government financial management system of tomorrow
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Top ten trends affecting government financial management systemsTRANSCRIPT
New New Technologies Technologies for Public for Public Financial Financial ManagementManagement
New New Technologies Technologies for Public for Public Financial Financial ManagementManagementMay 2007May 2007ICGFMICGFMMay 2007May 2007ICGFMICGFM
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 [email protected]
governmentIntegrated Financial Information Management
Systems (IFMIS)of tomorrow
How computer technology trends today are defining
Agenda
• Market and technology forces affecting Public Financial Management (PFM)
• Technology and PFM reform
• 10 key technology and market trends
• Conclusions
ICT makes a country’s 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
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
Technology in Context
Technology
IFMIS
Public Financial Management
Modernization and Reform
Government Objectives
Technology Vendor Viewpoint
Technology
IFMIS
Public Financial Management
Modernization and Reform
Government Objectives
Reality• Reform comes first• An IFMIS must support on-going PFM
modernization
• Technology enables the IFMIS
• Technology is not government modernization
Government IFMIS of tomorrow…
The four computer and market technology forces of today that are defining
1. Consolidation
2. Disintegration
3. Innovation
4. Integration
10 Technology TrendsConsolidation
1. Enterprise software consolidation2. Open source software3. Commoditization of the software stack
Disintegration4. Decentralization5. Business process management6. Software as a service (SaaS) and shared services
Innovation7. The web as a platform - Web 2.08. Wireless government
Integration9. Corporate Performance Management (& Government
Performance Management)10. Service Oriented Architectures (SOA)
with government and development trends
Not all technology and market trends are consistent
ERP systems have become bloated ‘understructures’ that have become
too expensive to maintain.Bruce Richardson, AMR Research August 2006
1. Market consolidation
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
Enterprise Software Market
ERP CRMSCM
BPM
CPM
CM
Microsoft
SAP
Infor
Oracle
Sage
LawsonEpicor
Chinadotcom
SiebelRetek
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
SiebelRetek
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
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
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?
The growth of free, open-source softwarepresents 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
2. Open Source Software
Open Source in GovernmentAfrica 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
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
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
Middleware – the layer of software used to connect two applications
or to connect an application to the network – is approaching acommodity state.
Patrick Carey and Bernard Gleason,
Vision 2010 – Future of Business Software Applications August 2005
3. Commoditization of the software stack
Software Stack
Business ApplicationsMiddlewareDatabase
Operating SystemServer
NetworkStorage
Managem
en
t
Drivers for Commoditization1. Standards =
– Ability to interchange middleware– Lower cost from vendors
2. 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
Current SituationAccelerated 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
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
4. De-centralization,
DevolutionDelegation
De-concentrationDivestment
Budgets
Ministry 1
Municipal Gov’t
Municipal Gov’t
VirementsInformation
VirementsInformation
VirementsInformation
Municipal Gov’t
Provincial Gov’t
National Government
National Government
Provincial Gov’t
Ministry 1
Municipal Gov’t
Municipal Gov’t
Municipal Gov’t
Reporting
Outturn ExpenditureInformation
Outturn ExpenditureInformation
Outturn ExpenditureInformation
Drivers for De-centralizationAdministrative Decentralization• Improve government efficiency and
effectiveness = improve outcomes• Large % of government budgets deployed
locally• Local and cultural autonomyFiscal Decentralization• Improves participation = more stable
countries• Reduce waste and corruption
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
Success with BPM also requires a culture of real-time management ..
and may need a separate process center of excellence.
Gartner Group February 2006
5. Business Process Management
What is Business Process Management (BPM)?
Workflow
Integration
Design and Development
Business Activity
MonitoringOrchestration
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
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
SaaS benefits are crystallizing, but chaos still abounds
Robert Bois,Aberdeen Group June 2006
6. Software as a Service (SaaS)
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
Drivers for SaaS• High cost to maintain complex software and
infrastructure– Licenses– Upgrades– Networks– Databases
• SaaS supports fast growth• Attractive for smaller organizations
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
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
7. The Web as a Platform - Web 2.0
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
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 O’Reilly, O’Reilly Media
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
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”
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
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
8. Wireless Government
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
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
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
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
9. Corporate Performance and Government Performance Management
What is Corporate Performance Management?
Reporting
OLAPData Mining Scorecarding
Budget Planning
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
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
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…
Performance and Budget
BudgetExecution
BudgetPlanning
GovernmentObjectives
ScenarioPlanning
BudgetForecasting
PerformanceMonitoring
BudgetReview
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%
Current Situation
• Mixed– Capacity issues– Improvements in MTEF– Remains output focused– Better results in projects yet…
• Commercial performance management software not budget centric
SOA will make today’s ERP systems look like yesterday’s mainframe apps.
Bruce Richardson, AMR Research August 2006
10. Service-Oriented Architecture (SOA)
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
Web Services
registerdiscover
bind
Current Situation• Proven practical in Web 2.0• Business software:
– Early & emerging – Rapid momentum
• Revolutionizing enterprise software– Therefore…
• Technical issues being solved
Conclusions
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
Modular
and Modular
modular, de-centralized & integratednon-monolithic & multiple vendors
wired & wirelesscommodity & innovative
The Government IFMIS of tomorrow will be:
coreIFMIS decentralize
extend
measure
Citizen Centric
citizen
more choices,better choices,proven choices,
sustainable choices.
Governments will have:
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
Recommended Links• The Future of Software:
http://www.forrester.com/Teleconference/Previous/Overview/1,5158,1411,00.html
• The Future of Government Communications Networks: http://www.dts.ca.gov/news_events/ppt/Gartner_JoeSkorupa.ppt
• Innovation Does Matter: http://fr.sun.com/sunnews/events/2006/may/symposium/pdf/paeinier_forrester.pdf
• Vision 2010: http://www-03.ibm.com/industries/education/doc/content/bin/IBM_BCS_White_Paper_Vision_2010_Business_Applications.pdf
• Information and communications for development 2006 : global trends and policies: http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2006/04/20/000012009_20060420105118/Rendered/PDF/359240PAPER0In101OFFICIAL0USE0ONLY1.pdf
• Web 2.0 in Business: http://www.mckinseyquarterly.com/article_abstract.aspx?ar=1913&l2=13&l3=11&srid=9&gp=1
Recommended Links• Ten Trends to Watch in 2006:
http://www.mckinseyquarterly.com/article_page.aspx?ar=1734&L2=21&L3=114&srid=190&gp=0
• 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?track=NL-453&ad=580643&asrc=EM_NLT_1199477&uid=2151015
• Does ERP Matter: http://www.infoworld.com/archives/emailPrint.jsp?R=printThis&A=/article/07/04/09/HNerpmatter_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/BuildingBlocksPlace.htm