LoS - Performance-Orientated Controlling

Acronym of the case:

LoS@BMF

Web address of the case:

http://english.bmf.gv.at/EGov/_start.htm

Country of the case:

Austria

Posting Date:

2 October 2009

Last Edited Date:

30 October 2009

Author:

Georg Gottholmseder (Federal Ministry of Finance)

Controlling | performance-orientation | Performance Management

Type of initiative

Strategic initiative

Case Abstract

Performance-oriented controlling procedures (Performance Management) in the Austrian tax and customs administration are based on an integral, systematic and multidimensional measuring, controlling and supervising (supervision) of performance. The basic principles of this performance-oriented controlling are:

Â·Â Â Â Â Â Â Â Â Object-oriented structures (tax offices and customs offices as partly autonomous units with sovereignty in matters of budget, staff and organisation)

Â·Â Â Â Â Â Â Â Â Autonomous responsibility in the following positions: team-leaders, executive directors, regional managers

Â·Â Â Â Â Â Â Â Â Permanent process of controlling strategy meetings, meetings on agreements on objectives, staff colloquies, local meetings of the managerial staff, regional and central meetings for the purpose of controlling

Â·Â Â Â Â Â Â Â Â Comprehensive controlling instruments, budget and resource plan, agreements on objectives, management information systems about performances and resources, systems for quality and knowledge management)

The core of this performance-oriented controlling is LoS, the Management Information System of the Austrian tax and customs administration. LoS is based on a performance measurement system that refers to the most important and controlling-relevant processes of tax and customs administration. For each of these processes, efficient key performance indicators have been defined, which serve to measure and analyse the success of a tax office or a customs office. The performance measurement system was developed according to the 3-level-model (economy, efficiency, effectiveness) with regard to the dimensions of a Balanced Scorecard (staff, customers, processes, finances). With the help of an integrated reporting system the results and the corresponding analysis as well as planned measures are communicated and exposed once a month to controlling on subsequent hierarchical levels, thereby supporting managerial staff in making their decisions. Through the so-called hierarchical transparency of the system, in addition to the corresponding hierarchical levels the individual units are also informed about the performance indicators of the units that are horizontally comparable to them. In this way, besides the effect of hierarchical controlling, internal competition and learning from each other are also supported.

The system LoS is responsible for the effect-oriented or rather efficiency controlling of about 10,000 employees (7450 in the tax offices, 1700 in the customs offices, 700 in the Audit Unit for Large Traders, 150 in the Tax Investigation Â Unit). Currently the system is at the disposal of altogether 390 employees in all offices of the Austrian fiscal administration since the beginning of April 2009 with 181 performance indicators in the field of taxes and 104 performance indicators in the field of customs. The monthly provision of data has to be carried out until the 12^th of the following month. At present the data volume transmitted monthly amounts to/ constitutes around 17 GB. The system is arranged as a web application, so that it can be accessed via the portal of the ministry of finance by the responsible employees.

Description of the case

Domain

eGovernment

Topic

Efficiency & Effectiveness, Benchmarking

Sector

Customs | Tax

Start date - End date

January 2005 (Ongoing)

Date operational

May 2007

Target Users

Administrative

Target Users Description

Key users of LoS are the employees within the department of Administrative Management of the Tax and Customs Administration in the Ministry of Finance, staff in charge of performance management within the Coordination of Taxes and Customs (=regional management level) and on the level of offices all executive directors (managers of the offices) and also partially the team-leaders (teams are the organisational units within offices). Since the conclusion of the third project stage (in April 2009) the system is available for about 390 users providing 181 indicators in the field of taxes and 104 indicators in the field of customs.

Scope

National | Regional (sub-national)

Status

Operation

Language(s)

German

Policy Context and Legal Framework

The basis for the implementation of the Management Information System LoS â€“ Performance-Oriented Controlling - was the reform of the tax and customs administration concerning about 10,000 employees.

A reform was indicatedÂ due to internal and external factors. Between 2001 and 2005 tax offices had to cope with a 24 percent increase in workload in the field of wage tax assessments while being confronted with an average reduction of personnel by 37 percent throughout Austria.

Existing differences in performances between the organisational units / offices became visible for example in considerable differences in the average processing time of applications or in the frequency of controls (e.g. processing time ranged between 38 and 87 days, differences in frequency of controls up to the threefold degree). Among the offices huge differences in size (e.g.18 to 320) employees existed. Development of staff and controlling did practically not exist.

Furthermore obsolete and inefficient processes, ineffective instruments of controlling, rigid hierarchical structures, technological changes and the upcoming expansion to Eastern Europe - in combination with the abolition of national borders within the European Union â€“ required a fundamentally new orientation of the Austrian fiscal administration with regard to the principles of New Public Management and Good Governance.

During a process lasting 5 years, not only the operational and organisational structures were re-organised, but also new instruments based on business management for improving performance have been introduced and a cultural change started. The target of the reform was to establish a service-oriented, economical, flexible and efficient organisation that should be able to cope with the quickly changing requirements. The traditional administration that had been controlled and managed via input data should develop into a context-oriented (oriented on stakeholder) administration, competent in performance or rather in effects of performance.

Since the completion of the reform in 2005 the Austrian fiscal administration presents itself with completely new organisational structures. The tax offices / customs offices have been put together into economically comparable organisational units. For the implementation of the reform a development oriented approach has been chosen. We started out from the assumption that the employees themselves should be able to develop a model suitable for the future. By far the greatest challenge regarding the reform was to initiate a basic change of the proceeding-culture within the fiscal administration. Long-term aspects of this new culture are service-orientation, performance-orientation, self responsibility, transparency and the willingness towards changes. Instruments based on the management principles of New Public Management were implemented and further developed consequently regarding the trend of Good Governance or rather Public Governance.

Since then management by objectives has been an essential part of the yearly planning and implementation process in the fiscal administration.

These profound changes provided the premise for the implementation of performance-oriented controlling and in the same way the basis for the start of the project LoS. Endorsing the autonomous responsibility of the managerial staff, assigning the responsibility for results and the allocation of resources and controlling by means of yearly agreements on objectives and performance required a comprehensive instrument for planning, controlling and for taking effective measures. The target was to provide a modern and complete controlling and analysing system for the responsible management level so that all parts of the fiscal administration (taxes and customs) as well as the whole controlling process (from planning targets â€“ realizing deviations â€“ analysis of deviations up to the documentation of measures for counterbalancing) would be covered.

Project Size and Implementation

Type of initiative

IT infrastructures and products

Overall Implementation approach

Public administration

Technology choice

Standards-based technology

Funding source

Public funding national

Project size

Implementation: €5,000,000-10,000,000

Yearly cost:

€500-999,000

Implementation and Management Approach

The development and implementation occurred in three stages:

LoS stage I: from 2005 to 2006

In the first stage of the project the conceptional definition of contents and instruments for the process of performance controlling, requirements regarding the technical systems as well as the data model and the presentation of the data supply processes have been defined. The result of this project stage was a comprehensive expert concept representing the basis for the following technical implementation.

LoS stage II: from 2006 to midyear 2007

In this stage the technical implementation was starting up. First of all a detailed description and an exact definition of performance indicators with the corresponding opportunities for presentation and analysis as well as the determination of data fields for single data records have been installed. The implementation was lasting about one year and in spring 2007, 84 indicators in the field of customs and 148 indicators in the field of taxes for about 140 users at all organisational levels (Federal Ministry of Finance, Coordination of taxes and customs, tax offices, customs offices, Audit Unit for Large Traders) were ready for use. The guidelines for the use of LoS like for example concerning the reporting of planned values as well as the obligation for commenting deviations are defined in the â€LoS Introduction Directiveâ€. The results with regard to the achievement of objectives per organisational unit (up to the team level) are represented by means of a traffic light system (red â€“ yellow â€“green). An implemented reporting system with standardized reports serves to inform simultaneously the managerial staff and supports them in their administrative practice. In the run-up to a comprehensive introduction, the system was presented to the prospective users by means of a nationwide information meeting. Each user was intensely trained regarding the contents and the application of the system. Furthermore a discussion forum via intranet for the exchange of experiences was established and a second-level-support was implemented. The current transmission of information occurs via a specially established user-platform. In addition, all reforms, changes, contents and training documents are provided directly by the system. At the moment the database covers performance indicators for the years 2007, 2008 and 2009. The data contents are updated and edited monthly and are available from the 12^th of the following month.

LoS stage III: from midyear 2007 to midyear 2009Â Â Â Â Â Â Â Â Â Â Â Â Â

During the last project stage the existing system was further consolidated technically as well as with regard to content. Concerning technical matters it was necessary to strengthen the existing infrastructure by a dynamic assignment of processor performances, to allow the handling of extreme work loads to be expected in the future. The implementation of a 3-stage-system environment (Development-Test-Production) made it possible to improve the system while maintaining the operation process. Furthermore offices (Tax Investigation Unit) and areas (valuation of economic units of property for purposes of taxation, completion of legal remedies, penal procedures) not included so far, have been integrated into the system and have been represented by means of the corresponding performance indicators.

At this stage of extension all executive directors (managers of the offices) and also partially the team-leaders have been integrated. Since the conclusion of the project stage (in April 2009) the system is available for about 390 users providing 181 indicators in the field of taxes and 104 indicators in the field of customs.

Technology solution

For the act of implementation the standard products Oracle as database, Oracle Warehouse Builder for data supply and Cognos 8.2 as instrument of interpretation and analysis have been selected and the products Metrics Studio, Analysis Studio and Cognos Viewer have been utilized. They were chosen because of the standard technology that was used in the Federal Ministry of Finance. The system is arranged as a web application, so that it can be accessed via the BMF portal by the responsible employees.

Database server

The databases are constructed using the enterprise platform Sun E20k as it is able to provide the required processing power. For the Management Information System LoS 20 CPUCores and altogether 160 GB RAM are provided by Sun E20k.

Frontend-Server

A HP DL380 G5 serves as the systemâ€™s front-end server which is equipped with the Windows 2003 Enterprise Server R2 in a basic configuration.

The Cognos Version 8.2 serves as the systemâ€™s front-end software which makes, depending on the operation, the dashboard, the metric studio and the analysis studio as instruments available to the users.

Moreover, the solutions are characterized by ease of use and high performance down to the last detail.

Impact, innovation and results

Economic effects

Larger than €10,000,000

Impact

The whole organisation takes benefit of the strategic orientation of the fiscal administration based on a completely new understanding of management and the aspect of performance orientation. Through the application of LoS performances can be planned and performance priorities can be directed. The focus is primarily set on results. Thanks to a comprehensive controlling, resources can be applied in an optimal way. With regard to LoS the employees profit from a concrete and detailed summary of own targets and priorities of the current year and of the current achievements of objectives.

At management level LoS supports staff supervision and makes it possible to harmonize the targets of the staff with those of the organisational units. The finance department profits amongst others from realizing developments promptly and as a result from taking strategic measures in time.

At all hierarchical levels LoS supports the managerial staff through a prompt overview and an uncomplicated supervision of achieved results referring to the agreed objectives. In this way it is possible to notice deviations from determined objectives quickly and to counteract accordingly. The standardized data supply allows a comparison within the offices and supports constructive internal competition. The system covers the whole controlling process from planning objectives, realizing deviations, deviation analysis, up to the documentation of measures to counteract through the input of planned values and the technical possibility of commenting.

LoS is a comprehensive arrangement of controlling instruments with tax- and customs-relevant information and points of view on a federal and a regional level and on the level of offices and teams. The comprehensive data contents being produced by LoS serve as a sensorium for risk potentials.

The data processed by the system are monthly dislocated from the productive systems and do not lead to any additional recording expenditure. LoS also serves as source of information for the specific areas of responsibility in the field of taxes and customs which are handled by specialized departments of the Federal Ministry of Finance.

During the last years the Austrian fiscal administration had to accept a dramatic staff reduction while the requirements increased constantly. The implemented controlling mechanism and LoS as Management Information System supported the administration in coping with this development.

Since the implementation of LoS the implemented controlling processes and the transparent presentation of performances and achievements of objectives already resulted in a considerable reduction of processing time referring to applications, mainly in the citizen-oriented field of allowances. The processing time ofÂ applications for family allowance (about 800,000 applications yearly) could be reduced from 25.7 calendar days to 17.4 calendar days (about 32%).

In the field of audit, the results achieved in 2008 by the use of clearly defined objectives and by targeted controlling were at a record level. The enforceable tax arrears could be reduced continuously through increasing efficiency and by intensifying the activities to recover tax debts.

In 2006 processing times for granting approvals according to customs law differedÂ significantly from each other in nationwide comparison (from 36 calendar days up to 7 calendar days) but this improved considerably in 2008.

Track record of sharing

Since the development of the application for and with the Ministry of Finance has just finished, there has so far not been any exchange of transfer with other institutions. Nevertheless, the project has been presented to the Public Management Department of the Federal Chancellery to point out the high potential of a comprehensive performance management tool. Together with the Federal Chancellery and two other Austrian ministries, a cooperation is being started, where the Ministry of Finance will share it's experiences with LoS.

Lessons learnt

Transparency concerning performance indicators increases performance
After a short period of scepticism acceptance among users is rather high
Being an early adopter in the field of comprehensive performance measurement raised employee motivation.