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Hall Time at HMRC

David Bicknell Published 21 May 2013

As chief information officer Mark Hall has stepped into big shoes at HMRC. Now he's also masterminding HMRC's strategy as a digital exemplar across government


As a Manchester United fan, the other week, Mark Hall was heading up to Old Trafford to watch Sir Alex Ferguson's last home game as manager. The new manager, David Moyes, clearly has big shoes to fill, just as Hall did when he took over from Phil Pavitt as HMRC's chief information officer (CIO) last October.

As well as being CIO, Hall is also responsible for HMRC's digital strategy. And with digital leadership in vogue within Whitehall, HMRC's progress in digitising its services should be an exemplar to other departments. And Hall believes, HMRC is pointing the way.

"We've been digital for some time, and we're one of the more mature departments. There are about 200 online services at the moment with about 100m online tax returns every year and 116m unique customer visits. So big in terms of scale and what we're doing. And on top of that, we already work with a lot of software developers, about 1500 software developers, who we support in their development of third party tax products.

"So we do a lot now and it's really been a key journey in terms of the things we're doing, mainly around the business tax area, making it easier for business to work with us, such as allowing the filing of VAT and Stamp Duty Land Tax. But our strategy now is to do a lot more in that space and start to move us to be a default channel for how we interact."

For Hall, in practical terms, that means continuing to give businesses more service but at the same time, move HMRC's digital services more to support individual taxpayers.

"The reason for doing it is we believe it's a better customer experience, in terms of being able to use quick processes, and being able to access services when needed. A digital approach is a lot cheaper to deliver and it does allow us to maximise revenue flows as well in terms of the tax we collect and the compliance work that we do. Ultimately moving things into a digital channel allows us to do that compliance work slightly easier because you're dealing with electronic information rather than a piece of paper.

"It really supports all our strategic objectives of bringing in more tax, giving better customer service and also reducing our costs."

Hall sits on the executive team at HMRC, reporting to permanent secretary Lin Homer. He has three areas of responsibility, which he believes are completely complementary, though they are operated separately both now and forwards into the future.

"The first area is IT, which is everything from IT strategy, architecture through programme delivery and development into operations. I also look after all areas of security, both physical and information security. And then there is the digital area which I call 'business digital'. It's not about the technology per se of digital; it's about how do we achieve the transformation that we're looking for about becoming a digital business. It's about ownership of our digital strategy; it's about creating a portfolio of change programmes that supports that; and it's also about operating and maintaining our digital presence or digital channel."

Hall sees himself as operating in a business facing role comprising a blend of information, security and digital.

"I think we'll increasingly see a more dominant role of digital across government departments and agencies. I don't think there is exactly one model suits all. I think it will vary because government departments range hugely in terms of scale and also mission in terms of what they're looking to do.

"For us, we have a big transformation journey around digital. We also have a very large IT estate to manage which automatically makes it a very large and central part of what the department does. For other departments, it has a different role. For us, digital will be a much strong part of this but it will vary. The mix of my day will be a mix of digital things, traditional outsourcing pieces of work, and traditional project delivery."

Digital maturity

In assessing HMRC's digital maturity, Hall believes that the department, as one of the biggest online departments in government - and at the end of January when tax returns are due, one of the most used web services in the country - is advanced. But he accepts that there is more to do.

"We've launched a whole series of digital exemplars which are the projects that will kind of move us towards the next wave of digital activity in HMRC.

"I think as far as becoming a truly digital business, a business that thinks digital first, I still think we've got some way to go. The strategy work we're doing is really quite critical because that is really starting to identify the extent of ambition and the timescales involved in achieving that level of ambition. And for me that will be quite pivotal in understanding how far
we think we can get and how quickly. I'm leading those discussions now and I think the thing to get across is that it will always be delivered in incremental stages."

HMRC's four key exemplars are Pay As You Earn Online, Digital Self Assessment, Tax for My Business and Agents.

"Pay As You Go Online is the first online digital service for 41m individuals, and that will allow people to tell us they want to do. For example, we get 4m and 5m people call us querying tax codes. So being able to look at your tax code and do that online is an immediate benefit. The things that people call about most are the things we're going to do first digitally. That's quite a new service which is taking us very much into the digital world," says Hall.

"Self assessment is an already well-proven and well-used service. 81% of all self-assessment returns - that's 81% of 10m - are done online. At the moment the online filing bit is very digital but many of the services around it all involve pieces of paper. So what we're doing is moving the whole experience to being an online digital experience and so we don't have paper outputs as well.

"The third exemplar is Tax for My Business. We have a huge amount of services for businesses, but what we're trying to do now is glue those together better in terms of being able to view things from one place. Think of it as a dashboard where small and medium sized businesses can see all their tax, all their obligations and where they are with their tax affairs all in one place. That's very much the area we're building. It will be a bit like an online banking experience where you can see all your accounts in one place."

A fourth exemplar, Agent Online Self-Serve, will enhance agents' ability to serve themselves, providing a secure way to apply for a Unique Agent Reference, allowing agents to see their clients' payments and liabilities across the main business taxes and enabling them to notify HMRC about new clients.

Delivering on digital

Beyond the exemplars themselves, Hall is now increasingly starting to look at how HMRC goes about 'delivering' on its digital services.

"The digital environment is quite different to traditional legacy approaches. So we're looking at how we invest in things like agile techniques and agile methods, how we manage change in the organisation, and we're just recently introduced a new change framework, a new governance approach for how we do change. But we're also looking at the skills and capabilities our teams need in terms of how to deliver that. One example is that we're bringing more work in-house, doing some more work ourselves. At the moment we have around 300 technical staff who maintain our customs and excise systems. So 200 systems, around a third of our revenue, is already maintained by these guys."

But given the move towards more agile projects, Hall can also see a benefit in HMRC having some of its own capability.

"It will always be a mixed economy though. We're not going to do a big in-source, that's not on the cards. But what we will have will be a mix of some of our own staff doing work, competing a lot more work, and Capgemini which is our prime integrator will continue to have a significant and important role for this for the next four years. But we're also preparing for the end of the Aspire contract in 2017, and doing the sourcing strategy work to identify what that means and how we might move towards the future model."

Traditionally, HMRC has had a large outsourced contract with a single prime contractor, Capgemini, and there was exclusivity in that contract. That has now changed, says Hall.

"What we've done now is broken the exclusivity with agreement with Capgemini, opened up more competition and Capgemini has separated itself into two core pieces. One is traditional development, providing services, and the other part is acting as an integrator, operating a bit more client side in terms of what it does and pulling together all of the other parties on our behalf. Some people might call this a SIAM model. We internally call it SSI - 'systems and service integrator' - and we went live with that model on 1st April. We were one of the first to actually do SIAM and that model has been successful so far. The next major iteration of that will be later this year because we're not doing it big bang, we're producing it in stages."

Working with SMEs

A key area of HMRC's future approach is to work more closely with small and medium-sized enterprises (SME)

"We recently held an event called an SME Innovation Expo which Stephen Kelly and myself led and we had 100 people from HMRC and six other departments and twelve smaller businesses really just talking about two things: firstly the great ideas they've got; but also about how we actually work better together. And as part of that we'll be taking forward all twelve in terms of conversations and looking at the next stage of ideas, which I think is a great success. The other part is that we have our own in house suppliers and we're looking at augmenting them with an ecosystem of small and medium businesses. One of the challenges of being a smaller business is it's quite hard to engage with a large organisation such as HMRC. But we think that by partnering with our in-house IT team, that gives them the best access route into the organisation."

In choosing the SMEs it wants to work with, HMRC is being opportunistic, using services such as G-Cloud.

"We're using existing mechanisms. We're not going out to do a big framework thing. It's more dynamic than that. It's about picking the people we need for the right work at the right time. This year we might need these ten suppliers. And in a year's time, we might need a different ten suppliers. People will come in and out. What they will do is build strong relationships with us during this time. And that is just the sort of agility we need."

In terms of timescales for delivery, Hall expects the digital services to emerge incrementally over the next couple of years.

"Using iterative approaches, we're already got work in alpha and we're out there consulting about the design and what it should look like and how it should work. And then what you'll see is a whole series of releases over the next couple of years. All these exemplars are using agile techniques, which, by the way, Customs & Excise used several years ago.

"Skills-wise, we're getting great support from GDS. We are using existing suppliers in some instances, and we will be doing digital work with the likes of Capgemini. We have our own in-house team who have many of the technology skills and developmental skills already. We're also bringing some people off the market to come and work with us in support. So it really is a blended economy and not one-size-fits-all in terms of how this fits together. If you look at the team developing it, there's someone from Capgemini sitting next to someone from Accenture sitting next to someone from our in-house team. And that's the kind of environment that works well."

In growing HMRC's internal team, HMRC is also looking at employing apprentices, and has just started its first three apprentices in the IT team.

As HMRC's strategy is still developing. the likely costs for HMRC's digital ambitions, are equally still being determined.

"At the moment we're doing the strategy work to create the bigger picture. So the ultimate size of benefit is currently being shaped as we work through the strategy options and choices. There is no figure yet," says Hall.

What is clear, however, is that HMRC's 13-machine consolidation strategy is still on track.

"Our 13 machine strategy is about taking our applications and consolidating them onto the smallest number of platforms. That continues to go well. Over the last few years we've taken out over a hundred systems and our ambition is to take out around another 300 over the next three years in terms of consolidating that estate down.

"In terms of the overall IT strategy, as well as that consolidation, there are three cornerstones. One is digital and another is about intelligence, risk analytics and data. You might call it big data in terms of being able to analyse data we used to identify compliance cases. The third area is customer insight or CRM, which is the segmentation of the customer base to be able to both serve better and be able to feed that work into analytics. The rest of the strategy is about consolidation or business process re-engineering of our legacy systems to start to work in the digital age or work with the customer insight etc."

Hall believes his biggest challenge is to identify what HMRC is building that's new, which parts of the legacy have a long term future and which parts are transitional.

"The transitional legacy starts to be seen in the 300 figure. We need them for now but eventually these things will need to go. Other parts of legacy will continue to be some of the engine room of the way we calculate tax. But at the same time we'll bring in new capabilities that cut across those engines. Big change is something that HMRC does well. Real Time Information (RTI) has recently gone live and we already have in the first month a million businesses working successfully through RTI. We already have online the previous 200 systems. That was the Carter Programme, and that was a huge piece of change. HMRC is good at delivering big changes."

Looking ahead, Hall sees the increasing use of commodity-based infrastructure - i.e. Cloud - being a key part of its strategy.

"I also see different commercial approaches to how you procure that commodity. A really good example is the work we're doing now. We're currently moving all our staff's data into the Cloud. This is the personal productivity data that we all use daily. We have an arrangement with Skyscape and we're currently in the process of migrating. That will roll out over the next few months. What that means is we can take out all the infrastructure that used to sit in local offices. That will deliver us millions of pounds worth of savings and gives us a lot more flexibility."

Leadership in digital transformation

At a time when the role of the CIO is arguably being challenged by the advent of 'digital leaders', Hall himself has the opportunity to demonstrate at HMRC how a CIO can deliver leadership in digital transformation.

"I think the IT industry at large is being challenged by the digital model. The roles depend on the respective organisation. For HMRC, data, information and IT is absolutely critical to what we do as an organisation. Information is the lifeblood of everything we do. Therefore it makes complete sense that we have a role that covers IT and digital and sits as a board level position. We also have a large IT estate to manage.

"I can imagine in other organisations that have a different set up it may make sense to transition to a model where there's more digital leadership and less emphasis on IT. It will vary depending on the different shape of the organisation."

So what defines Hall as a CIO? He describes himself very much as a facilitator.

"I've been at HMRC six years now having joined from the private sector, primarily a utilities background. I've had the advantage and the challenge of growing with the organisation over those six years. So the huge benefit I have is that I know now how things work very much now. And I can see the art of the possible in what we can do.

"What I've really enjoyed in the months since October is how much consensus there is around the senior leadership of HMRC. It really is very strong to achieve the outcome we're looking for, particularly around digital. And the challenge we're all working on is 'what is the route-map to achieve it?' My role is very much facilitating the conversation around digital so we can decide the best route map to deliver a successful outcome."

Like Sir Alex's successor at Manchester United, Hall will be expected to deliver 'trophies', starting with the digital exemplars. It may not quite be the equivalent of 'Fergie Time' at Old Trafford, but as CIO and digital leader, it's certainly Hall's time at HMRC.




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