This presentation is about current trends that are defining the government financial management systems of the future. It is also about my journey through more than 3 years of research in the market, customer feedback and discussions with the FreeBalance International Steering Committee and the FreeBalance Government of Canada Cluster. IFMIS: Integration Financial Management Information System
I will start with some perspective about the technology forces affecting PFM and how that relates to reform and modernization. 10 technology and market trends will be highlighted. Then, I’ll put it all together with a conclusion.. PFM: Public Financial Management
ICT: Information and Communications Technology ICT is acknowledged as a good thing by most observers. Yet, government financial management systems are failing to meet the technology promise.
There has been mixed results with custom developed, ERP and specialized IFMIS applications around the world. Inflexibility, sustainability and integration are typical difficulties. Many IFMIS implementations have been abandoned by governments and it is rare to find a high user satisfaction. By sustainable, I mean more than financially sustainable or affordable. I’m also speaking government self-sufficiency: the ability to support the entire technology footprint over time.
You’ve heard all of the hype about technology – how it enables all sorts of advantages. As a technologist, I have had a journey to learn some truths behind public financial management. In context: Governments change, priorities change, lesson are learned, the macro economic climate changes. Causing modernization and reform. All countries are in the process of reform, as we learned Tuesday from Justice Gomery about the Federal Accountability Act in Canada. Pubic Financial Management is one dimension of reform. The IFMIS must support PFM, but is often implemented without change in mind. Sometimes, infrastructure technology: tools, databases, middleware can enable the IFMIS to adapt. Yet, a poorly implemented IFMIS regardless of technology will not be effective.
The general viewpoint of technology vendors is often much different from the viewpoint in government. Vendors want to talk about technology. I have had to change my ways!
Yet, what comes first? What is the purpose of an IFMIS? What does technology really do? In my journey into public financial management, I have learned that technology is not modernization. An important realization.
My conclusion is that there are 4 main forces.
Disintegration of technology, products and services for specialization.
New innovative software and practices.
That requires new ways of working together.
I will talk about these 10 trends in this order with some analysis.
I came to my job with a technology background in many enterprise software companies with the assumption that technology trends affect all markets. I’ve learned that not all technology trends are consistent with government and development trends.
In enterprise software, we are in what Forrester calls the period of “refinement and digestion” before the beginning of new innovation and growth. This is a somewhat disturbing metaphor. We are seeing vendor consolidation, particularly in the ERP market. AMR: well known technology analyst firm
That has extended to other enterprise software markets.
There has been over 550 mergers and acquisitions in the enterprise software market from 2004 to 2006. Market analysts are predicting more consolidation.
For example, these 8 companies have acquired more than 100 vendors in the past 5 years.
Why are we seeing vendor consolidation? What does it mean to government? The larger vendors are not see much growth unless they acquire. The top 4 software vendors have 1/3 of the market but are growing slower than the rest of the market. Much of this is driven by shareholders who want their investments to grow. Leading to the general perception that being big means that you are winning and that you are the best. Sometimes the biggest is the best, sometimes it isn’t. Software is not Jurassic Park. Vendors generate much of their revenue from existing customers, so they buy customers through acquisitions and hope to set up barriers for other companies to sell to you. This increases what we call “switching costs” where the… vendor owns you. As you well see later, it is becoming more and more difficult for any vendor to own any customer. In fact, many vendors are beginning to realize that new features are having less value to customers. Many government customers are wondering why they need to pay for upgrades to get new features they don’t need.
There is a lot of speculation about which enterprise software vendors will survive. (Yet the best software tends to survive regardless of acquisition.)This is causing pressure for vendors to enter new markets including: middleware (hoping to lock customers in), the small and medium size enterprise market that is growing fast, and emerging markets like Latin America or Asia Pacific… Some are entering new vertical markets like retail or the public sector. Yet, IDC indicates that niche vendors focused on vertical markets will grow faster than general ERP vendors Many software vendors have a portfolio of products through acquisition that overlap. There are three large vendors, each with 3 or more financial management applications for government!. Which one are you getting? Many software vendors are attempting to reduce costs through consolidation and gain economies of scale. Make more money with more customers with reduced costs. This is a very important trend and it is changing the competitive nature among commercial software vendors. This trend has high visibility. Most governments have adopted or plan to adopt commercially proven financial management software. With so many choices around, customer satisfaction is becoming the most important criteria for commercial IFMIS acqusition. Stack: the software stack SME: small and medium size enterprises IDC: well known technology analyst firm
There is great interest in free and open source software in governments everywhere.
… from local governments to national governments. This is part of a major change in the software industry. We learned on Tuesday about how the Government of Paraguay is using more open source software.
Why? Commercial software does not provide an important additional value from open source in many situations. The difference in price can often not be justified. Sometimes open source products are more reliable and secure than commercial alternatives. Many countries do not want to be rely on commercial companies from other countries to run the government. Large commercial vendors are tracking down the use of software in government and demanding payment based on computer users, maintenance fees and demand compliance. WTO rules require that governments account for commercial licenses. Respectfully, Mr. Gates wants his money. Governments want software that can grow with them, that means active participation. Given the size of many commercial software vendors, governments in emerging countries have little say in the product direction. Open source provides the opportunity for participation in the product future.
We are seeing rapid open source growth in the public and private sector in emerging countries. Many open source products are proven in robust environments,… particularly in middleware. I’ll be talking about this in the next section. Open source software requires developing some internal IT capacity to assemble applications, train users and determine which components to use from a broad choice. There is a cost for open source in human resources – open source has a “total cost of ownership” (TCO) At this time, open source has not been implemented in many business applications. This was born out by the Gartner survey data presented on Tuesday where ERP, CRM and BI use of open source is much lower than middleware, database, applications development and operating system
Middeware is a general term used to describe software that enables applications like IFMIS.
This is a simple diagram showing the so-called software stack. A business application or a Government Financial Management Information System operates on top of a stack of infrastructure software. According to Forrester, this was a 207$ B market in 2005. This is becoming a commodity market: better software for lower prices – including the use of free and open source software. Many commercial vendors have moved to an open source model such as Tomcat (Sun-Netscape), Ingres (Computer Associates), and Eclipse (IBM).
Why commoditization of the software stack? The emergence of more and more technology standards makes it easier to change software and reduces the cost from competitors. This is a mature market. Costs are going down. Vendors who design application software are attempting to be neutral for middleware: open source, IBM, Microsoft, Oracle, BEA, etc. Customers want vendor independence. Customers want choice.
We are seeing a rapid increase in commoditization. Huge pressure on prices. Governments are forcing vendors to support middleware standards such as the Federal Enterprise Architecture in the United States. Move to use of free software. When you are on the Internet, end-users only see the web application. Middleware is becoming invisible to users.
Information systems need to support continuing government decentralization.
Devolution is the transfer of power to autonomous or semi-autonomous local governments. Delegation is the transfer of responsibilities for services and administration to local governments and institutions. Deconcentration is the assigning of implementation of national programs to lower branches of government. Divestment is the transfer of public services and institutions to private companies and firms
Local governments typically do not have the fund base to support expenses and rely on budget transfers from the national government or via provincial governments or through a specialized ministry.
And outturn data needs to be coordinated to determine budget actuals. Governments can report on total outturn data by economic classification, sector and budget objectives. Donors demand it. Citizen demand it.
Government administrative decentralization improves efficiency and effectiveness. This would have a huge affect on the overall improvement of outcomes because … of the large percentage of budgets deployed locally. Regional and local governments often have social service responsibility. As we learned on Tuesday, we are experiencing an increase in urbanization placing more burden on local governments. It also support local autonomy. Fiscal decentralization makes for more stable governments. Highly centralized governments tend to have a high degree of waste and provides more opportunities for corruption.
While we are seeing centralization in computing systems, we are seeing decentralization in government. So, this trend is in conflict with each other. It is difficult to devolve responsibility when all of the data and IFMIS functionality resides with the central government. But decentralization and devolution is happening on every continent – perhaps even Antarctica. Devolution often means that the sub-national government must own and operate it’s own date – not tack onto a central system. Many times the capacity at the local level is much lower than the central government. Current national systems are often too difficult to use at the local level. Many people conclude that local governments will never achieve the level of capacity to operate a local IFMIS. This has not been our experience. We have seen capacity increase in all tiers of government with simple software and appropriate knowledge transfer. So, using systems that operate well at the national level may not necessarily work at the sub-national level. For one thing, jurisdictions are different. For example, national governments often do not collect property taxes.
Have you noticed the increasing interest in business process management over the past 3 years? My first reaction to reading about BPM was “déjà vu” – the emergence of workflow software in the late 1980’s and early 1990’s. Gartner: well known technology analyst firm
In software, we seek the TLA – ‘three letter acronym’ like CRM and ERP. BPM is a combination of what was once workflow and enterprise integration. Design and development of business processes uses a single tool. It also includes business activity monitoring that is all centrally orchestrated and managed.
Workflow and integration enables greater automation. But, I think that the major driver for this market has been the difficulty in adapting enterprise software after customization. Many enterprise applications require significant customization by customers. Yet, conditions change. There is a need to adapt further. BPM is a technology that could enable customization by separating workflow and integration from the ERP software. Many governments are finding that software developed for the private sector includes private sector best practices. Many of these are not viable for governments. So, companies that sell to many markets: otherwise known as “horizontal or generic” hope that BPM will enable customers to reduce customization costs.
BPM is used by the private sector for government compliance – such as Sarbanes-Oxley in the United States. This is also leveraged by pharmaceutical companies. In government, process-oriented e-government sometimes uses BPM – grant management or e-procurement. BPM is not yet widely used for financial management because government financial management workflow and process tends to follow strict financial management standards. Broad capabilities for workflow customization is not needed for government financial management. Standards have been set to enable using different tools. (BPEL, WfML for example). There tends to be heavy BPM suites that provides more capabilities, yet this tends to reduce system performance. (There can also be differences between BPM suites originally developed with documents in mind or people/tasks in mind). There are many best-of-breed vendors, open source choices and large vendors in this market.
Software as a Service is upsetting the enterprise software market. It is more difficult business model than “software as software”. Aberdeen: well known technology analyst firm
SaaS means software that is hosted externally, priced on a subscription basis such as a monthly user rental price. This software tends to allow minimal customization and is a business model that .. attracts every businesses from the SOHO: small office, home office to large organizations. This is an improvement on the ASP model. The ASP model generally means hosting an existing commercial application rather. In SaaS, the software is designed specifically for the purpose of deploying functionality via the internet to many customers.
I attended many conferences from 1999 through 2001 that talked about the ASP model. Yet, this model was not successful until it was improved through SaaS. The main drivers for SaaS are: … the costs to purchase software, customize and upgrade and the associated costs for purchasing networks and databases. In SaaS, you connect via the Internet and the service provider worries about database and servers. SaaS does not slow down growth. Companies do not need to acquire new hardware and software to add users. This has become a good model for smaller companies.
SaaS is growing compared to traditional software purchases. But, this is primarily growth from nothing, so it does not have a broad installed base yet. And, it is not used in all enterprise software markets. It has high use in sales and support management, with Salesforce as the leading vendor. We don’t see this in use in the government back office, primarily because governments do not want a 3 rd party owning government data. However, we are seeing the demand for subscription pricing for software in government. There has been a similar trend to supporting central shared services in government, yet this often means the use of software that was not developed with this use in mind. We are seeing deployment of e-procurement announcement functionality through commercial vendors. Merx in Canada, Development Executive and others. The next stage in this trend is the development of appliances – a computer configured with software that can rented. Almost like a refrigerator – an “IFMIS in a Box”.
One provider of e-procurement services is the Development Gateway Foundation who provide custom procurement sites for many countries around the world and act as a clearing house for procurement announcements. It provides automated translation of abstracts in almost 20 languages and is hosted in Washington DC. It is the 3 rd most used (by volume) government e-procurement site after fedbizopps (USA) and the European Union.
Web 2.0 is the most exciting thing to happen to the Internet since the Internet.
Web 2.0 is a term for a new wave of internet applications for social software, rich interfaces supported by some new highly successful companies using technologies designed for the web – where the web is the platform. This is generated significant venture capital investment. Many of you may be users already of this technology in your personal life.
The term was developed by O’Reilly Media to describe the latest innovations in web technologies. “ Web 2.0 is the network as platform, spanning all connected devices; Web 2.0 applications are those that make the most of the intrinsic advantages of that platform: delivering software as a continually-updated service that gets better the more people use it, consuming and remixing data from multiple sources, including individual users, while providing their own data and services in a form that allows remixing by others, creating network effects through an &quot;architecture of participation,&quot; and going beyond the page metaphor of Web 1.0 to deliver rich user experiences.”
Famous providers include youtube,
Why Web 2.0? Many companies do not want to be limited by existing technology. Data is being reused, remixed to meet specific requirements – it’s had radical affects through aggregation. That encourages participation – like Blogs. Unlike the days of the dot com boom, the infrastructure for reliable multimedia, e-business and rich interfaces is now available. Some is in open source. Creating a so-called network effect where the participation of many people increases the value of data. It also supports specialization through the so-called long-tail where it is now affordable to provide specialized internet services to a small community. Internet businesses no longer have to be the size of Amazon, Yahoo, e-Bay or e-Trade to be financially viable.
There has been some adoption of Web 2.0 in government, particularly in Norway. The American government is getting ready with blogs, news feeds and wikis.
The success of Web 2.0 for consumers is setting expectations for business and government. Companies are adopting Web 2.0 faster than government. Collaboration is the major application category in use in business. Web 2.0 technology tends to be less expensive, easier to deploy, more flexible to handle needs and adaptable to meet changing requirements better than the previous generation of commercial tools. Many traditional commercial vendors cannot compete. For example, tools for managing the software lifecycle are very expensive and rigid compared to the new generation of Web 2.0 collaborative tools. One of the reasons for a lack of adoption in government is security. Web 2.0 requires scripting to operate on web sites providing opportunities for hackers. Technologies like Blogs that support deploying of information rapidly to the public may expose government secrets or may not have the appropriate government editing.
You can see from Google’s trend meter about how often Web 2.0 is being mentioned on the Internet. You will also notice that this is a very international trend.
The wireless revolution has been slow in North America. Innovation in Europe, Asia and Africa is providing new opportunities for electronic government.
You heard on Monday about the implementations of citizen services via the Internet in Canada. Not every country has high adoption of personal computers and Internet broadband through fibre and copper. Yet, there is a wide adoption of mobile phone technology everywhere. Wireless government is light e-government where the mobile phone becomes the government kiosk. To enable citizens and businesses to interact with the government. And enables the civil service to do some back-office functions like approving commitments, requesting vacation, handling expense reports. Yes, there are security issues here. However, with GPS technology (know where the person is), smart cards (although can be copied), and elliptical encryption methods (use far less computing power and operates on mobile devices) can overcome these issues.
The technology is proven. In Europe especially, the mobile telephone handles small transactions: buying from vending machines, paying parking meters, purchasing on-line music. Emerging countries have leaped forward with wireless adoption. Many of the country profiles on the World Bank web site show images of mobile telephones to show technology advancement. Low cost of mobile technology helps overcome the digital divide because users do not need sophisticated computers. And, mobile phone technology is easy to use and inexpensive.
We are seeing some early adoption, Although it is somewhat difficult to expose financial functionality via mobile phones And there are some technology issues. And, e-government applications can be sophisticated and require a large “form factor”. This may change. I think that we are going to see this as a practical technology to use on life events: birth, illness, marriage, starting a business, getting a license.
Many government professionals have been talking about performance management. In English, we would call “government performance” an oxymoron – a conflicting statement, such as “military intelligence” or “Canadian cuisine”, or perhaps “military cuisine” or even, “Canadian military”.
Corporate performance management technology is a convergence of different business intelligence and planning technologies.
IDC estimated that 161 exabytes of data were created in 2006 = 3 million times the amount of information in all the books that have ever been written. On Wednesday, Justice Gomery indicated this his inquiry examined 25 million pages of evidence. So, organizations are swamped with information. Traditional tools can help explain what happened, but do not tell you what to do. Not all factors that can be reported are important to performance. Financial information is mostly about the past, and you can’t change the past. Business intelligence products were not well integrated.
The focus of performance management is identifying performance objectives or KPIs that measure progress and takes information from multiple sources, not just the financial information. It uses capabilities of different tools and tells you what is important through scorecarding.
() Business Performance Management is bit different from Government performance management. In particular, business operates based on achieving profitability where the budget is a guideline. In government, there are many objectives and the budget is the law. That’s why budget management needs to be tightly integrated with performance management in government.
The lifecycle for performance and budget management tends to look like this: and tightly integrated with budget execution.
That requires linking budget inputs and outputs – the financial measurements with results or outcomes.
There are mixed results to date. The American government has moved aggressively into performance budgeting while many governments have not yet touched program budgeting. These are new days for civil servants. We are seeing more adoption of medium term expenditure frameworks. Many projects are seeing improved results, yet emerging governments are not seeing a rapid move to direct budgetary support. So, donors are getting their performance information but at a high transaction cost. Most software designed for performance management are not budget centric and are not always effective in government.
SOA will have the biggest long-term effect to back office systems. This has become a matter of debate in the industry. Many continue to believe that the best approach for integration is to buy everything from a single vendor and that this will never change. My view is that there is so much discussion that it like the early days of the Internet or Java – it’s here to stay and will only get bigger and better.
SOA is revolutionary. It is changing the software business in a dramatic fashion. Why? Write software once but use many times. Assemble applications from multiple components rather than everything from a single vendor. Including mixing software from different programming languages and operating systems. Like cats and dogs working together. Giving customers the ability to combine the best applications from many vendors instead of average software from a single vendor.
Web Services is the standard for Service Oriented Architecture. Functionality in applications are exposed and registered. Another application can discover this and bind to it and start using it. Eventually software will be written entirely as components and not require the big green circle.
This has proven practical in Web 2.0 – integrated google maps with database. All commercial software vendors are beginning to provide SOA technology. Although this is early days and there remain difficulties, but the high adoptions and interest mean that these technical problems are being overcome.
What does this mean to you? How will this affect your IFMIS?
In the next year, my crystal ball says that all of these trends will begin to affect your choices. In general we are seeing some trends that are affecting decisions today. Performance management is a growing and accelerating trend. Many government experiences in other countries can help you. We are seeing IFMIS changes now – the need for decentralized and devolved systems. Governments are beginning to demand open source or low priced infrastructure software. Many people have come up to me at the conference and asked about support for Linus and MySQL. And, governments want to buy software in components for future integration. SOA may have the largest impact to IFMIS of any of these trends. With Web 2.0 and wireless government that could transform the way governments communicate with businesses, citizens and other jurisdictions over the next 5 years.
So, the IFMIS of the future is modular.
And more modular.
Your core IFMIS will expand outside financial management, It will decentralize and devolve through countries, extend to provide better citizen service and support an infrastructure of measurement. This will provide the infrastructure necessary for citizen-centric government.
Where the IFMIS communicates through components to citizens and businesses. From the citizen perspective, integrated components provides a consistent experience with the government across jurisdictions, departments and information systems. The IFMIS of the future will support the “front office” including the use of wireless technology. It will become citizen centric. And, the technology will become invisible to the user.
New Technologies for Public Financial Management May 2007 ICGFM
Preface <ul><li>Slides have been updated with the script used for ICGFM (see notes pages) </li></ul><ul><li>Additional information sources slides have been added at the end of the presentation </li></ul><ul><li>For discussion, clarification, or expansion of concepts or desire to have custom presentation provided via WebX or in-person, e-mail me at [email_address] </li></ul>
government Integrated Financial Information Management Systems (IFMIS) of tomorrow How computer technology trends today are defining
Agenda <ul><li>Market and technology forces affecting Public Financial Management (PFM) </li></ul><ul><li>Technology and PFM reform </li></ul><ul><li>10 key technology and market trends </li></ul><ul><li>Conclusions </li></ul>
ICT makes a country’s economy more efficient and globally competitive, improves health and education services, and creates new sources of income and employment for poor people. World Bank, April 2006
IFMIS in Government Today <ul><li>Typical Solutions </li></ul><ul><ul><li>Custom-developed or bespoke </li></ul></ul><ul><ul><li>Enterprise Resource Planning (ERP) </li></ul></ul><ul><ul><li>Specialized government IFMIS applications </li></ul></ul><ul><li>Typical Difficulties </li></ul><ul><ul><li>Inflexibility to adapt to reform and decentralization </li></ul></ul><ul><ul><li>Sustainability by government ICT staff </li></ul></ul><ul><ul><li>Integration between budget execution and accounting </li></ul></ul><ul><ul><li>Integration between front-office and back-office </li></ul></ul>
Technology in Context Technology IFMIS Public Financial Management Modernization and Reform Government Objectives
Technology Vendor Viewpoint IFMIS Public Financial Management Modernization and Reform Government Objectives Technology
Reality <ul><li>Reform comes first </li></ul><ul><li>An IFMIS must support on-going PFM modernization </li></ul><ul><li>Technology enables the IFMIS </li></ul><ul><li>Technology is not government modernization </li></ul>
Government IFMIS of tomorrow… The four computer and market technology forces of today that are defining
10 Technology Trends <ul><li>Consolidation </li></ul><ul><ul><li>Enterprise software consolidation </li></ul></ul><ul><ul><li>Open source software </li></ul></ul><ul><ul><li>Commoditization of the software stack </li></ul></ul><ul><li>Disintegration </li></ul><ul><ul><li>Decentralization </li></ul></ul><ul><ul><li>Business process management </li></ul></ul><ul><ul><li>Software as a service (SaaS) and shared services </li></ul></ul><ul><li>Innovation </li></ul><ul><ul><li>The web as a platform - Web 2.0 </li></ul></ul><ul><ul><li>Wireless government </li></ul></ul><ul><li>Integration </li></ul><ul><ul><li>Corporate Performance Management (& Government Performance Management) </li></ul></ul><ul><ul><li>Service Oriented Architectures (SOA) </li></ul></ul>
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? <ul><li>Many acronyms: </li></ul><ul><ul><li>ERP (Enterprise Resource Planning) </li></ul></ul><ul><ul><li>SCM (Supply Chain Management) </li></ul></ul><ul><ul><li>CRM (Customer Relationship Management) </li></ul></ul><ul><ul><li>CM (Content Management) </li></ul></ul><ul><ul><li>CPM (Corporate Performance Management) </li></ul></ul><ul><ul><li>BPM (Business Process Management) </li></ul></ul><ul><ul><li>and many others </li></ul></ul>
Enterprise Software Market ERP CRM SCM BPM CPM CM
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 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
Drivers for Consolidation <ul><li>Lack of organic growth </li></ul><ul><li>Shareholders want companies to invest in more growth </li></ul><ul><li>Perception that big = winning </li></ul><ul><li>Maintenance business model </li></ul><ul><li>Buy customers </li></ul><ul><li>Own customers: barriers to entry </li></ul><ul><li>Lack of value for upgrading </li></ul>
Current Situation <ul><li>Survival of the fittest? </li></ul><ul><li>Pressure to enter new horizontal and vertical markets </li></ul><ul><ul><li>New stack wars </li></ul></ul><ul><ul><li>SME market </li></ul></ul><ul><ul><li>Emerging markets </li></ul></ul><ul><li>Overlapping technology portfolio </li></ul><ul><li>Consolidators attempting economies of scale </li></ul><ul><li>Customer satisfaction? </li></ul>
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
Open Source in Government Federal Government - DOD, NSA, NASA, NIST, FEMA, USAID, DOL, National Weather Service, FAA State Government - California, Oregon, Massachusetts, Hawaii, Delaware, Texas, Rhode Island, Utah Municipal Government - City of Austin, Dallam County Texas North America (USA) Brazil, Peru, Argentina, Columbia, Mexico, Venezuela Latin America European Union (EU) - Belgium, Bulgaria, Denmark, Estonia, France, Germany, Portugal, Spain, UK Non-EU countries - Ukraine Cities - City of Munich Europe Japan, China, Korea, Singapore, Thailand, Taiwan, India, Israel Australia - Department of Veterans Affairs, Bureau of Meteorology, Taxation Office, Department of Health and Centrelink, South Australia Government, Australian Capital Territory, NSW Department of Agriculture, Northern Territory Department of Education Asia and the Pacific South Africa Africa
Drivers for Open Source <ul><li>Software commoditization - lack of incremental benefits in commercial infrastructure software </li></ul><ul><li>Government self-reliance – reduce national technological dependence </li></ul><ul><li>Cost and choice - cost for license compliance </li></ul><ul><li>Future proofing </li></ul>
Current Situation <ul><li>Rapid uptake in emerging countries </li></ul><ul><li>Proven performance and reliability </li></ul><ul><li>Infrastructure middleware success </li></ul><ul><ul><li>Java EE, Apache, MySQL, Linux, JBoss, Tomcat, OpenOffice </li></ul></ul><ul><li>Some assembly required </li></ul><ul><ul><li>Usability issues </li></ul></ul><ul><ul><li>Market volatility </li></ul></ul><ul><li>Not established in business applications </li></ul>
Middleware – the layer of software used to connect two applications or to connect an application to the network – is approaching a commodity state. Patrick Carey and Bernard Gleason, Vision 2010 – Future of Business Software Applications August 2005 3. Commoditization of the software stack
Software Stack Business Applications Middleware Database Operating System Server Network Storage Management
Drivers for Commoditization <ul><li>Standards = </li></ul><ul><ul><li>Ability to interchange middleware </li></ul></ul><ul><ul><li>Lower cost from vendors </li></ul></ul><ul><li>Market maturation </li></ul><ul><ul><li>more and more functionality in middleware driving costs down </li></ul></ul><ul><ul><li>Application vendors want to be middleware neutral </li></ul></ul><ul><ul><li>Customers do not want to be locked-in </li></ul></ul>
Current Situation <ul><li>Accelerated Commoditization </li></ul><ul><li>Price pressure on middleware </li></ul><ul><li>Middleware standards are being set by governments (USA: F.E.A.) </li></ul><ul><li>Many governments developed open source middleware policies </li></ul><ul><li>On the Internet, no one knows what middleware you are running </li></ul>
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 4. De-centralization,
Budgets Municipal Gov’t Municipal Gov’t Municipal Gov’t Provincial Gov’t National Government Ministry 1 Virements Information Virements Information Virements Information
Reporting National Government Provincial Gov’t Ministry 1 Municipal Gov’t Municipal Gov’t Municipal Gov’t Outturn Expenditure Information Outturn Expenditure Information Outturn Expenditure Information
Drivers for De-centralization <ul><li>Administrative Decentralization </li></ul><ul><li>Improve government efficiency and effectiveness = improve outcomes </li></ul><ul><li>Large % of government budgets deployed locally </li></ul><ul><li>Local and cultural autonomy </li></ul><ul><li>Fiscal Decentralization </li></ul><ul><li>Improves participation = more stable countries </li></ul><ul><li>Reduce waste and corruption </li></ul>
Current Situation <ul><li>Conflicts with computing trend to integration (centralization) </li></ul><ul><li>Clear trend: devolution on every continent </li></ul><ul><li>Local capacity and sustainability issues </li></ul><ul><li>Difficulties in extending governance with existing solutions </li></ul>
Success with BPM also requires a culture of real-time management .. and may need a separate process center of excellence. Gartner Group February 2006 5. Business Process Management
What is Business Process Management (BPM)? Workflow Integration Design and Development Business Activity Monitoring Orchestration
Industry Drivers for BPM <ul><li>Maximizing efficiency - workflow and integration enables greater automation </li></ul><ul><li>Difficulties in adapting ERP after customization </li></ul><ul><li>Best practices from the private sector? </li></ul><ul><li>Horizontal companies hope BPM will reduce customization costs </li></ul>
Current Situation of BPM <ul><li>Established in compliance solutions </li></ul><ul><li>Leveraged in process e-government </li></ul><ul><li>Not established in government IFMIS </li></ul><ul><li>Well established standards </li></ul><ul><li>Performance/functionality compromise </li></ul><ul><li>No market leading vendor </li></ul>
SaaS benefits are crystallizing, but chaos still abounds Robert Bois, Aberdeen Group June 2006 6. Software as a Service (SaaS)
What is Software as a Service (SaaS)? <ul><li>Applications are hosted externally: e.g. Salesforce </li></ul><ul><li>Typically priced on a subscription basis </li></ul><ul><li>Typically provides minimal customization </li></ul><ul><li>Business model for SOHO, small to large organizations </li></ul><ul><li>Evolution of ASP (Application Server Provider), but typically serving a purpose-built application </li></ul>
Drivers for SaaS <ul><li>High cost to maintain complex software and infrastructure </li></ul><ul><ul><li>Licenses </li></ul></ul><ul><ul><li>Upgrades </li></ul></ul><ul><ul><li>Networks </li></ul></ul><ul><ul><li>Databases </li></ul></ul><ul><li>SaaS supports fast growth </li></ul><ul><li>Attractive for smaller organizations </li></ul>
Current Situation <ul><li>Increasing as a % of the market (from 0 to..) </li></ul><ul><li>Uneven adoption : high in customer relationship management </li></ul><ul><li>Rarely used in government back-office applications – why? </li></ul><ul><li>Similar technology used for shared services , yet… </li></ul><ul><li>E-Procurement ideal application </li></ul><ul><li>Emergence of appliances </li></ul>
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 7. The Web as a Platform - Web 2.0
What is Web 2.0? <ul><li>An umbrella term for second wave of internet innovation </li></ul><ul><ul><li>Web as platform + diversity of platforms </li></ul></ul><ul><ul><li>Mash-ups + syndication </li></ul></ul><ul><ul><li>Social software + community </li></ul></ul><ul><ul><li>Open source + rapid development </li></ul></ul><ul><ul><li>Rich web interfaces </li></ul></ul><ul><ul><li>Distributed documentation & data </li></ul></ul><ul><li>Companies : SixApart, Flickr, Pandora, Pageflakes, FaceBook, YouTube </li></ul><ul><li>Underlying technologies : blogs, wikis, AJAX, RSS, REST, SOAP, VOIP, podcasting, Skype, BitTorrent, Wikipedia </li></ul>
Web 2.0 is the network as platform, spanning all connected devices… creating network effects through an "architecture of participation," and going beyond the page metaphor of Web 1.0 to deliver rich user experiences.” Tim O’Reilly, O’Reilly Media
Drivers for Web 2.0 <ul><li>The Web as a Platform – using the internet as an API for new applications </li></ul><ul><li>Radical decentralization – distributed data, reused, remixed, (re)-aggregated, and (re)-syndicated </li></ul><ul><li>Self-service and participation </li></ul><ul><li>Infrastructure is available </li></ul><ul><li>The Network Effect </li></ul><ul><li>The Long Tail </li></ul>
Web 2.0 in Government <ul><li>Norway has the first Web 2.0 Government – eNorway 2009 initiative </li></ul><ul><li>US Government Ready for Web 2.0 </li></ul><ul><ul><li>Blogs – the govsphere is growing fast </li></ul></ul><ul><ul><li>RSS feeds – proliferating rapidly among US government agencies </li></ul></ul><ul><ul><li>Wikis – adopted by UK, US government for collaborative “telework” </li></ul></ul>
Current Situation <ul><li>Consumer market driving business applications </li></ul><ul><li>Corporations adopting blogging technology (Microsoft Channel 9) </li></ul><ul><li>Superior collaborative capabilities </li></ul><ul><li>Upset commercial vendor status-quo </li></ul><ul><li>Security concerns in government </li></ul>
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 8. Wireless Government
What is Wireless Government? <ul><li>Light e-government using mobile telephone technology </li></ul><ul><ul><li>Mobile telephone as kiosk </li></ul></ul><ul><li>Citizens and Businesses </li></ul><ul><ul><li>Finding government services </li></ul></ul><ul><ul><li>Notifications and alerts </li></ul></ul><ul><li>Civil Service </li></ul><ul><ul><li>Requisitions and receiving </li></ul></ul><ul><ul><li>Approvals </li></ul></ul><ul><ul><li>Time & Attendance </li></ul></ul>
Drivers for Wireless Government <ul><li>Proven voice and text technologies </li></ul><ul><li>Mobile telephone is the tool of choice for small transactions </li></ul><ul><li>Growth in emerging countries </li></ul><ul><li>Overcoming the digital divide </li></ul><ul><li>Citizen and civil servant usable and inexpensive </li></ul>
Current Situation <ul><li>Early adoption in government </li></ul><ul><li>Exposing IFMIS capabilities via wireless devices is difficult </li></ul><ul><li>Remains differences among devices </li></ul><ul><li>Most e-government needs computers and the Internet </li></ul><ul><li>Practical work on life events </li></ul>
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 9. Corporate Performance and Government Performance Management
What is Corporate Performance Management? Scorecarding Reporting OLAP Data Mining Budget Planning
Drivers for Corporate Performance Management <ul><li>Too much information </li></ul><ul><li>Business Intelligence tools such as reporting are not prescriptive </li></ul><ul><li>Not all indicators are relevant </li></ul><ul><li>Financial information is after the fact – you cannot change the past </li></ul><ul><li>Many non-integrated Business Intelligence (BI) tools </li></ul>
Corporate Performance Objectives <ul><li>“ Key Performance Indicators” (KPIs) and “scorecards” are simple to understand </li></ul><ul><li>KPIs measure in progress </li></ul><ul><li>Aggregates measurements from many sources </li></ul><ul><li>Utilizes capabilities of many tools </li></ul><ul><li>Provides clarity for what is important </li></ul>
Government Performance Management <ul><li>Business </li></ul><ul><li>“ Bottom Line” is clear: profitability </li></ul><ul><li>Measured on quarterly profitability </li></ul><ul><li>“ Bottom Line” is financial </li></ul><ul><li>Budget is a guideline </li></ul><ul><li>Simple financial measurements: revenue, expenditures, cost centres… </li></ul><ul><li>Government </li></ul><ul><li>Government mandates require many objectives </li></ul><ul><li>Measured on long-term outcomes </li></ul><ul><li>“ Bottom Line” is outcomes </li></ul><ul><li>Budget is the law </li></ul><ul><li>Difficult financial measurements: objectives, funds, projects… </li></ul>
Performance and Budget Budget Execution Budget Planning Government Objectives Scenario Planning Budget Forecasting Performance Monitoring Budget Review
Inputs, Outputs, Outcomes <ul><li>Objective </li></ul><ul><ul><li>Government development goal </li></ul></ul><ul><li>Input </li></ul><ul><ul><li>The money in the budget </li></ul></ul><ul><li>Output </li></ul><ul><ul><li>The money spent </li></ul></ul><ul><ul><li>The items purchased </li></ul></ul><ul><li>Outcomes </li></ul><ul><ul><li>Results for the national interest </li></ul></ul><ul><li>To improve education and literacy rates in remote regions </li></ul><ul><li>$M earmarked for this purpose </li></ul><ul><li>$M spent in 5 regions </li></ul><ul><li>2 schools built, 40 additional teachers hired, 250 computers and 1,500 books purchased… </li></ul><ul><li>Year 1: literacy tests increased by 2%. Year 2: by 5%. Year 3: by 10% </li></ul>
Current Situation <ul><li>Mixed </li></ul><ul><ul><li>Capacity issues </li></ul></ul><ul><ul><li>Improvements in MTEF </li></ul></ul><ul><ul><li>Remains output focused </li></ul></ul><ul><ul><li>Better results in projects yet… </li></ul></ul><ul><li>Commercial performance management software not budget centric </li></ul>
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 <ul><li>Promise of re-use : write once, use many times </li></ul><ul><li>Component-based architectures – promise of assembling applications from parts </li></ul><ul><li>Mix programming language, operating system and middleware </li></ul><ul><li>Pick best-of-breed applications </li></ul>
Impact on the IFMIS of Tomorrow <ul><li>Immediate Impact : </li></ul><ul><ul><li>Consolidation – Business Process Management – Software as a Service </li></ul></ul><ul><li>Long-Term Trend : </li></ul><ul><ul><li>Performance Management </li></ul></ul><ul><li>Major Change to IFMIS : </li></ul><ul><ul><li>De-centralization – Open Source – Commoditization of Software Stack – Service Oriented Architectures </li></ul></ul><ul><li>Innovation Opportunities : </li></ul><ul><ul><li>Web 2.0 – Wireless Government </li></ul></ul>
Conceptual Analysis <ul><li>Best tools and authors to analyze complex trends in high technology: </li></ul><ul><ul><li>Geoffrey Moore on technology adoption </li></ul></ul><ul><ul><li>Clay Christensen on innovation </li></ul></ul><ul><ul><li>Marshall McLuhan on medium (enhancement, reversal, retrieval, obsolesce) </li></ul></ul><ul><ul><li>Gartner Group on technology hype cycle </li></ul></ul>
Recommended Links <ul><li>The Future of Software: http://www.forrester.com/Teleconference/Previous/Overview/1,5158,1411,00.html </li></ul><ul><li>The Future of Government Communications Networks: http://www.dts.ca.gov/news_events/ppt/Gartner_JoeSkorupa.ppt </li></ul><ul><li>Innovation Does Matter: http://fr.sun.com/sunnews/events/2006/may/symposium/pdf/paeinier_forrester.pdf </li></ul><ul><li>Vision 2010: http://www-03.ibm.com/industries/education/doc/content/bin/IBM_BCS_White_Paper_Vision_2010_Business_Applications.pdf </li></ul><ul><li>Information and communications for development 2006 : global trends and policies: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2006/04/20/000012009_20060420105118/Rendered/PDF/359240PAPER0In101OFFICIAL0USE0ONLY1.pdf </li></ul><ul><li>Web 2.0 in Business: http://www.mckinseyquarterly.com/article_abstract.aspx?ar=1913&l2=13&l3=11&srid=9&gp=1 </li></ul>
Recommended Links <ul><li>Ten Trends to Watch in 2006: http:// www.mckinseyquarterly.com/article_page.aspx?ar =1734&L2=21&L3=114&srid=190&gp=0 </li></ul><ul><li>ERP Graveyard: http://www.erpgraveyard.com/ </li></ul><ul><li>Is it time for Wikigov: http://www.gcn.com/online/vol1_no1/43410-1.html </li></ul><ul><li>ERP Consolidation May be Threatening Innovation: http://searchcio.techtarget.com/originalContent/0,289142,sid19_gci1230304,00.html?track=NL-453&ad=580643&asrc=EM_NLT_1199477&uid=2151015 </li></ul><ul><li>Does ERP Matter: http://www.infoworld.com/archives/emailPrint.jsp?R=printThis&A=/article/07/04/09/HNerpmatter_1.html </li></ul><ul><li>The Building Blocks of a Simpler Future are in Place http://www.accenture.com/Global/Services/By_Subject/Service_oriented_Architecture/R_and_I/BuildingBlocksPlace.htm </li></ul>