Sustainability has become a “meme” – a pervasive cross-cutting concept
As in: are you sure that haircut is sustainable?
The implication is not trivial in developing countries where gross domestic income per capita is low. This seems to be linked to measurements of government effectiveness – notice that the income scale, from left-to-right, is exponential. You will be pleased to note that the World Bank ranks Canada highly in government effectiveness. World Bank governance indicators: http://info.worldbank.org/governance/wgi/sc_country.aspGNI per capita: http://en.wikipedia.org/wiki/List_of_countries_by_GNI_(nominal,_Atlas_method)_per_capita
What am I talking about? The environment, climate change?
Or fiscal sustainability – paying down the debt, ability to pay for entitlements
The critical calculus in developing countries is that environmental sustainability and financial sustainability are fully linked
This has visceral environment effects. Poor environmental oversight could result in sinking an entire country into the ocean, as publicized by the former President of the Maldives http://en.wikipedia.org/wiki/Mohamed_Nasheed with an underwater cabinet meeting http://www.thehindu.com/news/international/article34170.ece
Here in Canada, the federal government is ending the printing of business cards for public servants. It will save some money…
And some trees. But will we notice the financial impact in a big country like Canada? Or, the environmental impact...unless you live down-wind from a pulp mill…http://www.rfu.org/cacw/PulpPrimer.htm
Here’s where saving 10$ per public servant per year has an impact: in the bottom 1 billion people http://earthsky.org/human-world/how-many-people-in-the-world-today-are-hungry
There are hundreds of millions of people surviving on less that $1.25 per day purchasing power. Imagine distributing $10 per Full Time Equivalent to the poor in South Asia. Sustainability can have a transformational effect. http://www.economist.com/node/12010733?source=hptextfeature&story_id=12010733
Financial sustainability is important because it affects the fiscal space – the cost for borrowing. The Government of Canada has an excellent credit rating.http://en.wikipedia.org/wiki/Human_development_indexComposite credit ratings from Standard & Poors, Fitch, Moody’s and Dagong
So, borrowing is a problem for us – even when compared to other countries in the G8. In other words, we can finance our way out of financial valleys.Public debt: http://en.wikipedia.org/wiki/List_of_countries_by_public_debtDepartment of Finance:http://www.fin.gc.ca/ec2009/ec04-eng.asp
We might gripe about gasoline priceshttp://www.nyse.tv/nymex-crude-oil-price-history-chart.htm
But energy prices can make food too costly in developing countries – people can starvehttp://www.fao.org/worldfoodsituation/wfs-home/foodpricesindex/en/
Not to mention the economic costs of natural disasters that torment developing countrieshttp://issues.tigweb.org/disasters
So, good public financial management saves lives and saves the environment
Governments are cutting because of the financial crisis. Many believe that job cuts by governments in Canada could cost liveshttp://news.nationalpost.com/2012/04/11/budgets-cuts-mean-100-fewer-food-safety-inspectors-in-canada/http://www.obj.ca/Other/Special-Reports/2012-03-29/article-2942826/2012-BUDGET%3A-DND,-Public-Safety-hit-hardest/1http://www.safetyeh.ca/2012/05/02/will-cuts-affect-rail-safety-for-canadians/
But here’s a story of what goes around comes around. This gentleman might not be familiar to you. He’s the former President of Malawi http://en.wikipedia.org/wiki/Bingu_wa_Mutharika. Through economic mismanagement and policies that donors didn’t like, his government was cut off from aid. He had a heart attack. The inexpensive drug to save him was not available, so they put him on life support. Everyone heard about the heart attack and put their TVs, PCs and radios on. That brought down the electric grid. They put on back-up generators, but ran out of fuel. And he died. They couldn’t complete an autopsy in Malawi
Financial sustainability is a not optional in developing countries. It’s not “nice to have”. It’s a necessity. There’s so much to gain. The good news is that there has been a reduction in global poverty, but there remains much more to do. That’s why good governance is so important.http://mjperry.blogspot.ca/2012/03/despite-food-fuel-and-financial-crises.html
What can we learn from these developing nation governments?
What are you talking about Hadden? Have you gone mad? Learn from under-developed countries?Can Developing Countries Leapfrog in Government Performance Managementhttp://www.freebalance.com/blog/?p=2348
We all know about these countries. And usually, the word “endemic” or “chronic”is in front of these terms like “corruption”
On the other hand, problems are more visible in developing countries. But there is more to sustainability in developing countries.http://www.un.org/millenniumgoals/
Consider this – in 5 years from now, there will be more economic development in emerging economies that developed countrieshttp://www.economist.com/node/21525373
Who could have predicted that these so-called “backward” countries would be more resilient to the global financial crisis? It’s part of what is called the “new normal”.
An example of this “new normal” is the rise of immigration from Portugal to Angolahttp://www.bbc.co.uk/news/world-14716410
These are the 4 basic areas of sustainable public financial management that we can learn from developing countries
Here’s why technology is important: it’s not called IT. It’s called ICT4D: Information and Communications Technology for Development and M4D: Mobile for Development – it’s critical to country growth, particularly mobile
Look at Estonia – the digital country with E-everything. It’s an e-country. According to the President of Estonia: “98% of Estonians under 35 use the internet regularly and systematically”… Estonians are “e-believers” I don’t think that bandwidth providers are throttling. After all, this is where Skype was invented.http://e-estonia.com/news/12-03-22/he-president-toomas-hendrik-ilves-foreword-estonian-ict-demo-center-newsletter-----------" Today, 98% of Estonians under 35 use the internet regularly and systematically. This, I submit, represents an altogether different population than a generation ago, a population that already demands an altogether different approach from its government.The first thing to get right is to understand that the internet is not paper. Simple transference of the logic of paper-based administration to HTML is guaranteed to fail. If you want to create a quality e-service on the web, it is necessary to think of the root goals of data collection and its management and think of how to get necessary information to the user/citizen as quickly and as comfortably as well as securely as possible and to validate this electronically. This applies to virtually all applications.In other words, E-government is not about making it possible for people to fill out the same old forms and questionnaires online, but rather is about achieving the goals of administration and services in the most intelligent and citizen-friendly way using the opportunities offered by IT.The Estonian digital signature system, e-elections, e-police, the state portal, e-banking, e-taxdeclarations, e-health, e-school, the latest e-census (62% of population enumerated online) etc, prove that we are e-believers. We are proud of being pioneers in e-government as well as one of the hottest spots in the start-up scene.We are openly willing to trade and share experiences with the rest of the world. After all, it is the exchange of information that allows knowledge to grow." ToomasHendrikIlves,President of the Republic of Estonia
Electricity is unreliable and expensive in developing countries– this is material to the government budget and http://www.gallup.com/poll/151973/africa-power-reliability-similar-business-sectors.aspx
power generation has a negative environmental impacthttp://www.epa.gov/oms/renewablefuels/420f09024.htm
Governments don’t have the same legacy technology that we have – like old client/server ERP systems, so they can reduce power consumption
And stop throwing hardware at software problems
Skip over software bloat where unneededfeatures are added by vendors. More features = more hardware = more power consumption.http://www.successful.com.au/
Which is ironic because so many enterprise software companies now provide tools to measure power consumption and carbon footprints. These companies produce slick sustainability reports and yet do little to reduce the technical footprint of their software packages. This includes the unnecessary features that also require additional database storage operating on legacy code that isn’t efficient and generates the need for an additional translation layer from client/server to web. The designs are monolithic meaning that you can’t package just the features that you want and there is a large minimal footprint just to run basic features. And, these companies have proprietary middleware for scaling, transaction processing, database connectivity, operating system porting etc. that is not efficient. My sense is that putting all of this into hardware appliances is not going to solve the power consumption problem.
That’s why many developing countries skip old generations of technology. The growth benefit of telecommunications provides for developing countries was of higher magnitude than that for developed economies for every telecommunications service. Developing countries are less likely to have an investment in old technology on one hand. On the other, the benefits of technology are higher: improves market efficiency, reduces transaction costs, improves productivity. http://live.worldbank.org/information-communications-technology-development
These countries also tend to acquire turnkey IT systems often with a 5 year TCO calculation for all costs with the exception of the lower right. It stands to reason for example that a software system from vendor A may be less expensive to buy than from vendor B. Yet, the software for vendor B may be more complex, require more customization, demand more hardware and generates a higher burden when upgrading.The purpose of the presentation was to discuss sustainability. Since that time, many FMI PSMW 2012 attendees wanted to discuss the high cost & TCO associated with using ERP systems for public financial management. Additional content is available here:What is Sustainability in Government Resource Planning?http://www.freebalance.com/blog/?p=2458ERP or FreeBalance: What’s the lowest TCO for Government Shared Serviceshttp://www.freebalance.com/blog/?p=2072Beware the ERP License Policehttp://www.freebalance.com/blog/?p=2699Rethinking the Business Case for ERP in Governmenthttp://www.freebalance.com/blog/?p=2578E in ERP – does it stand for “economies of scale”http://www.freebalance.com/blog/?p=2042IT cartels in govhttp://www.freebalance.com/blog/?p=2078ERP Innovation – Is that all there is?http://www.freebalance.com/blog/?p=1992Cheesy Technology “Innovation"http://www.freebalance.com/blog/?p=2365More Evidence that ERP Software should not be used for Government Shared Serviceshttp://www.freebalance.com/blog/?p=2325Are victims to blame for failed ERP projects?http://www.freebalance.com/blog/?p=2315The Myth of “Best Practices” in Public Financial Managementhttp://www.freebalance.com/blog/?p=1663Does Technology Matter in Public Financial Management?http://www.freebalance.com/blog/?p=1266ERP not “up to snuff” for Government?http://www.freebalance.com/blog/?p=1159Meeting Government Financial Management Needshttp://www.freebalance.com/blog/?p=979What if ERP companies made chewing gum?http://www.freebalance.com/blog/?p=2264Fudd or FUD? What ever happened to Competitive Intelligence among ERP vendors?http://www.freebalance.com/blog/?p=2685Enterprise Software Lingo – what does it really mean?http://www.freebalance.com/blog/?p=2170(What’s so Funny ‘Bout) Standards, Agility and Accountability (in government)http://www.freebalance.com/blog/?p=2165
So IT financial sustainability is similar to the total cost of ownership. We often miss one critical element to IT sustainability.
Human capacity: a critical factor in IT decisions in developing countries
That’s why many developing nation governments make knowledge transfer from consultants mandatory – a condition of doing business so that governments can become self-sufficient. To reduce the overall total cost of ownership
You won’t know this – the Government of Afghanistan was able to roll-out FreeBalance government financial management software to every regional government in the country – including all the ones you’ve heard of on TV. Amount paid to foreign consultants and FreeBalance for implementation services? Zero. http://www.freebalance.com/news/whitepapers.aspPublic Financial Management Case Study: Islamic Republic of AfghanistanThis Case Study details the Government of the Islamic Republic of Afghanistan's success at improving governance through PFM reform. The Islamic Republic of Afghanistan PFM Case Study covers the sequence of PFM reform from 2002 to the present day. PFM reform is critical to improving good governance. Good governance is critical to economic development. Public Financial Management Case Study: KosovoThis Case Study covers the sequence of PFM reform in Kosovo from 1999 to the present day. The PFM Case Study analyzes Public Expenditure and Financial Accountability (PEFA) assessments. The Government of Kosovo has achieved excellent results (B and higher) for over half of the assessment criteria.
Developing country governments are now adopting good practices to prevent cost overruns, delays using risk-based approaches. We see significant scrutiny about program management, change management and capacity building to address elements with a high risk of cost overruns
These countries have a holistic approach to sustainability. It’s not a series of 1-off initiatives. It’s a view of interconnection.
There’s a focus on what is important. There are over 200 developing country governments that have had a PEFA assessment. Many have had 2. Developed countries? 1 – Norway which was done as an exercise by the Norwegian Aid department as training.
Provides a prescription for public financial management reform
This creates PFM Reform Action Plans, support for international public sector accounting standards and sequencing of functions in order that will have the most important effect
At the factors that are most critical for successhttp://www.scribd.com/icgfmconference/d/55923750-Free-Balance-Surveys-at-ICGFM
This goes beyond traditional project management 101 to practices critical for the government domain
Because public financial management reform has to get momentum – that’s another aspect of sustainability, the Platform approach is considered a good practiceshttp://blog-pfm.imf.org/pfmblog/2010/07/the-platform-approach-in-pfm-reform-positive-for-cambodia-so-far-but-not-necessarily-the-magic-bulle.html
Which brings us to sustainable planning. If a government doesn’t plan effectively, the bridge doesn’t get built. Or it can’t be maintained. That has a huge economic impact.
So governments budget on a medium term – rolling 3 to 5 year budgets. It might sound like “long live the 5 year plan”, but it is a far more sustainable planning method than adding or subtracting a % to yearly budgets.http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPUBLICSECTORANDGOVERNANCE/EXTPUBLICFINANCE/0,,contentMDK:20235448~pagePK:148956~piPK:216618~theSitePK:1339564,00.html
What does this mean from a practical perspective? Planning capital projects across multiple years. Recognizing costs that span these years to prevent short-term thinking and re-estimating based on economic changes.
Aligns with the macroeconomic realities on one hand (the fiscal framework) for effective planning. It takes the reality that outcomes take a few years to accrue and tied to other economic factors
Which is all about government performance, as it is exposed to Ministers in Timor-Leste
Which brings me to engaging citizens. What we learned from the Arab Spring is: if you don’t crowdsource to improve conditions, you might find yourself crowdsourced. And you might not like it.
Something invented in Brazil – engaging citizens in the creation of budgetshttp://en.wikipedia.org/wiki/Participatory_budgeting
Why engage citizens? It’s so difficult to determine result measurements in government because there is no bottom line like profit. Why not engage citizens to achieve “value for money”?
Why do that? To have citizens monitor spending and effectiveness. The press to find corruption. Competitors to discover bad procurement decisions.Does Open Government Mean Audit is a Civic Dutyhttp://www.freebalance.com/blog/?p=2582Citizen Audit Use Cases and Public Financial Managementhttp://www.freebalance.com/blog/?p=2539
There is a significant shift in democracy and engagement from representative democracyDavis, Mills. What is the Role of Cloud Computing, Web 2.0 and Web 3.0. Semantic Technologies in an Era of Connected Governancehttp://www.slideshare.net/Mills/what-is-the-role-of-cloud-computing-web-20-and-web-30-semantic-technologies-in-the-coming-era-of-transparent-collaborative-connected-egovernanceMicrosoft. Social Media Survival for U.S. Public Sector Professionalsdownload.microsoft.com/.../PublicSectorSocialMediaSurvivalGuide.pdf
To participationDavis, Mills. What is the Role of Cloud Computing, Web 2.0 and Web 3.0. Semantic Technologies in an Era of Connected Governancehttp://www.slideshare.net/Mills/what-is-the-role-of-cloud-computing-web-20-and-web-30-semantic-technologies-in-the-coming-era-of-transparent-collaborative-connected-egovernanceMicrosoft. Social Media Survival for U.S. Public Sector Professionalsdownload.microsoft.com/.../PublicSectorSocialMediaSurvivalGuide.pdf
Truly an opportunity to leverage open government to leapfrog more developed countries - to improve governance, to sustain those improvements to improve government resultshttp://www.opengovpartnership.org/
And open government may save money if you consider the cost to manage freedom of information requestshttp://www.infosource.gc.ca/bulletin/2011/b/bulletin34b/bulletin34b05-eng.aspThe Real ROI for Government Open Datahttp://www.freebalance.com/blog/?p=2329
What can we learn?
Cut IT costs
Take a more holistic view of sustainability aligned with public financial management
Conduct effective medium term planning
And engage citizens to improve results
Who is FreeBalance?
2012 05-28 what can we learn about sustainability from developing nation governments
Version 7 section • brief discussionwhat can we learn about sustainability from developing nation governments? May 2012 Doug Hadden VP Products
& what Version 7 have to do with does that section publicVersion 7management? financial section• brief discussion