H&R Block’s blockbuster data strategy

If you think your company isn’t making the most of its data, you’re probably right.

Just ask H&R Block. In 2019, before most people began sheltering in place due to COVID, the company rolled out a new data platform that would allow it to digitally serve the 13 million people who usually get their taxes done via tax prep experts at one of the company’s 10,000-plus retail offices.

“The upgrades we made came just in time because otherwise, we would have faced a much bigger problem,” says Aditya Thadani, the company’s vice president in charge of digital transformation and enterprise architecture.

H&R Block’s new data strategy, based on Microsoft’s Intelligent Data Platform, has been an essential ingredient in possibly the most sweeping strategic expansion in the company’s 67-year history. Rather than just focusing on tax-preparation services—a large percentage of the company’s revenues are booked in the two weeks before Tax Day—the company has become a player in the much larger market for small business services and has introduced a mobile banking app for consumers.

As a result, H&R Block is now a Wall Street darling. As of January 2023, the company’s share price had nearly tripled since the new data strategy was put in place.

While the timing may have been fortunate, the story nonetheless shows how a well-executed data modernization strategy can have a massive impact on everything from the speed of innovation to customer experience to bottom-line results.

The seeds of this resurgence were planted in 2017, when new CEO Jeff Jones began thinking about ways to leverage H&R Block’s reputation and retail presence to establish a broader, deeper relationship with clients throughout the year. Why stop at tax help, when small business owners who were short on time and sometimes financial expertise also needed help with payroll, invoicing, and strategy? Why not empower its 8 million “under-banked” clients—typically less-affluent people who don’t have, or don’t take full advantage of, a bank account—to participate more fully in the digital economy?

But there was a problem. The company’s previous approach to data was not up to the job. In fact, the walk-in business, which serves 13 million clients, and the online software business, which serves an additional 7 million, felt like two different companies. While the company has offered an online service since 2004, if a “DIY” client who did their taxes online walked into a retail location for some extra help, the tax pros there would have no record that they existed. To get help, they would have had to begin a new tax return from scratch, starting with their name and address. Similarly, walk-in clients couldn’t easily update or continue working on their tax return online once they got home.

“We tried to serve the client the way they want, where they want, but could we really?” says Thadani. “We had two operating units running on two different technology stacks that didn’t talk to each other. The information was completely siloed, introducing friction as clients switched from one channel to another.”

In early 2018, Jones approved investments to make IT a catalyst, rather than an obstacle, to fully realizing this vision.

Step one was obvious, but formidable: to transform the company’s underlying architecture from on-premises technology running in the company’s Kansas City data center to the cloud. Over an eight-month period, a team led by Sameer Agarwal, IT director of data platforms, migrated a million lines of code running on legacy AS400 and Netezza appliances to Microsoft SQL Server, and consolidated five racks of data appliances into a single rack of servers to handle applications that still needed to run on-premises. Today, 75 percent of the company’s workload is managed on Microsoft Azure, and Agarwal expects that to rise to 90 percent by mid-2023.