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Global Trends in the Design and Implementation of Financial Management Information Systems
 

Global Trends in the Design and Implementation of Financial Management Information Systems

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Cem Dener

Cem Dener

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    Global Trends in the Design and Implementation of Financial Management Information Systems Global Trends in the Design and Implementation of Financial Management Information Systems Presentation Transcript

    • ICGFM Winter ConferenceGlobal Trends in the Design and Implementation of Financial Management Information Systems Cem Dener December 5-7, 2011 Washington, DC
    • ICGFM Winter Conference Contents • FMIS terminology • FMIS Study: 25 Years of WB Experience on What Works and What Doesn’t  Key findings of the study, and FMIS prerequisites  Suggested FMIS design & implementation methodology • Current status of Treasury/FMIS projects • Trends in FMIS projects  Transition to integrated FMIS solutions  Integration of budget and treasury systems  Expansion of FMIS capabilities for spending units (web portals)  Improving transparency: disclosure of information on the web • FMIS Community of PracticeDecember 2011 Trends in Design and Implementation of FMIS 1
    • What is FMIS? Policy Development and Budget Review Preparation B FMIS: F = B + T (+ O) Public Investments Audit and Mgmt of Budget Evaluation Authorizations T Core Treasury System (Budget Execution) Fiscal Reports & Commitment of Budget Review Funds O Web Portal General Ledger Procurement/ AccountingPublish/Monitor Purchasing Daily Operations Debt and Aid Payments and Tax and O Management Receipts Mgmt Customs Asset / Inventory Mgmt Cash Payroll Calcs Management HR Mgmt
    • ICGFM Winter Conference Contents • FMIS terminology • FMIS Study: 25 Years of WB Experience on What Works and What Doesn’t  Key findings of the study, and FMIS prerequisites  Suggested FMIS design & implementation methodology • Current status of Treasury/FMIS projects • Trends in FMIS projects  Transition to integrated FMIS solutions  Integration of budget and treasury systems  Expansion of FMIS capabilities for spending units (web portals)  Improving transparency: disclosure of information on the web • FMIS Community of PracticeDecember 2011 Trends in Design and Implementation of FMIS 3
    • FMIS Study Financial Management Information Systems 25 Years of World Bank Experience on What Works and What Doesn’t April 2011 Objective In conjunction with the development of anew World Bank FMIS database in 2010, thisWorld Bank Study seeks to identify trends in the design and implementation of FMIS solutions in World Bank funded projects(1984-2010), and share observed/reported achievements, challenges and lessons learned with interested parties. December 2011 Trends in Design and Implementation of FMIS 4
    • FMIS Database (2011) WB Funded Treasury/FMIS Projects (1984-2011)December 2011 Trends in Design and Implementation of FMIS 5
    • FMIS Database 32 Active T/F projects Avg prj impl 6.8 years 53 out of 59 Completed prj (90 %) resulted in operational T/F solutions 59 Completed T/F as of Nov 2011December 2011 Trends in Design and Implementation of FMIS 6
    • Key Findings Key Findings of the FMIS Study The political commitment and ownership of the borrower matter. Success depends on adequate preparation. FMIS priorities and sequencing should be addressed carefully. A focus on developing institutional capacity, early in the process, is crucial. FMIS implementation is complex enough to deserve a dedicated project. The type of FMIS solution influences implementation. The presence of an ICT expert in the World Bank Team is important. The total number and complexity of procurement packages influence project duration. FMIS projects disburse late due to large ICT contracts, completed at later stages. ICT related risks need to be clearly identified during project preparation. December 2011 Trends in Design and Implementation of FMIS 7
    • FMIS Prerequisites Prerequisites for FMIS ICT SolutionsFunctional aspects• Improvement of budget classification (key segments for funding source, organizational, functional, and economic classifications, program / project / activity codes)• Development of a unified chart of accounts, integrated with budget (economic) classification• Improvement of treasury single account operations (moving towards centralized TSA)• Development of commitment control and monitoring mechanisms• Establishment of cash management functionsTechnical aspects• Establishment of a secure countrywide communication network• Preparation of system/data centersHuman resources• Presence of a core team of ICT specialists within PFM organizationsDecember 2011 Trends in Design and Implementation of FMIS 8
    • Suggested Methodology FMIS Development Methodology Years > 0 1 2 3 4 5 6 7 8 9 101. Identify the PFM reform needs of the government (What? Why?) • Assess PFM capacity & practices Preparation • Develop PFM Reform Strategy • Advisory support for PFM reforms • Conceptual Design • Assistance in PFM capacity building • Coordination with other donors2. Develop customized solutions (How? Where? When?) • Assess existing ICT skills & resources FMIS design and • Develop ICT/e-Gov Strategy implementation may take at • System Design least 6-7 years, despite advances in technology • Technical Specifications [ ICB docs ] • Assist in technical capacity building • Coordinate w/ other e-Gov initiatives3. Strengthen capacity and implement project (Who?) Approval Implementation • Project Mgmt Group (PMG) and PIU • Establish a countrywide network FMIS take off Support & Flying • Procurement of ICT solutions [ ICB ] Maintenance Solo • FMIS implementation Warranty Post • Capacity building & change mgmt Warranty • Monitoring & EvaluationImages: jscreationzs / FreeDigitalPhotos.net December 2011 Trends in Design and Implementation of FMIS 9
    • ICGFM Winter Conference Contents • FMIS terminology • FMIS Study: 25 Years of WB Experience on What Works and What Doesn’t  Key findings of the study, and FMIS prerequisites  Suggested FMIS design & implementation methodology • Current status of Treasury/FMIS projects • Trends in FMIS projects  Transition to integrated FMIS solutions  Integration of budget and treasury systems  Expansion of FMIS capabilities for spending units (web portals)  Improving transparency: disclosure of information on the web • FMIS Community of PracticeDecember 2011 Trends in Design and Implementation of FMIS 10
    • Timeline of FMIS Projects - I Project Status: C=Closed; A=Active; P=Pipeline Total Duration in years Treasury/FMIS Status: 1= Operational; 2= Oper. (Pilot); 3= In progress; 4=Pipeline 0= Not implementedDecember 2011 Trends in Design and Implementation of FMIS 11
    • Timeline of FMIS Projects - II Project Status: C=Closed; A=Active; P=Pipeline Total Duration in years Treasury/FMIS Status: 1= Operational; 2= Oper. (Pilot); 3= In progress; 4=Pipeline 0= Not implementedDecember 2011 Trends in Design and Implementation of FMIS 12
    • Timeline of FMIS Projects - III Project Status: C=Closed; A=Active; P=Pipeline Total Duration in years Treasury/FMIS Status: 1= Operational; 2= Oper. (Pilot); 3= In progress; 4=Pipeline 0= Not implementedDecember 2011 Trends in Design and Implementation of FMIS 13
    • FMIS Projects (1984-2010) Treasury/FMIS Application SoftwareDecember 2011 Trends in Design and Implementation of FMIS 14
    • FMIS Projects (1984-2010) Duration Success depends on adequate preparation…December 2011 Trends in Design and Implementation of FMIS 15
    • FMIS Projects (1984-2010) Total Cost of ICT Solutions in Treasury/FMIS ProjectsDecember 2011 Trends in Design and Implementation of FMIS 16
    • FMIS Projects (1984-2010) Total Cost of ICT Solutions in Treasury/FMIS Projects FMIS ICT cost per user for COTS & LDSWAn estimation of the cost of FMIS ICTsolutions needs to be performed carefullyduring project preparation based on: a detailed assessment of key ‘design parameters’ (users, nodes, server performance benchmarks, network connectivity, etc.) and basic ‘system requirements’ (FMIS application software functionality, workload estimates, data storage and transaction processing needs, etc.).In the absence of such design parameters and system requirements, it is not possible to havea realistic cost estimate during project preparation. This has lead to the acceptance ofrelatively large margins of error for FMIS ICT solutions, resulting in ICT costs much higherthan market rates due to this initial uncertainty. December 2011 Trends in Design and Implementation of FMIS 17
    • FMIS Projects (1984-2010) Cost of Treasury/FMIS ProjectsDecember 2011 Trends in Design and Implementation of FMIS 18
    • Regional Variations FMIS Projects (1984-2010) - Observations Appears to be four distinct regional T/F design & impl approaches: 1. LAC : Start centrally, expand gradually; first T, then F; mainly LDSW 2. ECA : Countrywide; first T, then F; hybrid COTS+LDSW; ICT specialist in TTs 3. AFR, MNA : Mainly for central gov; mostly F; based on COTS 4. EAP, SAR : Countrywide; mostly T; based on COTS 89% of completed T/F operational (29 full + 19 pilot impl) LCR is the most experienced region in FMIS design & implementation December 2011 Trends in Design and Implementation of FMIS 19
    • ICGFM Winter Conference Contents • FMIS terminology • FMIS Study: 25 Years of WB Experience on What Works and What Doesn’t  Key findings of the study, and FMIS prerequisites  Suggested FMIS design & implementation methodology • Current status of Treasury/FMIS projects • Trends in FMIS projects  Transition to integrated FMIS solutions  Integration of budget and treasury systems  Expansion of FMIS capabilities for spending units (web portals)  Improving transparency: disclosure of information on the web • FMIS Community of PracticeDecember 2011 Trends in Design and Implementation of FMIS 20
    • B + T (+ O) = Integrated FMIS Transition to Integrated FMIS Trends: • PFM automation process starts with a core Treasury system, in general • After successful operation of a countrywide Treasury system for several years, the next natural step is the integration of Budget and Treasury systems • B + T integration includes necessary interfaces for data exchange with external information systems of the line ministries, central bank (and private banks), revenue collection agencies, social security agencies, etc. • Other (O) PFM modules/systems are developed and/or interfaced with these core systems to create an integrated FMIS solution. Possible options for the development of integrated FMIS: 1. Gradual expansion of FMIS modules around a core Treasury System 2. Integration of existing in-house developed PFM information systems 3. Introduction of full scale integrated FMIS December 2011 Trends in Design and Implementation of FMIS 21
    • An Integrated FMIS Model Integrated FMIS External Users Ministries & Ministry of Finance Departments P, R I T, P Tax Administration Reports MoF IT Dept I T, P Customs Service FMIS Business Continuity Ctr Audit Reports Main System Center + Data Warehouse [ Treasury Data Ctr ] [ MoF Data Ctr ] State Property I T, P Fund FMIS Reports FMIS DB FMIS DB Web Portal @ MSC @ BCC Internet I T Main Civil Service Department & Core Treasury Macro Econ Forec Intranet System Budget Formul. • Public Central Bank TSA • Paym./receipts General Ledger I T, C Procurement Debt Mgmt • Purch./Commit. Reports • Cash/Fund Mgmt Asset/Invent Mgmt • Fin. Reports HR Mgmt/Pers DB I P, R Statistics Institute Regional Payroll Calcs.Spending Units Treasury Dept Other Gov Internal Audit I P, R Agencies/Depts Local finance directorates, T,P,C,A I Financial Reports public authorities, District municipalities, public T Transactions Treasury Div institutions P Plans C Contracts A Accounts R Reports I Interface TSA Treasury Single AcctDecember 2011 Trends in Design and Implementation of FMIS 22
    • B + T = Core FMIS Integration of Budget and Treasury Systems Why? Budget (preparation) and Treasury (execution) systems are integrated first, to: • ensure effective daily management of budget/treasury operations • improve budget performance monitoring and cash/commitment management • produce reliable accounting records, and timely, consistent reports • improve transparency/accountability (web portals for publishing results) How? Technical and operational challenges of B+T integration can be reduced by: • properly integrating related application software solutions and databases • operating a shared data center and network (servers, network, services etc.) • harmonizing budget classification/chart of accounts for all budget levels • ensuring adequate secure access to all budget institutions (central and local levels) for planning, execution, monitoring and reporting December 2011 Trends in Design and Implementation of FMIS 23
    • Integrated FMIS Integrated FMIS = Collaboration + Communication Whenever FMIS and other PFM information systems share the same central database to record and report all daily financial transactions, offering reliable consolidated results for decision support, performance monitoring and web publishing, they can be referred to as an ‘integrated’ FMIS (or IFMIS). Integrated FMIS should be accessible to all stakeholders for effective collaboration, coordination and communication. December 2011 Trends in Design and Implementation of FMIS 24
    • Expansion of FMIS Support for Spending Unit Operations Spending Units (SUs) usually perform the following PFM functions, which can be supported through centralized web-based FMIS solutions:  Budget preparation  Budget execution  Accounting and reporting Modes of SU operations: • Manual  Asset / inventory management • Separate software solutions  HRMIS / payroll • Ministry specific applications  Procurement • Connection to centralized FMIS (usually through a web portal)  Performance monitoring  Other sector specific operations There are two common ways to support SU operations through a centralized web-based FMIS solution:  Web portal access (secure connection via Internet or intranet)  Direct access (through secure intranet) <<< costly and more difficult Web portals can also be used to facilitate the communication between the SUs and the line ministries/agencies they are subordinated. December 2011 Trends in Design and Implementation of FMIS 25
    • Web-based FMIS SolutionDatabase Server 1 Application Servers 2 Web Server 3 User Terminals System Center Users FMIS Customized COTS Internal Access FMIS COTS modules VPN DB PFM Organizations (MoF Units, Treasury Offices,Line Ministries) Core Treasury Integrated System FMIS DB External Access Web Portal LDSW Internet Locally Developed LDSW Spending Units, Local Software modules DB Finance Directorates, Local Public Authorities, Municipalities, etc. InterfacesLDSW : Locally Developed Software Internal / ExternalCOTS : Commercial-off-the-Shelf SW December 2011 Trends in Design and Implementation of FMIS 26
    • Expansion of FMIS How to Provide Secure Access to Spending Units? Web Portal is the most popular choice to provide cost-effective, secure access to Spending Units with adequate internal controls:  overall system controls (financial control, accounting control, audit)  transaction level controls (correct processing, accurate recording, and reliable audit trail)  user access controls (authentication of all users through user ID/password, token/security key, or other means) Web Portals are usually designed to provide free access to unlimited number of SU users for PFM operations (mostly based on open source content management systems or similar applications). In general, unlimited number of FMIS users with specific roles and responsibilities can be defined. However, only a specific number of system users will be able to use the web based FMIS modules system simultaneously (concurrently). Total number of concurrent users can be increased by expanding the capacity of central servers and network connections. December 2011 Trends in Design and Implementation of FMIS 27
    • FMIS ICT Trends Using ICT Effectively in FMIS ProjectsSome of the instruments that can be used in FMIS projects to improve thereliability, cost effectiveness and accountability of information systemsinclude:  Using Electronic Payment Systems (EPS) for all government payments  Benefiting from digital / electronic signature for all financial transactions  Electronic records management  Publishing the budget execution results and performance monthly on the web (effective use of web portals)  Focus on the interoperability and reusability of information systems  FMIS development and project management based on industry standards  Using Free/Libre Open Source Software (FLOSS) in PFM applications December 2011 Trends in Design and Implementation of FMIS 28
    • Disclosure of Information Publishing Results from Treasury Systems/FMIS About 75% of the countries (42 out of 53) included in FMIS database, publish budget execution results on the web regularly. 32 out of 42 published results are available in English as well. Out of 42 published results, 39 web reports are static (presentation of results through files produced from DB). Only 3 web sites provide dynamic links to the DB for interactive queries for users. Most of the results are published as consolidated budget plans vs. actuals. Details of expenditures and dynamic monthly updates from FMIS DB are not visible yet. A new web site presenting the status of information disclosure based on Treasury/FMIS databases will be prepared and updated regularly to share the trends.December 2011 Trends in Design and Implementation of FMIS 29
    • Conclusions Conclusions FMIS is a complex system, which constantly evolve and expand in parallel to changes in PFM needs and advances in technology. Leadership, collaboration and innovation are important. It is very important to clarify key ‘design parameters’ and identify ‘which solution fits which problem in what situation’ at early stages of the project/system design. There is a growing interest in the development of new customizable platforms based on open source software and other innovative solutions to meet core FMIS requirements at a reasonable cost. Development of common web publishing standards and formats (e.g. open data initiative) is important to improve the accountability and transparency in PFM domain. The improvement of knowledge sharing and learning among the countries involved in FMIS development is crucial (communities of practice / peer learning platforms in various regions). December 2011 Trends in Design and Implementation of FMIS 30
    • ICGFM Winter Conference Contents • FMIS terminology • FMIS Study: 25 Years of WB Experience on What Works and What Doesn’t  Key findings of the study, and FMIS prerequisites  Suggested FMIS design & implementation methodology • Current status of Treasury/FMIS projects • Trends in FMIS projects  Transition to integrated FMIS solutions  Integration of budget and treasury systems  Expansion of FMIS capabilities for spending units (web portals)  Improving transparency: disclosure of information on the web • FMIS Community of PracticeDecember 2011 Trends in Design and Implementation of FMIS 31
    • FMIS CoP Web Site https://eTeam.worldbank.org/FMIS
    • What is FMIS CoP? FMIS Community of Practice Established in Sep 2010, as a platform for exchanging information, good practices and experiences gained in the design & implementation of FMIS solutions, mainly with the client countries, project teams and development partners. FMIS CoP is also focused on the development and dissemination of leading edge knowledge products, as well as the creation of a discussion platform to assist in improving the quality and performance of ongoing FMIS activities. FMIS CoP membership is open to all specialists and officials from interested countries and development partners, who wish to communicate and collaborate for the improvement of Public Financial Management (PFM) practices through FMIS solutions. December 2011 Trends in Design and Implementation of FMIS 33
    • Knowledge Products FMIS CoP – Knowledge Products FMIS Database contains a rich set of operational data and performance ratings for the benefit of task teams, as well as the client countries involved in Treasury/FMIS projects (95 projects from 54 countries as of Dec 2011). FMIS Study (1984-2010) presents the World Bank’s experience with FMIS to share the achievements and challenges observed, and provide guidance for improving the performance of future projects. The findings of this report are primarily based on a comprehensive database of 55 completed + 32 active Treasury/FMIS projects in 51 countries (as of Aug 2010). FMIS Data Mapper is available on Google Maps to present the key FMIS project information through an interactive customized map of the world.December 2011 Trends in Design and Implementation of FMIS 34
    • FMIS CoP EventsDecember 2011 Trends in Design and Implementation of FMIS 35
    • FMIS Data Mapper FMIS Data Mapper on Google MapsDecember 2011 Trends in Design and Implementation of FMIS 36
    • FMIS Data Mapper
    • www.worldbank.org/publicsector Thank Youhttps://eteam.worldbank.org/FMIS