New
Technologies
for Public
Financial
Management
May 2007
ICGFM
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 inperson, e-mail me at
[email protected]
How computer technology trends
today are defining
government
Integrated Financial Information Management
Systems (IFMIS)
of tomorrow
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
Government Objectives
Modernization and Reform
Public Financial Management
IFMIS
Technology
Government Objectives
Modernization and Reform
Public Financial Management
IFMIS
Technology
Technology Vendor
Viewpoint
Reality
• Reform comes first
• An IFMIS must support on-going PFM
modernization
• Technology enables the IFMIS
• Technology is not government
modernization
The four computer and market
technology forces of today that are
defining
Government IFMIS of tomorrow…
1. Consolidation
2. Disintegration
3. Innovation
4. Integration
10 Technology Trends
Consolidation
1. Enterprise software consolidation
2. Open source software
3. Commoditization of the software stack
Disintegration
4. Decentralization
5. Business process management
6. Software as a service (SaaS) and shared services
Innovation
7. The web as a platform - Web 2.0
8. Wireless government
Integration
9. Corporate Performance Management (&
Government Performance Management)
10. Service Oriented Architectures (SOA)
Not all technology and market
trends are consistent
with government and development trends
1. Market consolidation
ERP systems have become bloated
‘understructures’ that have become
too expensive to maintain.
Bruce Richardson,
AMR
Research August 2006
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
SCM
ERP
BPM
CRM
CM
CPM
Siebel
Retek
PeopleSoft
JDEdwards
Vantive
Triversity
FRX
Microsoft
SAP
SSAGlobal
Baan
Marcam
E-piphany
Ironside
Infor
Mapics
Lilly
Geac
JDA
Extensity
Comshare
Datastream
GreatPlains
Navision
Damgaard
Axapta
Chinadotcom
Soloman
Scala
Intentia
Oracle
Sage
Epicor
Lawson
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?
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…
UNU International
Institute for Software
Technology March 2006
Dr. Mike Reed,
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
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
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
Management
Software Stack
Business Applications
Middleware
Database
Operating System
Server
Network
Storage
Drivers for Commoditization
1. 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 lockedin
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
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
United Nations Global
Forum for Reinventing Government
Shabir Cheema
November 2006
Devolution
Delegation
De-concentration
Divestment
Budgets
National
Government
Ministry 1
Provincial
Gov’t
Virements
Information
Virements
Information
Virements
Information
Municipal
Gov’t
Municipal
Gov’t
Municipal
Gov’t
Reporting
National
Government
Ministry 1
Provincial
Gov’t
Outturn Expenditure
Information
Outturn Expenditure
Information
Outturn Expenditure
Information
Municipal
Gov’t
Municipal
Gov’t
Municipal
Gov’t
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
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
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
What is Business Process
Management (BPM)?
Workflow
Design and
Development
Orchestration
Integration
Business
Activity
Monitoring
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
6. Software as a Service (SaaS)
SaaS benefits are crystallizing,
but chaos still abounds
Robert Bois,
June 2006
Aberdeen Group
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 purposebuilt 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
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
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
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
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
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
What is Corporate Performance
Management?
Reporting
Data Mining
Scorecarding
Budget
Planning
OLAP
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
Scenario
Planning
Government
Objectives
Budget
Planning
Budget
Execution
Budget
Review
Performance
Monitoring
Budget
Forecasting
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
10. Service-Oriented Architecture (SOA)
SOA will make today’s ERP systems
look like yesterday’s mainframe apps.
Bruce Richardson,
AMR
Research August 2006
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
bind
register
discover
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
The Government IFMIS of
tomorrow will be:
modular, de-centralized & integrated
non-monolithic & multiple vendors
wired & wireless
commodity & innovative
extend
core
IFMIS
decentralize
measure
Citizen Centric
citizen
Governments will have:
more choices,
better choices,
proven choices,
sustainable choices.
[email protected]
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/1,51
58,1411,00.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/paein
ier_forrester.pdf
Vision 2010: http://www03.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://wwwwds.worldbank.org/external/default/WDSContentServer/WDSP/IB
/2006/04/20/000012009_20060420105118/Rendered/PDF/35924
0PAPER0In101OFFICIAL0USE0ONLY1.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=1
734&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,si
d19_gci1230304,00.html?track=NL453&ad=580643&asrc=EM_NLT_1199477&uid=2151015
• Does ERP Matter:
http://www.infoworld.com/archives/emailPrint.jsp?R=printT
his&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/Ser
vice_oriented_Architecture/R_and_I/BuildingBlocksPlace.h
tm
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