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Collaborative Budget Formulation: CMS or best-of-breed?


August 8, 2011

Doug Hadden, VP Products

John Moore of the Caribbean Regional Technical Assistance Centre (CARTAC)  has published a paper recommending the use of Content Management Software (CMS) such as Alfresco or Microsoft Sharepoint to manage the budget formulation process and support collaboration. The paper was described on the International Monetary Fund (IMF) blog. It generated some very lengthy discussion – particularly from me.

My contention is that CMS software does not satisfy the core requirements of budget formulation. And, the majority of benefits ascribed to the use of a CMS can be achieved through the use of Commercial Off-the-Shelf (COTS) budget management software such as FreeBalance Performance Budgeting. A CMS, in my view, is an ideal repository for managing document content and documenting processes and should be considered as part of a comprehensive budget management system.

Mr. Moore suggests that “Budget formulation is an example of a complex document development process that can benefit from the innovative use of a CMS.” Yet, Budget management is fundamentally financial in nature.

CMS Benefits

Mr. Moore provides a compelling list of benefits for using a CMS for budget formulation including:

  • IT: avoid the need for IT involvement for rolling out, managing and adapting the system
  • Flexibility: ability to adapt to meet the government workflow and processes
  • Rapid implementation: ability to install quickly and gain benefits from the system rapidly
  • Progressive activation: ability to update functions and processes as capacity improves and governments change
  • Extensibility: ability to use the CMS for additional functions other than budget formulation
  • Familiarity: ability to use standard office software tools in use by the government
  • Cost: lower cost by leveraging open source tools or tools currently in use by the government

First Principles in Budget Formulation

It’s important to map out budget formulation functions. The table below represents a logical view of these functions.



Inputs in the budget formulation process includes:

  • Financial transactions from previous years (and the active fiscal year) and multi-year commitments that roll-over to subsequent years
  • Previous budgets that had been passed and the changes that occurred to the budget during operation such as budget transfers
  • The year 2 and 3 budget estimate from the Medium Term Expenditure Framework (MTEF) that provides the baseline for the working budget
  • Macroeconomic data that predicts government revenue, identifies risks, and creates baseline budget assumptions such as currency exchange rates
  • Documents like budget justification, policy information and reports.


Outputs in the budget formulation process includes:

  • Budget controls are integrated with the Integrated Financial Management Information System (IFMIS) for commitment accounting. This can also include warrants, supplemental budgets, continuing resolutions and other budget control methods
  • Scenario plans that enables the government to quickly adjust budgets should risk factors come to fruition during the fiscal year
  • Documents such as the budget book is created

What is the Purpose of Budget Management?

The budget is the legal embodiment of government policy. The budget is the financial bottom line in governments. It’s very much the critical factor in good public financial management. It’s no surprise that the Public Expenditure and Financial Accountability (PEFA) Performance Measurement Framework highlights the importance of budgets: (underlines are mine).

  1. Credibility of the budget – The budget is realistic and is implemented as intended
  2. Comprehensiveness and transparency – The budget and the fiscal risk oversight are comprehensive, and fiscal and budget information is accessible to the public.
  3. Policy-based budgeting – The budget is prepared with due regard to government policy.
  4. Predictability and control in budget execution – The budget is implemented in an orderly and predictable manner and there  are arrangements for the exercise of control and stewardship in the use of public funds.
  5. Accounting, recording and reporting –  Adequate records and information are produced, maintained and disseminated  to meet decision-making control, management and reporting purposes.
  6. External scrutiny and audit –  Arrangements for scrutiny of public finances and follow up by executive are operating.

My observation is that examining budget formulation is too narrow a topic. The budget management system should operate during the fiscal year to enable budget transfers, adding documents and reports, and running new scenarios.

Logical Budget Formulation Functions

A CMS supports some of the functions needed in budget formulation. Some elements are missing.

  • Financial: Budget management software can support all of the financial functions required. These functions include ability to develop budgets in any combined top-down/bottom-up process. These systems can take previous data and adjust by formula (such as reduce by 5% all revenue categories or increase the cost of oil by 10%). It enables linking budget justification directly with the budget classifications. The budget passed by the legislature, often called the “organic budget law” or “the vote” is automatically integrated with the budget execution/accounting system to ensure proper budget controls. CMS software assumes that the financial calculations have occurred outside the system. Budget controls are managed outside the CMS, introducing the opportunity for errors. CMS software does not support the financial iterative nature of budget management.
  • Performance: Budget management software can link to policy, program and performance classifications in order to show decision-makers how the budget is expected to impact outcomes. This enables effective performance monitoring and evaluation. CMS software can link to performance documents but cannot link to the budget classification. Decision-makers are not able to gain a holistic view of the government performance expectations.
  • Content. Both budget formulation and CMS software can import or link to documents. Budget formulation software can import spreadsheet data directly to the financial budget plan. And, budget formulation software can merge documents with financial information to automatically render documents such as the budget book. Most CMS software does not support document automation. (Web CMS software like Drupal enables the creation of “books” but is somewhat limited in the ability to use all of the formatting from source office documents.)
  • Workflow: Both budget formulation and CMS software can support flexible workflow processes. Budget formulation software supports the budget calendar through approval cycles where budget figures are approved by line ministries, budget office, Ministry of Finance etc. The estimated budget, based on input by users, can be calculated at any time. CMS software is not able to render the budget numbers at any time.
  • Versioning: Both budget formulation and CMS software can support multiple versions and revision control.
  • System and User Management: budget information is highly confidential. (I fundamentally disagree with Mr. Moore’s assertion: “budget systems that enforce data consistency among budget and accounting data are not popular because they lack flexibility” because data consistency and integrity is a prerequisite for budget formulation.) User permissions in the budget formulation system are tied directly to the chart of accounts. For example, a user in a line ministry may only have access to data from that line ministry and specific programs. The CMS software supports user security based on documents. In other words, a user with access to a broader range of financial information could publish a document in the CMS to users who are not supposed to see that information.
  • Database: The database management system is the core to budget formulation and CMS software. Financial information is stored in structured data. Workflow is managed via the database as a “state machine”. Documents are stored in the database as large objects.

Revisiting the CMS Benefits

  • IT: the assertion that CMS software requires less IT intervention than budget formulation systems is not well supported in the paper. CMS software needs to be installed, as do databases, virus protection, firewalls etc. Databases and users need to be managed.
  • Flexibility: budget formulation systems can be just as flexible in managing workflow and processes as CMS software.
  • Rapid implementation: budget formulation software may take more time to implement than CMS because of the need to link with financial transactions
  • Progressive activation: budget formulation software can be progressively activated to support new functions, policies and financial management
  • Extensibility: budget formulation software can extend into comprehensive budget management but cannot, like CMS software, be used for a broad range of needs
  • Familiarity: budget formulation software can support office tools and can operate like office tools such as providing a spreadsheet look and feel
  • Cost: the cost factors providing in Annex A of the paper require more analysis. The point that “the direct cost for annual software license fees associated with a country’s FMIS and tax systems can be $500,000 E.C. or more” is comparing the cost of many financial applications with much more value to a government than a CMS.


  1. Content management is part of budget formulation and does not provide the benefits of government-specific flexible budget management software. That’s why FreeBalance has integrated with Drupal and Sharepoint for budget management.
  2. Financial information is core to budget formulation. That’s why any effective budget formulation system must integrate with budget classifications and the budget execution/accounting system.


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Doug Hadden

Doug Hadden

Executive Vice President, Innovation at FreeBalance
Doug is responsible for identifying new global markets, new technologies and trends, and new and enhanced internal processes. Doug leads a cross-functional international team that is responsible for developing product prototypes and innovative go-to-market strategies.

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