The Office of State Revenue Queensland has incorporated mining royalties into its SAP ERP system and built an innovative and simple front-end eBusiness application. Not only has it been a hit with clients, the project was awarded a Best Run Database & Technology Platform – App Development and Integration Award at the 2013 SAP Customer Awards of Excellence. Eleanor Reader reports.
The Office of State Revenue (OSR) is responsible for the taxation aspects of Queensland Treasury’s Revenue Program, administering state duties, taxes and grants for the people of Queensland. It collects royalties, payroll tax, duties and land tax, and administers the first home owner grant.
When the Queensland Government underwent a whole-of-government change in 2012, the OSR was given responsibility for looking after mining royalties – a new revenue stream.
To do so, they needed to build the mining royalties into the back-end SAP ERP system from scratch and design a new customer focused front-end application to address growing concerns from customers.
“We had a number [of front-end applications] already in place for other revenue lines, such as payroll tax and duties in particular, which provided a service, but our clients were telling us that there were some issues they were facing using that particular way of lodging returns,” says Dave Elson, director of enterprise systems and grants management, OSR.
The OSR took the opportunity to review the service delivery, and after an initial kick-off meeting, decided the interface should be very simple and intuitive, so the application didn’t require too much in-built help text.
The challenge
Mining royalties, by nature, are extremely complex. The front-end application needed to show the clients what their obligations were, what they had lodged and what they needed to do, all the while doing the basic calculations through the whole process, so they could actually lodge a return.
The OSR chose UXC Oxygen (formerly Stream Technologies) as its implementation partner on the project.
However, to build a solution which could handle the level of complexity involved in mining royalties and make it simple was going to be no mean feat. There would only be a small group of companies using the system, but they are very, very large players. To build an application that satisfied these large organisations, it was critical that OSR spent a considerable amount of time with them working through the application process. A group of 20 were chosen to give feedback.
“We actually sat down with them and said, ‘This is what it looks like, give us your feedback’. I think we incorporated around 40 per cent of their changes into the final design,” says Elson.
Gough Venter, director of innovation at UXC Oxygen, says he found the OSR’s ability to engage customers at an early stage with co-design sessions interesting and very progressive for a government department.
“They are really customer focused,” he says. “It’s almost as though the customer themselves were designing their own experience.”
The OSR initially engaged SAP, with whom they have a close working relationship, for the project. However there were some concerns that what they were proposing didn’t actually meet their needs.
“UXC Oxygen met our requirements regarding the build and also they had a track-record in developing custom front-end applications which were web-based and very intuitive. And to be perfectly honest, they offered us a great price, which meant value for money for taxpayers,” says Elson.
The solution
The solution was built using a similar approach that SAP has taken with CRM Web Channel.
“SAP were moving in that direction for the CRM Web Channel framework. We looked at how it was constructed and used that approach with Java, because it seems to be the way that customer-facing applications are going,” says Martin Costello, applications manager of enterprise systems, OSR.
The back-end ERP remained as standard as they could make it, while all their energy was directed at building the best front-end client application they could.
“The back-end system, which is doing all the heavy lifting, is standard, whereas we try to customise the front-end as much as possible because of the client,” says Elson.
Venter adds that it was good to be able to build the solution using the administration of royalties as the starting point, because they are the most complex aspect of OSR’s business.
“It’s rare to build a framework that we could replicate to other revenue streams and other kinds of returns. The framework has subsequently been used for payroll tax, insurance duties and so on, and eventually maybe down the track for grants. There is a big focus on a robust design when building a repeatable solution,” says Venter.
The implementation
The solution was implemented in 10 months and the first batch of royalties went live in September 2012. Considering the complicated nature of royalties payments, Elson says it was quite an aggressive timeframe to put in place, especially considering government traditionally doesn’t necessarily have the best delivery track record.
“Within OSR, we do deliver on time and budget. Some of the comments after the project went live were that it was probably the smoothest implementation they have ever had,” he says.
A team of 30-40 people worked on the project, and although there were no particular dramas during the implementation, the team did need to put change control processes in place, as well as learn how the whole Java environment works.
One of the critical factors for the successful implementation was that OSR had UXC Oxygen on-site and had a very strong project management framework in place, according to Elson. This allowed the team to simply work through issues as they arose, with communication being hugely important.
“There is always going to be issues on any project – it was just a matter of sitting down and trying to find a solution,” he says.
The OSR rolled out the same framework for payroll payments in June this year, which only took eight weeks to build, test and implement. Having the initial design time to really get it right the first time and then be able to replicate that framework made the process as efficient as possible, says Costello.
As opposed to royalties, which are complex but limited, the size and scale of payroll was the challenging element. Every business that does any work with any business in Queensland or had large returns through the payroll tax forms are included – resulting in the system needing to service 21,000 users.
The client-facing application offers two new features: authentication via the AUSkey credential and a Twitter feed.
“We tightened up some of the authentication in the front-end using AUSkey. Because it’s critical and very market-intensive information, our royalties division is very concerned with security and access,” says Elson.
“We also built into the application our Twitter feed as well, so when they log in they can see that feed, whether it’s about training or allotment dates, which is quite unique. I don’t think there are any other return applications which do that.”
The OSR has just been through its peak period for the year – the annual payroll return lodgement. While all 21,000 users are now on the solution, they started with a pilot group of 900 users, who were known to have had issues previously.
“We targeted users who were still using paper lodgement and weren’t embracing the e-business channel, as well as clients who experience compatibility issues, whether that be with Internet Explorer or Adobe, which numbers around 400-500 each month,” says Elson.
“Out of the 900 pilot users, we had no system issues at all. The only issue we had was against one client and that was an existing back-end service which we believe is somehow related to volume, and we haven’t completed our stress and volume testing.”
Business benefits
As a result of implementing this new web-based system, the number of calls to OSR’s support area have reduced, which will be a significant benefit to the department in the future. The project has also been awarded a 2013 SAP Customer Award of Excellence.
“A number of pilot clients that have complete a return in June have come back in and started lodging their annual return, which is a much more complex form, without any support from the business at all. So essentially with no training, people have been able to come in and lodge a relatively complex form, which just goes to show the simple, easy and efficient mantra that we had has probably hit the mark,” says Costello.
Transaction time has also been reduced.
“We have kept the calls to the back-end to a minimum; there may have been five to seven calls to the back-end previously, now we have restricted that to two or three. The time from starting a transaction to finishing it is a lot less now as well – that’s always been one of our issues,” says Costello.
The decrease in calls to OSR’s contact centre was helped by the addition of hover text help notes, which have made the interface much more user-friendly internally and externally.
Previously the OSR business has required a significant amount of training material, but this has been simplified to just a basic user guide, “and even that is probably not going to be needed as much”, Costello adds.
The solution can also be deployed outside the government networks for when the OSR wants to demonstrate it at training seminars.
Although the OSR hasn’t followed the exact approach that SAP would have when delivering the user interface (UI), opting for the Java-based solution instead, this could be a benefit for the business.
“I think one of the advantages of having a more open platform is that we protect ourselves, because that’s what’s widely used by the community and it’s actually a good way of actually it out there, because you are not using proprietary front-end UIs that may change if SAP changes direction,” says Elson.
“We haven’t got that issue any more, we’re using something which is fairly commonly used and it’s as simple as you can get.”
Another benefit of the chosen UI is that visually it seamlessly blends into the OSR website, rather than looking like an SAP system.
Future direction
The OSR has also adopted SAP HANA, and in the future would like to see some leverage between the in-memory platform and royalties regarding its front-end compliance activity, which at the moment is a back-end process.
Because the OSR is a revenue agency, it captures a large volume of information, and the department is excited to do much better business intelligence than they have previously.
“It provides a new opportunity for us regarding auditing of royalties clients. We can do some front-end validation on that information, which we probably wouldn’t have been able to do in the past,” says Elson.
The OSR has been achieving a very high usage rate with eBusiness – around 96-97 per cent of transactions – for a long period. While it is difficult to improve on this, they are hoping to eliminate a number of issues they have faced previously and that will push the usage level even higher.
“We are very happy with what we have got and we are very happy with where we are going,” says Elson.
“I think this is a good benchmark and I think it allows us flexibility; we are looking at other areas that we hadn’t previously thought of to put online now, so it has opened up a few things for us.”
This article originally appeared in Inside SAP Summer 2013.
