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Implementing FM Info. System Project (Bill)
Transcript of Implementing FM Info. System Project (Bill)
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The World Bank
Implementing Financial Management
Information System Projects:
The World Bank ExperiencePreliminary Results
Bill Dorotinsky
PRMPS
Budget Execution Course
November 5, 2003
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Outline
Definitions Review Scope
Reform project nature and design Reform Project Emphasis
Loan Objectives Project Components
Summary Project Characteristics
Success?
Risks, successes, and failures General lessons
Preconditions?
Open Questions
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What is an FMIS?
Financial management system:
Information system that tracks financial events andsummarizes information
supports adequate management reporting, policy
decisions, fiduciary responsibilities, and preparation ofauditable financial statements
Should be designed with good relationships betweensoftware, hardware, personnel, procedures, controls anddata
Generally, FMIS refers to automating financialoperations
Definitions
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What are core and non-core
FMIS systems? Core systems
General ledger, accounts payable andreceivable. May include financial reporting,fund management and cost management.
Non-core systems
HR/payroll, budget formulation, revenue (tax &customs), procurement, inventory, propertymanagement, performance, managementinformation
Definitions
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What is integrated FMIS?
Can refer to core and non-core integration
But, generally, four characteristics*
Standard data classification for recordingevents
Common processes for similar transactions
Internal controls over data entry, transaction
processing, and reporting applied consistentlyDesign that eliminates unnecessary duplication
of transaction entry
Definitions
*from Core Financial System Requirement. JFMIP-SR-02-01. Joint Financial ManagementImprovement Program. Washington, D.C., November 2001.
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What constitutes a good system?
Ability to* Collect accurate, timely, complete, reliable, consistent
information
Provide adequate management reporting Support government-wide and agency policy decisions
Support budget preparation and execution
Facilitate financial statement preparation
Provide information for central agency budgeting,analysis and government-wide reporting
Provide complete audit trail to facilitate audits
Definitions
*from Core Financial System Requirement. JFMIP-SR-02-01. Joint Financial ManagementImprovement Program. Washington, D.C., November 2001.
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Bank FMIS Project Review Scope
AFR EAP ECA LCR MNA SAR Total
Number of Country 5 2 7 10 2 1 27
Number of Project 6 3 7 15 2 1 34
Country List Burkina Faso Indonesia (2) Hungary Argentina Algeria Pakistan
Malawi Mongolia Ukraine Bolivia (2) Yemen
Ghana Kazakhstan Brazil (2)
Zambia Azerbaijan Chile
Uganda (2) Russia Colombia
Albania Ecuador (3)
Turkey Guatemala (2)
Honduras
Nicaragua
Venezuela
The review covers 34 projects in 27 countries across 6 regions, involving
$1 billion over 17 years.
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Project Emphasis
Project Type # Of Project %
IFMS only project 5 14.7%
FM project with IFMS component 13 38.2%
Broad public sector management 16 47.1%
Total 34 100.0%
Most Bank projects are not FMIS-only, but embedded in broaderfinancial management or public sector reforms.
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FMIS Project Components
Components within FMIS %
1 Implementing/modernizing FMS 15.5%
2 Budgeting system reform 10.8%
3 Treasury Operation 8.8%
4 Training (FM) 7.7%
5 Accounting/financial reporting reform 7.2%
6 Auditing reform 7.2%
7 Institutional capacity of MoF/MoE/MoP 6.7%
8 Training (IT) 5.2%
9 Public Debt management 4.6%
10 Information and Data Management 4.6%
Many of the projects paid attention to training and soft systems surrounding
the technology.
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Project Characteristics
An FMIS project, on average,
took 7 years to be complete
Ranging from 9.1 years for AFR to 5.8 years for
LCR
average Bank-financed cost was $12.3 million*
component changes in 75 % of projects
* Excluding $600 million for Russia
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Success?
If success is defined as
delivered as-specified ex ante
43 % delivered as specified
delivered on-budget
50 % delivered on budget
delivered on-time
21 % delivered on-time
then, only 21 % were successful
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Success?
But, these indicators only looks atproject, notimpact on financial management, operations
Improvements to reporting? Staffing changes?
Generally, no or weak performance indicators in projects
no baseline
broader impact assessment difficult.
However, in self-assessed sustainability 25 % unsustainable
6 % highly likely to be sustainable
69 % likely sustainable
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Project Risk Assessment All Region
Official Project Risk (available only for each project)
1Lack of institutional capacity(including H.R)
23.6%
2 Lack of (weak) government commitment 19.1%
1Too many project components
(coordination problem)11.2%
2 Technical complexity of information system 9.0%
3 Vested-interests of various stakeholders 9.0%
4Lack of (low) utilizationof newly developed system
7.9%
5 Unclear responsibility of project components 2.2%
6 Lack of communication infrastructure 2.2%
7 Failure to provide sufficient counterpart funding 2.2%
8 Change of government priority 2.2%
9 Coordination risk among central and local governments 2.2%
10 Lack of (weak) legal framework 2.2%
11 Others 6.7%
Project Risks
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Success Factors Success Factors Frequency1 Flexible project management 21.43%
2 Project coordination 14.29%
3
Link political environment
and leadership14.29%
4
External environment
(uncontrollable) 14.29%
5
Capacity building (training)
Plan14.29%
6 Close Bank's supervision 7.14%
7 Others 14.29%
Total 100.0%
Lessons:
Full-time project coordinator (36%)
Champion at political level (14 %)
Training (14 %)
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Failure Factors Frequency
1 Lack of commitment 23.33%
2
Lack/ineffective project
coordination 23.33%
3 Loose project design and
planning10.00%
4 Institutional/organizationalresistance
10.00%
5 Poor human resourceCapacity
6.67%
6 Inappropriate technology 6.67%
7 External environment(uncontrollable)
6.67%
8 Complex project design 3.33%
9 Lack of proper skills in
project team3.33%
10 Others 6.67%
Total100.00%
Failure Factors
Lessons:
Full-time project coordinator (23%)
Commitment (23%)
Project design (20%)
Resistance (10%)
HR capacity (7%)
Commitment: champion
HR/training: IT AND FM capacity
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1 Political commitment/ownership from borrowing country 15.71%
2 Right skills in project team 10.00%
3 Proper institutional reform/change 10.00%
4 More narrowed project focus 8.57%
5 Close project supervision by the Bank 7.14%
7 Coalition building with key players 5.71%
8 Flexible project management 5.71%
9Comprehensive diagnostic study and clearimplementation plan 5.71%
10 Coordination among key agencies/other projects 5.71%
11 Sustainable human resource development 5.71%
12 Business procedure reform/changes before IT 4.29%
13 Careful project sequencing within/between projects 4.29%
14 Proper choice of technology 2.86%
15 Up-front coordination among donors 1.43%
16 Early delivery of tangible results 1.43%
17 Right choice of technology 1.43%
18 Others 4.29%
General Lessons
P di i ?
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Preconditions?
HR Capacity, ICT Readiness, & Project Success
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9Burkina Faso L
Malawi L
Uganda L
Bolivia L
Indonesia L
Brazil L
Guatemala (1) S
Nicaragua S
Honduras S
Ecuador (2) S
Columbia S
Chile S
Hungary S
Argentina S
Human Development Index* E-gov Readiness*
(Human Development Index: UNDP Human Development 2001 Index,E-government Readiness: UNPAN Global E-Government Index)
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Open questions
Is it appropriate to use FMIS projects to
drive other reforms? Cost-effective?
Is FMIS an effective entry-point? What other preconditions for considering an
FMIS investment should exist?
What performance measures should beincluded to assess effectiveness?
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Supplemental Slides
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Guidance for Risk Reduction
Procurementin self-contained modules, each of which addvalue, even if nothing else was purchased
Stay with known technology, well-proven approaches andstandard software
where new technology is unavoidable, thorough pilot testing
is warranted. End-user involvement up-front in system design, and
developing communication strategies
Build into the process independent, expert review at key stagesin project to assess status
Single official should be responsible for project execution,preferably someone senior enough to assure compliance
Clear lines of responsibility and accountability in projectmanagement
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Donor Coordination Aspects Overlapping initiatives in same business area at different levels of
government
Ensure that the processes and systems are compatible, support the same goal,
and are correctly sequenced. Requires fine-tuning as the project progresses, and
organizational goals shift
Options: Multi-donor trust fund which can be used to support diagnostic work,
capacity building, and allow for dialogue
Each Donor covers a particular component, hardware, software,
communications, change management, training, etc
Each Donor covers a level of government, or group of states/regions or
districts in the same development stage
But: greater complexity in financing and administration, greater likelihood of
failure
Source: Adapted from Presentation, Deepak Bhatia,IFMIS Implementation: Aspects for Consideration
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IT architecture
Develop information architecture to rationalize information needs andflows
Develop data architecture to enable sharing, access, management,security and integrity of data
Develop system architecture to computerize and support business
processes Develop technology architecture to support computerized processes,information flows, and data management
Develop networking architecture to enable information flows acrossspace and institutional boundaries
Develop security architecture to ensure protection, integrity andconfidentiality of data
Put in place management structure and systems to manage operation ofall the above architectures
Source: Presentation, Deepak Bhatia, IFMISImplementation: Aspects for Consideration
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Financial Records Management
Development and implementation of economic and fiscal policy to:
Provide the audit trailand support the auditfunction
Enable governmentmeet its legalobligations forfinancialmanagement
Creation and management of authentic, reliable, and securefinancial records are critical actions (paper/electronic)
Without effective and efficient records management in place,the desired impact of financial and governance reforms isoften minimal at best
Protect the integrityof key records andthe information theycontain
Ensure the timelydisposal of obsoleterecords
Meet the financial management needs of the government,including:
Source: IRMT discussion on evidence-based governance, as inclued in
Presentation by Deepak Bhatia, IFMIS Implementation: Aspects for Consideration
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Critical Issues for Financial
Records Management
The need to recognize the importance of protecting the
authenticity and integrity of financial records
The need for effective legislative and organizational
frameworks for financial management and financial records
care
The importance of developing standards for financial records
management and financial records care
The central role of education and training for successful
records care
The need to raise awareness across government of the value
of all records, including financial records
Source: IRMT discussion on evidence-based governance, as inclued in
Presentation by Deepak Bhatia, IFMIS Implementation: Aspects for Consideration
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Change Management Objectives
Redesign budget, revenue and expenditure processes
Redefine organizational, job and skill requirements
Minimize resource requirements to implement IFMS
Institutionalize service, efficiency mindset
Gain staff commitment and feedback on redesigned processes.
Help line ministries implement process improvements
Create the foundation for a Government-wide communicationsstrategy
Source: Presentation, Deepak Bhatia, IFMISImplementation: Aspects for Consideration
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Eight Key Steps To a Successful
Transformation
1. Establish a sense of urgency
2. Form a powerful guiding coalition
3. Create a vision4. Communicate the vision
5. Empower others to act on the vision
6. Plan for and create short-term wins
7. Consolidate improvements and produce still morechange
8. Institutionalize new approaches
Adopted from Harvard Business Review March-April 1995
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What Is a Business case?
A business case outlines the overall business benefits thatjustify the initial and commitment of time, resources and
funding for technology projects
ROIOperational
Process improvements
(Tangible and Intangible)
TechnicalBenefits to IT infrastructureand support for technology
strategy
Financial
Costs, benefits and impact
on business performance
measures
Source: SAP
Strategic
New capabilities and
improved competitive
position
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ICT Procurement Aspects
Find adequate and sustainable solution for projectmanagement and implementation (appropriate
blend of own staffing, use of TA, and purchase of
technical capacity)
Organise procurement in manageable pieces
Single responsibility (turnkey) contracts
Separate application software development
Phasing implementation
Splitting procurement and managing several suppliers
Source: Presentation, Deepak Bhatia, IFMISImplementation: Aspects for Consideration
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Typical Mistakes in ICT
Procurement
Reliance on inadequate IT expertise
Mindset fixed on obtaining specific brands
Eager to receive hardware, with littleregard to use it productively any time soon
Underestimation of effort and complexity in
preparing bidding documents Overestimation of internal technical
capacity
Source: Presentation, Deepak Bhatia, IFMISImplementation: Aspects for Consideration
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Useful References
Margaret Bartel, Integrated Financial Management Systems: A Guide to Implementation Based on The
Experience in Latin America, (Washington, DC, Institute For Democratic Strategies, LATPS Occasional
Paper Series, 1996)
Central Computer and Telecommunications Agency, Good Practice in Developing Sustainable
Information Systems: Supporting Guides, (London: Department for International Development (DFID),
1998)
Christopher Pollitt & Geert Bouckaert, Public Management Reform: A Comparative Analysis, (Oxford,
Oxford University Press, 2000)
Joint Financial Management Improvement Program. Core Financial System Requirement. JFMIP-SR-
02-01. (JFMIP, Washington, D.C., November 2001)
The Hidden Threat to E-government, Avoiding large government IT failure, OECD Public ManagementPolicy Brief, PUMA Policy Brief No. 8, (London, March 2001)
United Nations Division for Public Economics and Public Administration, Benchmarking E-
government: A Global Perspective, 2002