$21m gone, but IRD says system revamp achievable

Fusion middleware licences bought from Oracle will be used, despite halting of project

Inland Revenue’s new strategy to develop software for the processing of student loans to a new legislative framework will be possible within the remaining budget, says Peter Mersi, deputy commissioner for business transformation.

This is despite abandoning its Oracle software project, resulting in $21 million being written off. Cabinet had approved a budget of $35 million to be spent on the system.

Mersi says the new course of development can be finished with the remaining $14 million.

IRD has changed tack away from what proved to be a complex approach based on Oracle’s Enterprise Tax Management (ETM) software and will now cater for the changes to student loans processing by enhancing its FIRST system.

“We are not building our own system,” he says “We are modifying our existing system, which we know and understand. The same analysis and design process which indicated that the proposed new system for student loans would not meet budget and deadline requirements, showed we can meet those requirements through modifications to FIRST.”

Development done on the interface of student loans to the Studylink system at the Ministry of Social Development has used the Fusion middleware licensed from Oracle and this component will go into operation as part of the final system, Mersi says. This part of the system is already in testing and will enable students to monitor their borrowings and repayments without having to contact both IRD and MSD.

Changes to the student loans system were necessary to handle the provisions of the Student Loan Scheme Bill, currently going through Parliament, but the Oracle ETM-based system was also intended to be the first component of a broad-ranging new computer system for IRD.

Although this approach has been abandoned, “the long-term plan is still to move eventually away from FIRST, which is now more than 20 years old,” Mersi says. “Work done on FIRST in recent years, along with the planned modifications, means we are confident it will perform the student loans functions as required until its eventual replacement.”

What went wrong with Oracle approach

The original approach was changed because the work proved far more difficult and time-consuming than anticipated, IRD says. It was evident that it would not be possible to finish the project in time for the legislation change, or within the $35m budget using the ETM plan.

The extract, transform and load of data from the existing system to the new proved to be particularly problematic. “The difficulties arose because of the particular complications of student loans,” Mersi says.

“Unlike a normal bank loan, for example, repayments depend on factors including the loan-holder’s income, whether he or she is resident in New Zealand, and the need to apply these rules retrospectively, in some cases back to 1992. All of these factors are programmed into FIRST, and proved far more difficult to extract and migrate than expected.”

Computerworld lodges Official Information request

Computerworld requested a detailed breakdown of the $21million spent so far, in terms of the amounts spent on Oracle licences fees and development effort, with an indication of how much spending (including licences) would still be useful and how much has gone to waste.

No such detailed breakdown has yet been provided. “The bulk of the expenditure to date will either directly contribute to delivering student loans through FIRST - for example the Fusion middleware licenses we purchased are being used to build new interfaces between Inland Revenue and Studylink – or will be used in future products,” Mersi says in a written statement.

Computerworld has lodged a request under the Official Information Act for copies of Oracle’s original proposal, progress reports and correspondence pertinent to the development.

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Tags OracleFusion MiddlewareIRDfrststudent loan system

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