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Integration of Government Resource Planning Systems

 

December 14, 2009

This is section 3.3.2 of a series of blog entries creating a Government IFMIS Technology Evaluation Guide. This includes information to assist in evaluating IFMIS options and the technology requirements for FreeBalance IFMIS implementations. These series will be combined with feedback to produce a comprehensive Technology Evaluation Guide to be published on our web site

Integration has become an important factor for Government Resource Planning (GRP). GRP software is often referred to as Integrated Financial Management Information Systems (IFMIS). Some observers have suggested that the need for “integrated” in IFMIS is relatively low.  There has been confusion about where real-time and batch integration is required. And, there has been some debate whether interfaces are sufficient to support needed integration.

Batch, real-time and systems integration are necessary non-functional requirements for any GRP. There are practical reasons for selecting different methods of integration.

Integration as meme

Integration has become a code word in the enterprise software market. Large vendors with generic applications promote the notion that acquiring software from a single source reduces integration problems. This is the notion of portfolio management that we’ve described in a previous blog post. Integration has become a code word in the industry for acquiring software from a single vendor. Yet, government financial management is complex. There are many specialized needs that cannot be satisfied with business software. No single vendor, even FreeBalance, supports every government need. Therefore, there will always be a need to integrate GRP with additional applications. Government organizations should look at integration in practical terms.

Batch integration

Accounting functions have traditionally been batch oriented. Items were posted from journals to ledgers. Government Resource Planning adds commitment accounting to this mix. Batch integration is often necessary when required sub-systems are not able to integrate in real-time or when approval cycles are required. For example, payroll is rarely integrated with financial systems in real-time because payroll runs are approved and adapted. Time and attendance systems are often not in real time. And, payroll data is rarely transferred to financial systems in detail.

There is a standard set of milestones in GRP following the budget cycle. This is supported in the FreeBalance Integration File Structure (IFS) that supports flat file and XML integration. This structure supports error checking and validation across 17 well defined interfaces supporting budget (appropriations), expenditure, revenue, treasury and asset functions in government.

IFS GRP Element Purpose
Budget Appropriations Sets initial financial budgets
Allotment 1 Appropriations Sets Allotment 1 spending limits
Allotment 2 Appropriations Sets Allotment 2 spending limits
Commitment Expenditures Sets commitments (intent to spend) or obligations (legal obligation) and sets aside budget.
Requisition Expenditures Creates a requisition (intent to spend)
Purchase Order Expenditures Creates a purchase order to a vendor. De-commits funds (against the intent to buy) and obligates funds for legal obligation.
Vendor Expenditures Creates new vendors
Goods Receipt Note (GRN) Expenditures Accepts receipt of goods and services. Provides an accrual based on receive date.
Goods Returned Note (GRtN) Expenditure Returns defective or non compliant items to the vendor. Provides an accrual based on return date.
Invoice Expenditure Invoice is received from the vendor.
Expenses Expenditure Expenditure is approved.
Sales Revenue Items are sold or interdepartmental transfer
Contact Revenue Import contact information
Customers Revenue Import customer information
Bank Treasury Import bank information to reconcile with General Ledger
Assets Assets Import asset information
Journal Voucher General Ledger Adjusting entry or direct to GL entry.

Real-time Integration

There is a view that all integration in a GRP should be in real-time. This view promotes the notion that systems should be always-on to support real-time integration. Yet, many governments around the world do not have access to always-on high bandwidth networks. And, there is often a limited advantage to real-time interfaces. Appropriations are voted by the legislature. Monthly allotments are often sufficient to set spending limits. Nevertheless, there are numerous functions where real-time integration should be implemented including:

  • Commitments should be reflected in real-time at the organizational unit level to eliminate chances for over-spending
  • Accounts Payable and Accounts Receivable updates should update the General Ledger in real time rather than through a batch mode. Payables should show commitments in real time and payments after cheque release. It is important to track the government cash position as accurately as possible.
  • The General Ledger should be integrated with the budget system as an additional level of balancing. The completion of a revenue or expenditure cycle is really the completion of a budget cycle.

Service-Oriented Architecture

We’ve described the trend towards Service-Oriented Architecture (SOA) and the implication on GRP. The first generation of systems for Public Financial Management (PFM) supported interfaces in a monolithic architecture.

The FreeBalance Accountability Suite is designed as a second-generation PFM system. The underlying components are integrated via industry standard Web-Services. Components from third-parties can be added and integrated at any level in the software. Modules are reused across the FreeBalance Accountability Suite. Functionality from additional modules from third parties or developed by the government can leverage this reuse. For example, a special application for trust funds for aboriginal people can leverage the same Chart of Accounts, appropriations and revenue functionality support in the Accountability Suite. 

Of course, batch and real-time integration supports the ability to transform data structures from different systems such as bank EFT to be leveraged within the FreeBalance Accountability Suite.

System integration

The FreeBalance Accountability Suite supports standards for systems integration. Government organizations often develop standards for identity or security. These leverage open standards. The support for Java standards and the plug-in architecture for the FreeBalance Accountability Suite supports systems integration for Single Sign-On (SSO), Public Key Infrastructure (PKI) and systems and network management.

 

 

 

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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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