implementing fm info. system project (bill)

7/27/2019 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



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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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The World Bank 29

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



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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



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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

implementing fm info. system project (bill)

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