2012-09-10 FMIS Training at Crown Agents

Version 7 section

• brief discussion 0. IFMIS ~ GRP Training &

Introduction to Good Practices

Version 7 section

• brief discussion

Agenda

1. Intro to FreeBalance – 15 minutes

2. FMIS/GRP Introduction – 90 minutes

3. Technology Leapfrog

– 45 minutes

4. Performance Management in PFM – 60 minutes

5. Sequencing PFM technology - Governance Valuations – 90 minutes

6. Financially sustainable GRP, governance structures, lessons learned – 45 minutes

7. GRP and Anti-Corruption – 30 minutes

8. Future of PFM technology

– 30 Minutes

9. “Parking Lot”

Version 7 section


Version 7 section 1. Valuable learning experience

2. Contrast public and private sector accounting & management

3. Training course, not a demonstration

4. Breadth of financial management in government

5. Strategic, tactical, futures

6. Vendor-neutral “good practices”

7. Share lessons among group

8. Voice lasts until end of day

9. Address specific ideas, concerns

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Version 7 section

4 4

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1. Introduction to FreeBalance

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Agenda




– 45 minutes






– 30 Minutes


“free balance”

+ Budget

- Commitments

- Obligations

- Actuals

= Free Balance

Version 7 section


for public financial management support reform and modernization to improve

governance, transparency and accountability.

FreeBalance solutions

Version 7 section


Version 7 section FreeBalance in a Nutshell

How

• For Profit Social Enterprise focused on governance

• Customer-centric to ensure customer sustainability

• Laser focus on the public sector in products and processes

• Configuration approach rather than customization

Why

• Help governments around the accelerate country growth, improve stability and reduce poverty through improved governance

What

• Comprehensive Government Resource Planning software • Implementation participation to improve success • Capacity building to achieve government self-sufficiency • Steering Committee to ensure alignment with customers

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FreeBalance Offices and Regional Support Centres

• services & support • sales, business development & marketing • product management & development • corporate services

Dili

Ulaanbaatar

Bishkek Ottawa

Guatemala City

Washington

St. Johns

Lisbon

Monrovia

Freetown Kampala

Pristina

Ramallah

Kolkata

Kabul

Bangalore

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Version 7 section

PLEASE EXCUSE THE ANY BIAS…

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BIAS 1: “GRP” VS “ERP”

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BIAS 2: INTEGRATIVE APPROACH VS “SYSTEMS INTEGRATION”

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BIAS 3: PHASED APPROACH VS “BIG BANG”

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BIAS 5: PERSPECTIVE ON CORRUPTION AND DEVELOPMENT ~ “GOOD PRACTICES” VS “BEST PRACTICES”

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First Generation “ERP Era” to

2007

Strategic Inflection

Point 2007-2010

Second Generation “GRP Era”

2010+

BIAS 5: MARKET IS CHANGING VS STAYING SAME

Version 7 section


Global PFM

Provider

Canadian Company

GRP Leader

100% Government

Focus

ISO-9001/2008

Covers Budget Cycle

Modern Web

Technology

High Success

Rate

Company Summary

Version 7 section


2. FMIS/GRP Introduction

Version 7 section


Agenda




– 45 minutes

4. Performance Management in PFM

– 60 minutes

5. Sequencing PFM technology - Governance Valuations

– 90 minutes

6. Financially sustainable GRP, governance structures, lessons learned

– 45 minutes



– 30 Minutes


What's special in Government?

Reality Check

Stakeholders

Shareholders

Citizens

hu

nd

red

s

millions Reality Check

Ownership?1

• By definition, [public sector organizations] do not 'own

themselves' in the way that commercial organisations do,

and so cannot, for example, switch from producing widgets

to making jam if they so choose. Indeed, the concept of

'successful' public sector organisations is itself elusive, for

this reason. The common currency of profit and

shareholder value that defines the private sector

clearly does not apply to public organisations, and

attainment of other goals gives no guarantees for their

future. As the requirements of public service and political

imperatives change, public sector organisations are often

reorganised, reformed or even eliminated, regardless of

their past level of achievement or recognition

1. Better Management.com

Lines of Business?

One of the most

successful and

largest business

conglomerates

across many lines of

business

http://www.ge.com/en/

Lines of Business? Agriculture and Agri-Food Canada , Atlantic Canada Opportunities Agency , Atlantic Pilotage Authority Canada , Atomic Energy of Canada Limited , Auditor General of Canada, Office of the , Bank of

Canada , Business Development Bank of Canada , Cadets Canada , Canada Border Services Agency (CBSA) , Canada Business Network , Canada Council for the Arts , Canada Deposit Insurance

Corporation , Canada Economic Development for Quebec Regions , Canada Firearms Centre , Canada Industrial Relations Board , C anada Lands Company Limited, Canada Mortgage and Housing

Corporation , Canada Pension Plan Investment Board , Canada Post Corporation , Canada Revenue Agency (CRA), Canada School of Public Service , Canada Science and Technology Museum

Corporation , Canada Transportation Act Review , Canada-Nova Scotia Offshore Petroleum Board , Canadian Air Transport Security Authority (CATSA) , Canadian Artists and Producers Professional

Relations Tribunal , Canadian Broadcasting Corporation , Canadian Centre for Occupational Health and Safety , Canadian Centre on Substance Abuse , Canadian Coast Guard , Canadian Commercial

Corporation , Canadian Dairy Commission , Canadian Environmental Assessment Agency , Canadian Food Inspection Agency , Canadi an Forces Grievance Board , Canadian Grain Commission ,

Canadian Heritage , Canadian Human Rights Commission , Canadian Human Rights Tribunal , Canadian Institutes of Health Research , Canadian Intellectual Property Office (CIPO) , Canadian

Intergovernmental Conference Secretariat , Canadian International Development Agency , Canadian International Trade Tribunal , Canadian Judicial Council , Canadian Museum of Civilization Corporation

, Canadian Museum of Nature , Canadian Nuclear Safety Commission , Canadian Pari-Mutuel Agency , Canadian Polar Commission , Canadian Police College , Canadian Race Relations Foundation ,

Canadian Radio-television and Telecommunications Commission , Canadian Space Agency , Canadian Tourism Commission , Canadian Transportation Agency , Canadian Wheat Board , Cape Breton

Development Corporation , Cape Breton Growth Fund (CBGF) , Citizenship and Immigration Canada , Climate Change (Government of Canada) , Commissioner for Federal Judicial Affairs, Office of the ,

Commissioner of Official Languages, Office of the , Commissioner of Review Tribunals CPP/OAS, Office of the , Commissioner of the Environment and Sustainable Development , Communications

Security Establishment , Communications Security Establishment Commissioner, Office of the , Competition Bureau , Competition Tribunal , Copyright Board Canada , Correctional Service Canada (CSC)

, Courts Administration Service , Defence Construction Canada , Defence Research and Development Canada (Defence R&D Canada) , Elections Canada , Employment Insurance Board of Referees,

Enterprise Cape Breton Corporation , Environment Canada , Environmental Protection Review Canada , Ethics Commissioner, Office of the , Export Development Canada , Farm Credit Canada , Federal

Bridge Corporation Limited , Federal Court , Federal Court of Appeal , Federal Labour Standards Review , Finance Canada, Depa rtment of , Financial Consumer Agency of Canada (FCAC) , Financial

Transaction and Reports Analysis Centre of Canada (FINTRAC) , Fisheries and Oceans Canada , Foreign Affairs Canada (FAC) , Freshwater Fish Marketing Corporation , Functional Communities of the

Government of Canada , Governor General of Canada , Great Lakes Pilotage Authority Canada , Hazardous Materials Information Review Commission, Health Canada , House of Commons , Human

Resources and Skills Development Canada (HRSDC), Immigration and Refugee Board of Canada , Indian and Northern Affairs Canada , Indian Claims Commission , Indian Residential Schools Resolution

Canada , Industry Canada , Information Commissioner of Canada, Office of the , Infrastructure Canada , Inspector General of the Canadian Security Intelligence Service , Interagency Advisory Panel on

Research Ethics , International Centre for Human Rights and Democratic Development , International Development Research Centre , International Joint Commission , International Trade Canada (ITCan),

Justice Canada, Department of , Law Commission of Canada , Leadership Network, The , Library and Archives Canada, Marine Atla ntic , Military Police Complaints Commission , NAFTA Secretariat -

Canadian Section , National Advisory Council on Aging , National Arts Centre , National Battlefields Commission , National Ca pital Commission (NCC) , National Crime Prevention Strategy , National

Defence, National Energy Board , National Farm Products Council , National Film Board of Canada , National Gallery of Canada , National Joint Council , National Literacy Secretariat , National Research

Council Canada , National Round Table on the Environment and the Economy , National Search and Rescue Secretariat , Natural R esources Canada , Natural Sciences and Engineering Research Council

of Canada , Networks of Centres of Excellence, Office of the Secretary to the Governor General , Pacific Pilotage Authority Canada , Parks Canada , Parliament of Canada , Passport Canada , Patented

Medicine Prices Review Board , Pension Appeals Board , Policy Research Initiative , Prime Minister of Canada, Office of the , Privacy Commissioner of Canada , Privy Council Office, Public Health Agency

of Canada , Public Safety and Emergency Preparedness Canada, Public Sector Pension Investment Board , Public Service Commissi on of Canada , Public Service Human Resources Management Agency,

of Canada , Public Service Integrity Office , Public Service Labour Relations Board , Public Service Staffing Tribunal , Publ ic Works and Government Services Canada , Queens Quay West Land

Corporation , Rebuilding Afghanistan , Receiver General for Canada , Review Tribunal (Agriculture and Agri -food) , Royal Canadian Mint , Royal Canadian Mounted Police (RCMP), Security Intelligence

Review Committee , Senate of Canada , Service Canada , Social Development Canada (SD), Social Sciences and Humanities Researc h Council of Canada , Species at Risk Act Public Registry , Standards

Council of Canada , Statistics Canada , Status of Women Canada , Superintendent of Financial Institutions, Office of the , Su preme Court of Canada , Tax Court of Canada , Team Canada inc , Technology

Partnerships Canada , Telefilm Canada , Transport Canada, Transportation Appeal Tribunal of Canada , Transportation Safety Board of Canada , Treasury Board of Canada Secretariat, Veterans Affairs

Canada , Veterans Review and Appeal Board Canada , VIA Rail Canada Inc. , Voluntary Sector Initiative , Western Economic Dive rsification Canada.

Defence

Agriculture

Research

Health

Transportation

Legal Post Office

Environment

Industry

Banking Export Taxation

Legislature

Commissions

Granting

Foreign Affairs

Welfare

Broadcasting

Museums

Regulatory Boards

Natural Resources

Police and Security

Insurance

Mint

Prisons

Comparing Strategy1 1. Arvenson

Best Management Practices

Sameness

Standardized Technology

Growth Rate, Earnings,

Market Share, Uniqueness,

Advanced Technology

Key success factors

National Security Protection of intellectual

capital, Proprietary

Knowledge

Justification for secrecy:

Leadership, Legislators,

Planners

Customer Demand Budget priorities set by:

Taxpayers, Inspectors,

Legislators

Stockholders, Owners,

Market

Stakeholders

Customer satisfaction Customer satisfaction Desired Outcome

Accountability to public,

Integrity, Fairness

Innovation, Creativity,

Goodwill, Recognition

Values

Cost Reduction, Efficiency Profit, Growth, Market Share General Financial Goal

Mission effectiveness Competitiveness General Strategic Goal

Public Sector Private Sector Strategic Feature

Citizen

& protection of

citizen rights

Government Financial Management Goals1 1. Parry

To implement best international

standards of fiscal transparency and

accountability.

4. Best Practice in Transparency and

Accountability

Timely and relevant information to better

manage allocated resources to achieve

efficiency, economy, effectiveness and

value for money.

3. Management of Resources to Achieve

Value for Money

To ensure that Government priorities are

identified and articulated as budgetary

objectives, and at all levels of

government reflected in the allocation of

resources.

2. Allocation of Resources In

Accordance with Government Priorities

Management of fiscal flows, balances

and risk

1. Effective Fiscal Management

Explanation Goal

The objective of implementing

a computerized IGFMIS system:

Increase the effectiveness and efficiency of state

financial management and facilitate the adoption

of modern public expenditure management

practices in keeping with international standards

and benchmarks1.

1. Points

Definitions

Integrated Financial Management System (IFMS) or

Integrated Public Financial Management System (IPFMS) or

Integrated Financial Management Information System (IFMIS)

IFMS is a common information and communication technology (ICT) platform which

integrates core public financial management (PFM) functions (e.g. budgeting, treasury

operations, accounting, cash/debt management, auditing/reporting) to ensure

efficient management of public resources.

IFMS is usually a centralized system which supports distributed (countrywide)

operations of PFM organizations on a unique central database containing all financial

information.

Reliable databases, enhanced business processes and consistent information flows

between various PFM modules increase overall operational efficiency, improves

planning and decision making process, and enhances transparency.

1. Dener

Technology in Context

Technology

IFMIS

Public Financial Management

Modernization and Reform

Government Objectives

Technology Vendor Viewpoint

Technology

IFMIS


Modernization and Reform


Public Financial Management • Typical term: Integrated Financial Management

Information System (IFMIS)

– Our term: Government Resource Planning

(GRP)

• IFMIS in context of PFM

– Technology foundation for implementing PFM reform

through political reform

– IFMIS implementations must be sequenced to the

unique country context

– IFMIS systems must be flexible to adapt to changes

and budget reform evolution

– IFMIS implementations must be sustainable

Reality

• Reform comes first

• An IFMIS must support on-going PFM

modernization

• Technology enables the GRP

• Technology is not government

modernization

Public Sector requires different approach

• Several governmental agencies in the US,

Germany, Australia, and Malaysia have

reported that the integration of agencies

and systems in the public sector can be

quite different from the private sector,

requiring the use of a different approach

and model.

1. Wagner, Antonucci

Profit

(Loss)

Private Sector The key financial concept is:

Public Sector The key financial concept is:

Budget

Profit

(Loss)

Private Sector The key control is:

Public Sector The key control is:

Budget

Bottom Line?

Private

Sector

Public

Sector

profit free balance

Reality check:

Governments are more concerned

about whether money was spent

where it was planned to be spent

rather than whether it did any good.

The Budget is THE LAW

• Approved by legislature and executive

often described as the “organic budget

law”

• In many countries, the budget is the

expression of parliamentary

“confidence”

Commercial Financial Management1

• Input decision driven by need to maximize profit

• Clear concept of business entity

• Funding directly linked to business process

• Legal requirement to value entity’s assets and liabilities

1. Parry

Inputs (measured in $)

Business

Process Outputs

(measured in $)

Difference = Profit

Key Private Sector Reports and Concepts

Profit and Loss

Statement

Earnings before

depreciation, interest, taxes

Shareholder’s Equity

Balance Sheet

Goodwill

Weighted Average Cost

Shareholder’s Equity

Statement of Cash Flow

Equity Investments

Borrowing

Working Capital Debt to Equity Ratio

Return on equity

Return on sales

Return on equity

Earnings per share

Net days outstanding

Price earnings ratio

Net present value

Future value

Weighted average cost of

Capital

Gross Profit Margin

Reality check:

How many of these concepts

are important in government?

Government Financial Management Process1

1. Parry Planning

Resource

ceiling

Policy

objectives

Programs & projects

Budgeting

Reporting &

Monitoring

Accounting

Budget Execution

Feedback for monitoring & control

Medium

term budget

Annual

budgets

Budgeted performance

targets

Fund release

Cash& Debt

Management

General

ledger

Performance

recording

Asset

management

HRM &

Payroll

Financial & performance

reports to managers

Financial statements

1. Rodin-Brown

1. Rodin-Brown

Asset / Inventory Mgmt

Procurement/ Purchasing

Mgmt of Budget

Authorizations

Commitment of Funds

Payments and Receipts Mgmt

Cash

Management

Debt and Aid Management

Fiscal Reports & Budget Review

Audit and

Evaluation

Budget

Preparation

Policy Development

and Review

Definitions

Budget Execution [ Treasury System ]

Payroll Calcs

HR Mgmt

F M I S Web Portal

Public Financial

Management Cycle

1. Dener

Version 7 section


Government Resource Planning (GRP)

Appropriations

Expenditures

Procurement

Treasury

Materials

Civil Service

Receipts

Payroll

Social Programs

Budget Controls

Planning

Analysis

Budget Law

Policy

Forecasting

Budget Books

Government Financial Management1

• Input decisions driven by budget as the legal

embodiment of public policy

• Definition of government entity difficult,

boundaries different for fiscal and business

management

• Funding not linked to business process

• No legal requirement to identify assets and

liabilities

1. Parry

Inputs (measured in $)

Business

Process Outputs

(service delivery)

Comparison = Value for Money

Inputs = Appropriations

Seeing change in the

last 2 points.

Government Financial Management Software1

• Features required for government financial management software – System driven by budget as legal authority to raise taxes

and spend money

– Manage multi level fund release against budget authorisation – warranting and commitment accounting

– Able to provide complex expenditure analysis to meet internal and international requirements = complex chart of accounts structure

– Accounting systems typically still cash based so must be able to record transactions initiated by cash

– If accrual accounting used must also be able to provide cash flow information

– Comply with IPSAS and IMF requirements

1. Parry

Example of the Public Sector Difference1

• Commercial Entity Perspective

– Excess revenue = sales success

– Excess costs = necessary costs

– Results = success

• Government Perspective

– Surplus to Consolidated

Fund

– Excess spending =

budget overrun

– Result = problem

1. Parry

Financial Statement

Budget

for 2005

Actual

for 2005

Difference

Revenue $500 $800 +$300

Cost $300 $480 +$180

Surplus $200 $320 +$120

What are governments trying to achieve?

• General: efficiency and effectiveness

through automation

• Reduced fraud and corruption through

controls & audit

• Improved cash management, decision-

making, value for money through

reporting & analysis

• Improved decision-making through

decentralization

Simplified World Bank Treasury Reference Model: Organization

Ministry of Finance

Spending Agencies

Revenue Agencies

Central Bank Audit Organization

Planning / Budget

Budget Preparation

Ledgers, Controls Financial Reports

Procurement Purchasing , Procurement

Treasury Cash, Debt, Bank

Foreign Exchange

Public Service Payroll, Pensions


Ministry of Finance

Spending Agencies

Revenue Agencies


Planning / Budget

Budget Preparation




Foreign Exchange


Accounting 101

• Assets, Liabilities, Equity

• Debit, Credits

• Journals and Ledgers

• Financial Reports

“Commitment Accounting is...”

where spending controls

are enacted that ensure

that no budget executor

can exceed their annual

appropriations .

Four Types of Accounting

• Financial Accounting: reporting results to external stakeholders consistent with G.A.A.P.

• Tax Accounting: reporting results to government consistent with the laws of that nation.

• Cost or Managerial Accounting: providing actionable information

• Fund or Commitment Accounting: accounting method used for not for profits, educational institutions and governments

– Budgetary Control

– Keeping track of in-progress expenditures

Key Advantages of Commitment Accounting

• Ensures sufficient funds will be reserved

against a budget to meet contractual

obligations.

• Guarantees that budget funds will not be

spent inadvertently on unauthorized

costs.

• Helps in planning for anticipated and

future costs.

What is a commitment?

• It is the stage between the establishment of

an agreement between parties (whether that

be signing a contract or passing legislation)

and the fulfillment of the requirements of the

agreement by one or more parties.

• The reservation of funds for a specific

purpose and its formal entry into agency's

accounting system so recording the

reservation.

Types of Commitments

• Planned/Intended Expenditures or Travel

Plans

– Soft Commitments/Pre-encumbrances

– Requisitions For Goods or Services

• Purchase Orders or Contractual

Obligations

– Hard Commitments/Obligations/

Encumberances

Commitment Accounting Practices

• Requirement to commit funds for

anticipated or contracted future

spending

• Delegation of authority to commit funds

(commitment thresholds)

• Monthly review of commitments

(monitory discharge and de-commitment

of committed funds)

Financial Accountability - Commitments in the System

• Commitments indicate what budget

funds are required to pay for future

purchases & labour costs.

• When commitments are paid they

become actual expenditures –

“actuals”

Above and Below

Above the line Budget

Below the line Actual

Fiscal space

Accounting

•Ledgers

•Accruals

•Financial Statements

•Legal obligations

•Who and how much due

•Control arrears

•Budget execution

•Budget control

•Management and forecasting

Reality check:

Private sector applications

focus “below the line”

Simplified Example

Budget:

100 Commitment:

25

Available:

100

free balance:

75

Approve

General

Ledger:

25

Commitment:

0

free balance:

75

Obligation:

25

General

Ledger:

25

Budget:

100

free balance:

75

Accounts Payable, Liabilities, Expenses, etc.

Obligation:

0

General

Ledger:

0

General

Ledger:

0

Commitment Accounting benefits

1. Track actual expenditures

2. Predict future expenditures based on

commitments

3. Ensure that the budget is not overspent

4. Ensure that the budget meets the law


Ministry of Finance

Spending Agencies

Revenue Agencies


Planning / Budget

Budget Preparation




Foreign Exchange


Transaction Data Flow

Journal V. G. Ledger

AP

Budgets

Allotment 2

Allotment 1

C

Commit

Requisition

Purchase O.

GRN/GRTN

Payment Expense V.

Sales Invoice

Cash Sale Cash Receipt

B

B

AR B

balance - integrity

adjustment

A

A

A

Transaction Data Flow

Journal V. G. Ledger

AP

AR

Budgets

Allotment 2

Allotment 1

C

Commit

Requisition

Purchase O.

GRN/GRTN

Payment Expense V.

Cash Receipt

Sales Invoice

Cash Sale

B

B

B

A

A

A

What is the Chart of Accounts?

• Defines how accounting information is:

– Categorized

– Collected

– Reported

• COA issues include:

– Best way to roll up granular information to

summary

– Best way to enable security

– Best way to manage controls

– Appropriate level of granularity required

Chart of Accounts

Fund

Organization

Program

Location

Object

Project

Chart of Account Groups (Example)

This is a SAMPLE

Object Code is the only mandatory

element for FreeBalance.

COA Purpose

Organization

Location

Approve

Responsibility

Tier

Fund

Objective

Performance

ReportGFSMDG

Program

Project

Activities

Economic Code

Accounting

Code

COA Arrangement

Fund Organization

Location

Approve

Responsibility

Tier

Objective

Performance

ReportGFSMDG

Economic Code

Program

Project

Activities

Accounting

Code

Sample Chart of Accounts

Organization Fund Program/ Project Location Object

Organization


Organization Type

(1)

Councils

(3)

Sector

(1)

Reporting Groups

(2)

Divisions

(5)

Cost Centres

(7)

Fund


All Fund

(1)

General Gov.

(1)

Source Type

(1)

Donor Type

(1)

Fund Table

(1)

Fund Source

(3)

Donor Table

(3)

Source Group

(3)

Project/Program


Project

(3)

Component

(4)

Sub Group

(1)

GFS Function 2

(4)

Sub Component

(6)

Activities

(8)

GFS Function 3

(5)

Activity Group

(3)

Project Type

(1)

GFS Function 1

(3)

Pillars

(1)

Objectives

(1)

MDG

(2)

Themes

(2)

Priority

(1)

Location


Province

(1)

Districts

(3)

Divisions

(4)

Ward

(5)

Object


Account Type

(1)

Main Category

(1)

Sub Category

(2)

Item Group

(2)

Object Group

(3)

Object Code

(4)

Expenditure Type

(1)

Sub Type

(2)

GFS L1

(1)

GFS L2

(2)

GFS L3

(3)

GFS L4

(2)

GFS L5

(5)

Typical Scenario Government Commitment Accounting

• Guideline amounts selected

• At the detail level: general ledger coding block

• Typically no controls at the “financial budget”

– Too granular to be “material:

– Restricts managers from making decisions

they are authorized to make

Financial Budget

It is all about the chart of accounts


• Amount approved by legislature or Ministry of Finance

• Is at a summary level

• May represent money to be released for the entire year

to a high level of authority (lots of scenarios possible)

• Act as budget control

• Often called “Allotment”

Financial Budget

Appropriation


• Amount released for use

• Controls, but typically not at the granular level

• Often represents money to be spent during a fiscal

period

• Usually at the decision manager level

Financial Budget

Appropriation

Warrant

Version 7 section

• brief discussion different

organizational configurations

MULTIPLE

CONTROLS

aggregate

detailed

MULTIPLE

CONTROL

LEVELS

configured

CONTROLS

bu

dg

et

ap

pro

pri

atio

ns

tra

nsfe

rs

co

mm

itm

en

ts

ob

liga

tio

ns

rece

ivin

g

exp

en

ditu

res

COMMITMENT CYCLE

segregation of

duties & workflow

monthly

PERIOD

yearly

TOLERANCE

LEVELS

flexible

strict

Financial Controls

COA Example

Fund Organization Locations Object Fund Type Project

Fund

(1) Ministry/Agency

(4)

Ministry/Agency

(4)

Ministry/Agency

(4)

Atoll

(3)

Location

(3)

Indicator

Economic Type

(2)

Economic Type

(2)

Economic Item

(5)

Economic Item

(5)

Economic Item

(5)

Economic Item

(5)

Fund Source

(2)

Project

Status

(1)

Cash Indicator

(1)

Allotment 2

Allotment 1

Budget

Commit/

Obligation

Fund

(1)

Fund

(1)

Fund

(1)

Fund

(1)

Fund

(1)

Ministry/Agency

(4)

Ministry/Agency

(4)

Ministry/Agency

(4)

Location

(3)

Location

(3)

Location

(3)

Fund Source

(2)

Fund Source

(2)

Fund Source

(2)

Project ID

(4)

Project ID

(4)

Project ID

(4)

Project ID

(4)

Cash Indicator

(1)

Economic Group

(2)

Economic Type

(2)

Category (1)

Main Category

(1)

Account Type

(1)

Asset/ Liability / Revenue / Expenses / Retained Earnings

Asset / Liability / Revenue / Expenses / Equity

Income Statement / Balance Sheet

Financial / Statistical

EXP. CS, SI, SV,

CR, DN, CN

General Ledger

G/L Offset Code

Journal Voucher

GFS Code

(5)

Allow to Exceed:

[Y/N]: Yes’,’No’,

[W]: ‘With Warning’

[T]: Tolerance Allowed

[M]: Message if Overspent

T

Y/N, W, T

Y/N, W

M

Coding Block

1. May be up to 50 characters

in length

2. May consist up to 10

segments

3. Can be up to 12 characters

long

4. Each segment can have an

unlimited number of roll

up tables

GoM Functions

(2)

COFOG1 Sector (3)

COFOG2 Sector (4)

COFOG3 Sector (5)

Cash Indicator

(1)

Cash Indicator

(1)


• Two levels of “commitments”:

– Soft commitment or commitment

– Hard commitment or obligation

• Not all governments utilize two levels

– Is a best practice

– Provides a better view for the status of the commitment

– In our experience, customers who implement purchasing or procurement have two levels

Obligations vs. Commitments

Commitment or Soft Commit Obligation or Hard Commit

What is accrual?

• Transaction and events are recognized when they occur rather than when cash is paid or received

• Cash accounting is not always representative of what is really going on

• Assets, liabilities, net assets, revenues and expenses recognized

• All assets and liabilities are measured on the historical cost basis, sometimes with the re-measurement to the fair value of certain assets and liabilities

http://tven.us/img/CashQ2.jpg

Why is this a problem in government?

• Corporations with shareholders and auditors

must operate on an accrual basis

• Accrual determines the real value of a company

• There is no “real value” of a government entity

• Accrual accounting is an order of magnitude

more difficult than cash bookkeeping

• Accounting capacity issues in Developing

Nations

• Hence, the notion of a hybrid approach

http://tven.us/img/CashQ2.jpg

Good-bye Accrual World1?

• Cash accounting reports cash transactions when received or paid. Consequently, financial statement items such as amounts owed to or by the government or other non cash items are not recorded.

• Modified cash accounting follows cash accounting principles, but at year-end adjustments are made recognizing some non-cash items such as AR and AP

• Modified accrual follows full accrual principles with one significant departure — not recognizing capital assets on the statement of financial position. Instead they are recognized fully as expenditures when bought.

1. CA Magazine

Modified

Cash

Cash

Modified

Accrual

Methods of

modified accrual

differ among

governments.

State of the Art

• Most governments in hybrid state.

– Canada is modified accrual (mostly).

– New Zealand in accrual.

– Developing Nations tend to be cash or modified cash.

• Slow move towards accrual.

• Private Sector is almost always accrual.

– Presents challenges for private sector financial software.


Ministry of Finance

Spending Agencies

Revenue Agencies


Planning / Budget

Budget Preparation




Foreign Exchange


Version

Version

Version

Government What If Scenarios,

Iterative Versions and Approvals

Approve

Budget Book

Budget Law

Budgetary Controls

PFM

International

Financial

Standards

Government Fiscal

Regulations

Budget Office


Legislature and Executive

Historical

Information

10%10%10%10%10%

10%10%10%10%10%

Budget

Circular

Cost Assumptions

Revenue

Assumptions

Previous Plans

100% 90% 80%

Macro-Economic Analysis

International Organizations

Version

Version

VersionVersion

Version

Version

Divisional What If Scenarios, Iterative

Versions and Approvals

Ministry What If Scenarios, Iterative

Versions and Approvals

Approve

Approve

Line Ministry

Across fiscal periods

Budget Transfers

• Budget transfer (virements) depend on authority and are different from one government to another

• Often legal constraints on transfers

• Can tighten or loosen controls during the fiscal year

• Can move money to sub-nationals or other departments

Account

Account

from one account to another

from one type segment to another

Budget

from budget to allotment

Some comments

• Adoption of “proper” MTEF limited

success

– MTMF (macroeconomic framework)

– MTFF (fiscal framework)

– MTBF (budget framework)

– MTSS (sectoral strategies)

– MTPF (performance framework)

• Program Budgeting preceded

Performance Budgeting [typically]

Budget Ceremony

• +/- %

• View that budget = outcomes

• Lack of zero-based budgeting concepts

• Few tools that enable end-to-end budget

preparation for government


Ministry of Finance

Spending Agencies

Revenue Agencies


Planning / Budget

Budget Preparation




Foreign Exchange


“Treasury” Function

Debt Management

Predict Cash Requirements

Optimize Bank Accounts

Investment Management

Treasury Single

Account

Why TSA?

• Corruption

• Liquidity

• Predictability


Ministry of Finance

Spending Agencies

Revenue Agencies


Planning / Budget

Budget Preparation




Foreign Exchange


0 10 20 30 40 50 60 70 80 90 100

1. Iraq

9. Hungary

17. Qatar

25. Austria

33. Yemen

41. Germany

49. Ghana

57. Namibia

65. West Bank/Gaza

73. Burundi

81. Rwanda

89. South Africa

97. Senegal

105. Morocco

113. Burkina Faso

121. Honduras

129. Congo, Dem. Rep. of

137. Taiwan

145. Cameroon

153. Costa Rica

Government Spending as % of GDP http://anepigone.blogspot.com/2008/03/government-spending-as-

percentage-of.html

http://anepigone.blogspot.com/2008/03/government-spending-as-percentage-of.html









0 10 20 30 40 50 60

Czech Republic

Armenia

Slovak Republic

Angola

Hungary

Congo, Republic of

Ukraine

Slovenia

Australia

Mongolia

Ireland

Argentina

Malta

Afghanistan

St. Kitts and Nevis

Thailand

Jordan

Bahrain, Kingdom of

Government Wage Bill as % of Expenditures World Bank 2000-2008 Average

Payroll and PFM

• Wage bill is material to government

expenditures

• Corruption opportunity

• Variability in payroll

– Seasonal, emergency employment

– Training, travel & other costs

• Significant cash management implication

• Requires planning, forecasting and

controls


Ministry of Finance

Spending Agencies

Revenue Agencies


Planning / Budget

Budget Preparation




Foreign Exchange


Audit

• Internal Audit

• External Audit “Supreme Audit

Organization”

• Maturing

– Compliance

– Risk Management

– Performance

• CAAT

International Standards

• World Bank Treasury Reference Model

• International Monetary Fund Code of Good Practice on Fiscal Transparency

• International Monetary Fund Government Finance Statistics (GFS)

• International Federation of Accountants International Public Sector Accounting Standards Board International Public Sector Accounting Standards (IPSASs)

• UN Common Functions of Government

• Medium Term Expenditure Frameworks (MTEF)

• Generally Accepted Accounting Principles (GAAP)

• International Aid Transparency Initiative (IATI)

• eXtensible Business Reporting Language (XBRL)

World Bank Treasury Reference Model

• Purpose

– Development tool for fiscal managers and system developers, intended to help implement good practices in fiscal accounting and expenditure control

• Key Principles

– Facilitating the process of designing a treasury system project and preparing technical specifications for a tender document that will meet World Bank procurement standards.

– Improved analytical standards for fiscal reporting

• Implications

– Guidelines to identify completeness

http://devportal/files/Additional%20Treasury%20Reference%20Model.ppt

http://devportal/files/Additional Treasury Reference Model.ppt

http://devportal/files/Additional Treasury Reference Model.ppt

IMF Code of Good Practice on Fiscal Transparency

• Purpose

– Method to assess government fiscal transparency with

practical advice for improvement

• Key principles:

– Roles and responsibilities of and within government

should be clear

– Comprehensive reliable information of fiscal activities

should be available to the public

– The processes of budget preparation, execution, and

reporting should be open

– Integrity of information should be assured

• implications:

– Controls and transparency

IMF Government Finance Statistics Manual

• Purpose:

– Provide a comprehensive conceptual and accounting

framework suitable for analyzing and evaluating fiscal policy

and performance of the general government sector and

broader public sector of any country.

• Key Drivers:

– Improve government accounting and transparency in

operations

– Need for ways to assess the effectiveness of spending on

government and/or donor funded programs (e.g. poverty

reduction, sustainability of fiscal policies etc.)

• Implications:

– Chart Of Accounts design that incorporates both

GFS classifications and countries specific needs

– General capabilities and GFS based reporting

http://devportal/files/Additional%20GFS.pdf

http://devportal/files/Additional GFS.pdf

http://devportal/files/Additional GFS.pdf

IFAC IPSASs

• Purpose

– Report requirements for government and public sector

organizations

• Key principles:

– Transition from cash-basis to accrual accounting

– 21 Reporting Standards

– Sets preliminary benchmarks

• Product implications:

– Ability to transition customers from cash to full accrual

– Support specific reports

http://devportal/files/Additional%20IPSAS.ppt

http://www.ifac.org/index.tmpl

http://devportal/files/Additional IPSAS.ppt

http://devportal/files/Additional IPSAS.ppt

Medium Term Expenditure Frameworks

• Purpose

– Rational planning and budget formulation process within which the government establishes a credible and transparent criteria for allocating public resources to strategic priorities while ensuring overall fiscal discipline

• Key principles:

– 3 Year planning.

– Sector Effectiveness and Efficiency Review process.

– Performance Indicator Framework for measuring agency performance against committed deliverables

• Implications:

– Budget management software operates with 3+ years cycle, need for a strong fiscal framework, performance planning and performance reporting

http://devportal/files/Additional%20MTEF.ppt

http://devportal/files/Additional MTEF.ppt

http://devportal/files/Additional MTEF.ppt

UN Classification of the Functions of Government • Purpose

– Functional classification to report government statistics to the IMF

– "Functional" classifications identify the "functions" -- in the sense of "purposes" or "objectives" -- for which groups of transactors engage in certain transactions

• Key principles: • "Functional" classifications identify the "functions"

-- in the sense of "purposes" or "objectives" -- for which groups of transactors engage in certain transactions


– COA Set Up

Generally Accepted Accounting Practices (GAAP)

• Purpose

– A collection of rules and procedures and conventions that define accepted accounting practice; includes broad guidelines as well as detailed procedures.

– Somewhat different among countries.

– Focused on “financial accounting” not managerial or fund accounting

• Key principles:

– Many accounting practices that cover public and private sector.

• implications:

– Support standard accounting principles, support auditable data. Much of GAAP does not apply to the public sector.

– US GAAP burdensome, International Financial Reporting Standards (IFRS) may be more applicable.

International Aid Transparency Initiative (IATI)

• Purpose

– IATI aims to make information about aid spending easier

to access, use and understand.

– Its purpose is to help implement the transparency

commitments made at the Accra Agenda for Action in

the most consistent and coherent ways. The Accra

Agenda for Action arose from the March 2005 Paris

Declaration on Aid Effectiveness.

• Key principles:

– Aid transparency & move to using country systems.


– Reporting and integration standard.

http://www.accrahlf.net/WBSITE/EXTERNAL/ACCRAEXT/0,,menuPK:64861886~pagePK:4705384~piPK:4705403~theSitePK:4700791,00.html

http://www.oecd.org/document/18/0,3343,en_2649_3236398_35401554_1_1_1_1,00.html


eXtensible Business Reporting Language (XBRL)

• Purpose

– Global standard for reporting and exchanging business

information.

– Simplifies by providing 1 type of output for all

stakeholders

– Primarily method for business to report to government,

but being considered in government

• Key principles:

– metadata set out in XBRL taxonomies, which capture the definition of individual reporting concepts as well as the relationships between concepts and other semantic meaning. Information being communicated or exchanged is provided within an XBRL instance.

Product implications:

– Reporting and integration standard, XML support

http://en.wikipedia.org/wiki/Metadata

http://en.wikipedia.org/wiki/Taxonomy

http://en.wikipedia.org/wiki/Reporting

http://en.wikipedia.org/wiki/Semantic

Typical Challenges1

• Lack of Engagement and Political/ Management Support.

• Inadequate Preparation (Vision, Policies, Capacity)

• Weak Governance Arrangements.

• Over Complicated Expensive Systems

• Inadequate acquisition and contract management.

• Unrealistic action plans.

• Non participation, lack of dedicated teams.

• Inadequate training

• Weak, contractor with technical/commercial focus

1 Murphy

Also lack of knowledge

transfer from consultants.

Developing Nation Issues

• No luxury for massive technology footprint – The Complexity Trap

• Functional and technical capacity challenges – The Capacity Trap

• Cost and upkeep of commercial infrastructures and vendor lock-in

• Bandwidth and digital divide limitations

• Sustainability and knowledge transfer

• However: little technical and functional baggage holding back change

GRP Practices

Best?

• Double Entry Bookkeeping

• Commitment Accounting

• Treasury Single Account

Maybe

• Modified Cash

Good

• 2 – Phased Commit

• Aggregate Controls

• Decentralization

• Program Budgeting

• International Standards

• Multiple Year COA

Maybe

• Accrual Accounting

• Performance Management

Version 7 section

• brief discussion 3. Technology & Transparency

Leapfrog

& Case Study

Version 7 section


Agenda




– 45 minutes


– 60 minutes


– 90 minutes


– 45 minutes



– 30 Minutes


Confusion?

3

Congress cuts transparency funding

How can Timor-Leste afford government transparency?

5

Timor-Leste United States Comparison

Independence 2002 1776 3.4%

GDP Per Capita $2,600 $47,400 5.5%

GDP Growth 8% 2.7% 338%

Unemployment 20% 9.7% 206%

Below poverty line 42% 12% 350%

Life Expectancy 67.95 78.92 86%

Literacy 58.6% 99% 59%

globalization

= competition

choice

citizens are watching

empowered

Democratic Republic of Timor-Leste

(RDTL) Transparency

Objectives

build civil society

build infrastructure

build capacity

build citizen involvement in government

improve government performance

?

GDP Per Capita (PPP, logs)

UG

AN

DA

PA

PU

A N

EW

GU

INE

A

AU

ST

RA

LIA

-3

-2

-1

0

1

2

3

209 Countries

No

rma

lize

d G

ove

rnm

en

t E

ffe

ctive

ne

ss I

nd

ex

HIGH

LOW

Benefits of Transparency Government Effectiveness and GDP*

* At purchasing power parity

Source: The World

Bank

Higher the government

effectiveness = higher the

country GDP Per Capita

Strengthening Public Financial Management in Timor-Leste


UG

AN

DA

PA

PU

A N

EW

GU

INE

A A

US

TR

AL

IA

-3

-2

-1

0

1

2

3

207 Countries

No

rma

lize

d V

oic

e a

nd

Acco

un

tab

ility

Ind

ex

.

HIGH

LOW

Benefits of Transparency Voice and Accountability and GDP*


Source: The World

Bank

Higher the government

accountability = higher the




UG

AN

DA

PA

PU

A N

EW

GU

INE

A

AU

ST

RA

LIA

-3

-2

-1

0

1

2

3

204 Countries

No

rma

lize

d C

on

tro

l o

f C

orr

up

tio

n I

nd

ex

HIGH

LOW

Benefits of Transparency Control of Corruption and GDP*


Source: The World

Bank

Higher the control of

corruption = higher the



= stability

= investor confidence

avoid the resource curse

technology leapfrog

Version 7 section


leapfrog theory…

Version 7 section


entrenched technology

26 26

use what works

skip what doesn’t work

skip stages

modernize

rapidly

review

Transparency and Accountability

The next generation of public financial management technology will allow the public to

track the budget live, to see where every dollar is being spent, and to gain renewed confidence in

the process

Democratic Republic of Timor-Leste Vision

sequenced

Public Financial Management – Foundation for Country Growth

FMIS (software and

hardware)

Human Resource

Development

Capacity Building

(Training)

GoTL LAWS

Procurement Commission

Autonomous Agencies

Ministries

Decentralization


PFM in Overdrive?

1. International Standards

IPSAS International Public Sector Accounting

Standards


http://www.ipsas.org/en/ipsas_standards.htm

EITI Extractive Industries

Transparency Initiative

http://eiti.org/

GFS Government Financial Statistics

http://www.imf.org/external/pubs/ft/gfs/manual/gfs.htm

MTEF Medium Term

Expenditure Frameworks

http://bit.ly/iQjU5q

IATI International Aid

Transparency Initiative

http://www.aidtransparency.net/

2. Document Management

manages correspondence with

senior managers

repository for freedom of information

3. e-Procurement

review

Strengthening Public Financial Management in Timor-Leste 45

integrated with back-office procurement & commitment

accounting within IFMIS

vendor alerts

tender results published

government tenders published

Version 7 section


front/back office integration

4. Transparency Portal

review


www.transparency.gov.tl

http://www.transparency.gov.tl/

subscribe

drill down

articles

Expenditures, Transparency Portal

10 years of data

drill through the chart of accounts

Expenditures, Transparency Portal

export to xls, doc, pdf, html, xml

track commitments

5. Performance Management

review


integration with macro-economic data

examines budget execution data

integrated with back-office procurement & commitment

accounting within IFMIS


56

simple classifications

transparent presentation of public investment programs

physical & financial progress

drill down

narrative

progress

proof

Lessons Learned


61

1. Transparency

is not an Option

0

20

40

60

80

100

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Mobile cellular telephone subscribers Per 100 inhabitants

YouTube Facebook

Twitter SMS

citizen auditors

2. Transparency = Performance > Embarrassment

Role of Civil Society

• NGO’s can help organise literacy groups and provide

materials. They can provide private education and

education for the blind. They can provide school

materials for students, and assist with school equipment

chairs and books

• NGO’s can help us organise and run technical training

courses in our villages

Timor-Leste National Vision

3. Sequenced Holistic Multiple-Year PFM Strategy

Improve

budget

execution

Improve

government

capacity

Improve

transparency

&

accountability

Improve

government

performance

review

Public Financial Management – Foundation for Country Growth

4. Build Capacity

review

• Training beyond software

– IT capacity

– Project management

– Government accounting

• Beyond training

– Adaptable help

– E-Learning

– Knowledge management

• Intuitive systems

– Translation including terminology

– Simple & goal-oriented interfaces

• Mentoring

PFM Modernization Alignment with Capacity Building

5. Require Sustainability in Partner Performance

6. Leverage Open Systems

Transition to Open Environment: Transparency

Domain Closed Transition Open

Transparency Access to

Information Document Machine Readable

Data Availability Data for Sale Publish as Exception Do not Publish as

Exception

Mode Publish, Audited &

Vetted Mixed

Near Real-Time Publishing

ROI Reason Revenue Generation What are they going to

do with the data? Government as

Platform

Target Business Community Civil Society & Press Citizens

Transition to Open Systems: Technology

Domain Closed Transition Open

Integration Proprietary within

Suite Support for Industry

Standards Service Oriented

Architecture

Middleware Proprietary =

Customer Lock Proprietary/Open Tactical approach

Open Standards = Customer Choice

Viewpoint Open Systems reduce system performance

Open Systems extend value

Open Systems = Extensibility

Extensibility High Costs Need for vendor

Ecosystem Low Cost Application

Assembly

Leapfrog is possible

Timor-Leste United States Comparison

1. Standards GFS, IPSAS, EITI, IATI,

MTEF EITI, OGP Leaped


Manager Document Management

Various Records & Correspondence

Catching Up


Manager’s Dashboards, Results

Portal

Various tools across government

Leaping

4. Transparency Transparency Portal Data.gov & others -

underfunding Leaping

5. e-Procurement August 15 FedBizOpps To leap

www.revenuewatch.org

http://www.revenuewatch.org/

How? Timor-Leste United States

Strategic Vision Holistic 1 Year Budgets, complex

election cycles

Government Structure Unitary Federal

Civil Society & Media Seen as Improving Results Seen as “Special Interests”

Government Intervention Seen as Good Seen Suspiciously

1. Standards Ease to Move to

International Standards Long History of Entrenched

National Standards


Single system data source Multiple entrenched

systems


4. Transparency

5. e-Procurement

Version 7 section


Lessons Learned

Technology

• Re-purpose open systems rapidly to support portal functionality

• Optimal product footprint

• Rapid implementation

• Broad choice in middleware

Transparency

• Good practices in budget classifications

• Holistic whole-of-country

• Ministry of Finance and Planning leadership

• Civil society enablement

Goodbye Conflict, Welcome Development

Version 7 section

• brief discussion 4. Performance Management in

PFM

Version 7 section


Agenda




– 45 minutes


– 60 minutes


– 90 minutes


– 45 minutes



– 30 Minutes


military

intelligence military

business

ethics business

British

cuisine British

Government

performance Government

What is Corporate Performance Management?

Reporting

OLAP Data Mining Scorecarding

Budget

Planning

Drivers for Corporate Performance Management

• Too much information

• Business Intelligence tools such as

reporting are not prescriptive

• Not all indicators are relevant

• Financial information is after the fact – you

cannot change the past

• Many non-integrated Business

Intelligence (BI) tools

Corporate Performance Objectives

• “Key Performance Indicators” (KPIs) and

“scorecards” are simple to understand

• KPIs measure in progress

• Aggregates measurements from many

sources

• Utilizes capabilities of many tools

• Provides clarity for what is important

Government Performance Management

Business

• “Bottom Line” is clear: profitability

• Measured on quarterly profitability

• “Bottom Line” is financial

• Budget is a guideline

• Simple financial measurements: revenue, expenditures, cost centres…

Government

• Government mandates require many objectives

• Measured on long-term outcomes

• “Bottom Line” is outcomes

• Budget is the law

• Difficult financial measurements: objectives, funds, projects…

Performance and Budget

Budget

Execution

Budget

Planning

Government

Objectives

Scenario

Planning

Budget

Forecasting

Performance

Monitoring

Budget

Review

Inputs, Outputs, Outcomes

• Objective

– Government development goal

• Input

– The money in the budget

• Outturn

– The money spent

– The items purchased

• Output

– Number of citizens reached, kms of road built etc.

• Outcomes

– Non-financial measurements of results

Remember?

• MBA Harvard, 1973

• President’s

Management Agenda

• Program Assessment

Rating Tool (PART)

Current Situation

• Mixed

– Capacity issues

– Improvements in MTEF

– Remains output focused

– Better results in projects yet…

• Commercial performance management

software not budget centric

Corporate Performance Management

input

outturn output

outcome

profit


input

outturn output

mandate

budget

outcome

Maturing of Government Performance

• Budget is executed based on budget law

• Was the money spent where it was

intended?

• Were all fiscal discipline processes

followed?

budget

compliance


• Budget is tied to objectives

• Was the budget developed based on

government objectives?

• Were the results from one year used in

budget preparation?

budget

compliance

managing for

results


• Budget is tied to results

• Can results be tied to outputs and

outcomes? (cost per unit of outcome)

• Are processes improved to improve

value for money?

budget

compliance

managing for

results

value for

money

Unintended consequences

• False positive:

– Measurements show success, but impact is negative

• False negative:

– Measurements show failure, but impact is positive

• Why?

– No objective measurement like profit

Measured

Outcomes

Outcomes

not

measured

Version 7 section


We can Measure Lots of Things

Version 7 section


Information Overload

Version 7 section


Important?

Version 7 section


Hidden?

Version 7 section


Performance

Version 7 section


Key Performance Indicators (KPIs)

Version 7 section



Version 7 section


Scorecard

Version 7 section


Traffic Lights

Version 7 section



Version 7 section


Balanced Scorecard

Version 7 section


Version 7 section 1. Citizens

• How do we look to citizens?

–Government: Citizens

–Private Sector: Customers

Version 7 section


Version 7 section 2. Financial

• How effective are we planning and executing our budget?

–Government: Budget

–Private Sector: Profit

Version 7 section


Version 7 section 3. Internal Processes

• What must we excel at?

Version 7 section


Version 7 section 4. Learning and Growth

• What do we need to do to continuously improve?

–Government: Capacity Building

Version 7 section


Complexity in Government

Version 7 section


1. No ‘bottom line’ ~ Profit

• Objective • Government

development goal • Input

• The money in the budget

• Outturn • The money spent • The items

purchased

Inputs, Outputs, Outcomes

• Output • Number of citizens

reached, kms of road built etc.

• Outcomes • Non-financial

measurements of results

Version 7 section


Government: Financial (budget) leads to Outcomes

Version 7 section


Private Sector: Outcomes Lead to Financial (profit and loss)

Version 7 section


2. Aligned to the Budget

Version 7 section


Count

Strong Alignment

StrategyFinancial

Customer

Learning & Growth

Internal Process

Mission

Strategy Map Government Strategy Map

Cit

izen

Fi

nan

cial

In

tern

al

Pro

cess

Le

arn

ing

& G

row

th

1 2 3 4

1 2 3 4

1 2 3 4

1 2 3 4

Measurement Measurement Measurement

FreeBalance Example Government Strategy Map

Cu

sto

me

r Fi

nan

cial

In

tern

al

Pro

cess

Le

arn

ing

& G

row

th

1 2 3 4

1 2 3 4

1 2 3

1 2 3 4

P3 Customer-Centric Development

C3 Improve Support Case Metrics

C2 Improve Customer Satisfaction

Some priorities

1. Smooth government payment processing

Complete accountability & reporting on gov. finances

Minimized cost of debt service & banking fees

Improve governance and administrative capacity

Reduce corruption

2. Achieve liquidity (cash

management) Avoid fiscal

deficits Improve efficiency Promote transparency

Promote good governance

3. Economic

growth Social Cohesion

(inter-ethnic) Good

governance Promoting private

sector development Creating strong, transparent

public institutions Strengthen

Infrastructure

4. Reduce corruption

perception Real-time financial

reporting Reduction in labour costs, increase in

efficiency Create a professional

public service

5. Build strong stage

institutions Poverty

reduction Improve peace and

security Facilitate pro-poor

growth Rehabilitate infrastructure

6. improve fiscal sustainability in a mineral-based economy

protect poor and vulnerable

encourage transparent and prudent mining investments

competitive and stable medium-term business investment climate

7. Achieve stability Institutional coordination

Improve transparency Improve citizen services Promote business

sector

8. Agricultural

growth Good governance

Transportation infrastructure

Improved healthcare Energy growth

Prudent use of natural resources

9. Sustainable national

capacity Short term

stabilization Transparent and effective

public financial management Improve security

Develop non-oil sustainable development

10. Eliminate wage bill overruns, controls

Improve governance

On-time payments Accurate payroll

records Eliminate “quiet” corruption

Government Strategy Map

Cit

izen

Fi

nan

cial

In

tern

al

Pro

cess

Le

arn

ing

&

Gro

wth

Infrastructure Development

Private Sector Development

Good Governance Service Delivery

Poverty Reduction Health

Education

Agriculture

Energy

Fiscal Sustainability

Capital Projects Investment

Revenue Collection

Transparency

Audit & Oversight

Anti-Corruption Decentralization

Procurement Processes

Sustainable National Capacity

Professional Skills Development

Version 7 section


Version 7 section Lesson Learned • Performance Management harder in government than

private sector

• All objectives must be aligned to budget

• Balanced Scorecard is good tool to develop performance management

• Opportunity to leapfrog more developed countries

• Technology, alone, won’t provide performance metrics

53 53

Version 7 section

• brief discussion 5. Governance Valuation:

Sequencing PFM Reforms (& GRP)

Version 7 section


Agenda




– 45 minutes






– 30 Minutes


Version 7 section


Governance Formula?

Version 7 section


Not “prescriptive”

Version 7 section


Technology

5 5

Version 7 section


Evaluation Methods Evaluation Method Scope Back-Office Technology Front-Office Technology

Public Expenditure and Financial Accountability (PEFA)

Comprehensive PFM assessment

No technology guidance although PEFA assessments attribute some achievements to the use of technology

Commonwealth Public Financial Management Self-Assessment Toolkit (CPFM-SAT)


A3: Use of IFMIS B2: Use of Debt Management

software No technology guidance for publishing

information The Chartered Institute of Public Finance & Accountancy (CIPFA) Whole Systems Approach


O7: Financial management information systems

Revenue Watch Institute Index Extractive Industries

transparency

Paris Declaration and Accra Agenda for Action Aid effectiveness Use of country systems for PFM and procurement does not specify use of

technology

International Budget Partnership Open Budget Index (OBI)

Budget preparation and reporting transparency

Internet publishing of budget documents gains higher rating for many categories

Gartner Group Open Government Maturity Model

Open government Provides open government technology

insight

Institute for Electronic Government e-Democracy Model

E-Democracy Use of e-mail systems

Use of web technology Andersen & Henriksen E-Government Maturity E-Government

Layne and Lee Framework of E-Government E-Government Horizontal and vertical integration

within government

World Bank World Governance Indicators Meta collection of 3rd party

indicators No technology guidance

Global Integrity Report Governance and anti-

corruption

http://www.pefa.org/

http://www.pefa.org/

http://www.thecommonwealth.org/






http://www.cipfa.org.uk/

http://www.cipfa.org.uk/

http://www.revenuewatch.org/


http://internationalbudget.org/what-we-do/open-budget-survey/

http://internationalbudget.org/what-we-do/open-budget-survey/

http://www.gartner.com/

http://www.gartner.com/

http://www-01.ibm.com/industries/government/ieg/pdf/e-democracy putting down roots.pdf



http://www.hellezinnerhenriksen.info/abstracts.html



http://www.ingentaconnect.com/content/els/0740624x/2001/00000018/00000002/art00066



http://www.globalintegrity.org/report

http://www.globalintegrity.org/report

PFM Component Map


Component Map

Performance & Commitment Management


Budget & Commitment Management

Core Government Financial Management

Public Financials Management

Government Treasury Management

Expenditure and Revenue Management

Public Expenditure Management

Government Receipts Management

Civil Service Management

Civil Service Management

Governance and Service Delivery

Transparency & Accountability

Service Delivery

Version 7 section


What’s changed?

Version 7 section


Country PFM Context

Version 7 section



Data from Government Operations

Expenditures Revenue

Budget

formulation

Budget

execution Human

Treasury Resources



PFM Domain

Version 7 section


Core Government Financial Management




Budget

formulation

Budget

execution Human

Treasury Resources



Version 7 section


Expenditures & Procurement Government Performance Management



Budget

formulation

Budget

execution Human

Treasury Resources



Version 7 section


Revenue Management Government Performance Management



Budget

formulation

Budget

execution Human

Treasury Resources



Version 7 section


Human Resources




Budget

formulation

Budget

execution Human

Treasury Resources



Version 7 section


Treasury Government Performance Management



Budget

formulation

Budget

execution Human

Treasury Resources



Version 7 section


Transparency Government Performance Management



Budget

formulation

Budget

execution Human

Treasury Resources



Version 7 section


Performance Government Performance Management



Budget

formulation

Budget

execution Human

Treasury Resources



Version 7 section


What do we mean by Budget 2.0?

18 18

Budget 1.0 Transitional Budget 2.0

Back-office centric functions and

technology

Back-office centric functions deployed on

the web – “e-government”

Network-centric functions for citizen

interaction – “government 2.0”

Version 7 section


What do we mean by Budget 2.0?

19 19




Budget

formulation

Budget

execution Human

Treasury Resources



Version 7 section


0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

Budget execution

Budgetcomprehensiveness

Timeliness

International standards

Budget formulation

Policy management

Oversight

Transparencymechansism

Budget 1.0

Transition

Budget 2.0

“Budget 2.0”


Published Documents Web Publishing

Open Data Narrative Centric Visualization Centric

Citizen Centric

Interactive Data


Audit

Parliamentary Oversight

Citizen Oversight

Audio Visual

Performance Audit

Press & NGO

Access to Information

Cooperative Planning Expert Networks

Transparency Mechanisms

Oversight


Macro-Fiscal Frameworks Performance

Management Participatory Policy Policy-Budget Linkages

Policy Outreach


Budget as Ceremony Budget Books

Performance Management

Participatory Budgeting

Budget & Commitment Controls

Accrual Budgeting Program Budgeting

Policy Management

Budget Formulation


National Standards IPSAS Cash IPSAS Accrual

IMF GFS XML-based IATI, EITI, XBRL

MTEF


Annual Reports Unaudited Reports

Open Data

In-Year Execution

Audit Reports

Pre-Budget Statement

Interactive Data

Standards

Timeliness


National Government Sub-National

Parastatal

Accrual Extensions

Information Completeness


Cash Modified

Cash Modified Accrual Full Accrual

Budget & Commitment Controls

Performance Discipline Cash & Liquidity

Management

Budget Forecasting

Budget Comprehensiveness

Budget Execution & Accounting Methods

Version 7 section






Budget

formulation

Budget

execution Human

Treasury Resources



Version 7 section


Politics

Version 7 section


Policy

Version 7 section


Platform

Version 7 section


planning: budget – controls - monitoring

Version 7 section


public service performance

Version 7 section


public: transparency drives accountability

Version 7 section


private sector: value for money and development

PEFA/PFM Alignment

Version 7 section


Base Data Sources

• World Governance Indicators

• PEFA Assessments

• Open Budget Index

• Revenue Watch

• Corruption Perception Index

• Human Development Index

• Leger Global Happiness Index

• Gini Coeficient

• Debt Ratings (multiple)

• Doing Business Index

• Government Spending data

• Remittances data

• Government employment data

• OECD ODA

• Legatum Prosperity Index

• Earth Institute World Happiness Report

• Global Integrity Report

35 35

Version 7 section


Version 7 section • Resource dependency – revenue management & revenue transparency

• Government employment as %, size – civil service management

• Debt and deficits – expenditure management and procurement

• Population, regional disparities, ethnic issues – decentralization

• Democracy, freedom, stability, income disparity – budget and performance transparency

Sample Factors

Version 7 section


Calculates?

Technology Priorities

PFM Priorities

Country Conditions

Version 7 section


Anchor


PFM Priorities

Country Conditions

Benchmark Priority

Gaps Sequencing

Version 7 section


Sequenced


PFM Priorities

Country Conditions

Benchmark Priority

Gaps Sequencing

capacity

Version 7 section


40 40

Version 7 section


Test…

41 41

Version 7 section


6. Financially Sustainable GRP

Version 7 section


Agenda




– 45 minutes


– 60 minutes


– 90 minutes


– 45 minutes



– 30 Minutes


The Sad Truth

Majority of government financial management information systems

implementations in developing countries do not meet expectations

over-budget

4

late

5

unsustainable

minimal improvement

yet FreeBalance has a very high success rate

Version 7 section


Version 7 section

1. Perfection is the enemy of Good

2. Sustainability = adapting to reform and capacity growth

3. Traditional software model is not working in emerging economies

Lessons Learned

Version 7 section


What is Success? 1. On budget

2. On time

3. Addresses local capacity

4. Is financially sustainable

5. Is sustained by the government organization

6. Requires a minimum of foreign consultants

7. Modernizes with the government

1. Perfection is the Enemy of Good

Make it as simple as possible.

But no Simpler

Albert Einstein

Overwhelming Feature list

• “Featuritis”

• Benefits incorrectly tied to features

• Increasing the capacity gap everywhere

• More features, the better?

– Unconsumed features

– Infrastructure bloat

– ITC-generated costs

Software Capacity Gap

Time

Usability Feature Gap

Version 7 section • Typical Project Management methodologies

– Lack of focus on what’s important in the context

• Focus on “best-practices”

– Focus on what is theoretically best vs. what is important now

– Extends the capacity gap

What’s Wrong?

15

who’s on first?

Capacity Balance

Capacity

Simple Financial

Management

ICT Solution

Financial

Management

ICT Solution

Matches Capacity

Typical Commercial

Financial

Management ICT

Solution

• Cash-basis

• Pragmatic

• Limited budgetary controls

• National standards

• Specialized

• Personal-class tools and

middleware

• Underwhelming

• Accrual basis

• Best practices

• Complex budgetary controls

• International standards

• Comprehensive

• Enterprise-class tools and

middleware

• Overwhelming

Simple Financial

Management

ICT Solution

Typical Commercial

Financial

Management Solution

Capacity Foundations

Capacity

Food Health Education IT

Capacity

Accounting

Capacity

Rule of Law

Energy Availability

Capital Availability

Security ICT Infrastructure

Transport Power

In Context

Capacity

Build

Capacity

the plan was foolproof

project management

Project Management 101

Integration Management

Cost Management

Scope Management

Quality Management

Time Management

HR Management

Risk Management

Communications Management

1) Human resources & capacity more thought

and more risk

2) Communications is highly political, cross-

cultural

3) Scope creep directly related to “reputation”

4) Flexibility in change management needed

• known knowns, known unknowns, unknown

unknowns

Beyond Project Management

101

Version 7 section


Weakness of typical Project Approaches

• Business Process Reengineering

• Train the trainer as key capacity building approach

• Focus on the politicians

• Long implementation cycles: curb enthusiasm

• Macroeconomic planning and budget preparation

• Many process changes require legal reform

• Train the cadre, give them tools

• Politicians change

• Builds opposition momentum

• What budget?

24 24

Governance Underbelly

• Software manufacturers at “arm’s length”

• Consulting firms – incentives for over-budget

• Software manufacturers – consulting firms as make stakeholder

• Manufacturer commitment?

Version 7 section


1.Perfection is Enemy of the Good

• Need to focus on the country context

– Civil service capacity

– Ease of use is critical

– Needs for improved governance: quick wins

• Holistic project management

– IT, software & PFM capacity

– Good practices, not “best” practices

– Vendor governance is critical (pig and the hen)

26 26

2. Sustainability

27

the operation was a success 28

however, the patient died

29

Example Implementation

$23.6M IFMIS ERP implementation

Consultancy 36%

Capacity Building 4%

Recurrent 10% Software

13%

LAN/WAN 12%

Hardware 25%

Concerns about Sustainability

• the complexity of the system, structure and vocabulary

alienates and further hampers participation.

• concern has been that the system itself might be too advanced and complex,

• will become underutilized and that the costs involved won’t pay off.

• concerns that budget experts of the consultant implementing

the system may not fully have understood the procedures in place

Version 7 section • Often have an “IT” definition of success

– Measure now and assume everything will be fine

• Unknown unknowns

• Changes to country context

– Rapid and almost unprecedented in public financial management reform

What’s Wrong?

32

• Significant internal resistance to massive change

• Customization costs

• Political will dissipates

• Civil service and consultant turnover

• More opportunity for opposition to kill project

Capacity Balance • Laws need to be modernized

to accommodate software (accrual, electronic cheques, automated budgets)

• Infrastructure upgrade

• Significant functional and technical training

Capacity

Years

Customization

What’s Needed

• A realistic start point

• Configuration

• ICT follows reform

• Small wins through phases

• Rapid return on investment

• Grows to support best practices and international standards

Capacity

Systems

Follow

Capacity

Progressive Activation

Functions Modernization

Financials

Treasury

Property Tax

Purchasing

Water & Sewage

Purchasing

Payroll

Utilities

Inventory

Assets and Fleet

Cash-based

Cash Management

Modified Cash

Budgetary Controls

MTEF

Aggregate Controls

Modified Accrual

Civil Service Reform

Performance Mgmt

Accrual

Modernization

Expenditure

Controls

Compliance

Capacity

Legal Reform

Multi-Fund

Controls

Procurement

Controls

Version 7 section


Version 7 section Enterprise Software Costs by Category Averages from Multiple Sources

22%

20%

36%

22% software

computer hardware &networking

consulting forimplementation

internal costs

Does not include many

long-term costs

Version 7 section


38 38

Actual Use of Requested Features Successful Endeavours

7%

13%

16%

19%

45%

Always

Often

Sometimes

Rarely

Never

Version 7 section


Total Cost of Ownership (TCO)

Easy to Calculate

• Software Licenses

• Computer Hardware

• Implementation Services

• Training (software)

• Software Maintenance

Hidden, Partially Hidden

• Network, bandwidth

• Costs for additional customization

• Foreign consultants after implementation

• Upgrade (and forced upgrades) cost for application software and middleware

• Continuous training and certification (including IT and PFM)

• Employee retention

• Electricity

Version 7 section


Version 7 section • Financial sustainability is about TCO

• PFM sustainability is about government self-reliance

– Capacity

– Reduce need for foreign consultants

• Sustainability is about reform and modernization

– IFMIS as a foundation for adaptation

2. Sustainability

3. The traditional software model is not working

for developing nation governments

PFM casino?

Product

Management

Sales &

Marketing

User

Trainer

Consultant

Customer

Support

Product

Development

Typical Approach

Product

Management

Sales &

Marketing

User

Trainer

Consultant

Customer

Support

Product

Development

Product often designed

with different

customers in mind

Product developers

have no expertise in

government financials Salespeople want to

sell to every possible

market.

Consultants help

customers to

customize code.

Government needs

may not go into

upgrades

Consulting firms

generate revenue from

customization.

Government is one of

many “verticals”

Typical

Version 7 section


Version 7 section • When all you have a nail….

• Specialization across the value chain

– Loss of holistic understanding of customer needs

– Incentives for making solutions not sustainable

– Focus on “technology” rather than customer

– Ability to “blame the victim”

What’s Wrong?

Version 7 section


Blaming the Victim? • Customer didn’t articulate

business processes properly

• Customer had unrealistic expectations for delivery

• Customer changed requirements after the first phase

• Customer did not dedicate enough staff to manage project

• Customer did not train enough staff

Vendor should understand the government domain.

Product should be designed for rapid implementation.

Product should be designed for progressive activation.

Product should not place a significant burden on the government.

Vendor should know how to build capacity

Version 7 section


Version 7 section

3.Technology Lessons Learned

Software design, implementation and support methodology critical to ensuring success

Fully open systems are less expensive to implement and sustain: “future proofing”

Adaptable systems inexpensively conform to reform

Version 7 section


7. GRP and Anti-Corruption

Version 7 section


Agenda




– 45 minutes






– 30 Minutes


Version 7 section


0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

0.000 0.100 0.200 0.300 0.400 0.500 0.600 0.700 0.800 0.900 1.000

Corruption Linkage with Human Development Human Development Index compared to Corruption Perception

Human Development Index: UNDP

Corruption Perception: Transparency International

Version 7 section


-2.5

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2

2.5

0 20 40 60 80 100 120

Corruption Linkage with Prosperity Low Control of Corruption reduces Country Prosperity

World Governance Indicators: Control of Corruption

Legatum Prosperity Index

Version 7 section


Version 7 section

GRP IS NOT A CORRUPTION CURE-ALL

Version 7 section


Version 7 section

COUNTRIES WITH BETTER-PERFORMING PFM SYSTEMS HAVE LOWER CORRUPTION PERCEPTION INDEXES BECAUSE ROBUST PFM SYSTEMS RAISE THE RISK OF DETECTION AND THE COST FOR BAD BEHAVIOR

Version 7 section


38%

30%

12%

8%

6% 5% 1%

Executive

Police

Financial institutions

Legilslature

Foreign and Domestic Investors

Judiciary

Foreign Donors

Corruption Sources in Developing Countries World Bank Study, 2000

significant impact of GRP

on anti-corruption

GRP as a tool to reduce corruption

Version 7 section


Version 7 section • Governance: the manner in which the acquires and exercises its authority to provide public goods & services

• Corruption: the use of public office for private gain and is an outcome – a consequence of the failure of accountability relationships in the governance system

8 8

Version 7 section


Version 7 section PFM Exposures

Budget Preparation Lower Budget priority manipulation

Budget Execution High Largest opportunity for corruption including:

• Extra-Budgetary High Off-budget, cash fungibility

• Payments Medium Withholding of payments

• Procurement High Bid rigging, collusion, bribery

• Public Investment Projects High Significant political manipulation

Payroll Medium Ghost employees, bribes for pay

Tax Administration High Tax avoidance

Treasury Medium Bank account manipulation

Version 7 section


Version 7 section GRP as Anti-Corruption

• Prevents certain types of corruption

– Automation

– Behaviour Change

• Detects corruption though reporting and audit

• Requires other factors for enforcement, comprehensiveness and proper configuration

10 10

Version 7 section


Version 7 section

different organizational configurations

MULTIPLE

CONTROLS

aggregate

detailed

MULTIPLE

CONTROL

LEVELS

configured

CONTROLS

bu

dg

et

ap

pro

pri

atio

ns

tra

nsfe

rs

co

mm

itm

en

ts

ob

liga

tio

ns

rece

ivin

g

exp

en

ditu

res

COMMITMENT CYCLE

segregation of

duties & workflow

monthly

PERIOD

yearly

TOLERANCE

LEVELS

flexible

strict

• Automated controls including segregation of duties, follow government laws

Version 7 section


Version 7 section Other control factors

• Electronic payments – removes “cash” fungibility

• Decentralization – reduces opportunity for centralized corruption

• Behaviour – knowing that “under the microscope”

• Asset Management – tracking assets

• Human Resources – “ghost” employees

12 12

Version 7 section


Version 7 section Audit

• All transactions + approvals logged, date, time, user n audit trail

• All vendor, employee, taxpayer information for cross reference

• Fraud detection patterns

– Payments, addresses, “under limits”, procurement to tax, civil service financial disclosure

• On-line reporting

Version 7 section


Version 7 section

USING COUNTRY SYSTEMS - DISCUSSION

Version 7 section


Version 7 section Food for Thought

• The “corruption” narrative

• Quality of donor financial management systems?

• Donor incentives?

• Historical perspective on corruption

• Contribution of “Western” Companies

• Lack of “enforcement” by Western Governments

• Institutionalized corruption: earmarks, Super PACs

15 15

Version 7 section


8. Future of GRP/IFMIS

Version 7 section


Agenda




– 45 minutes


– 60 minutes


– 90 minutes


– 45 minutes



– 30 Minutes


Government Resource Planning Systems

of Tomorrow

How computer technology trends

today are defining

Agenda

• Market and technology forces affecting Public Financial Management (PFM)

• Technology and PFM reform

– The role of the Integrated Financial Management Information System (IFMIS)

• 10 key market trends

• Conclusions: What will the government IFMIS of 2010 look like?

Government IFMIS of tomorrow…

The four market technology forces

of today that are defining

1. Consolidation

2. Disintegration

3. Innovation

4. Integration

10 Market Trends Consolidation

1. Enterprise software consolidation

2. Open source software

Disintegration

3. Decentralization

4. Sequencing implementation

5. Software as a service (SaaS) and shared services

Innovation

6. Government as Platform: Government 2.0

7. Mobile government

8. Usability

Integration

9. Corporate Performance Management (& Government Performance Management)

10. Service Oriented Architectures (SOA)

with government and development trends

Not all technology and market

trends are consistent

ERP systems have become bloated

‘understructures’ that have become

too expensive to maintain.

Bruce Richardson, AMR

Research August 2006

1. Market consolidation

What is Enterprise Software?

• Many acronyms:

– ERP (Enterprise Resource Planning)

– SCM (Supply Chain Management)

– CRM (Customer Relationship Management)

– CM (Content Management)

– CPM (Corporate Performance Management)

– BPM (Business Process Management)

– and many others

Microsoft

SAP

Infor

Oracle

Sage

Lawson Epicor

Chinadotcom

Siebel

Retek

PeopleSoft

JDEdwards

Vantive

Triversity

SSAGlobal

Baan

Marcam

E-piphany

Ironside

Mapics

Lilly

Geac

JDA

Extensity

Comshare

Datastream

FRX

GreatPlains

Navision

Damgaard

Axapta

Soloman

Scala

Intentia

Ross

Pivotal

Accpac

Best

Mas 90/200

Peachtree

Timerline

Siebel

Retek

PeopleSoft

JDEdwards

Vantive

Triversity

SSAGlobal

Baan

Marcam

E-piphany

Ironside

Mapics

Lilly

Geac

JDA

Extensity

Comshare

Datastream

FRX

GreatPlains

Navision

Damgaard

Axapta

Soloman

Scala

Intentia

Ross

Pivotal

Accpac

Best

Mas 90/200

Peachtree

Timerline

Drivers for Consolidation

• Lack of organic growth

• Shareholders want companies to invest in

more growth

• ‘free markets’ monopolies

• Perception that big = winning

• Maintenance business model

• Buy customers

• Own customers: barriers to entry

• Lack of value for upgrading

Current Situation

• Survival of the fittest?

• Pressure to enter new horizontal and vertical markets

– New technology stack wars

– ‘SME’ market

– Emerging markets interest

• Overlapping technology portfolio

• Consolidators attempting economies of scale

• Customer satisfaction?

The growth of free, open-source software

presents developing countries with an

opportunity to escape from technological

dependence on developed

countries, but also a challenge to

build up local expertise…

Dr. Mike Reed, UNU International

Institute for Software

Technology March 2006

2. Open Source Software

Drivers for Open Source

• Software commoditization - lack of

incremental benefits in commercial

infrastructure software

• Government self-reliance – reduce

national technological dependence

• Cost and choice - cost for license

compliance

• Future proofing

Current Situation

• Rapid uptake in emerging countries

• New procurement regulations

• Proven performance and reliability

• Infrastructure middleware success

– Java EE, Apache, MySQL, Linux, JBoss,

Tomcat, OpenOffice

• Some assembly required

– Usability issues

– Market volatility

• Not established in business applications

including political devolution,

de-concentration,

delegation, and transfer

to non-governmental organizations,

promotes democracy and

good governance by providing an

institutional framework to bring

decision-making closer to the people

Shabir Cheema United Nations Global Forum

for Reinventing Government November 2006

3. De-centralization,

Devolution

Delegation

De-concentration

Divestment

Budgets

Ministry 1

Municipal

Gov’t

Municipal

Gov’t

Virements

Information

Virements

Information

Virements

Information

Municipal

Gov’t

Provincial

Gov’t

National

Government

National

Government

Provincial

Gov’t

Ministry 1

Municipal

Gov’t

Municipal

Gov’t

Municipal

Gov’t

Reporting

Outturn Expenditure

Information

Outturn Expenditure

Information

Outturn Expenditure

Information

Drivers for De-centralization

Administrative Decentralization

• Improve government efficiency and effectiveness = improve outcomes

• Large % of government budgets deployed locally

• Local and cultural autonomy

Fiscal Decentralization

• Improves participation = more stable countries

• Reduce waste and corruption

Current Situation

• Conflicts with computing trend to

integration (centralization)

• Clear trend: devolution on every

continent

• Local capacity and sustainability issues

• Difficulties in extending governance with

existing solutions

Start with the implementation of foundation

infrastructure and undertaken at a pace

that will ensure that users effectively cope

with new technologies, methods and processes

Ron Points December 2007

4. Sequencing Implementation

Why Sequencing?

• Small wins overcome internal resistance

to change

• Results influence politicians and donors

• Sequence in any country differs based on

country priorities

• Transition plan and change management

• Capacity building in steps improves

sustainability of solution by the

government

Current Situation

• Some countries trying more at once:

creating long implementation cycles

– Functional experts want phases

– IT experts want elegant technology

• Irony: more success in post-conflict:

– Need for quick implementations

– Focus on capacity

SaaS benefits are crystallizing,

but chaos still abounds

Robert Bois,Aberdeen Group

June 2006

5. Software as a Service (SaaS) &

Cloud Computing

What is Software as a Service (SaaS)?

• Applications are hosted externally: e.g.

Salesforce

• Also called “Cloud Computing”

• Typically priced on a subscription basis

• Typically provides some customization

• Also:

– IaaS

– PaaS

Drivers for SaaS • High cost to maintain complex software and

infrastructure [Death of IT]

– Licenses

– Upgrades

– Networks

– Databases

• SaaS supports fast growth

Current Situation

• Significant increase in market penetration

• Uneven adoption: high in customer relationship management, HR

• Exposes limitations in legacy technology

• Caused more consolidation as ERP companies acquire

• Rarely used in government back-office applications – why?

• Similar technology used for shared services, yet…

No matter how you brand the hype,

get ready for a quantum leap in the way

the Web works and —

more importantly —

how it works for you and your business.

Wayne Gomes, Rich Internet

Group November 2005

6. The Web as a Platform - Gov 2.0

What is Web 2.0? • An umbrella term for second wave of internet

innovation

– Web as platform + diversity of platforms

– Mash-ups + syndication

– Social software + community + crowdsourcing

– Open source + rapid development

– Rich web interfaces

– Distributed documentation & data

• YouTube + Facebook + Flickr + Twitter + Blogging

Drivers for Government 2.0

• Government as Platform– open data to

spurn economic activity

• Drive for Transparency

• Increased expectation of participation:

crowdsource or be croudsourced [Arab

Spring]

• Infrastructure is available

• The Network Effect

• The Long Tail

Current Situation

• OGP – rapid expansion of Gov 2.0 and

open data sets

• Emergence of standards

• Recognition of citizen force multiplier

• Citizen tools like Ushahidi

• Barriers: cost and culture

• Culture change is in progress

New wireless technology is resulting in

innovative business models

and holds the promise of connecting poor users,

extending competition to all market segments,

and accelerating development of broadband

infrastructure and access.

World Bank April 2006

7. Mobile Government

What is mGovernment?

• Light e-government using mobile telephone

technology

– Mobile telephone as kiosk

• Citizens and Businesses

– Finding government services

– Notifications and alerts

• Civil Service

– Requisitions and receiving

– Approvals

– Time & Attendance

Drivers for mGovernment

• Proven voice and text technologies

• Mobile telephone is the tool of choice for

small transactions

• Growth in emerging countries – theme of

“ICT4D”

• Introduction of new products aimed to

overcome the digital divide

• Citizen and civil servant usable and

inexpensive

Current Situation

• Early adoption in government

• Exposing GRP capabilities via tablets

ideal, less so on small form factors

• Remains differences among devices

• Most e-government needs computers

and the Internet

• Practical for life events

Agencies are addressing goals of decreasing

administrative burdens, lowering costs, enabling

better informed decision making, and ensuring

tmeliness in responding to sector needs.

Aberdeen Group March 2004

8. Corporate Performance and


Current Situation

• Mixed

– Capacity issues

– Improvements in MTEF

– Remains output focused

– Better results in projects yet…

66% of all IT projects either fail

outright or take much longer to install

than expected because of their complexity.

9. Usability – “UX”

The Economist October 2004

Features

•“Featuritis”

• Benefits incorrectly tied to features

• Increasing the capacity gap everywhere

• More features, the better?

– Unconsumed features

– Infrastructure bloat

– ITC-generated costs

Featurities

Time

Usability

Feature Gap

The Secret of Success

• Realistic view of capacity and infrastructure

• Focus on what is important

– Vehicle for your road

• Why complexity?

– Engineers and not people too

– “Apologists”

• Usability & Simplicity

• Capacity enhancement

– Not personnel reduction

• Sustainable

Current Situation

• Re-thinking “windows”

• Recognition of usability as a problem for

everyone – regardless of capacity

• Movement from “functional” design to

“user-centric” design

• Leverage of some Web 2.0 user-interface

concepts in commercial software

SOA will make today’s ERP systems

look like yesterday’s mainframe apps.

Bruce Richardson, AMR

Research August 2006

10. Service-Oriented Architecture (SOA)

SOA Drivers

• Many applications in use

• Promise of re-use: write once, use many

times

• Component-based architectures –

promise of assembling applications from

parts

• Mix programming language, operating

system and middleware

• Pick best-of-breed applications

Web Services

register discover

bind

Current Situation

• Proven practical in Web 2.0

• Enterprise software momentum

• Difficulties with monolithic / monopoly

approach

• Technology plumbing has been mostly

resolved

• Revolutionizing enterprise software

– Therefore…

Conclusions:

GRP of the Future

Modular

and Modular

modular, de-centralized & integrated

non-monolithic & multiple vendors

wired & wireless

commodity & innovative

The Government IFMIS/GRP of

tomorrow will be:

core

IFMIS decentralize

extend

measure

Citizen Centric

citizen

Version 7 section


9. Parking Lot

Version 7 section


Agenda




– 45 minutes






– 30 Minutes


Version 7 section


Version 7 section 1. Valuable learning experience

2. Contrast public and private sector accounting & management

3. Training course, not a demonstration

4. Breadth of financial management in government

5. Strategic, tactical, futures

6. Vendor-neutral “good practices”

7. Share lessons among group

8. Voice lasts until end of day

9. Address specific ideas, concerns