Implementing Financial Management
Information System Projects:
The World Bank Experience
Preliminary Results
Bill Dorotinsky
PRMPS
The World Bank
Budget Execution Course
November 5, 2003
Outline
• Definitions
• Review Scope
• Reform project nature and design
•
•
•
•
Reform Project Emphasis
Loan Objectives
Project Components
Summary Project Characteristics
• Success?
– Risks, successes, and failures
– General lessons
• Preconditions?
• Open Questions
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Definitions
What is an FMIS?
• Financial management system:
– Information system that tracks financial events and
summarizes information
– supports adequate management reporting, policy
decisions, fiduciary responsibilities, and preparation of
auditable financial statements
– Should be designed with good relationships between
software, hardware, personnel, procedures, controls and
data
• Generally, FMIS refers to automating financial
operations
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Definitions
What are core and non-core
FMIS systems?
• Core systems
– General ledger, accounts payable and
receivable. May include financial reporting,
fund management and cost management.
• Non-core systems
– HR/payroll, budget formulation, revenue (tax &
customs), procurement, inventory, property
management, performance, management
information
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Definitions
What is “integrated” FMIS?
• Can refer to core and non-core integration
• But, generally, four characteristics*
– Standard data classification for recording
events
– Common processes for similar transactions
– Internal controls over data entry, transaction
processing, and reporting applied consistently
– Design that eliminates unnecessary duplication
of transaction entry
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*from Core Financial System Requirement. JFMIP-SR-02-01. Joint Financial Management
Improvement Program. Washington, D.C., November 2001.
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Definitions
What constitutes a good system?
• Ability to*
– Collect accurate, timely, complete, reliable, consistent
information
– Provide adequate management reporting
– Support government-wide and agency policy decisions
– Support budget preparation and execution
– Facilitate financial statement preparation
– Provide information for central agency budgeting,
analysis and government-wide reporting
– Provide complete audit trail to facilitate audits
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*from Core Financial System Requirement. JFMIP-SR-02-01. Joint Financial Management
Improvement Program. Washington, D.C., November 2001.
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Bank FMIS Project Review Scope
The review covers 34 projects in 27 countries across 6 regions, involving
$1 billion over 17 years.
AFR
EAP
ECA
LCR
MNA
SAR
Total
Number of Country
5
2
7
10
2
1
27
Number of Project
6
3
7
15
2
1
34
Country List
Burkina Faso
Indonesia (2)
Hungary
Argentina
Algeria
Pakistan
Malawi
Mongolia
Ukraine
Bolivia (2)
Yemen
Ghana
Kazakhstan
Brazil (2)
Zambia
Azerbaijan
Chile
Uganda (2)
Russia
Colombia
Albania
Ecuador (3)
Turkey
Guatemala (2)
Honduras
Nicaragua
Venezuela
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Project Emphasis
Most Bank projects are not FMIS-only, but embedded in broader
financial management or public sector reforms.
# Of Project
%
IFMS only project
5
14.7%
FM project with IFMS component
13
38.2%
Broad public sector management
16
47.1%
34
100.0%
Project Type
Total
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FMIS Project Components
Many of the projects paid attention to training and ‘soft systems’ surrounding
the technology.
Components within FMIS
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%
1 Implementing/modernizing FMS
15.5%
2 Budgeting system reform
10.8%
3 Treasury Operation
8.8%
4 Training (FM)
7.7%
5 Accounting/financial reporting reform
7.2%
6 Auditing reform
7.2%
7 Institutional capacity of MoF/MoE/MoP
6.7%
8 Training (IT)
5.2%
9 Public Debt management
4.6%
10 Information and Data Management
4.6%
9
Project Characteristics
• An FMIS project, on average,
– took 7 years to be complete
• Ranging from 9.1 years for AFR to 5.8 years for
LCR
– average Bank-financed cost was $12.3 million*
– component changes in 75 % of projects
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* Excluding $600 million for Russia
10
Success?
• If success is defined as…
– delivered as-specified ex ante
• 43 % delivered as specified
– delivered on-budget
• 50 % delivered on budget
– delivered on-time
• 21 % delivered on-time
• … then, only 21 % were successful
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Success?
• But, these indicators only looks at project, not
impact on financial management, operations
– Improvements to reporting? Staffing changes?
• Generally,
• no or weak performance indicators in projects
• no baseline
• broader impact assessment difficult.
• However, in self-assessed sustainability
• 25 % unsustainable
• 6 % highly likely to be sustainable
• 69 % likely sustainable
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Project Risks
Project Risk Assessment
1
2
1
2
3
4
5
6
7
8
9
10
11
Official Project Risk (available only for each project)
Lack of institutional capacity
(including H.R)
Lack of (weak) government commitment
Too many project components
(coordination problem)
Technical complexity of information system
Vested-interests of various stakeholders
Lack of (low) utilization
of newly developed system
Unclear responsibility of project components
Lack of communication infrastructure
Failure to provide sufficient counterpart funding
Change of government priority
Coordination risk among central and local governments
Lack of (weak) legal framework
Others
The World Bank
All Region
23.6%
19.1%
11.2%
9.0%
9.0%
7.9%
2.2%
2.2%
2.2%
2.2%
2.2%
2.2%
6.7%
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Success Factors
Lessons:
Success Factors
Frequency
1
Flexible project management
21.43%
2
Project coordination
14.29%
•Full-time project coordinator (36%)
•Champion at political level (14 %)
Link political environment
3
and leadership
External environment
•Training (14 %)
4
(uncontrollable)
Capacity building (training)
5
6
7
The World Bank
Plan
14.29%
14.29%
14.29%
Close Bank's supervision
7.14%
Others
14.29%
Total
100.0%
14
Failure Factors
Lessons:
•Full-time project coordinator (23%)
•Commitment (23%)
•Project design (20%)
•Resistance (10%)
•HR capacity (7%)
Commitment: champion
HR/training: IT AND FM capacity
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Failure Factors
Frequency
1
Lack of commitment
23.33%
2
Lack/ineffective project
coordination
23.33%
Loose project design and
planning
4 Institutional/organizational
resistance
5 Poor human resource
Capacity
6 Inappropriate technology
7 External environment
(uncontrollable)
8 Complex project design
9 Lack of proper skills in
project team
10 Others
10.00%
3
Total
10.00%
6.67%
6.67%
6.67%
3.33%
3.33%
6.67%
100.00%
15
General Lessons
1
Political commitment/ownership from borrowing country
15.71%
2
Right skills in project team
10.00%
3
Proper institutional reform/change
10.00%
4
More narrowed project focus
8.57%
5
Close project supervision by the Bank
7.14%
7
Coalition building with key players
5.71%
8
5.71%
10
Flexible project management
Comprehensive diagnostic study and clear
implementation plan
Coordination among key agencies/other projects
11
Sustainable human resource development
5.71%
12
Business procedure reform/changes before IT
4.29%
13
Careful project sequencing within/between projects
4.29%
14
Proper choice of technology
2.86%
15
Up-front coordination among donors
1.43%
16
Early delivery of tangible results
1.43%
17
Right choice of technology
1.43%
18
Others
4.29%
9
The World Bank
5.71%
5.71%
16
Preconditions?
HR Capacity, ICT Readiness, & Project Success
Burkina Faso L
0.9
Argentina S
0.8
Malawi L
0.7
Hungary S
0.6
Uganda L
0.5
0.4
0.3
Chile S
0.2
Bolivia L
0.1
0
Columbia S
Indonesia L
Ecuador (2) S
Brazil L
Honduras S
Guatemala (1) S
Nicaragua S
Human Development Index*
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E-gov Readiness*
(Human Development Index: UNDP Human Development 2001 Index,
E-government Readiness: UNPAN Global E-Government Index)
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Open questions
• Is it appropriate to use FMIS projects to
drive other reforms? Cost-effective?
– Is FMIS an effective entry-point?
• What other preconditions for considering an
FMIS investment should exist?
• What performance measures should be
included to assess effectiveness?
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Supplemental Slides
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Guidance for Risk Reduction
• Procurement in self-contained modules, each of which add
value, even if nothing else was purchased
• Stay with known technology, well-proven approaches and
standard software
– where new technology is unavoidable, thorough pilot testing
is warranted.
• End-user involvement up-front in system design, and
developing communication strategies
• Build into the process independent, expert review at key stages
in project to assess status
• Single official should be responsible for project execution,
preferably someone senior enough to assure compliance
• Clear lines of responsibility and accountability in project
management
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Donor Coordination Aspects
 Overlapping initiatives in same business area at different levels of
government
Ensure that the processes and systems are compatible, support the same goal,
and are correctly sequenced. Requires fine-tuning as the project progresses, and
organizational goals shift
 Options:
 Multi-donor trust fund which can be used to support diagnostic work,
capacity building, and allow for dialogue
 Each Donor covers a particular component, hardware, software,
communications, change management, training, etc
 Each Donor covers a level of government, or group of states/regions or
districts in the same development stage
But: greater complexity in financing and administration, greater likelihood of
failure
The World Bank
Source: Adapted from Presentation, Deepak Bhatia,
IFMIS Implementation: Aspects for Consideration
21
IT architecture
• Develop information architecture to rationalize information needs and
flows
• Develop data architecture to enable sharing, access, management,
security and integrity of data
• Develop system architecture to computerize and support business
processes
• Develop technology architecture to support computerized processes,
information flows, and data management
• Develop networking architecture to enable information flows across
space and institutional boundaries
• Develop security architecture to ensure protection, integrity and
confidentiality of data
• Put in place management structure and systems to manage operation of
all the above architectures
The World Bank
Source: Presentation, Deepak Bhatia, IFMIS
Implementation: Aspects for Consideration
22
Financial Records Management
Creation and management of authentic, reliable, and secure
financial records are critical actions (paper/electronic)
Meet the financial management needs of the government,
including:
Development and implementation of economic and fiscal policy to:
Provide the audit trail
and support the audit
function
Enable government
meet its legal
obligations for
financial
management
Protect the integrity
of key records and
the information they
contain
Ensure the timely
disposal of obsolete
records
Without effective and efficient records management in place,
the desired impact of financial and governance reforms is
often minimal at best
Source: IRMT discussion on evidence-based governance, as inclued in
Presentation by Deepak Bhatia, IFMIS Implementation: Aspects for Consideration
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Critical Issues for Financial
Records Management
• The need to recognize the importance of protecting the
authenticity and integrity of financial records
• The need for effective legislative and organizational
frameworks for financial management and financial records
care
• The importance of developing standards for financial records
management and financial records care
• The central role of education and training for successful
records care
• The need to raise awareness across government of the value
of all records, including financial records
Source: IRMT discussion on evidence-based governance, as inclued in
Presentation by Deepak Bhatia, IFMIS Implementation: Aspects for Consideration
The World Bank
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Change Management Objectives
• Redesign budget, revenue and expenditure processes
•
Redefine organizational, job and skill requirements
•
Minimize resource requirements to implement IFMS
•
Institutionalize service, efficiency mindset
• Gain staff commitment and feedback on redesigned processes.
•
Help line ministries implement process improvements
• Create the foundation for a Government-wide communications
strategy
The World Bank
Source: Presentation, Deepak Bhatia, IFMIS
Implementation: Aspects for Consideration
25
Eight Key Steps To a Successful
Transformation
1.
2.
3.
4.
5.
6.
7.
Establish a sense of urgency
Form a powerful guiding coalition
Create a vision
Communicate the vision
Empower others to act on the vision
Plan for and create short-term wins
Consolidate improvements and produce still more
change
8. Institutionalize new approaches
Adopted from Harvard Business Review March-April 1995
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What Is a Business case?
A business case outlines the overall business benefits that
justify the initial and commitment of time, resources and
funding for technology projects
Financial
Technical
Costs, benefits and impact
on business performance
measures
Benefits to IT infrastructure
and support for technology
strategy
ROI
Strategic
Operational
New capabilities and
improved competitive
position
Process improvements
The World Bank
Source: SAP
(Tangible and Intangible)
27
Business Case for IT Initiatives
1.
2.
3.
4.
5.
What problem exists that
must be solved?
What people/stakeholders
(how many constituents)
does this problem affect?
What solutions are
available to solve this
problem?
What are the benefits of
each solution?
What is the relative cost of
each solution?
Source: Gartner
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6. What stakeholders are
affected by the intended
solution?
7. Are stakeholders willing to
pay for this solution or must
government fund it?
8. Can other fund sources be
used?
9. How can these stakeholders
affect my political future?
10. If we pay to solve this
problem, what other
problem goes unsolved?
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ICT Procurement Aspects
• Find adequate and sustainable solution for project
management and implementation (appropriate
blend of own staffing, use of TA, and purchase of
technical capacity)
• Organise procurement in manageable pieces
• Single responsibility (turnkey) contracts
• Separate application software development
• Phasing implementation
• Splitting procurement and managing several suppliers
The World Bank
Source: Presentation, Deepak Bhatia, IFMIS
Implementation: Aspects for Consideration
29
Typical Mistakes in ICT
Procurement
• Reliance on inadequate IT expertise
• Mindset fixed on obtaining specific brands
• Eager to receive hardware, with little
regard to use it productively any time soon
• Underestimation of effort and complexity in
preparing bidding documents
• Overestimation of internal technical
capacity
The World Bank
Source: Presentation, Deepak Bhatia, IFMIS
Implementation: Aspects for Consideration
30
Useful References
Margaret Bartel, Integrated Financial Management Systems: A Guide to Implementation Based on The
Experience in Latin America, (Washington, DC, Institute For Democratic Strategies, LATPS Occasional
Paper Series, 1996)
Central Computer and Telecommunications Agency, Good Practice in Developing Sustainable
Information Systems: Supporting Guides, (London: Department for International Development (DFID),
1998)
Christopher Pollitt & Geert Bouckaert, Public Management Reform: A Comparative Analysis, (Oxford,
Oxford University Press, 2000)
Joint Financial Management Improvement Program. Core Financial System Requirement. JFMIP-SR02-01. (JFMIP, Washington, D.C., November 2001)
The Hidden Threat to E-government, Avoiding large government IT failure, OECD Public Management
Policy Brief, PUMA Policy Brief No. 8, (London, March 2001)
United Nations Division for Public Economics and Public Administration, Benchmarking Egovernment: A Global Perspective, 2002
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