Transcript Document
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 in person, 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
Technology Vendor Viewpoint
Technology IFMIS t emen s ctive anag d Reform nt Obje rnization an al M anci Fin Governme Mode Public
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 CPM CM CRM
Siebel Retek PeopleSoft JDEdwards Vantive Triversity SSAGlobal Baan Marcam E-piphany Ironside Mapics Lilly Geac JDA Extensity Comshare Datastream Epicor Microsoft Oracle Chinadotcom Lawson GreatPlains Sage Navision Damgaard Axapta Soloman 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…
Dr. Mike Reed, UNU International Institute for Software Technology March 2006
Open Source in Government
Africa Asia and the Pacific Europe Latin America North America (USA) South Africa 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
European Union (EU)
- Belgium, Bulgaria, Denmark, Estonia, France, Germany, Portugal, Spain, UK
Non-EU countries
- Ukraine
Cities
- City of Munich
Brazil, Peru, Argentina, Columbia, Mexico, Venezuela 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 -
compliance
Future proofing
cost for license
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
Software Stack
Business Applications Middleware Database Operating System Server Network Storage
Drivers for Commoditization
1.
2.
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 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
Shabir Cheema United Nations Global Forum for Reinventing Government November 2006
Devolution Delegation De-concentration Divestment
Budgets
National Government Provincial Gov’t Ministry 1
Virements Information
Municipal Gov’t
Virements Information
Municipal Gov’t
Virements Information
Municipal Gov’t
Reporting
National Government Provincial Gov’t Ministry 1
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 =
countries more stable
Reduce waste and corruption
Current Situation
• • • •
Conflicts
with computing trend to integration (centralization) Clear trend:
devolution
continent on every Local capacity and sustainability issues Difficulties in extending governance
existing solutions with
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 Business Activity Monitoring Integration
Industry Drivers for BPM
• •
Maximizing efficiency
- workflow and integration enables
greater automation
Difficulties in
adapting
customization ERP after • • 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, Aberdeen Group June 2006
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
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
BitTorrent, Wikipedia : blogs, wikis, AJAX, RSS, REST, SOAP, VOIP, podcasting, Skype,
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 OLAP 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
Scenario Planning Budget Planning Government Objectives Budget Execution Budget Forecasting Budget Review Performance Monitoring
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
register bind 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
core IFMIS decentralize extend 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://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/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=NL 453&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