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New Technologies for Public Financial Management

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Title: New Technologies for Public Financial Management


1
New Technologies for Public Financial Management
  • May 2007
  • ICGFM

2
Preface
  • Slides have been updated with the script used for
    ICGFM (see notes pages)
  • Additional information sources slides have been
    added at the end of the presentation
  • For discussion, clarification, or expansion of
    concepts or desire to have custom presentation
    provided via WebX or in-person, e-mail me at
    dhadden_at_freebalance.com

3
How computer technology trends today are defining
government Integrated Financial Information
Management Systems (IFMIS) of tomorrow
4
Agenda
  • Market and technology forces affecting Public
    Financial Management (PFM)
  • Technology and PFM reform
  • 10 key technology and market trends
  • Conclusions

5
ICT makes a countrys 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
6
IFMIS in Government Today
  • Typical Solutions
  • Custom-developed or bespoke
  • Enterprise Resource Planning (ERP)
  • Specialized government IFMIS applications
  • Typical Difficulties
  • Inflexibility to adapt to reform and
    decentralization
  • Sustainability by government ICT staff
  • Integration between budget execution and
    accounting
  • Integration between front-office and back-office

7
Technology in Context
8
Technology Vendor Viewpoint
IFMIS
Public Financial Management
Modernization and Reform
Government Objectives
9
Reality
  • Reform comes first
  • An IFMIS must support on-going PFM modernization
  • Technology enables the IFMIS
  • Technology is not government modernization

10
The four computer and market technology forces of
today that are defining
Government IFMIS of tomorrow
11
1. Consolidation
12
2. Disintegration
13
3. Innovation
14
4. Integration
15
10 Technology Trends
  • Consolidation
  • Enterprise software consolidation
  • Open source software
  • Commoditization of the software stack
  • Disintegration
  • Decentralization
  • Business process management
  • Software as a service (SaaS) and shared services
  • Innovation
  • The web as a platform - Web 2.0
  • Wireless government
  • Integration
  • Corporate Performance Management ( Government
    Performance Management)
  • Service Oriented Architectures (SOA)

16
Not all technology and market trends are
consistent
with government and development trends
17
1. Market consolidation
ERP systems have become bloated
understructures that have become too
expensive to maintain.
Bruce Richardson, AMR Research August 2006
18
What is Enterprise Software?
  • Many acronyms
  • ERP (Enterprise Resource Planning)
  • SCM (Supply Chain Management)
  • CRM (Customer Relationship Management)
  • CM (Content Management)
  • CPM (Corporate Performance Management)
  • BPM (Business Process Management)
  • and many others

19
Enterprise Software Market
ERP
CRM
SCM
BPM
CM
CPM
20
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
21
Drivers for Consolidation
  • Lack of organic growth
  • Shareholders want companies to invest in more
    growth
  • Perception that big winning
  • Maintenance business model
  • Buy customers
  • Own customers barriers to entry
  • Lack of value for upgrading

22
Current Situation
  • Survival of the fittest?
  • Pressure to enter new horizontal and vertical
    markets
  • New stack wars
  • SME market
  • Emerging markets
  • Overlapping technology portfolio
  • Consolidators attempting economies of scale
  • Customer satisfaction?

23
2. Open Source Software
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
24
Open Source in Government
Africa South Africa
Asia and the Pacific 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
Europe European Union (EU) - Belgium, Bulgaria, Denmark, Estonia, France, Germany, Portugal, Spain, UK Non-EU countries - Ukraine Cities - City of Munich
Latin America Brazil, Peru, Argentina, Columbia, Mexico, Venezuela
North America (USA) 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
25
Drivers for Open Source
  • Software commoditization - lack of incremental
    benefits in commercial infrastructure software
  • Government self-reliance reduce national
    technological dependence
  • Cost and choice - cost for license compliance
  • Future proofing

26
Current Situation
  • Rapid uptake in emerging countries
  • Proven performance and reliability
  • Infrastructure middleware success
  • Java EE, Apache, MySQL, Linux, JBoss, Tomcat,
    OpenOffice
  • Some assembly required
  • Usability issues
  • Market volatility
  • Not established in business applications

27
3. Commoditization of the software stack
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
28
Software Stack
Business Applications Middleware Database Operatin
g System Server Network Storage
Management
29
Drivers for Commoditization
  • Standards
  • Ability to interchange middleware
  • Lower cost from vendors
  • Market maturation
  • more and more functionality in middleware driving
    costs down
  • Application vendors want to be middleware neutral
  • Customers do not want to be locked-in

30
Current Situation
  • Accelerated Commoditization
  • Price pressure on middleware
  • Middleware standards are being set by governments
    (USA F.E.A.)
  • Many governments developed open source middleware
    policies
  • On the Internet, no one knows what middleware you
    are running

31
4. De-centralization,
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
32
Devolution Delegation De-concentration Divestment
33
Budgets
National Government
Provincial Govt
Municipal Govt
Municipal Govt
Municipal Govt
34
Reporting
National Government
Ministry 1
Provincial Govt
Municipal Govt
Municipal Govt
Municipal Govt
35
Drivers for De-centralization
  • Administrative Decentralization
  • Improve government efficiency and effectiveness
    improve outcomes
  • Large of government budgets deployed locally
  • Local and cultural autonomy
  • Fiscal Decentralization
  • Improves participation more stable countries
  • Reduce waste and corruption

36
Current Situation
  • Conflicts with computing trend to integration
    (centralization)
  • Clear trend devolution on every continent
  • Local capacity and sustainability issues
  • Difficulties in extending governance with
    existing solutions

37
5. Business Process Management
Success with BPM also requires a culture of
real-time management .. and may need a separate
process center of excellence.
Gartner Group February 2006
38
What is Business Process Management (BPM)?
39
Industry Drivers for BPM
  • Maximizing efficiency - workflow and integration
    enables greater automation
  • Difficulties in adapting ERP after customization
  • Best practices from the private sector?
  • Horizontal companies hope BPM will reduce
    customization costs

40
Current Situation of BPM
  • Established in compliance solutions
  • Leveraged in process e-government
  • Not established in government IFMIS
  • Well established standards
  • Performance/functionality compromise
  • No market leading vendor

41
6. Software as a Service (SaaS)
SaaS benefits are crystallizing, but chaos still
abounds
Robert Bois,Aberdeen Group June 2006
42
What is Software as a Service (SaaS)?
  • Applications are hosted externally e.g.
    Salesforce
  • Typically priced on a subscription basis
  • Typically provides minimal customization
  • Business model for SOHO, small to large
    organizations
  • Evolution of ASP (Application Server Provider),
    but typically serving a purpose-built application

43
Drivers for SaaS
  • High cost to maintain complex software and
    infrastructure
  • Licenses
  • Upgrades
  • Networks
  • Databases
  • SaaS supports fast growth
  • Attractive for smaller organizations

44
Current Situation
  • Increasing as a of the market (from 0 to..)
  • Uneven adoption high in customer relationship
    management
  • Rarely used in government back-office
    applications why?
  • Similar technology used for shared services, yet
  • E-Procurement ideal application
  • Emergence of appliances

45
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46
7. The Web as a Platform - Web 2.0
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
47
What is Web 2.0?
  • An umbrella term for second wave of internet
    innovation
  • Web as platform diversity of platforms
  • Mash-ups syndication
  • Social software community
  • Open source rapid development
  • Rich web interfaces
  • Distributed documentation data
  • Companies SixApart, Flickr, Pandora, Pageflakes,
    FaceBook, YouTube
  • Underlying technologies blogs, wikis, AJAX, RSS,
    REST, SOAP, VOIP, podcasting, Skype, BitTorrent,
    Wikipedia

48
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 OReilly, OReilly Media
49
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50
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51
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52
Drivers for Web 2.0
  • The Web as a Platform using the internet as an
    API for new applications
  • Radical decentralization distributed data,
    reused, remixed, (re)-aggregated, and
    (re)-syndicated
  • Self-service and participation
  • Infrastructure is available
  • The Network Effect
  • The Long Tail

53
Web 2.0 in Government
  • Norway has the first Web 2.0 Government eNorway
    2009 initiative
  • US Government Ready for Web 2.0
  • Blogs the govsphere is growing fast
  • RSS feeds proliferating rapidly among US
    government agencies
  • Wikis adopted by UK, US government for
    collaborative telework

54
Current Situation
  • Consumer market driving business applications
  • Corporations adopting blogging technology
    (Microsoft Channel 9)
  • Superior collaborative capabilities
  • Upset commercial vendor status-quo
  • Security concerns in government

55
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56
8. Wireless Government
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
57
What is Wireless Government?
  • Light e-government using mobile telephone
    technology
  • Mobile telephone as kiosk
  • Citizens and Businesses
  • Finding government services
  • Notifications and alerts
  • Civil Service
  • Requisitions and receiving
  • Approvals
  • Time Attendance

58
Drivers for Wireless Government
  • Proven voice and text technologies
  • Mobile telephone is the tool of choice for small
    transactions
  • Growth in emerging countries
  • Overcoming the digital divide
  • Citizen and civil servant usable and inexpensive

59
Current Situation
  • Early adoption in government
  • Exposing IFMIS capabilities via wireless devices
    is difficult
  • Remains differences among devices
  • Most e-government needs computers and the
    Internet
  • Practical work on life events

60
9. Corporate Performance and Government
Performance Management
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
61
What is Corporate Performance Management?
Scorecarding
62
Drivers for Corporate Performance Management
  • Too much information
  • Business Intelligence tools such as reporting are
    not prescriptive
  • Not all indicators are relevant
  • Financial information is after the fact you
    cannot change the past
  • Many non-integrated Business Intelligence (BI)
    tools

63
Corporate Performance Objectives
  • Key Performance Indicators (KPIs) and
    scorecards are simple to understand
  • KPIs measure in progress
  • Aggregates measurements from many sources
  • Utilizes capabilities of many tools
  • Provides clarity for what is important

64
Government Performance Management
  • Business
  • Bottom Line is clear profitability
  • Measured on quarterly profitability
  • Bottom Line is financial
  • Budget is a guideline
  • Simple financial measurements revenue,
    expenditures, cost centres
  • Government
  • Government mandates require many objectives
  • Measured on long-term outcomes
  • Bottom Line is outcomes
  • Budget is the law
  • Difficult financial measurements objectives,
    funds, projects

65
Performance and Budget
66
Inputs, Outputs, Outcomes
  • Objective
  • Government development goal
  • Input
  • The money in the budget
  • Output
  • The money spent
  • The items purchased
  • Outcomes
  • Results for the national interest
  • To improve education and literacy rates in remote
    regions
  • M earmarked for this purpose
  • M spent in 5 regions
  • 2 schools built, 40 additional teachers hired,
    250 computers and 1,500 books purchased
  • Year 1 literacy tests increased by 2. Year 2
    by 5. Year 3 by 10

67
Current Situation
  • Mixed
  • Capacity issues
  • Improvements in MTEF
  • Remains output focused
  • Better results in projects yet
  • Commercial performance management software not
    budget centric

68
10. Service-Oriented Architecture (SOA)
SOA will make todays ERP systems look like
yesterdays mainframe apps.
Bruce Richardson, AMR Research August 2006
69
SOA Drivers
  • Promise of re-use write once, use many times
  • Component-based architectures promise of
    assembling applications from parts
  • Mix programming language, operating system and
    middleware
  • Pick best-of-breed applications

70
Web Services
71
Current Situation
  • Proven practical in Web 2.0
  • Business software
  • Early emerging
  • Rapid momentum
  • Revolutionizing enterprise software
  • Therefore
  • Technical issues being solved

72
Conclusions
73
Impact on the IFMIS of Tomorrow
  • Immediate Impact
  • Consolidation Business Process Management
    Software as a Service
  • Long-Term Trend
  • Performance Management
  • Major Change to IFMIS
  • De-centralization Open Source Commoditization
    of Software Stack Service Oriented
    Architectures
  • Innovation Opportunities
  • Web 2.0 Wireless Government

74
Modular
75
and Modular
76
The Government IFMIS of tomorrow will be
modular, de-centralized integrated non-monolithi
c multiple vendors wired wireless commodity
innovative
77
extend
78
Citizen Centric
79
Governments will have
more choices, better choices, proven
choices, sustainable choices.
80
dhadden_at_freebalance.com
81
Conceptual Analysis
  • Best tools and authors to analyze complex trends
    in high technology
  • Geoffrey Moore on technology adoption
  • Clay Christensen on innovation
  • Marshall McLuhan on medium (enhancement,
    reversal, retrieval, obsolesce)
  • Gartner Group on technology hype cycle

82
Recommended Links
  • The Future of Software http//www.forrester.com/T
    eleconference/Previous/Overview/1,5158,1411,00.htm
    l
  • The Future of Government Communications Networks
    http//www.dts.ca.gov/news_events/ppt/Gartner_JoeS
    korupa.ppt
  • Innovation Does Matter http//fr.sun.com/sunnews/
    events/2006/may/symposium/pdf/paeinier_forrester.p
    df
  • Vision 2010 http//www-03.ibm.com/industries/educ
    ation/doc/content/bin/IBM_BCS_White_Paper_Vision_2
    010_Business_Applications.pdf
  • Information and communications for development
    2006 global trends and policies
    http//www-wds.worldbank.org/external/default/WDSC
    ontentServer/WDSP/IB/2006/04/20/000012009_20060420
    105118/Rendered/PDF/359240PAPER0In101OFFICIAL0USE0
    ONLY1.pdf
  • Web 2.0 in Business http//www.mckinseyquarterly.
    com/article_abstract.aspx?ar1913l213l311srid
    9gp1

83
Recommended Links
  • Ten Trends to Watch in 2006 http//www.mckinseyqu
    arterly.com/article_page.aspx?ar1734L221L3114
    srid190gp0
  • ERP Graveyard http//www.erpgraveyard.com/
  • Is it time for Wikigov http//www.gcn.com/online/
    vol1_no1/43410-1.html
  • ERP Consolidation May be Threatening Innovation
    http//searchcio.techtarget.com/originalContent/0,
    289142,sid19_gci1230304,00.html?trackNL-453ad58
    0643asrcEM_NLT_1199477uid2151015
  • Does ERP Matter http//www.infoworld.com/archives
    /emailPrint.jsp?RprintThisA/article/07/04/09/HN
    erpmatter_1.html
  • The Building Blocks of a Simpler Future are in
    Place http//www.accenture.com/Global/Services/By_
    Subject/Service_oriented_Architecture/R_and_I/Buil
    dingBlocksPlace.htm
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