In recent years, governments have moved from digitisation, the transfer of manual records to digital formats, to digitalisation. This takes advantage of digital technologies to do things differently, such as the online payment of taxes. Research by McKinsey indicates that, globally, the annual economic value of these initiatives could be as high as $1 trillion in terms of improved cost and operational performance.12
Digital transformation leverages digital technologies to do different things, changing operating models to enable new opportunities for creating revenue and value. Finance professionals in the government sector overwhelmingly agree that digital technologies are crucial to current and future success. They also understand that the communication and integration of strategy are integral to that success.
The impact of digitalisation is rapidly growing as government entities increasingly deploy the cloud, data analytics, mobile solutions, and social media. They are doing so not only to provide performance data and online services to citizens and other stakeholders but also to exploit internal opportunities to improve operational quality and efficiency.
But some public services are still running on slow, fragmented computer systems from decades past. In such cases, governments face a significant challenge. They need to take an ‘ecosystem’ approach to overcome silos, creating economies of scale, re-engineering obsolete or inefficient processes, and enabling integrated services across and between government organisations.The following examples illustrate some ways local government bodies can respond to technology, particularly attacks on their services through integrated services.
________________________________________________________________________________________________________________________________________________________________________________________12 Cem Dilmegani, Bengi Korkmaz, and Martin Lundqvist. ‘Public-sector digitization: The trillion-dollar challenge,’ McKinsey Digital (McKinsey & Co., 1 December 2014).
The following situation is becoming increasingly ‘normal’ and we can learn by examining how this government responded to an attack.13
The Crawford County government still can’t provide certain services after getting hit by a malware attack over the Christmas holidays.
County Judge Dennis Gilstrap said Tuesday ransomware of unknown origin struck the county’s servers Dec. 26. He said it could be two or three weeks before the county’s computer system is back online and completely recovered.
The FBI website defines ransomware as malicious software preventing access to computer files, systems or networks and demands a ransom in exchange for their return.
Gilstrap said Crawford County hasn’t paid a ransom. The county’s information technology provider, the Rogers [AR]-based Apprentice Information Systems, shut down everything as soon as the county realized it had been hit by a cyber-attack. This included all of the county’s servers and computers.
‘And so it’s just kind of been a method of discovery as they go in and bring back up to see what information may have been lost or compromised’, Gilstrap said. ‘To this point, we did lose some of the files on the individual computers’.
Gilstrap attributed the time it’s been taking to address this issue to Apprentice needing to ‘reimage’ the county’s computers. He estimated the number of these computers to be about 200 and said they were hit at different levels.
However, Gilstrap said most of the files lost weren’t vital and not backed up on the computer system.
‘Which information we keep on those computers is pretty much public information with the exception of employee serial numbers, Social Security numbers, that type of thing, and we don’t feel like any of that was compromised’, Gilstrap said.
________________________________________________________________________________________________________________________________________________________________________________________13 Thomas Saccente, ‘Crawford County grappling with ransomware attack aftermath’, Arkansas Democrat-Gazette, 16 January 2022.
Apprentice’s policy isn’t to comment on ongoing issues such as this, according to the county judge’s office.
Every county department is still dealing with the effects of the ransomware attack, which has caused inconvenience for residents, according to Gilstrap. For example, a couple of days following the attack, residents wanting to pay their taxes were redirected to how they could do so online.
‘The plan was to go back and get every office one or two of their computers in each office reimaged and up to operating until we could get them all’, Gilstrap said.
County Clerk Jo Wester said her office couldn’t do anything for residents; it needs to print a receipt or have a document as of Wednesday. This includes issuing marriage licenses, doing business as cards and ministerial credential cards. It also can’t copy marriage licenses, although it can register voters.
The Pennsylvania Department of Revenue has been working to implement a new tax system to improve customer service and replace outdated technology in use at the department for several decades. Some highlights of the project are listed here, as outlined by Pennsylvania’s Department of Revenue secretary in 2022, and include the implementation of the department’s new tax system — the Pennsylvania Tax Hub (PATH) — as well as myPATH, the online portal that customers use to meet their filing, payment and account obligations.14
Since the new system’s inception in January 2019, there have been more than 2 million refunds issued out of PATH for more than $952 million, most of which were issued electronically via direct deposit.
Over 10.3 million payments have been processed in PATH for a total of more than $22 billion. 99.9% of payments processed through PATH have not required manual intervention by a DOR employee.
Over 31,000 property tax/rent rebate applications have been submitted via myPATH since this new service debuted on Nov. 30, 2020. This is a significant amount when you consider this electronic filing option was never available to Pennsylvania citizens before myPATH.
Users of myPATH have remitted over 350,000 payments and more than 350,000 returns so far.
The new portal provided International Fuel Tax Agreement (IFTA) customers with online self-service options for the first time. Over 85% of IFTA customers are now using myPATH.
The department has realised more than a 90% reduction in the error rate in IFTA returns received via myPATH compared to the legacy paper-based system.
Since it debuted in February 2019, myPATH has been visited more than 1.4 million times while logged in and more than 881,000 times while not logged in.
Over 66,000 myPATH accounts have been created since inception.
‘The benefits of this project align with the department’s strategic goals related to streamlining agency processes, improving customer service, boosting tax compliance and improving the public’s confidence in the department,’ notes John Kaschak, Pennsylvania’s executive deputy secretary for revenue. ‘Many of the changes resulting from the modernisation effort also are allowing department employees to focus on value-added processes and processes that are core to our mission’. Kaschak added that the additional electronic services should result in fewer processing errors related to returns and payments.
________________________________________________________________________________________________________________________________________________________________________________________14 Dan Hassell, Secretary for the Pennsylvania Department of Revenue, budget hearing testimony before the House Appropriations Committee, 15 February 2022. (broken link)