The United States Internal Revenue Service (IRS) serves ( more people in the United States than any other public f or private institution. Each year, it processes over 200 million tax returns from more than 1 80 million individuals and more than 45 million businesses. The IRS
itself employs more than 100,000 people in over
1,000 different sites. In a typical year, it adapts to
more than 200 tax law changes and services more
than 23 million telephone calls,
Amazingly, the IRS accomplishes this work
using information systems that were designed and
developed in the 1960s, In fact, some of the com-
puter programs that process tax returns were first writ-
ten in 1962. In the mid-1990s, the IRS set out on a
Business System Modernization (BSM) project that
would replace this antiquated system with modern
technology and capabilities. However, by 2003, it
was clear that this project was a disaster. Billions of dollars had been spent on the project, and all major components of the new system were months or years
behind schedule.
In 2003, newly appointed IRS commissioner
Mark W. Everson called for an independent review of
all BSM projects. Systems development experts from
the Software Engineering Institute at Carnegie Mellon
University and the Mitre Corporation, as well as man-
I agers from the IRS, examined the project and made a
list of factors that contributed to the failure as well as recommendations for solutions. In their report, the first two causes of failure cited were: