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Government Financial Management Sustainability a Developing Country Problem Too


January 15, 2010

Sustainability is a key issue for Government Resource Planning (GRP) systems in emerging countries. That’s why we leverage the expertise of our customers at the FreeBalance International Steering Committee (FISC) to find better ways to reduce long-term costs. That’s why it is the dominant theme for our corporate blog. After all, what’s the use of a GRP if the government can’t afford to use it, maintain it and adapt it?

As we are gearing up for FISC 2010, we encountered a story in the local newspaper, the Ottawa Citizen: City taking a costly hit over lack of IT workers. It is reported that the City of Ottawa, Canada’s capital, is having difficulty attracting and retaining qualified information technology staff for their “financial, human-resources, inventory, fleet and maintenance” software.”  This software, from a well-known international vendor, not FreeBalance, was acquired as part a Y2K upgrade.

Many emerging nation governments acquire an Integrated Financial Management Information System (IFMIS) through a loan or grant. Proposals received are evaluated on a 5-year Total Cost of Ownership (TCO) basis. The government must fund the maintenance, upgrade and re-configuration funds to support the system after this 5 year period. (We’ve written about how to best evaluate TCO.)  By the end of 5 years, it is expected that the government is mostly self-sustaining: outside consultants or the software vendor is required for unusual circumstances.

10 Years After and Not Self-Sustaining

The City of Ottawa awarded C$1.7M in external consulting contracts in the summer of 2009. The average daily rate for specialists is C$1,200, according to the article.  We’ve learned, unofficially, that the implementation required approximately 2 years. (FreeBalance implementations, at the country level, average 9 months.)

Public servants who become experts in certain software packages can move to the private sector to increase salary. There is a disincentive for consultants to build capacity in the government.

Perhaps the City of Ottawa could learn more about capacity building from the Government of Afghanistan.

A Different Philosophy

As a For Profit Social Enterprise (FOPSE), our mission is to improve governance through the use of robust GRP software. It has become our ethical mission to make this software sustainable by governments. How?

  • Simplify the software so that it does not require foreign consultants to operate
  • Use configuration to simplify implementation and maintenance
  • Leverage progressive activation to enable governments to modernize without the high cost of customization
  • Involvement directly in the project with our partners to ensure knowledge transfer – including good practices in public financial management
  • Local and regional support so that costs are in line with local rates
  • FreeBalance International Steering Committee sessions on improving sustainability – not the traditional user group method
  • Customer portal and Customer Exchange to encourage knowledge sharing

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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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