Development of Application Software for Integrated Financial Management Systems Cem Dener ECSPE Washington, DC July 2007 Development of Application Software

Development of Application Softwarefor

Integrated Financial Management Systems

Cem DenerECSPE

Washington, DCJuly 2007



Cem DenerECSPE


July 2007 IFMS Application Software 2

Presentation• Definitions

• Factors Affecting the Development

of ASW

• Available Solutions

• IFMIS ASW Solutions in ECA

IFMS Application Software


Definitions DefinitionsComputer Software (SW), consisting of programs, enables a computer to perform

specific tasks, as opposed to its physical components (hardware or HW) which

can only do the tasks they are mechanically designed for.

[source: www.wikipedia.org]

For IT Professionals, there are three major categories of computer software:

System Software helps run the computer hardware and computer system (e.g.

operating systems, device drivers, diagnostic tools, servers, windowing systems,

and utilities).

Programming Software provides tools to assist a programmer in writing

computer programs (codes) using different programming languages in a more

convenient way (e.g. code editors, compilers, interpreters, linkers, debuggers).

Middleware is also a kind of programming software that connects software

components or applications to support complex, distributed applications.

Application Software allows end users to accomplish one or more specific

tasks. Typical applications include business software, industrial automation,

educational software, medical software, databases, and computer games. IFMS

falls into this category.


DefinitionsApplication Software (ASW)

For end users, there are two major types of Application Software:

Commercial-off-the-Shelf (COTS) Software is a term for ready-made

application software, available for sale, lease, or license to end users. In most

IFMIS applications, COTS requires modification (customization) of the code and

integration work.

Custom Developed Software (CDSW) is a “user-written” or “in-house

developed” (or “bespoke” or “tailored”) software designed to meet the specific

needs of end users. In most IFMIS applications, CDSW is integrated to/linked

with “customized” COTS software.

Other common terms used in ASW development work:

Customization (adaptation) is the modification of COTS software (ideally less

than 10-20 % of the code) to meet individual needs or specific requirements of

the application.

Parameterization is the process of entering software specific parameters

defined by the user according to technical requirements before testing and

using ASW.

Localization is the process of translating the user interface, menus and

messages that a program presents to a user into various languages for a specific

country or region.


DefinitionsWB Standard Bidding Document - Supply & Installation of Information

Systems (March 2003) Definitions (General Conditions of Contract)

(vii) “Software” means that part of the System which are instructions that cause information processing Subsystems to perform in a specific manner or execute specific operations.

(viii) “System Software” means Software that provides the operating and management instructions for the underlying hardware and other components, and is identified as such in Appendix 4 of the Contract Agreement and such other Software as the parties may agree in writing to be Systems Software. Such System Software includes, but is not restricted to, micro-code embedded in hardware (i.e., “firmware”), operating systems, communications, system and network management, and utility software.

(ix) “General-Purpose Software” means Software that supports general-purpose office and software development activities and is identified as such in Appendix 4 of the Contract Agreement and such other Software as the parties may agree in writing to be General- Purpose Software. Such General-Purpose Software may include, but is not restricted to, word processing, spreadsheet, generic database management, and application development software.

(x) “Application Software” means Software formulated to perform specific business or technical functions and interface with the business or technical users of the System and is identified as such in Appendix 4 of the Contract Agreement and such other Software as the parties may agree in writing to be Application Software.

(xi) “Standard Software” means Software identified as such in Appendix 4 of the Contract Agreement and such other Software as the parties may agree in writing to be Standard Software.

(xii) “Custom Software” means Software identified as such in Appendix 4 of the Contract Agreement and such other Software as the parties may agree in writing to be Custom Software.

(xiii) “Source Code” means the database structures, dictionaries, definitions, program source files, and any other symbolic representations necessary for the compilation, execution, and subsequent maintenance of the Software (typically, but not exclusively, required for Custom Software).


Definitions

WB Standard Bidding Document - Supply & Installation of Information Systems

Appendix 4 (Sample Forms)

Appendix 4. Categories of Software The following table assigns each item of Software supplied and installed under the Contract to one of the three categories: (i) System Software, (ii) General-Purpose Software, or (iii) Application Software; and to one of the two categories: (i) Standard Software or (ii) Custom Software.

(select one per item) (select one per item)

Software Item

System

Software

General- Purpose Software

Application

Software

Standard Software

Custom Software

COTS CDSWIFMIS


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.

Asset / Inventory

Mgmt

Procurement/Purchasing

Mgmt of Budget

Authorizations

Commitment of Funds

Payments and Receipts

Mgmt

CashManagement

Debt and Aid Management

Fiscal Reports &

Budget Review

Audit and Evaluation

Budget Preparation

Policy Development and

Review

Definitions

Budget Execution[ Treasury System ]

Payroll CalcsHR Mgmt

F M I SWeb Portal

Public Financial

Management Cycle


Factors Affecting the Development of ASW

Factors Affecting the Development of ASW for IFMS

IFMS Functionality and Scope

Technology Architecture (centralized, distributed, …)

Existence of secure countrywide Network infrastructure

Existence of ICT Standards and Regulations

Local capacity for software development and maintenance

Institutional capacity for system management and support


IFMS Functions Common Implementation Options

Macroeconomic Forecasting CDSW / Existing Models Budget Preparation CDSW / COTS Core Treasury System COTS (customized) Payment Management + Interface with banking system (TSA) Revenue Management + Interface with revenue collection Accounting (General Ledger) Cash / Fund Management + Interface with banking system (TSA) Commitments / Purchasing + Interface with procurement agency Asset / Inventory Management Financial Reports Operational Support for SUs CDSW for Spending Units (e-Treasury) Internal Debt Management CDSW / Interface with Debt Mgmt

System External Debt and Aid Mgmt. Interface with Debt Mgmt System Personnel Database / Payroll CDSW / COTS Support for Auditing Custom developed reports Web Publishing (Web Portal) CDSW Financial Mgmt Information System COTS / CDSW

[ COTS : “customized” Commercial-off-the-Shelf Software CDSW : Custom Developed Software ]

IFMS Functionality / Implementation Options


IFMS : Information & Communication Technology

Modern integrated PFM systems are designed and

implemented as

centralized web-based applications

Implementation of the IFMS includes the following ICT

components:

[0]Establishment of countrywide network connections

(communications lines) as Government contribution.

[1]Development of web-based Application Software (ASW) as a

combination of customized COTS package + custom developed

software.

[2]Installation of central servers (database & application servers) and

data storage units (fiber disk arrays) at the main system center &

business continuity center.

[3]Installation of standard field hardware (domain servers, user

workstations and peripherals) in central and field offices.

[4]Installation of network equipment, system and user management

tools and engineering support solutions.


B C

C1 2

M S

C

Local Server

Firewall

Database Server(s)

MoF / Treasury

District Offices

District Offices

Spending Units

Application Servers

Web Server

Collection Point

(city center)

Dedicatedline

Spending Units

Internet

Virtual Private Network

Tunnelling

Encryption

On-demand lines for towns

PCs / Thin Clients

[ 2 ]Central Servers

[ 3 ]Field

Hardware

[ 0 ]Wide Area Network

District Offices

3

A typical 3-tier web-based implementation and [ ICT ] components

IFMS : Technological Architecture

[ 4 ]Network Equipment

[ 1 ] IFMS

Application Software

IFMS DB

MSC : Main System Center BCC : Business Continuity Center


User TerminalsSystem

Center

Database Server

Application Servers

Users

Web Server

Core PFMS modules

We

b P

ort

al

Customized COTS

CDSW

Internal + External

IFMS

Custom developed software modules

COTS DB

PFM Organizations

Spending Units, Local finance directorates, local

public authorities, municipalities, etc.

Internal Access

External Access

CDSW DB

CDSW : Custom Developed Software

COTS : Commercial-off-the-Shelf SW

VPN

Internet

1 2 3

Interfaces

Web-based Centralized IFMS Model

Integrated IFMS

DB

Core Treasury System

T TransactionsP PlansC ContractsA AccountsR ReportsI InterfaceTSA Treasury Single Acct

Spending Units

Local finance directorates, public authorities,

municipalities, public institutions

Integrated IFMS

Ministry of Finance

Business Continuity Center + FMIS

MoF IT Dept

I

I

IState Property

Fund

Public Procurement

Internet & Intranet

IFMSWeb Portal

External Users

Reports

Reports

T, P

T, C

T,P,C,A

Main Civil Service Department

Internal Audit I P, R

Payroll Calcs.

Asset/Invent Mgmt

Ministries & Departments P, R

Audit Reports

Reports

Debt Mgmt

Budget Formul.

IFMSMain System Center

I Customs ServiceT, P

I Tax AdministrationT, P

Core Treasury System

• Paym./receipts• General Ledger• Purch./Commit.• Cash/Fund Mgmt• Fin. Reports

Macro Econ Forec

IFMS DB@ MSC

IFMS DB@ BCC

Statistics InstituteI P, RHR Mgmt/Pers DB

National Bank TSA

Regional Treasury Dept

District Treasury Div

I

Other Gov Agencies/Depts

T

Financial Reports

IFMS : Functional Modules and Users


IFMS Technology Architecture

Functional / Technical / Economical Aspects

Distributed systems Centralized systems

Budget preparation Separate modules for Central and Local levels Central module shared by all levels

Transaction processing Separate modules for Central and Local levels Central module shared by all levels

Data storage Separate databases for Central and Local levels Central database shared by all levels

Consolidation of data Necessary and difficult Not necessary. Automatic

Financial Reporting All units generate their financial reports from their local

database. Difficult to follow the overall performance on a daily basis.

All units generate their financial reports from the central database. Overall performance can be followed from the

center, instantaneously.

Auditing Difficult to implement Easy to implement

On-line / Off-line Off-line On-line

Access to Data Controlled access to consolidated data only from the center Instantaneous controlled access to all data from all units

Database management Separate for Central and Local levels Central level

Install application SW Separate for Central and Local levels Central level

Software updates Separate for Central and Local levels Central level

Local Area Network High capacity LAN Low capacity LAN

Wide Area Network Low capacity WAN High capacity WAN

System management Very difficult Automatic central system monitoring

Technical support Very difficult Manageable from center

Maintenance Very difficult Manageable from center

Data Exchange On-demand connection to selected nodes for data exchange On-line (fast) data exchange between all nodes

Internet services Limited for each node. Locally provided. High security risk. Unlimited for all nodes. Centrally provided. Better security.

Implementation period 2-3 years 1-2 years

SW install./ maint. cost High / High Low / Low

HW install./ maint. cost High / High High / Low

NW install./ maint. cost Low / High High / High

Technical support cost Very High Low

Total cost of ownership High Low


Available SolutionsSome of the Available IFMS Solutions

FreeBalance eFinancials (FreeBalance Software, Canada)

Oracle E-Business Suite (Oracle Corporation, USA)

SAP R/3 (SAP AG, Germany)IFMS Functionality vs Modules FreeBalance eFinancials Oracle E-Business Suite SAP R/3

www.freebalance.com www.oracle.com www.sap.com

Budget Preparation Budgeting Budgeting Strategic Enterprise Mgmt (BPS)

Budget Appropriations Appropriations General Ledger Funds Management (FM)

Management of Payments Expenditures Payables Accounts Payable (FI-AP)

Management of Revenues Revenues Receivables Accounts Receivable (FI-AR)

Accounting (General Ledger) General Ledger General Ledger Financials-General Ledger (FI-GL)

Cash/ Fund Management Appropriations + Expenditures Cash Management Financials (FI) +Treasury (TR)

Commitment/ Purchasing Purchasing Procurement Material Management (MM)

Asset/ Inventory Management Fixed Assets Assets Assets Accounting (FI-AA)

Financial Reports eFinancials standard reports E-Business standard reports SAP for Public Sector

HR Management and Payroll Human Capital PeopleSoft Enterprise Human Capital Management

Interfaces and Workflow Mgmt Controls built-in built-in

Technology Platform

Web based application support expected in 2007 Yes Yes

Web services support Yes Yes Yes

Operating System Windows Windows, Linux, UNIX Windows, Linux, UNIX

Hardware x86 architecture All All

Databases Oracle, MS SQL Oracle Oracle, SAP, DB2, Informix, MS SQL

Other ASW options in ECA: FinancialOne (TechnologyOne, Australia); MS Dynamics NAV (Navision) (Microsoft Corp. USA); 1C:Enterprise (1C, Russian Federation)


IFMS ASW Solutions in ECA

Projects say2000i PE-P049174-SPN PE-P069939-SPN PE-P064508-SPN PE-P066100-SPN PE-P071063-SPN PE-P082916-SPN PE-P063081-SPN PE-P090389-LEN PE-P099840-LEN Treasury/Public Financial Mgmt Systems Turkey Ukraine Albania Russian Fed. Azerbaijan Kyrgyz Rep. Moldova Georgia Ukraine Tajikistan

PFMP TRE1 PARP TDP IBTA 2 GTAC PFMP PSFMRSP PFMS PFMMP

Project status Completed Completed Completed Implementation Implementation Implementation Implementation Implementation Preparation Preparation

ASW Solution Oracle Oracle + MS SQL Oracle Oracle SAP ? ? ? ? ?

COTS / CDSW / Combination CDSW CDSW COTS COTS COTS COTS + CDSW COTS + CDSW COTS + CDSW COTS + CDSW COTS + CDSW

Technological Architecture

1 Web-based (online), centralized Yes - Yes Yes Yes Yes Yes Yes Yes Yes

2 Web-based (hybrid), distributed - Yes - Yes - - - - - -

3 Client-server (off-line), distributed - Yes - - - - - - - -

Total cost of the project 15,910,000 26,866,000 8,970,000 613,000,000 13,350,000 10,210,000 15,331,000 15,000,000 65,000,000 9,050,000

Cost of IFMS ICT solutions 15,455,000 22,767,000 5,200,000 520,000,000 6,565,000 7,220,000 7,775,000 9,500,000 54,600,000 6,000,000

ASW development cost 1,855,000 3,393,000 2,750,000 65,000,000 2,900,000 2,810,000 3,150,000 3,500,000 22,000,000 2,500,000

1 ICT as % of total project cost 97.1% 84.7% 58.0% 84.8% 49.2% 70.7% 50.7% 63.3% 84.0% 66.3%

2 ASW as % of total project cost 11.7% 12.6% 30.7% 10.6% 21.7% 27.5% 20.5% 23.3% 33.8% 27.6%

3 ASW as % of total ICT solutions 12.0% 14.9% 52.9% 12.5% 44.2% 38.9% 40.5% 36.8% 40.3% 41.7%

Duration of the project 8.5 7.7 6.8 10.4 7.9 6.6 6.3 4.5 5.5 5.5

1 Identification to Effectiveness: yrs 2.0 2.3 0.4 3.2 3.4 1.3 1.8 0.9 1.5 1.5

2 Effectiveness to Completion : yrs 6.5 5.4 6.4 7.2 4.5 5.3 4.5 3.6 4.0 4.0

Scope (total # of nodes) 1,600 668 176 2,290 60 88 160 90 720 113

Users (total # of concurrent users) 6,000 8,000 272 15,000 200 465 247 300 9,000 350

Users (total # of users) 115,550 78,800 366 321,200 410 560 239 650 89,000 503

IFMS Functionality

1 Macro Economic Forecasting - - - - - - Yes Yes Yes Yes

2 Budget Preparation and Approval Yes - Yes - - - Yes Yes Yes Yes

+ Performance Program Budgeting Yes (2004) Yes (?) - - - - - - Yes Yes

3 Budget Execution and Monitoring Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

+ Commitment of funds Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

+ Payments Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

+ Receipts (revenues fm tax, customs) Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

4 Cash Flow Management Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

5 Accounting (Treasury General Ledger) Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

+ Cash/Mod.Cash/Mod.Accr./Accrual Modified Accrual Modified Cash Modified Cash Modified Cash Modified Cash Cash Modified Cash Modified Cash Modified Cash Modified Accrual

6 Financial Reports Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes

+ Compliance with std (GFS, IPSAS) GFS 2001+IPSAS GFS 2001 GFS 2001 GFS 2001 GFS 2001+IPSAS GFS 2001 GFS 2001 GFS 2001+IPSAS GFS 2001+IPSAS GFS 2001+IPSAS

7 Debt and Aid Management Yes - Yes - Yes - Yes Yes Yes Yes

8 Fixed Assets/Inventory Management Yes - - - - - - Yes Yes Yes

9 Personnel Management Yes - Yes - - Yes Yes - MoF Yes Yes - MoF Yes - MoF

10 Payroll Calculations Yes - Yes - - Yes Yes - MoF Yes Yes - MoF Yes - MoF

11 Financial Control / Audit Yes - Yes Yes Yes - Yes Yes Yes Yes

12 Management Information Systems Yes Yes Yes Yes - - Yes Yes Yes Yes


ECA Treasury/IFMS Projects

ECA Treasury / PFMS Projects 1995 2000 2005 2010 2015

Albania P069939 PARP (TS)1993

Azerbaijan P066100 TIMS (TS)1998

Jul’07

Hungary P043446 PFMP (TS)1996Kazakhstan P037960 TMP (TS)1994

Slovak Rep**P069864 PFMP (TS)1992

Georgia P063081 FMIS (IFMS)1998

Kyrgyz Rep P071063 TMIS (TS)1994Moldova P082916 PFMP (IFMS)1993

Russia P064508 TDP (TS)1992

Türkiye* P035759 say2000i (TS+)1927Ukraine P049174 TSP (TS)

1996

Ukraine P090389 PFMP (IFMS)1996Tajikistan P099840 PFMP (IFMS)1997

Uzbekistan P070084 PFMRP (TS)1999

TurkmenistanP034092 IBTA (TS)1992Croatia P050718 PFMP (TS)1992

Armenia** P081668 IDF (GFMIS)1996

Extension

Implementation

Prep.>Appr.>Effect.

Treasury established

Preparation

Dropped

AH

AH

AH

AH

DR

DR

CD

AH, CD

CD

CDCD

CD

CD

CD

CD

DR

CD

DR

AH

DR

CD

AH Ali HashimDR Dominique de RoquefeuilCD Cem Dener

AH

AH

* The Bank funded the ICT consultant/prj coord only.** The Bank funded the TA activities only. eGov

starts

eGovprojects stall

World Wide Web Browsers Java

Web TV Google

Wireless Skype

eGov recovery

eEurope

Blogs YouTube

Completed

In Progress

Avg. completion time 7.1 yrsAvg. implementation 5.7 yrs

Avg. compl. 7.2 yrsAvg. impl. 5.1 yrs

Avg. compl. 5.5 yrsAvg. implem. 4.1

yrs

Oracle / CDSWOracle /

COTSOracle / CDSWOracle + MS SQL /

CDSWOracle / COTS

SAP / CDSW

SAP / COTS

Oracle / COTS

COTS + CDSW

COTS + CDSW

COTS + CDSW


Challenges in IFMS Projects

Other ICT Challenges Government ownership and financial support

Recruitment and sustainability of IT specialists in public sector

Existence of a reliable countrywide network infrastructure

Realistic ICT cost estimates to reduce procurement risks

Web based applications & open systems to reduce cost and

duration of implementation

Proper requirements for Records Management,

Information/System Security and Digital Signature in design

Coordination with e-Gov activities (interoperability & resource

sharing)

Project management, monitoring and evaluation skills



Thank You




Thank You


Documents

Development of Application Software for Integrated Financial Management Systems Cem Dener ECSPE Washington, DC July 2007 Development of Application Software