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2011 03-15 achieving government financial management implementation success

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Presentation at CIPFA on lessons learned in government financial management implementation and sustainability

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2011 03-15 achieving government financial management implementation success

  1. 1. Achieving Government Financial Management Implementation Success<br />Doug Hadden<br />FreeBalance<br />
  2. 2. The Sad Truth<br />Majority of government financial management information systems implementations in developing countries do not meet expectations<br />2<br />
  3. 3. over-budget<br />3<br />
  4. 4. late<br />4<br />
  5. 5. unsustainable<br />5<br />
  6. 6. minimal improvement<br />6<br />
  7. 7. yet FreeBalance has a very high success rate<br />
  8. 8. reveal corporate secrets<br />
  9. 9. Perfection is the enemy of Good<br />Sustainability = adapting to reform and capacity growth<br />Traditional software model is not working<br />Lessons Learned<br />
  10. 10. NUNAVUT<br />MONGOLIA<br />CANADA<br />KYRGYZSTAN<br />KOSOVO<br />AFGHANISTAN<br />USA<br />WESTBANK<br />IRAQ<br />JAMAICA<br />ANTIGUA<br />PAKISTAN<br />LIBERIA<br />SOUTH<br />SUDAN<br />SIERRA <br />LEONE<br />PANAMA<br />GUYANA<br />UGANDA<br />NATIONAL &<br />WHOLE GOV’TS<br />TIMOR-LESTE<br />NAMIBIA<br />DEPARTMENTAL,<br />& SUB-NATIONAL<br />Who is FreeBalance?<br />10<br />
  11. 11. What is Success?<br />On budget <br />On time<br />Addresses local capacity<br />Is financially sustainable<br />Is sustained by the government organization<br />Requires a minimum of foreign consultants<br />Modernizes with the government<br />
  12. 12. Kosovo PEFA Assessments<br />
  13. 13. 1. Perfection is the Enemy of Good<br />13<br />
  14. 14. Make it as simple as possible.<br />But no Simpler <br />Albert Einstein<br />
  15. 15. Overwhelming Feature list<br />“Featuritis”<br />Benefits incorrectly tied to features<br />Increasing the capacity gap everywhere<br />More features, the better?<br />Unconsumed features<br />Infrastructure bloat<br />ITC-generated costs<br />
  16. 16. Software Capacity Gap<br />Usability<br />Feature Gap<br />Ability to Consume<br />Software Features<br />Capacity Gap<br />Time<br />
  17. 17. Typical Project Management methodologies<br />Lack of focus on what’s important in the context<br />Focus on “best-practices”<br />Focus on what is theoretically best vs. what is important now<br />Extends the capacity gap<br />What’s Wrong?<br />17<br />
  18. 18. who’s on first?<br />
  19. 19. Financial<br />Management<br />ICT Solution<br />Matches Capacity<br />Typical Commercial<br />Financial<br />Management ICT<br />Solution<br />Simple Financial<br />Management<br />ICT Solution<br />Capacity Balance<br />Capacity<br />
  20. 20. Typical Commercial<br />Financial<br />Management Solution<br />Simple Financial<br />Management<br />ICT Solution<br />Accrual basis<br />Best practices<br />Complex budgetary controls<br />International standards<br />Comprehensive<br />Enterprise-class tools and middleware<br />Overwhelming<br />Cash-basis<br />Pragmatic<br />Limited budgetary controls<br />National standards<br />Specialized<br />Personal-class tools and middleware<br />Underwhelming<br />
  21. 21. Capacity Foundations<br />Food<br />Health<br />Education<br />IT<br />Capacity<br />Accounting<br />Capacity<br />Rule of<br />Law<br />Energy<br />Availability<br />Capital<br />Availability<br />Security<br />ICT<br />Infrastructure<br />Transport<br />Power<br />Capacity<br />
  22. 22. In Context<br />Build<br />Capacity<br />Capacity<br />
  23. 23. the plan was foolproof<br />
  24. 24. Human resources & capacity more thought and more risk<br />Communications is highly political, cross-cultural<br />Scope creep directly related to “reputation”<br />Flexibility in change management needed<br />known knowns, known unknowns, unknown unknowns<br />Beyond Project Management 101<br />
  25. 25. Weakness of typical Project Approaches<br />Business Process Reengineering<br />Train the trainer as key capacity building approach<br />Focus on the politicians<br />Long implementation cycles: curb enthusiasm<br />Macroeconomic planning and budget preparation<br />Many process changes require legal reform<br />Train the cadre, give them tools<br />Politicians change<br />Builds opposition momentum<br />What budget?<br />25<br />25<br />
  26. 26. Need to focus on the country context<br />Civil service capacity<br />Ease of use is critical<br />Needs for improved governance: quick wins<br />Holistic project management<br />IT, software & PFM capacity<br />Good practices, not “best” practices<br />1.Perfection is Enemy of the Good <br />26<br />26<br />
  27. 27. 2. Sustainability<br />27<br />
  28. 28. the operation was a success<br />28<br />
  29. 29. however, the patient died<br />29<br />
  30. 30. Example Implementation<br />Recurrent<br />Software<br />10%<br />13%<br />Capacity Building<br />4%<br />Hardware<br />25%<br />LAN/WAN<br />Consultancy<br />12%<br />36%<br />$23.6M IFMIS ERP implementation<br />
  31. 31. Concerns about Sustainability<br />the complexity of the system, structure and vocabulary alienates and further hampers participation.<br />concern has been that the system itself might be too advanced and complex, <br />will become underutilized and that the costs involved won’t pay off.<br />concerns that budget experts of the consultant implementing the system may not fully have understood the procedures in place<br />
  32. 32. What’s Wrong?<br />Often have an “IT” definition of success<br />Measure now and assume everything will be fine<br />Unknown unknowns<br />Changes to country context<br />Rapid and almost unprecedented in public financial management reform<br />32<br />
  33. 33. Capacity Balance<br />Years<br />Customization<br />Laws need to be modernized to accommodate software (accrual, electronic cheques, automated budgets)<br />Infrastructure upgrade<br />Significant functional and technical training<br /><ul><li>Significant internal resistance to massive change
  34. 34. Customization costs
  35. 35. Political will dissipates
  36. 36. Civil service and consultant turnover
  37. 37. More opportunity for opposition to kill project</li></ul>Capacity<br />
  38. 38. What’s Needed<br />Systems<br />Follow<br />Capacity<br /><ul><li>A realistic start point
  39. 39. Configuration
  40. 40. ICT follows reform
  41. 41. Small wins through phases
  42. 42. Rapid return on investment
  43. 43. Grows to support best practices and international standards</li></ul>Capacity<br />
  44. 44. Progressive Activation<br />
  45. 45. Modernization<br />Capacity<br />Compliance<br />Expenditure<br />Controls<br />Multi-Fund<br />Controls<br />Procurement<br />Controls<br />Legal Reform<br />
  46. 46. Unprecedented Reform Momentum?<br />PFM Reform tied to Country Context<br />Resource rich<br />Full IPSAS, GFS, COFOG support in COA<br />Support for program budget <br />Ministerial (including sector-specific) dashboards<br />Development of Key Performance Indicators<br />Transparency portal<br />10 years of budget information<br />E-Procurement portal<br />
  47. 47. Timor LesteEast Asia & Pacific<br />DILI<br />
  48. 48. PFM – Foundation for Country Growth<br />39<br />Public Financial Management<br />GoTL LAWS<br />Human Resource Development<br />Decentralization<br />FMIS<br />(software and hardware)<br />Autonomous Agencies<br />Procurement Commission<br />Capacity Building<br />(Training)<br />Ministries<br />
  49. 49. Improve government performance<br />Improve transparency & accountability<br />Improve budget execution<br />Improve government capacity<br />Phased Approach<br />40<br />
  50. 50. Financial sustainability is about TCO<br />PFM sustainability is about government self-reliance<br />Capacity<br />Reduce need for foreign consultants<br />Sustainability is about reform and modernization<br />IFMIS as a foundation for adaptation<br />Sustainability<br />41<br />41<br />
  51. 51. 3. The traditional software model is not workingfor developing nation governments<br />42<br />
  52. 52. PFM casino?<br />
  53. 53. Product<br />Development<br />Sales &<br />Marketing<br />Product<br />Management<br />Customer<br />Support<br />Trainer<br />Consultant<br />User<br />Typical Approach <br />
  54. 54. Government is one of many “verticals”<br />Product developers have no expertise in government financials<br />Salespeople want to sell to every possible market.<br />Product<br />Development<br />Sales &<br />Marketing<br />Product<br />Management<br />Customer<br />Support<br />Product often designed with different customers in mind<br />Consulting firms generate revenue from customization.<br />Trainer<br />Consultant<br />User<br />Government needs may not go into upgrades<br />Consultants help customers to customize code.<br />Typical<br />
  55. 55. Typical Result COTS software<br />46<br />private sector<br />public sector<br />
  56. 56. When all you have a nail….<br />Specialization across the value chain<br />Loss of holistic understanding of customer needs<br />Incentives for making solutions not sustainable<br />Focus on “technology” rather than customer<br />Ability to “blame the victim”<br />What’s Wrong?<br />47<br />
  57. 57. Developers visit customers and are part of “SWAT” teams.<br />Customers visited at least once every year.<br />All problems & feature requests are tracked – management dashboard<br />Vendor consultants bring experience to write specifications.<br />Steering Committee sets product direction.<br />Local in-country support pass on needs.<br />User<br />Customers interact with Vendor staff and other customers on collaborative plafrom<br />Solution: Customer Centric Approach<br />Product Development<br />Product Management<br />Consultant<br />Customer Support<br />
  58. 58. Need to Focus on the Domain<br />
  59. 59. <ul><li>Software design, implementation and support methodology critical to ensuring success
  60. 60. Fully open systems are less expensive to implement and sustain: “future proofing”
  61. 61. Adaptable systems inexpensively conform to reform</li></ul>Technology Lessons Learned<br />
  62. 62. Thank you<br />www.freebalance.com/blog<br />51<br />
  63. 63. Blaming the Victim?<br />Customer didn’t articulate business processes properly<br />Customer had unrealistic expectations for delivery<br />Customer changed requirements after the first phase<br />Customer did not dedicate enough staff to manage project<br />Customer did not train enough staff<br /><ul><li>Vendor should understand the government domain.
  64. 64. Product should be designed for rapid implementation.
  65. 65. Product should be designed for progressive activation.
  66. 66. Product should not place a significant burden on the government.
  67. 67. Vendor should know how to build capacity</li></li></ul><li>
  68. 68. review<br />Strengthening Public Financial Management in Timor-Leste <br />54<br />
  69. 69. review<br />Strengthening Public Financial Management in Timor-Leste <br />55<br />
  70. 70. review<br />56<br />

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