Global Trends in the Design and Implementation of Financial Management Information Systems

ICGFM Winter Conference

Global Trends in the Design and Implementation of Financial Management Information Systems

Cem Dener

December 5-7, 2011Washington, DC

Contents• FMIS terminology

• FMIS Study: 25 Years of WB Experience on What Works and

What Doesn’t

Key findings of the study, and FMIS prerequisites

Suggested FMIS design & implementation methodology

• Current status of Treasury/FMIS projects

• Trends in FMIS projects Transition to integrated FMIS solutions

Integration of budget and treasury systems

Expansion of FMIS capabilities for spending units (web

portals)

Improving transparency: disclosure of information on the

web

• FMIS Community of Practice

December 2011 2Trends in Design and Implementation of FMIS


B

O

O

T

What is FMIS?

Asset / Inventory Mgmt

Procurement/Purchasing

Mgmt of Budget Authorizations

Commitment of Funds

Payments and Receipts Mgmt

CashManagement

Debt and Aid Management

Fiscal Reports & Budget Review

Audit and Evaluation

Budget Preparation

Policy Development and Review

Payroll CalcsHR Mgmt

Web PortalPublish/Monitor

Public Investments

Tax and Customs

FMIS: F = B + T (+ O)

Core Treasury System(Budget

Execution)

General Ledger

Accounting Daily Operation

s





What Doesn’t







portals)


web



FMIS Study

Financial ManagementInformation Systems

25 Years of World Bank Experience on

What Works and What Doesn’t

April 2011

Objective

In conjunction with the development of a

new World Bank FMIS database in 2010,

this World Bank Study seeks to identify

trends in the design and implementation

of FMIS solutions in World Bank funded

projects (1984-2010), and share

observed/reported achievements,

challenges and lessons learned with

interested parties.

FMIS Database (2011)


WB Funded Treasury/FMIS Projects(1984-2011)

FMIS Database


59 Completed T/F as of Nov 2011

32 ActiveT/F projects

Avg prj impl 6.8 years

53 out of 59 Completed prj (90 %) resulted in operational T/F solutions

Key Findings of the FMIS Study The political commitment and ownership of the borrower

matter.

Success depends on adequate preparation.

FMIS priorities and sequencing should be addressed carefully.

A focus on developing institutional capacity, early in the process, is crucial.

FMIS implementation is complex enough to deserve a dedicated project.

The type of FMIS solution influences implementation.

The presence of an ICT expert in the World Bank Team is important.

The total number and complexity of procurement packages influence project duration.

FMIS projects disburse late due to large ICT contracts, completed at later stages.

ICT related risks need to be clearly identified during project preparation.

Key Findings


FMIS Prerequisites

Prerequisites for FMIS ICT SolutionsFunctional aspects

• Improvement of budget classification (key segments for funding source, organizational, functional, and economic classifications, program / project / activity codes)

• Development of a unified chart of accounts, integrated with budget (economic) classification

• Improvement of treasury single account operations (moving towards centralized TSA)

• Development of commitment control and monitoring mechanisms

• Establishment of cash management functions

Technical aspects

• Establishment of a secure countrywide communication network

• Preparation of system/data centers

Human resources

• Presence of a core team of ICT specialists within PFM organizations


FMIS Development Methodology Years > 0 1 2 3 4 5 6 7 8 9 10

• Advisory support for PFM reforms

• Assess existing ICT skills & resources

1. Identify the PFM reform needs of the government (What? Why?)

• Assess PFM capacity & practices

• Assistance in PFM capacity building

• Technical Specifications [ ICB docs ]

• Develop ICT/e-Gov Strategy

• System Design

2. Develop customized solutions (How? Where? When?)

• Develop PFM Reform Strategy

• Conceptual Design

3. Strengthen capacity and implement project (Who?)

• Project Mgmt Group (PMG) and PIU

• Coordination with other donors

Preparation

• Assist in technical capacity building• Coordinate w/ other e-Gov initiatives

• Procurement of ICT solutions [ ICB ]• FMIS implementation

• Monitoring & Evaluation

• Capacity building & change mgmt

Warranty

• Establish a countrywide network

Implementation

FMIS take off

Approval

FlyingSolo

Support &Maintenanc

ePost

Warranty

FMIS design and implementation may

take at least 6-7 years, despite advances in

technology

Images: jscreationzs / FreeDigitalPhotos.net

Suggested Methodology






What Doesn’t







portals)


web


Timeline of FMIS Projects - I


Project Status: C=Closed; A=Active; P=Pipeline Total Duration in years Treasury/FMIS Status: 1= Operational; 2= Oper. (Pilot); 3= In progress; 4=Pipeline 0= Not implemented

Timeline of FMIS Projects - II



Timeline of FMIS Projects - III



FMIS Projects (1984-2010)


Treasury/FMIS Application Software



Duration

Success depends on adequate preparation…



Total Cost of ICT Solutions in Treasury/FMIS Projects



FMIS ICT cost per user for COTS & LDSWAn estimation of the cost of FMIS ICT

solutions needs to be performed carefully during project preparation based on: a detailed assessment of key

‘design parameters’ (users, nodes, server performance benchmarks, network connectivity, etc.) and

basic ‘system requirements’ (FMIS application software functionality, workload estimates, data storage and transaction processing needs, etc.).

In the absence of such design parameters and system requirements, it is not possible to have a realistic cost estimate during project preparation. This has lead to the acceptance of relatively large margins of error for FMIS ICT solutions, resulting in ICT costs much higher than market rates due to this initial uncertainty.

Total Cost of ICT Solutions in Treasury/FMIS Projects



Cost of Treasury/FMIS Projects

Regional Variations


FMIS Projects (1984-2010) - Observations Appears to be four distinct regional T/F design & impl

approaches:

1. LAC : Start centrally, expand gradually; first T, then F; mainly LDSW

2. ECA : Countrywide; first T, then F; hybrid COTS+LDSW; ICT

specialist in TTs

3. AFR, MNA : Mainly for central gov; mostly F; based on COTS

4. EAP, SAR : Countrywide; mostly T; based on COTS

89% of completed T/F operational (29 full + 19 pilot impl)

LCR is the most experienced region in FMIS design &

implementation





What Doesn’t







portals)


web


Transition to Integrated FMIS Trends:

• PFM automation process starts with a core Treasury system, in general

• After successful operation of a countrywide Treasury system for several years, the next natural step is the integration of Budget and Treasury systems

• B + T integration includes necessary interfaces for data exchange with external information systems of the line ministries, central bank (and private banks), revenue collection agencies, social security agencies, etc.

• Other (O) PFM modules/systems are developed and/or interfaced with these core systems to create an integrated FMIS solution.

Possible options for the development of integrated FMIS:

1. Gradual expansion of FMIS modules around a core Treasury System

2. Integration of existing in-house developed PFM information systems

3. Introduction of full scale integrated FMIS

B + T (+ O) = Integrated FMIS


T TransactionsP PlansC ContractsA AccountsR ReportsI InterfaceTSA Treasury Single Acct

Spending Units

Local finance directorates, public authorities,

municipalities, public institutions

Integrated FMIS

Ministry of Finance

Business Continuity Ctr + Data Warehouse

[ MoF Data Ctr ]

MoF IT Dept

I

I

IState Property

Fund

Public Procurement

Internet & Intranet

FMISWeb Portal

External Users

Reports

Reports

T, P

T, C

T,P,C,A

Main Civil Service Department

Internal Audit I P, R

Payroll Calcs.

Asset/Invent Mgmt

Ministries & Departments P, R

Audit Reports

Reports

Debt Mgmt

Budget Formul.

FMISMain System Center[ Treasury Data Ctr ]

I Customs ServiceT, P

I Tax AdministrationT, P

Core Treasury System

• Paym./receipts• General Ledger• Purch./Commit.• Cash/Fund Mgmt• Fin. Reports

Macro Econ Forec

FMIS DB@ MSC

FMIS DB@ BCC

Statistics InstituteI P, RHR Mgmt/Pers DB

Central Bank TSA

Regional Treasury Dept

District Treasury Div

I

Other Gov Agencies/Depts

T

Financial Reports


An Integrated FMIS Model

Integration of Budget and Treasury Systems

Why? Budget (preparation) and Treasury (execution) systems are

integrated first, to:

• ensure effective daily management of budget/treasury operations

• improve budget performance monitoring and cash/commitment management

• produce reliable accounting records, and timely, consistent reports

• improve transparency/accountability (web portals for publishing results)

How? Technical and operational challenges of B+T integration can be

reduced by:

• properly integrating related application software solutions and databases

• operating a shared data center and network (servers, network, services etc.)

• harmonizing budget classification/chart of accounts for all budget levels

• ensuring adequate secure access to all budget institutions (central and local levels) for planning, execution, monitoring and reporting

B + T = Core FMIS


Integrated FMIS = Collaboration + Communication

Whenever FMIS and other PFM information systems share the same central database to record and report all daily financial transactions, offering reliable consolidated results for decision support, performance monitoring and web publishing, they can be referred to as an ‘integrated’ FMIS (or IFMIS).

Integrated FMIS should be accessible to all stakeholders for effective collaboration, coordination and communication.

Integrated FMIS


MoF

Line Ministries (central)

Spending Units (countrywide)

Integrated

FMIS

Support for Spending Unit Operations Spending Units (SUs) usually perform the following PFM

functions, which can be supported through centralized web-based FMIS solutions:

Budget preparation Budget execution Accounting and reporting Asset / inventory management HRMIS / payroll Procurement Performance monitoring Other sector specific operations

There are two common ways to support SU operations through a centralized web-based FMIS solution: Web portal access (secure connection via Internet or

intranet) Direct access (through secure intranet) <<< costly and

more difficult

Web portals can also be used to facilitate the communication between the SUs and the line ministries/agencies they are subordinated.

Expansion of FMIS


Modes of SU operations:• Manual• Separate software solutions• Ministry specific applications• Connection to centralized

FMIS(usually through a web portal)

User TerminalsSystem

Center

Database Server

Application Servers

Users

Web Server

FMISmodules

We

b P

ort

al

Customized COTS

LDSW

Internal / External

FMIS

Locally Developed Software modules

COTS DB

PFM Organizations(MoF Units, Treasury

Offices,Line Ministries)

Spending Units, Local Finance Directorates,

Local Public Authorities,

Municipalities, etc.

Internal Access

External Access

LDSW DB

LDSW : Locally Developed Software

COTS : Commercial-off-the-Shelf SW

VPN

Internet

1 2 3

Interfaces

Integrated FMIS

DB

Core Treasury System


Web-based FMIS Solution

How to Provide Secure Access to Spending Units?

Web Portal is the most popular choice to provide cost-effective, secure access to Spending Units with adequate internal controls:

overall system controls (financial control, accounting control, audit)

transaction level controls (correct processing, accurate recording, and reliable audit trail)

user access controls (authentication of all users through user ID/password, token/security key, or other means)

Web Portals are usually designed to provide free access to unlimited number of SU users for PFM operations (mostly based on open source content management systems or similar applications).

In general, unlimited number of FMIS users with specific roles and responsibilities can be defined. However, only a specific number of system users will be able to use the web based FMIS modules system simultaneously (concurrently). Total number of concurrent users can be increased by expanding the capacity of central servers and network connections.

Expansion of FMIS


Using ICT Effectively in FMIS ProjectsSome of the instruments that can be used in FMIS projects to improve the reliability, cost effectiveness and accountability of information systems include:

Using Electronic Payment Systems (EPS) for all government payments

Benefiting from digital / electronic signature for all financial transactions

Electronic records management

Publishing the budget execution results and performance monthly on the web (effective use of web portals)

Focus on the interoperability and reusability of information systems

FMIS development and project management based on industry standards

Using Free/Libre Open Source Software (FLOSS) in PFM applications

FMIS ICT Trends


Disclosure of Information


Publishing Results from Treasury Systems/FMIS

About 75% of the countries (42 out of 53) included in FMIS database, publish budget execution results on the web regularly. 32 out of 42 published results are available in English as well.

Out of 42 published results, 39 web reports are static (presentation of results through files produced from DB).

Only 3 web sites provide dynamic links to the DB for interactive queries for users.

Most of the results are published as consolidated budget plans vs. actuals. Details of expenditures and dynamic monthly updates from FMIS DB are not visible yet.

A new web site presenting the status of information disclosure based on Treasury/FMIS databases will be prepared and updated regularly to share the trends.

Conclusions


Conclusions FMIS is a complex system, which constantly evolve and

expand in parallel to changes in PFM needs and advances in technology. Leadership, collaboration and innovation are important.

It is very important to clarify key ‘design parameters’ and identify ‘which solution fits which problem in what situation’ at early stages of the project/system design.

There is a growing interest in the development of new customizable platforms based on open source software and other innovative solutions to meet core FMIS requirements at a reasonable cost.

Development of common web publishing standards and formats (e.g. open data initiative) is important to improve the accountability and transparency in PFM domain.

The improvement of knowledge sharing and learning among the countries involved in FMIS development is crucial (communities of practice / peer learning platforms in various regions).





What Doesn’t







portals)


web


FMIS CoP Web Site https://eTeam.worldbank.org/FMIS

What is FMIS CoP?


FMIS Community of Practice

Established in Sep 2010, as a platform for exchanging

information, good practices and experiences gained in the

design & implementation of FMIS solutions, mainly with the client

countries, project teams and development partners.

FMIS CoP is also focused on the development and dissemination of

leading edge knowledge products, as well as the creation of a

discussion platform to assist in improving the quality and

performance of ongoing FMIS activities.

FMIS CoP membership is open to all specialists and officials from

interested countries and development partners, who wish to

communicate and collaborate for the improvement of Public Financial

Management (PFM) practices through FMIS solutions.

Knowledge Products


FMIS CoP – Knowledge Products

FMIS Database contains a rich set of operational data and

performance ratings for the benefit of task teams, as well as the

client countries involved in Treasury/FMIS projects (95 projects from

54 countries as of Dec 2011).

FMIS Study (1984-2010) presents the World Bank’s experience

with FMIS to share the achievements and challenges observed, and

provide guidance for improving the performance of future projects.

The findings of this report are primarily based on a comprehensive

database of 55 completed + 32 active Treasury/FMIS projects in 51

countries (as of Aug 2010).

FMIS Data Mapper is available on Google Maps to present the key

FMIS project information through an interactive customized map of

the world.

FMIS CoP Events


FMIS Data Mapper

FMIS Data Mapper on Google Maps


FMIS Data Mapper

www.worldbank.org/publicsector

Thank You

https://eteam.worldbank.org/FMIS

http://www.worldbank.org/publicsector

https://eteam.worldbank.org/FMIS

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Global Trends in the Design and Implementation of Financial Management Information Systems

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