Four Mistakes to Avoid in Building an E-Customs System

What pitfalls should be avoided when developing an E-Customs system? Key risks that may arise for a country creating and implementing new customs IT systems, drawing from Poland’s experience.

The EU is building a paperless customs system – the E-Customs system, this is legislated in the EU Customs Code. The path to E-Customs involves developing and implementing a range of IT systems that will take over significant portions of customs procedures, alongside the legal and organizational transformations required to support their operation.

Ukraine faces a significant challenge: in order to be recognized as ready for EU accession, it needs to align both legally and organizationally with the Customs Union countries, while also developing and implementing a series of IT systems that meet EU requirements. Poland, having faced this monumental task earlier, offers valuable lessons that can help Ukraine avoid critical mistakes. What lessons can be drawn from Poland’s experience?

It should be noted right away: Poland encountered certain risks in advance, while others emerged during initial stages, but the key takeaway is that approaches were developed to meet EU requirements.

Possible mistake 1: “The IT Department leads the creation of E-Customs”

In Poland’s early E-Customs development phase, IT department was the one pushing towards digitization and there was a temptation to entrust everything to IT specialists, allowing the IT department to take the lead role in developing and implementing the new systems.

However, it soon became clear that IT systems are only reflections of processes owned by the respective functional departments. These departments, not IT, are the ultimate users and thus must define the business processes that the IT systems need to support. The IT department is responsible only for technical implementation, shaping the technical infrastructure and maintaining standards for a consistent IT environment.

Given the complexity of these systems, all created systems need to interact both internally and with the systems of other EU countries. Thus, pre-defined business and IT architecture must guide the design and implementation of these systems. This ensures a holistic view and allows for optimization, while integration and systems compatibility are crucial for the service-oriented architecture (SOA) that underpins the European E-Customs system.

Risks: If the IT department leads, systems may be developed without sufficient input from process owners and without necessary coordination between various processes/systems. This can result in poorly defined requirements or even missing functional requirements, defined before the start of the procurement procedure which leads to delays in system implementation, lack of integration between individual systems, and, as a consequence, manual data transfers, separate points of authorization, and fragmented access. At the end we have dissatisfied users and challenges with acceptance for changes brought by digitalization of customs processes.

Best Practice: Lead the development and implementation of IT systems through functional departments responsible for the system requirements, process management and results.

Possible mistake 2: “Doing everything in-house”

Almost immediately, the model of implementing IT system development through external contractors was chosen in Poland as the only viable option for two main reasons: the complexity of the customs IT environment (the systems that need to be changed and developed are numerous and intricate) and the limited internal resources at Customs and the Ministry of Finance.

The advantages of external contractors include competent resources, experience in developing the relevant IT systems, guaranteed final delivery (primarily through contractual mechanisms such as penalties, sanctions in case of untimely or low-quality delivery), and transparency (an international procurement process and system delivery in accordance with common standards).

Risks: Limited internal development of smaller systems was attempted in the past, but these faced challenges with integration and proper documentation. The solutions relied on the knowledge of one or a few individuals within the administration. When such a person leaves the organization, it creates significant problems for further system development and maintenance. These individuals often hesitate to share their knowledge or may be unwilling to do so at all. Other threats include potential delays in the creation and implementation of systems, possible lack of transparency during system development, and the risk of non-compliance with required standards.

Best Practice: Outsource system development, implementation, and maintenance, while the IT department focuses on quality management, methodology, technical standards, and support.

Possible mistake 3: Lack of centralized management and oversight

Effective governance reduces local initiatives and prevents duplication of system functions. Individual department initiatives not only fail to contribute but may harm the E-Customs system development. The process must be as centralized and standardized as possible.

Risks: Local initiatives may lead to multiple IT solutions developed in-house for various processes, including support processes (e.g., HR, procurement, resource management). These solutions may duplicate planned central developments level (for example, within the framework of technical assistance projects), fail to meet all necessary requirements, or lack integration with other systems. This can be expensive and inefficient, with the state ultimately bearing the cost of staff time spent on such initiatives.

Best Practice: Focus on integration and system compatibility, reuse of data, standardization, a single source of core data, a unified data model (data warehouse), a single point of access, and unified authorization.

For example, in Poland, integration efforts led to the creation of one trader registry (instead of four), one help desk, one HR/payroll system (instead of 16), one central authorization system (replacing multiple local solutions), and one risk analysis system (consolidating several risk analysis modules). A single point of access, communication portal, and data warehouse were also established.

Possible mistake 4: “IT systems are the responsibility of Departments and IT, not Leadership”

Effective leadership is crucial. The E-Customs program is not only about IT systems; it also involves the organizational and legal transformation of the Customs Service.

Risks: One of the key goals of E-Customs is to minimize the human factor, which is among the leading causes of corruption. In this sense, customs IT systems are vital for preventing corruption – but only if they themselves do not become a source of it.

Responsibility for the overall results of Customs and its transformation rests with its leadership. Thus, the Head of the Customs Service must lead the E-Customs Program. It is essential to build an effective management system for the program, with the Head of the Customs Service at its helm.

Best Practice: Define clear roles for effective management. Program formula allows for proper management and supervision in case of such a complex endeavor as E-customs environment development and implementation. The Head of the Customs Service should lead the program, with oversight provided by a Supervisory Board/Steering Committee(comprising representatives from the Ministry of Finance and the Customs Service and created by order of the Minister of Finance); Program Coordinator; Program coordination team supporting Program Coordinator; project managers; project groups (based mainly in the structures of competence centers).

For certain central projects (such as NCTS), the management structure is arranged as follows, and this model has already been successfully implemented in Ukraine during the launch of NCTS: the Supervisory Board (with the participation of senior officials from the Ministry of Finance and the State Customs Service), the project leader from Customs, and the Project Team, which consists of officials and experts directly involved in the implementation of the project.

Conclusion

Summarizing the Polish experience in building the E-Customs system, which has been developed over more than 20 years, several key aspects are evident:

The Scope of Tasks

The range of tasks Ukraine must undertake is outlined in the MASP-C (Multi-Annual Strategic Plan for Electronic Customs of the EU). Importantly, it also establishes the system requirements and the necessity for these systems to integrate with those of the Customs Union member states. For more details on the scope of the tasks, visit this link: https://biz.nv.ua/ukr/markets/ukrajina-yes-yak-modernizuvati-ukrajinsku-mitnicyu-dlya-vstupu-krajini-v-yevropeyskiy-soyuz-50432420.html

The EU4PFM program continues to prepare the specifications for IT systems and remains committed to supporting Ukraine, particularly in the development of IT systems, providing consultations, expertise, training, and capacity-building for customs officers.

by Magdalena Rzeczkowska

International Expert in Customs Reforms

EU Public Finance Management Support Programme for Ukraine (EU4PFM)

Minister of Finance of Poland in 2022-23, currently – director of the Brussels office of the Center for the Analysis of Legislation, Politics and Economics CALPE.

by Vytenis Ališauskas

Key International Expert in Customs

EU Public Finance Management Support Programme for Ukraine (EU4PFM)