March 14, 2016Doug Hadden
The challenge of improving government budgeting planning was an important subject covered at the FreeBalance International Steering Committee (FISC) conference in Managua, Nicaragua last week. This was a good segue from the government performance session earlier in the day.
Governments often have poor budget predictability. Why are governments unable to effectively predict revenue and expenditures requirements? Analysis required for the creation of “Medium-Term Macroeconomic Frameworks” is often well-formed. However, the creation of annual and medium-term budgets are often inaccurate. FISC attendees discussed the problem of poor data.
Inaccurate and untimely data can lead to improper policies. Many governments acquire separate financial systems for accounting, tax administration, procurement, budget planning, assets, debt and payroll. These systems have different classifications and database structures. The result of different metadata is fragmented information.
Meanwhile, data is increasing exponentially from many sources. Civil society demand more open data. SMACT (social, mobile, analytics, cloud and the “Internet of Things”) is enabling the power shift from institutions to community.
Big Data to the Rescue?
Consistent metadata is the first stage to un-fragmented data. Big data techniques promises to increase data accuracy and timeliness. Visualization promises to make the wealth of data accessible for decision-makers.
It became clear during discussions with attendees silo approaches to data and public policy creates a disintegrated environment. In addition, many of the financial sub-systems are custom-developed and do not reflect the latest government policies. Policy-makers are forced into decisions with higher degrees of uncertainty than is reasonable given the wealth of available data.
Some governments are transitioning information systems to a consistent governance platform that includes common business processes, metadata and controls. This platform reduces errors while providing decision-makers with timely information to model different planning scenarios.