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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

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preface
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@freebalance.com
slide3

How computer technology trends today are defining

government

Integrated Financial Information Management

Systems (IFMIS)

of tomorrow

agenda
Agenda
  • Market and technology forces affecting Public Financial Management (PFM)
  • Technology and PFM reform
  • 10 key technology and market trends
  • Conclusions
slide5

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
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

Technology in Context
technology vendor viewpoint

Technology

Technology Vendor Viewpoint

IFMIS

Public Financial Management

Modernization and Reform

Government Objectives

reality
Reality
  • Reform comes first
  • An IFMIS must support on-goingPFM modernization
  • Technology enables the IFMIS
  • Technology is not government modernization
slide10

The four computer and market technology forces of today that are defining

Government IFMIS of tomorrow…

10 technology trends
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)
slide16

Not all technology and market trends are consistent

with government and development trends

slide17

1. Market consolidation

ERP systems have become bloated

‘understructures’ that have become

too expensive to maintain.

Bruce Richardson, AMR ResearchAugust 2006

what is enterprise software
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
slide20

Siebel

Retek

PeopleSoft

JDEdwards

Vantive

Triversity

SSAGlobal

Baan

Marcam

E-piphany

Ironside

Mapics

Lilly

Geac

JDA

Extensity

Comshare

Datastream

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

Chinadotcom

Microsoft

Lawson

Oracle

Epicor

Sage

Infor

SAP

FRX

GreatPlains

Navision

Damgaard

Axapta

Soloman

Scala

Intentia

Ross

Pivotal

Accpac

Best

Mas 90/200

Peachtree

Timerline

drivers for consolidation
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
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?
slide23

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

drivers for open source
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 situation26
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
slide27

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

software stack
Software Stack

Business Applications

Middleware

Database

Operating System

Server

Network

Storage

Management

drivers for commoditization
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
current situation30
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
slide31

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 GovernmentNovember 2006

slide32

Devolution

Delegation

De-concentration

Divestment

budgets

Ministry 1

Virements

Information

Virements

Information

Virements

Information

Budgets

National Government

Provincial Gov’t

Municipal Gov’t

Municipal Gov’t

Municipal Gov’t

reporting

Outturn Expenditure

Information

Outturn Expenditure

Information

Outturn Expenditure

Information

Reporting

National Government

Ministry 1

Provincial Gov’t

Municipal Gov’t

Municipal Gov’t

Municipal Gov’t

drivers for de centralization
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 situation36
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
slide37

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 GroupFebruary 2006

what is business process management bpm

Workflow

Business Activity Monitoring

Design and Development

Orchestration

Integration

What is Business Process Management (BPM)?
industry drivers for bpm
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
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
slide41

6. Software as a Service (SaaS)

SaaS benefits are crystallizing,

but chaos still abounds

Robert Bois,Aberdeen GroupJune 2006

what is 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
Drivers for SaaS
  • High cost to maintain complex software and infrastructure
    • Licenses
    • Upgrades
    • Networks
    • Databases
  • SaaS supports fast growth
  • Attractive for smaller organizations
current situation44
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
slide46

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
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
slide48

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
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
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 situation54
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
slide56

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 BankApril 2006

what is 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
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 situation59
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
slide60

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 GroupMarch 2004

what is corporate performance management

Data Mining

Reporting

Budget

Planning

OLAP

What is Corporate Performance Management?

Scorecarding

drivers for corporate performance management
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
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…

Government Performance Management
performance and budget

Performance

Monitoring

Government

Objectives

Budget

Forecasting

Budget

Execution

Budget

Planning

Scenario

Planning

Budget

Review

Performance and Budget
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%

Inputs, Outputs, Outcomes
current situation67
Current Situation
  • Mixed
    • Capacity issues
    • Improvements in MTEF
    • Remains output focused
    • Better results in projects yet…
  • Commercial performance management software not budget centric
slide68

10. Service-Oriented Architecture (SOA)

SOA will make today’s ERP systems

look like yesterday’s mainframe apps.

Bruce Richardson, AMR ResearchAugust 2006

soa drivers
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-breedapplications
web services

bind

discover

register

Web Services
current situation71
Current Situation
  • Proven practical in Web 2.0
  • Business software:
    • Early & emerging
    • Rapid momentum
  • Revolutionizing enterprise software
    • Therefore…
  • Technical issues being solved
impact on the ifmis of tomorrow
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
slide76

The Government IFMIS of tomorrow will be:

modular, de-centralized & integrated

non-monolithic & multiple vendors

wired & wireless

commodity & innovative

slide77

decentralize

core

IFMIS

measure

extend

slide79

Governments will have:

more choices,

better choices,

proven choices,

sustainable choices.

conceptual analysis
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
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 links83
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