P Murphy, IFMIS Nairobi November 2004

1

Perspectives on IFMIS Implementation in selected Sub-Saharan African Countries

[P. Murphy]

P Murphy, IFMIS Nairobi November 2004 2

Comparative Analysis

This Session looks at IFMIS Implementation in terms of:

• Change

• Implementation Processes

Using an organisational systems perspective.

The objective is to share experiences from a selected group of countries that have had a degree of success in implementing financial systems.

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IFMIS – Analytical DimensionsPresentation looks at IFMIS

implementation as a Change Processes

IFMIS Drivers of ChangeVision & IFMIS Change Process. IFMIS/ICT Acquisition ProcessIFMIS/ICT Capacity to ChangeIFMIS Transition Strategy

IFMIS Transition Process & Transition Management

IFMIS Capacity Building & Sustainability

In the context of Govt Organisations – Systems ModelBounded entities of interrelated sub-systems that interact with the external environment. (P.E.T.S.) – Transparent/Opaque Components.

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IFMIS Conceptual Framework

Political

Economic

Social

Technical

Implementation Strategies

External & Internal Drivers

New ICT(IFMIS)

Public Financial ManagementTask Environment

Processes & Procedural

Change

Transition Management

CapacityBuilding

New Legislation & Improved

PFM

Outputs

Improved

Budgeting

Accountability

Transparency

Transaction Processing Efficiency

Control

Management Information

Decision Making Support

IFMIS SoftwareImplementation

Methodology

Inputs

FISS

IFMIS Application

Implementation Methodology

ICT

Contractors

GoU Staff

Project Staff

Project Management

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IFMIS Processes

IFMIS

Acquisition Process

Transition Management

Capacity Building

Vision Financial

Information Systems Strategy

ImplementationProcesses

Drivers

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IFMIS Change Drivers

Country Key Issues (Context, Recognition, Willingness & Ownership)

1 Kenya(Pilot ORACLE Financials)

IFMIS part of PFM reform. Limited Political/Economic Drivers. Urgent need to replace outdated technology. DP Support - PFM/Infrastructure.. Primary Ownership with AccGen. Variable MoF/IT Agency Support. Some resistance from entrenched interests.

2 Mauritius(Implemented ORACLE Financials)

Strong Professional Demand (AccGen), Limited Political/Economic Drivers. Fiscal Discipline. Existing Bespoke System- Y2k Driver,No DP support. Proactive trusted ICT supplier with substantial experience of working with Treasury. Availability of skilled/motivated Staff.

3 South Africa(Current Be-spoke Systems Under Review)

Strong PFM Reform -move to performance budgeting, accrual based financial reporting Limited Political/Economic Drivers. Extensive legacy systems. Primary drivers need to replace aging expensive Technology with limited functionality and respond to new legislation.. Ownership has been diverse efforts now being made to internalise.

4 Tanzania(Implemented EPICOR PLatinum ).

PFM Crises/Loss of DP Funding/Developing ICT Capacity. IFMIS part of PFM reform. Crises/New Management/DP support opened space for implementation. High risk AccGen Management Style. Early resistance but PFM ownership developed over implementation period.

5 Uganda(Pilot ORACLE Financials)

IFMIS part of PFM reform. Limited Political/Economic Drivers. Capacity Issues.. Strong AccGen Ownership, MoF support developed over time. Extensive DP support for holistic and comprehensive approach.

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Lessons/Challenges – Change Drivers

Area Lessons Challenges

Context It is important to identify and engage external/internal drivers of change.

How can external drivers be identified,engaged and strengthened?

Recognition& Willingness

Governance Arrangements often weak with insufficient Stakeholder Participation/Support and resistance to change.

How can Stakeholders Participation (ie Budget, Public Service) and willingness to support change be improved?

Ownership/Champion

AccGen usually nominated executive owner but difficultly in securing other MoF Depts inputs. AccGen may often be given the responsibility but without the authority (HR/Organisational Issues).

How can executive ownership be improved and how can responsibility/accountability be translated into necessary authority?

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Vision of Change ProcessCountry Key Issues – PFM Reform, Use of IFMIS, Scope

1 Kenya(Comprehensive Change as part of PFM Reform)

To progressively provide efficient and effective support to Budget, Financial Management, Control and Audit in MDA. Implementation (functionality/coverage)takes place over 5-10 year period. (Pilot, Rollout, Expansion)

2 Mauritius(FM/Accounting/FR Reform)

To rapidly (2-3 years) implement a modern IFMIS (FM/Accounting)that would resolve Y2K issues, improve efficiency of transaction processing and facilitate improved financial reporting.

3 South Africa(Comprehensive Change as part of PFM Reform)

To put in place an integrated financial management system built on standards and technologies required to facilitate interoperability with departmental core systems unique to national and provincial departments.

4 Tanzania(Comprehensive Change as part of PFM Reform)

To progressively (2-10 years) implement a generic Public Sector Budget, FM, RM & FR System (and sustainable capacity) for MoF, CG Ministries and Departments using recognised PFM standards. Later expanded to encompass TRA/LG/Agencies with diverse functionality according to organizational need. Implementation over a

5 Uganda(Comprehensive Change as part of PFM Reform)

Progressive implementation (3-10 years) of a sustainable Public Sector Budget, FM, RM, FR & Auditing System. (CG/LG) with diverse functionality according to need. (Pilot, Rollout, Expansion)

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IFMIS Lessons/Challenges- VisionArea Lessons Challenges

PFM Reform

PFM/IFMIS implementation requires substantive government wide (often frame-breaking) change (Policy & Operational) in the manner in which Public Budgeting, Financial, Resource Management & Auditing processes take place.

How can a broader shared understanding/vision/involvement of PFM/IFMIS reform be developed such that reform initiatives are integrated, owned, resistance to change minimized and complementary organizational change supported ?

Use of an IFMIS

IFMIS is a core component of PFM Reform. Reform however takes time to implement, an evolutionary rather than revolutionary IFMIS approach increases chances of success. Results accumulate over a 2 to 10 year period. Early Wins Helpful.

How can an evolutionary medium/long term IFMIS reform be made compatible with the need to achieve short term improvements in PFM to meet fiduciary requirements ?

Scope IFMIS system can facilitate comprehensive PFM reform across Central and Local Government & Public Sector Agencies or it can be much more limited.

What criteria should be considered for determining the scope of an IFMIS? How should implementation be phased from a functional and entity perspective?

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AcquisitionCountry Key Issues – Preparation, Procurement

1 Kenya(ORACLE Financials)

Detailed FISS/PFM Review. Acquire comprehensive high end IFMIS. Follow thorough procurement through open competitive methodology, difficult process though eventually completed with many delays. ICT, WAN provided separately and still are not yet fully installed.

2 Mauritius(ORACLE Financials)

Limited studies, Single source procurement. Proactive trusted ICT supplier with substantial experience of working with Treasury

3 South Africa Well developed legacy systems that have existed for many years, Detailed study undertaken for revamping system. In the process of establishing framework for IFMIS acquisition.

4 TanzaniaEpicor - Platinum

Outline Study. Open Tender based on bilateral/local tender process. Mid Range system. Tender required local supplier provision of internationally recognised software/consultancy/training. Separate tender for ICT, software vendor co-opted to define and evaluate ICT requirement.

5 Uganda(ORACLE financials)

Detailed FMS/PFM Review. Tender documents outcome of the study.

Acquire comprehensive high end IFMIS/ICT in 2 phases on a turnkey basis. follow thorough procurement methodology using WB Single Stage Bidding. Evaluate results of phase 1 before finalising contract for phase 2.

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IFMIS Lessons/Challenges- AcquisitionArea Lessons Challenges

Preparation Identify/emphasize unique PFM features and capacity building requirements in definitions.High end/Mid range Systems offer similar levels of functionality. However implementation, licensing and maintenance costs of high end system substantial.Budget, Cash and Commitment Management are not standard.Early Stakeholder Engagement

Is it necessary to do a FMS study, cannot this be undertaken during BPR?

Are High End Systems necessary for most Sub Saharan Countries?

How can early stakeholder engagement be ensured?How can one commit contractor to providing required PFM functionality?

Procurement Turnkey solution provides a single accountability relationship. Need to ensure contractor provides for capacity building/change management. Key issue is Contractor Capacity and Support

Do lengthy formal rule based procurement systems lead to over complex solutions?

How can the concurrent/named user licensing issues be dealt with?

How can the contractor be committed to capacity building

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Implementation StrategyCountry Key Issues –System, Implementation

Methodology & Sequencing.1 Kenya

(Phased but Comprehensive Solution)

Initially core FM/Accounting Modules and interfaces in Pilot, Train and Test then Rollout. MTEF/Budget Module to follow as solution & PFM Cycle Permit. Process delayed due to WAN approval difficulties. Testing finalised with delays. FM/Accounting rollout now commenced.

2 Mauritius(Partial Solution)

Implement FM, Accounting and Financial Reporting Modules. Follow rapid implementation methodology. Implementation of budget module dependent on decision by MoF to use system to support MTEF/Budget Reform. FM/Accounting fully implemented.

3 South Africa(To be defined)

Evolutionary rather than revolutionary change in light of the sustained development of systems and internal recognition of need to change at different stages of maturity. Internally led rather than externally compelled change. From the FMS to BAS and now preparatory activities for an IFMIS. A phased change strategy reflecting capacity/policy issues.

4 Tanzania(Phased but Comprehensive solution )

Implement comprehensive mid range IFMIS but in phases as resources and capacity permits. Follow rapid implementation methodology. Initially core Accounting Modules and interfaces in Pilot then rapid Rollout. Budget Module followed as solution, willingness, resources & PFM Cycle permit. Currently consolidating system.

5 Uganda(Phased but comprehensive solution)

Implement comprehensive high end CG/LG IFMIS but in phases.Follow thorough implementation methodology. Initially core Accounting Modules and interfaces in Pilot, test and then rollout. Budget Module to follow as Solution & PFM Cycle permit.

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IFMIS Lessons/Challenges - StrategiesArea Lessons Challenges

System Transition

Effective Governance, Project & Contract Management Arrangements Essential with specialist sub groups (ICT,Application,Capacity, Etc)Clear action plan with baseline, timelines, accountabilities etc. Dedicated ICT/PFM team required.Must ensure key application management and ICT staff involved at each stage of the implementation. Process is a major learning opportunity for client. Contractor also has to learnTrain core application and ICT management group on Application/Architecture at the start of process.Provide early Sensitisation training important to manage expectations.Implementation typically starts with Core FM/Accounting Modules. However broader framework needs to be addressed even if not fully operationalised.

What governance arrangements should be put in place?What should action plan cover?

How can Government specific MTFF, Performance Budget, Commitment/Cash Control, Revenue Management requirements be met?

How can joint working be implemented.

How should sequencing be organised?

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IFMIS Lessons/Challenges - Strategies

Implement-ation

Ensure BPR/Solution definition stage reflect desired medium term PFM changes. Minimise customisation.Contractors tend to try to water down requirements Govt tends to expand.. Ensure in-country solution development and client team involvement.Important to encourage cooperative not conflicting working arrangements between Contractor/Client.Contractor must provide PFM, ICT, CM & Project Management Capacity.Some flexibility required as PFM requirements changing over time.Ensure attention given to reporting tools

How can cooperative working be ensured?

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ICT ArchitectureCountry Key Issues

1 Kenya Central Database Server, In-house IT Unit, DRC yet to be implemented, Limited WAN solution. Recently developed E Governance Policy yet to be fully integrated with IFMIS. HR System supplied separately with little integration. Support, Maintenance and Warranty arrangements with Local Software & Hardware Contractors

2 Mauritius Central Database Server, small AccGen supported Data Centre. Leased line based WAN. DRC yet to be established. ICT Agency used to Quality Control. Support, Maintenance and Warranty arrangements with Local Software & Hardware Contractors funded by Govt Budget.

3 South Africa

Strong ICT Agency(SITA) runs all ICT infrastructure for bespoke systems. Large IBM mainframe based servers. Extensive country wide WAN. DCR etc

4 Tanzania Central Database Server, MoFPED LAN, Redundent Wireless WAN 11Mb Bandwidth, Low cost terminals, Citrix Server. Attempt to establish internet based VPN. Internal ICT Group established. Weak ICT Agency focussed on Payroll Maintenance and Development. Transitional ICT Strategy Developed. DRC being tendered. Support, Maintenance and Warranty arrangements with Local Software & Hardware Contractors funded by Govt Budget.

5 Uganda Central Database Servers, MoF LAN, MDALG LANs, Redundent Telecoms provider based WANs. DRC being established. ICT Agency being established. Long term warranty/maintenance/WAN arrangements made with service providers.

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IFMIS Lessons/Challenges - ArchitectureArea Lessons Challenges

Data Centre & site Infrastructure

Undertake thorough ICT Architecture Planning. Provide upgrade Path.Include substantive site supervision arrangements. Ensure integrity & security.Deploy either in-house or facilities management capacity. Establish sustainable support frameworkEnsure Backup and DRC and support arrangements.Provide for maintenance and replacement policy.Secure power supply.

How do we ensure provision of DCR?

What are key operating conditions for Data Centre.

ICT Capacity

In house ICT capacity and external local and international support necessary.Secure Core/Periphery Remote Operation

How can local support capacity be developed for centre and periphery?

WAN Options include Fibre Optic, Wireless, Vsat, Leased Line & Internet.Need to monitor and mange WAN Performance

What criteria should be used to make choice.How can WAN performance be addressed

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Capacity to Change Country Key Issues (PFM, ICT,Training & CM Capacity)

1 Kenya(Some Strengthening)

Enhance capacity with PFM Advisor and appoint Project Manager. Rely on existing ICT Capacity. Create project implementation teams from existing qualified PFM & ICT staff. Contract international vendor with local presence. Provide extensive training.

2 Mauritius(In house)

Utilise existing staff under direction of AAG. Utilise existing strong Software/ICT provider. Establish in-house implementation team under direction of experienced and qualified AAG.

3 South Africa

Strong ICT & FM Capacity Developed. Budget Management Capacity needs further development. Implementation arrangements to be decided.

4 Tanzania(Extensive Strengthening)

Enhance capacity with PFM Advisor and part time ICT Advisor. Recruit and train (12 +25+70) young PFM/ICT graduates for FSDU & User Depts. Utilise local contractor with support from international vendor. Restructure AccGen’s Department. Provide extensive training. Use FDSU as implementation team.

5 Uganda(Extensive Strengthening)

Enhance capacity with PFM Advisor, Training Advisor, Project Manager and 7 FMS. Recruit 20 graduates for AccGEN. Recruit 6 ICT/Data Centre Staff. Create project implementation teams from existing qualified PFM & ICT staff. Contract international vendor with local presence. Dedicated team for procurement/contract maangement.

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IFMIS Challenges/Lessons Learnt - CapacityArea Lessons Challenges

PFM PFM/PM/CM Advisors typically required to assist with policy/process framework definition.Carefully position PFM Advisor(s).Consider needs of Budget/Accounting/AuditEssential to establish/recruit and train application implementation management group

How can resistance to use of external consultants be overcome?

How can sustanable application management groups be created?

Is a change management advisor required.

ICT ICT Advisor(s) required to support ICT interaction and capacity buildingEssential to establish/recruit and train ICT implementation management group

How can sustainable ICT management group be created?

Training Provide for extensive PFM/ICT/Application training.Plan training at relevant times. Quality Control, Adopt Training of Trainers Approach.

Who should provide training facilities.How should training be programmed and monitored.

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IFMIS Transition MethodologyCountry Key Issues (Implementation Teams, Process,

Testing/Pilot, Evaluation,Rollout) 1 Kenya

Implementation 5 Plus Years

Plan & Implementation Team established, BPR, Solution Design, UAT, Data Migration, Production Testing, Training & Parallel Running/Implementation. In parallel ICT infrastructure design and deployment. Contractor team onsite, Evaluation Undertaken

2 MauritiusImplementation 2 years. Operational 4 years

In house implementation – 6 Months. Setup, Training, Implementation. System Overlaid and progressively implemented, functionality increased over time.

3 South Africa Bespoke solution - (IFMIS proposals now being considered.)

4 TanzaniaImplementation 2 years, Operational 4 Years

Interim System installed (One Year). Parallel implementation team/SDU formed. Detailed BPR/Solution Design, Pilot Running with Core System – all in 6 months. System Overlaid. Phased increase in functionality and coverage over first year. Evaluation and roll out over subsequent years with increasing functionality and coverage.

5 UgandaImplementation 3 years.

Plan and Implementation Team(s) established & trained, BPR, Solution Design, Offshore build, UAT, Production Testing, Training, Data Conversion, Parallel Running, Pilot Stage, Pilot Evaluation. Phased increase in functionality and coverage over first year. Evaluation and roll out over subsequent years with increasing functionality and coverage.

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IFMIS Challenges/Lessons Learnt - TransitionArea Lessons Challenges

Teams Dedicated implementation team(s) essential Application, ICT, Training, Security/Controls/Change Management/ Project Management etc

How/where should implementation team(s) be established

Process Detailed implementation plan covering all relevant stages and components with timeframes outputs and accountabilities. Agreed and realistic sequencing with early wins.Conflict between Results and Capacity Building.

Flexible Cooperative Implementation Methodology required that ensures action learning and continuous active client contractor dialogue,rapid feedback.

Weekly Monitoring by Project Management Group.

How can results/capacity building conflict be dealt with?

What key issues must the implementation deal with?

How can flexible cooperative arrangements be evolved?

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IFMIS Capacity BuildingCountry Key Issues (Application & Facilities Management, User

Training, Resources, Warranty, Maintenance)

1 Kenya Capacity building integral to implementation approach. In-house Application Group Established, Existing ICT Data Centre Group. Extensive training provided.

2 Mauritius Application & ICT managed by AccGen Department, no formal Data Centre but small ICT support team,

3 South Africa

Current in-house bespoke system supported by outsourced consultants with small core in-house team.

4 Tanzania Capacity building integral to implementation approach. AccGen Department Restructured, FSDU Application Group Established, ICT Data Centre Group Established, Extensive training provided,

5 Uganda Due to early staffing difficulties, large team of FM Specialists, IFMIS Accountants and Data Centre Staff Recruited. Extensive training provided. Aim is to provide for a) Recruitment of IFMIS Accountants during next phase and b) Further develop FM & ICT skills of existing staff. Long term warranty/maintenance/WAN arrangements made with service providers

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• Implementation approaches, although often sharing common technical features, depend also on the Country Context.- Recognition, management support, willingness to engage in change and establish capacity are critical issues.

• IFMIS implementation involves substantive government wide (often frame-breaking) change in the manner in which Public Budgeting and Financial Management Processes take place. – The core IFMIS Group vision/strategy must recognize this, commitment to specific PFM changes is essential for successful IFMIS implementation.

• IFMIS although often perceived as a technical IT based issue has both Hard (ICT, Software, Processes) and Soft Dimensions(Power, Politics, Culture, People) – The IFMIS design, implementation and change management processes need to reflect this.

• The intended scope of an IFMIS can vary, from simple General Ledger System to a comprehensive system addressing Budget, Revenue, Financial Management, Resource Management, Payroll, Accounting, Financial Reporting, Auditing and Accountability processes across Central and Local Government & Public Sector Agencies. – Scale, scope and sequencing of the changes are important.

Key Issues

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Key Issues – Cont’d

• Competent Transition Management Capacity is a key issue in ensuring successful IFMIS implementation. The requires PFM, ICT and CM skills. - IFMIS Project Management teams should encompass these skill sets.

• Capacity building during the transition stage facilitates sustainable operational capacity. Implementation is a major learning opportunity.

• PFM is an extensive area change is continuous implementation does not end with functionality/coverage but rather with internalized capacity

Costs

Depends on what is planned/expected,choice of system and context?

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Key Risks• Lack of Engagement and Political/ Management Support.

• Inadequate Preparation (Vision, Policies, Capacity)

• Weak Governance Arrangements.

• Over Complicated Expensive Systems

• Inadequate acquisition and contract management.

• Unrealistic action plans.

• Non participation, lack of dedicated teams.

• Inadequate training

• Weak, contractor with technical/commercial focus