FTB Offers Vendors a Detailed Look at Priorities, Challenges

Vendors looking for a quick fling should swipe left on the California Franchise Tax Board; they’re admittedly “needy” and looking for a real relationship.

IT and cyber officials briefed industry during a private look June 10 at the agency’s strategy and upcoming needs. The takeaways from that conversation included the measured rollouts of new technology, the need for strong security across the enterprise, and calls for long-term commitment.

For those who have been dodging their state income taxes, FTB is the premier tax agency of the land. It processes a staggering $166 billion in tax revenue — or 78 percent of the General Fund — from more than 22 million tax returns each year.

CIO Nadean Shavor noted that this work requires the agency to have one of the largest IT footprints in state government. Its structure has historically been a layered, function-based model that Shavor said has not been very efficient. As such, FTB is currently in the early stages of reorganizing to align with a more product-line model.

In recent years, FTB has been focused on modernizing its IT infrastructure and has seen significant rollouts, like the Enterprise Data to Revenue Project Phase 2 (EDR2). Shavor said EDR3 is just around the corner. That project will replace the FTB’s accounting system.

Chief Technology Officer Lisa Portillo noted that there are some opportunities for more basic improvements to the FTB portfolio, namely a structured and deliberate move toward the cloud, modernization of the case management system and honing the department’s data use.

Both Portillo and Shavor underscored the need to reduce the department’s technical debt. Part of that process also includes solutions that FTB can maintain and operate without long-term costs post-implementation.

Where new solutions are involved, there are multiple considerations for the department, Shavor said. They include ongoing maintenance and operations, staff training and cost modeling. While FTB has historically been able to navigate the capital outlay model on a five- to 10-year timeline, consumption-based models are introducing less predictability.

“That’s the kind of stuff that I’m really worried about with very tight budgets,” she said. “And so, trying to figure out that model and how we do that prediction in this cloud environment, I think, does keep me up a lot at night.”

The responsibility to collect state income tax comes with a whole host of pre-existing security concerns as well as emergent ones, CISO Robert Mayorga told the packed house. The state’s tight budget situation has made efficiency and consolidation of security tools unavoidable.

Mayorga added that partnerships in both the public and private sectors, as well as timely intelligence, play a huge part in managing the threat landscape and developing longer-term business forecasts.

Where AI is concerned, the trio takes a cautious approach. For the technical team, the tools need to solve real problems or dramatically improve workflows; on the security side, they pose a very real threat and possible defense against that threat.

“We no longer have the luxury of time, right? These are models that, over the next 12 to 18 months, are, in real time, discovering vulnerabilities and simultaneously developing exploits to take advantage of those vulnerabilities. So, that’s pretty daunting,” the CISO said.

Portillo said the FTB is currently working on its first major AI implementation and is not looking to rush into others just yet. Understanding where the technology fits in the broader mission is essential from both an operational and security standpoint.

“We’re still figuring out how to do the implementation to provide the service, bring the value, while still maintaining the guardrails of what we set out with our security stance,” Portillo said.

For vendors looking to go steady with FTB, the trio had very simple ground rules: come prepared and aware of the mission, don’t oversell your capabilities expecting to clean up on the back end, don’t come to the first date expecting to walk away with a proof of concept in the bag, and don’t rely solely on email to make a connection.

“Like some of you know that have a relationship with us, we’re kind of needy sometimes. … It is the truth. We have a lot of ideas of where we want to go, and we have a lot of questions, because we want to be really safe when we’re plotting out a strategic direction of what we look like, what we’re looking like for the next few years,” Portillo said.