget of $58.5 million and approximately 1,000 employees. In 2002, in need of an agency-wide transformation, AZ DOR partnered with Accenture in a multiyear value-based project, the Business Reengineering/Integrated Tax System (BRITS), to reengineer key agency processes and implement Accenture's integrated tax system. At approximately the same time as the agency contracted Accenture, the governor appointed a new agency director, J. Elliott Hibbs. Director Hibbs is a firm believer in performance measurement and agency planning, and quickly redefined AZ DOR's strategic planning process. As the agency's business partner, Accenture sought to find a way to link the performance improvements from the BRITS project with the agency's mission and the strategic goals of the new director.

Solution

In need of a framework to link the BRITS project with the agency's new focus, AZ DOR became the ideal candidate for a US pilot of the Accenture Public Service Value (PSV) Model (patent pending). Accenture's PSV Model aims to help agencies strike the right balance between competing pressures to increase citizen outcomes and operate cost effectively. The model hypothesizes that those agencies delivering improved outcomes and cost effectiveness over time can become high-performance government agencies.

The BRITS project is a benefits-funded agreement (paid from increases in revenue) between AZ DOR and Accenture. The contract was designed as a fiscally responsible way to accomplish the BRITS mission: To service the needs of our customers and stakeholders by redesigning and restructuring the Department of Revenue and its supporting systems. These two motives underpinning BRITS—improved service for stakeholders and fiscal responsibility—align perfectly with the public service values stressed by PSV (outcomes and cost effectiveness).

Results

The Accenture team presented key findings from the FY03 PSV analysis to AZ DOR leadership in January 2004. Findings from the analysis aligned with the key changes in AZ DOR's recent history, including:

  • FY 97-99: During this period, there was a shift in the organizational culture under a prior AZ DOR director. The department's emphasis on a team–based environment and customer orientation, at the expense of more fundamental DOR functions, led to a decline in outcomes and cost effectiveness.

  • FY 99-01: AZ DOR's efforts to gear up for Y2K compliance led to increased automation, decreased taxpayer burden, and improved taxpayer responsiveness.

  • FY 03: Under new Director J. Elliott Hibbs, the combination of multiple factors, including a reduced budget, the Revenue Enhancement and Tax Amnesty programs, and continued improvement in reducing taxpayer burden led to value creation.

In addition to illustrating the impact of agency changes on value creation for Arizona taxpayers, the PSV project highlighted some key findings that the department could use to form future agency decisions, including:

  1. Resources Drive Outcomes. Arizona Department of Revenue experienced its highest levels of PSV outcomes in 1996 and 1997. Not coincidentally, these are the two years in the analysis time period when AZ DOR had the highest adjusted expenditure per taxpayer and the most employees.

  1. Improving Cost Effectiveness. AZ DOR is capitalizing on limited resources to deliver an impressive level of outcomes. The department's PSV cost effectiveness score has improved each year since 1999, reaching its high point in 2003. The improving cost effectiveness trend indicates that AZ DOR is delivering a strong level of outcomes with their limited resources.

  2. Compliance Gap: Growth in actual taxpayers for AZ DOR is not keeping pace with the growth in the potential taxpaying population, especially for corporate and individual taxpayers. The increasing gap in actual vs. expected taxpayers is resulting in declining voluntary revenue (as a percentage of overall economic growth in the state).

PSV will play a key role in AZ DOR's future, serving as the agency's foundation for strategic planning, performance measurement and performance management. As next steps, the PSV team is currently working with AZ DOR to create a PSV tool that the agency will be able to use to help justify budget requests from the state and make investment and resource allocation decisions. Moreover, the PSV tool will remain an integral piece of the BRITS project, serving as the one key indicator of how this reengineering effort creates value for Arizona taxpayers.