1. Budget Execution Course
Implementing Financial Management Information System Projects: The World Bank Experience Preliminary Results
Bill Dorotinsky
PRMPS
Budget Execution Course
November 5, 2003

2. 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

3. What is an FMIS? Definitions Financial management system:
Information system that tracks financial events and summarizes information
supports adequate management reporting, policy decisions, fiduciary responsibilities, and preparation of auditable financial statements
Should be designed with good relationships between software, hardware, personnel, procedures, controls and data
Generally, FMIS refers to automating financial operations

4. What are core and non-core FMIS systems?
Definitions
What are core and non-core FMIS systems?
Core systems
General ledger, accounts payable and receivable. May include financial reporting, fund management and cost management.
Non-core systems
HR/payroll, budget formulation, revenue (tax & customs), procurement, inventory, property management, performance, management information

5. What is “integrated” FMIS?
Definitions
What is “integrated” FMIS?
Can refer to core and non-core integration
But, generally, four characteristics*
Standard data classification for recording events
Common processes for similar transactions
Internal controls over data entry, transaction processing, and reporting applied consistently
Design that eliminates unnecessary duplication of transaction entry
*from Core Financial System Requirement. JFMIP-SR Joint Financial Management Improvement Program. Washington, D.C., November 2001.

6. What constitutes a good system?
Definitions
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
*from Core Financial System Requirement. JFMIP-SR Joint Financial Management Improvement Program. Washington, D.C., November 2001.

7. Bank FMIS Project Review Scope
The review covers 34 projects in 27 countries across 6 regions, involving $1 billion over 17 years.

8. Project Emphasis
Most Bank projects are not FMIS-only, but embedded in broader financial management or public sector reforms.

9. FMIS Project Components
Many of the projects paid attention to training and ‘soft systems’ surrounding the technology.

10. 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

11. Success? If success is defined as… … then, only 21 % were successful
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

12. Success?
But, these indicators only looks at project, not impact 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

13. Project Risks

14. Success Factors Lessons: Full-time project coordinator (36%)
Champion at political level (14 %)
Training (14 %)

15. 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

16. General Lessons

17. Preconditions? Human Development Index* E-gov Readiness*
HR Capacity, ICT Readiness, & Project Success
Burkina Faso L
0.9
Argentina S
Malawi L
0.8
0.7
Hungary S
0.6
Uganda L
0.5
0.4
0.3
Chile S
0.2
Bolivia L
0.1
Columbia S
Indonesia L
Ecuador (2) S
Brazil L
Honduras S
Guatemala (1) S
Nicaragua S
Human Development Index*
E-gov Readiness*
(Human Development Index: UNDP Human Development 2001 Index,
E-government Readiness: UNPAN Global E-Government Index)

18. 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 be included to assess effectiveness?

19. Supplemental Slides

20. Guidance for Risk Reduction
Procurement in self-contained modules, each of which add value, even if nothing else was purchased
Stay with known technology, well-proven approaches and standard 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 stages in 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 project management

21. 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

22. IT architecture
Develop information architecture to rationalize information needs and flows
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 across space and institutional boundaries
Develop security architecture to ensure protection, integrity and confidentiality of data
Put in place management structure and systems to manage operation of all the above architectures
Source: Presentation, Deepak Bhatia, IFMIS Implementation: Aspects for Consideration

23. Financial Records Management
Creation and management of authentic, reliable, and secure financial records are critical actions (paper/electronic)
Meet the financial management needs of the government, including:
Development and implementation of economic and fiscal policy to:
Provide the audit trail and support the audit function
Enable government meet its legal obligations for financial management
Protect the integrity of key records and the information they contain
Ensure the timely disposal of obsolete records
Without effective and efficient records management in place, the desired impact of financial and governance reforms is often minimal at best
Source: IRMT discussion on evidence-based governance, as inclued in
Presentation by Deepak Bhatia, IFMIS Implementation: Aspects for Consideration

24. 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

25. 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 communications strategy
Source: Presentation, Deepak Bhatia, IFMIS Implementation: Aspects for Consideration

26. Eight Key Steps To a Successful Transformation
Establish a sense of urgency
Form a powerful guiding coalition
Create a vision
Communicate the vision
Empower others to act on the vision
Plan for and create short-term wins
Consolidate improvements and produce still more change
Institutionalize new approaches
Adopted from Harvard Business Review March-April 1995

27. What Is a Business case? ROI Financial Technical Strategic Operational
A business case outlines the overall business benefits that justify the initial and commitment of time, resources and funding for technology projects
Financial
Costs, benefits and impact on business performance measures
Technical
Benefits to IT infrastructure and support for technology strategy
ROI
Strategic
New capabilities and improved competitive position
Operational
Process improvements
(Tangible and Intangible)
Source: SAP

28. Business Case for IT Initiatives
What problem exists that must be solved?
What people/stakeholders (how many constituents) does this problem affect?
What solutions are available to solve this problem?
What are the benefits of each solution?
What is the relative cost of each solution?
What stakeholders are affected by the intended solution?
Are stakeholders willing to pay for this solution or must government fund it?
Can other fund sources be used?
How can these stakeholders affect my political future?
If we pay to solve this problem, what other problem goes unsolved?
Source: Gartner

29. ICT Procurement Aspects
Find adequate and sustainable solution for project management 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, IFMIS Implementation: Aspects for Consideration

30. Typical Mistakes in ICT Procurement
Reliance on inadequate IT expertise
Mindset fixed on obtaining specific brands
Eager to receive hardware, with little regard 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, IFMIS Implementation: Aspects for Consideration

31. 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 (JFMIP, Washington, D.C., November 2001)
The Hidden Threat to E-government, Avoiding large government IT failure, OECD Public Management Policy 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