Jeff Butler's Presentation PDF

An IBM-TechAmerica Event
TECHAMERICA BIG DATA COMMISSION
DEMYSTIFYING BIG DATA Washington, DC

November 14, 2012
Big Data and Analytics at the IRS
Jeff Butler
Director, Research Databases
IRS, Research, Analysis & Statistics
November 14, 2012
1
Presentation Agenda
IRS business environment

Business processes, enterprise data, and systems
Research and analysis at the IRS
Examples of analytics
Methods and techniques
Skills and system requirements
Big Data environment for IRS Research
Volume, variety, velocity
Systems, architecture, tools
Information quality strategy
Best practices and lessons learned
Big Data challenges
Five myths about Big Data and Analytics
TECHAMERICA BIG DATA COMMISSION 2
DEMYSTIFYING BIG DATA An IBM-TechAmerica Event

IRS Business Environment

Business Processes Data Environment Systems & Operations
234 million tax returns filed

Tax Returns
1.8 billion third-party information returns received
$2.4 trillion in gross receipts

Accounts Management
122 million in refunds totaling $415 billion
319 million vists to IRS website

Customer Service
83 million toll-free telephone calls
223 million letters or notices sent to taxpayers

Enforcement
$116 billion in accounts receivable

Types of Data Sources of Data
Forms Taxpayers
Schedules Employers
Worksheets Information Preparers
Tax Returns
Attachments Returns
Banks
Images Brokers
Correspondence Non-Profits
Customer
Transactions Interagency
Accounts
Phone Calls Fed/State
Notices Treaty Partners
Case
Transcripts Third Party Intermediaries
Management
Structured Service
Unstructured Enforcement

Business Processes
Accounts Customer
Tax Returns Enforcement Other
Management Service
Data Systems and Applications
Tax Processing Case Management Customer Accounts

Return Submission Examination Transactions
Refunds Appeals Notices
Math Errors Collection Correspondence
Issue Resolution Underreporter Telephone
Settlements Criminal Walk-in Centers
State Exchange Investigation Web Service

Over 450 separate systems or applications in the IRS

Data are stored in different formats (flat files, XML,
databases, VSAM) and on multiple platforms
Separate authorization policies for system access
Most systems designed for operational processing, not
research or analytics
Case for Analytic Data Environment

Cost of compiling data from multiple enterprise systems is too high
Enterprise tools are not suited for advanced analytics
Operational data systems are not designed to isolate resource-
intensive computation for research and analyisis
Different skill sets are needed for analytics

IRS Research Environment

Research & Analytics in the IRS
Taxpayer Behavior Examples of Analytics

Failure to file or remit payment Predict patterns of filing and payment
Abusive tax shelters compliance
ID Theft Estimate U.S. tax gap
Return preparer non-compliance Measure taxpayer burden
Misreporting of income and deductions ID fraud and ID Theft
Refund fraud Simulate impact of legislative changes on

taxpayer behavior
Off-shore transactions
Optimize case management inventories
Analyze taxpayer networks and their
structural relationships
Develop workload allocation models

Methods and Techniques
Regression-based methods (GLM, logisitic, quantile,

non-linear, proportional hazards)
Social network analysis and graph theory
Machine learning (neural networks, SVMs, genetic
algorithms)
Education and Skills
Time series analysis
Economics
Multivariate statistical methods (discriminant analysis, Statistics
clustering, density estimation, factor analysis)
Mathematics
Simulation (Monte Carlo, MCMC, agent-based modeling)
Computer science
Decision trees (CART, CHAID, C5, hybrids) Operations research
Bayes rules and other classifiers Physics
Sampling and survey estimation Behavioral sciences

Data and Systems Requirements Solutions Checklist
Fast integration of data from a variety Does the data model allow for fast load
of sources in a format conducive to times and high performance for massively
analysis large data?
Comprehensive set of searchable Are data elements easy to find and
metadata understand?
Dynamic storage that supports user- Do flexible storage management protocols
defined data structures support user-created data?
High-performance database designed Is the right database available for fast
for analytics analytics on massively large volumes?
Tools for queries, advanced analytics, Are there tools in the right place for the
and visualization right job?
Systems to support massively large Does the systems infrastructure support
computing tasks resource-intensive computation?

Big Data Environment

IRS Research: Big Data Environment
Compliance Data Warehouse (CDW)
Overview and Capabilities
Data from over 30 sources, including tax returns, customer

accounts, case management systems, and third parties
Computing environment for resource-intensive processing
and user-defined data structures
Metadata for over 32,500 columns that includes definitions,
lookup tables, cross-references, and other artifacts
Tools for a variety of analytics, including SAS, SQL, R, Stata,
Hyperion, and ArcGIS
Web services for data profiling, reports, SSN masking, and
password management
Training and support to ensure efficient use of systems
Nearly 1,000 users from IRS, Treasury, Congress, and
universities

Compliance Data Warehouse (CDW)
Key Features
Number of key data sources ........................ 32

Number of database tables ...................... 1,985
Number of columns. 46,150
Number of columns with searchable metadata........................... 32,510
Number of metadata-column attributes. 715,220
Total database storage .. 460TB
Total disk storage .... 1.2PB
Number of user accounts ... 920
Average daily concurrent connections ..840
Average daily database queries . 6,500
Average daily database queries from the website ...............................1,200

IRS Compliance Data Warehouse
Data Availability (Volume)
Storage Volume, in Terabytes Number of User Database Tables
2500 3000
2000 2500
2000
1500
1500
1000
1000
500
500
0 0
2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013
Available Used
CDW is the largest database in the IRS

Over 1000% increase in data and storage in the past 8 years
Challenge: Is data growing faster than the resources needed to support it?

Data Timeliness (Velocity)
Frequency of Data Release Extract-to-Load Latency, in Days
200
180
160
140
120
100
80
60
40
20
0
2004 2006 2008 2010 2012 2005 2006 2007 2008 2009 2011
Continued shift to higher frequency data releases for research and analytics
In 2005, it took over 4 months to load a full year of tax return data vs. 10 hours today
Challenge: What are the limits of real-time replication in heterogeneous environments?

System and Database Usage
Average Daily Connections Average Daily Database Queries
1000 6000
900
800 5000
700 4000
600
500 3000
400
2000
300
200 1000
100
0 0
2004 2006 2008 2010 2012 2004 2006 2008 2010 2012
Accounts Daily Connections Database Queries Web Queries
Usage driven by new data, increased literacy in SQL, new tools, and web services
New users in Treasury, Joint Committee on Taxation (Congress), universities
Challenge: What is the right mix of analytic and operational use?

Metadata Management
Number of Columns with Metadata
60000
Metadata Matters
50000 One of the most important ingredients for
data warehousing success
40000
Touches every part of the data supply chain
30000 Informs and guides decision making
User satisfaction is highly correlated to
20000 robust, accessible metadata
New frontier: Real-time data profiling at the
10000
metadata layer
0
2005 2006 2007 2008 2009 2011 2013
Columns Metadata
CDW has the largest structured metadata repository in the IRS

In 2012, more than 32,500 columns each with over 20 separate metadata attributes
Challenge: How to minimize the lag time between data and metadata releases?

Data Supply Chain
Source Systems
Query, Analysis, Reporting

Database
Extract Staging
Flat File Transform

Load
DW
XML
Validate
VSAM Roll-Ups
Source Metadata ETL/T Metadata Data Model Metadata Report Metadata
Central Metadata Repository Web Accessible

System and Data Accessibility
Database Servers Application/Web Servers

(Sybase IQ, Oracle, SQL Server) Shared Storage (>1PB) (SAS, R, Hyperion)
(DB, Backup, Staging, User)
IRS Network IRS Network
SAS R SQL ODBC/JDBC Hyperion ArcGIS

Systems Infrastructure
Servers
2005-2009: 2x CPU 192GB RAM
2009-2012: 4x CPU 512GB RAM
2012-2014: 8x CPU 1024GB RAM
Storage
2005-2009: 256MB drives, 1-2Gb/s I/O
2009-2012: 1GB drives, 2-4Gb/s I/O
2012-2014: 3GB drives, 8Gb/s I/O
Networking
SAN, bus adapter, and backplane speeds
are critical for I/O-bound tasks
Most high-volume queries are I/O bound
Strategy for High Performance

Continue to leverage Moores and Kryders law
Find opportunities to improve network throughput for I/O bound tasks

Web Services: Metadata and Data Profiling

Web Services: Metadata and Data Profiling

Best Practices and Lessons Learned

Strategies for Big Data and Analytics
Build multi-disciplinary teams that combines analytic

skills (statistics, machine learning) with IT skills (system
and database administration)
Maintain a focus on data quality that includes easily
accessible metadata, web-based data profiling, and online
feedback and collaboration capabilities
Create simple data models that are conducive to the
widest possible variety of analytics
Implement right-size governance that allows for rapid
change management
Avoid investments in solutions that are in search of a
problem
Develop a culture that tolerates non-linear processes and
controlled disruption

Challenges
I/O bottlenecks from off-loading data from the database

to application server
Software vendors must push more analytic
APIs into the database
Hardware vendors must provide faster disk speeds
and network throughput rates
Continued shift in costs to software, labor, and security
Legal or administratve policies that inhibit Inter-agency
data exchange
Growth of data outpacing the ability to manage data
quality
Managing dual goals of safeguarding privacy of data
while expanding access to new information

Contact Information
If you have further questions or comments:
Jeff Butler
Director, Research Databases
Internal Revenue Service
Research, Analysis, and Statistics
jeff.butler@irs.gov

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An IBM-TechAmerica Event

TECHAMERICA BIG DATA COMMISSION

DEMYSTIFYING BIG DATA Washington, DC

Big Data and Analytics at the IRS

IRS business environment

TECHAMERICA BIG DATA COMMISSION 2

DEMYSTIFYING BIG DATA An IBM-TechAmerica Event

TECHAMERICA BIG DATA COMMISSION 3

DEMYSTIFYING BIG DATA An IBM-TechAmerica Event

Business Processes Data Environment Systems & Operations

234 million tax returns filed

$2.4 trillion in gross receipts

319 million vists to IRS website

223 million letters or notices sent to taxpayers

TECHAMERICA BIG DATA COMMISSION 4

DEMYSTIFYING BIG DATA An IBM-TechAmerica Event

Business Processes Data Environment Systems & Operations

Types of Data Sources of Data

TECHAMERICA BIG DATA COMMISSION 5

DEMYSTIFYING BIG DATA An IBM-TechAmerica Event

Business Processes Data Environment Systems & Operations

Data Systems and Applications

Tax Processing Case Management Customer Accounts

TECHAMERICA BIG DATA COMMISSION 6

DEMYSTIFYING BIG DATA An IBM-TechAmerica Event

Business Processes Data Environment Systems & Operations

Over 450 separate systems or applications in the IRS

Case for Analytic Data Environment

TECHAMERICA BIG DATA COMMISSION 7

DEMYSTIFYING BIG DATA An IBM-TechAmerica Event

TECHAMERICA BIG DATA COMMISSION 8

DEMYSTIFYING BIG DATA An IBM-TechAmerica Event

Taxpayer Behavior Examples of Analytics

ID Theft Estimate U.S. tax gap

Return preparer non-compliance Measure taxpayer burden

Misreporting of income and deductions ID fraud and ID Theft

Refund fraud Simulate impact of legislative changes on

TECHAMERICA BIG DATA COMMISSION 9

DEMYSTIFYING BIG DATA An IBM-TechAmerica Event

Methods and Techniques

Regression-based methods (GLM, logisitic, quantile,

TECHAMERICA BIG DATA COMMISSION 10

DEMYSTIFYING BIG DATA An IBM-TechAmerica Event

Data and Systems Requirements Solutions Checklist

TECHAMERICA BIG DATA COMMISSION 11

DEMYSTIFYING BIG DATA An IBM-TechAmerica Event

TECHAMERICA BIG DATA COMMISSION 12

DEMYSTIFYING BIG DATA An IBM-TechAmerica Event

Overview and Capabilities

Data from over 30 sources, including tax returns, customer

TECHAMERICA BIG DATA COMMISSION 13

DEMYSTIFYING BIG DATA An IBM-TechAmerica Event

Number of key data sources ........................ 32

TECHAMERICA BIG DATA COMMISSION 14

DEMYSTIFYING BIG DATA An IBM-TechAmerica Event

CDW is the largest database in the IRS

TECHAMERICA BIG DATA COMMISSION 15

DEMYSTIFYING BIG DATA An IBM-TechAmerica Event

TECHAMERICA BIG DATA COMMISSION 16

DEMYSTIFYING BIG DATA An IBM-TechAmerica Event

Accounts Daily Connections Database Queries Web Queries

TECHAMERICA BIG DATA COMMISSION 17