March 5, 2009Doug Hadden
The African Development Bank, CIDA, DFID, Dutch Ministry of Foreign Affairs, SIDA have collaborated to publish “the first phase of what is intended to be multi-donor evaluation of PFM reform. The first phase – a literature review to synthesize the main theoretical approaches and findings from evaluations of PFM reform programmes, and to identify knowledge gaps – was led by DFID.”
View of Integrated Financial Management Information Systems (IFMIS)
This is a comprehensive review of the PFM reform literature. The conclusions made about success in IFMIS implementations are generally fair. There have been many unsuccessful IFMIS implementations in emerging countries. “Failure rates were reportedly high, because of unrealistic timescales, lack of ownership, insufficient consultation and inadequate specifications,” according to the report. Most of the literature on IFMIS failure from multiple sources focuses on these project issues.
It is typical to attribute standard project management characteristics to success or failure of IFMIS implementations. Although these characteristics are important, we believe that there are factors that are specific to IFMIS in emerging countries. Some standard project management characteristics are more important in this context. Some of these characteristics include:
- Facilitated implementation and training because of the underlying design of the IFMIS software.
- Effective implementations through high of vendor commitment and knowledge in the public financial management domain.
- Managed milestones for sequenced roll-outs adapted to the country context enables capacity building through technology.
- Progressive activation to enable future reform and modernization.
- Program management that addresses risk factors up front and provides an implementation blueprint to increase stakeholder buy-in.
One of the more important references in the report is the “failure to undertake parallel reforms.” This is a very important observation because IFMIS implementation should follow reform
More Needed about IFMIS Success
The report concludes that the “evaluation of’ ‘first generation’ implementations of MTEF and IFMIS highlighted a number of critical success factors; however, no evaluation appears to have been carried out on whether lessons have been learnt.” This is somewhat true because many reports are anecdotal. Nevertheless, the review that did not seem to reference a large body of literature, particularly the International Journal on Government Financial Management published by ICGFM. The review of the 2007 ICGFM Winter Conference on the subject of IFMIS is an excellent primer.
Two sources for success are referenced in the review. “Diamond and Khemani (2005) promote the use of a modular approach to IFMIS implementation, with the initial introduction of just the core functions of budget execution, accounting, payment processing, commitment control and financial reporting. Based on experience in Ethiopia, Peterson (2006) argues that process change not process (innovation) re-engineering is the best method.” The consensus in the PFM community is that the modular approach is the best method. There does not appear to be a consensus on the nature of process engineering. It is our experience that process improvement can be accomplished as part of the modular approach. Reform processes requires capacity building that can be enhanced through modular implementation followed by progressive activation.
Realistic Time Frames
Governments are often blamed for having “unrealistic time frames” for the IFMIS implementation. Most of these systems were acquired through formal proposal cycles. The winning vendors agree to the time frames. Blaming the government for the time frames is blaming the victim.
Some government IFMIS implementation time expectations are unrealistic. FreeBalance does not bid when we think that the time frames are far too risky. The FreeBalance software design that leverages configuration and is designed exclusively for government has enabled us to implement very rapidly.