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Sustainability challenges in emerging countries

 

February 23, 2009

The meeting of the FreeBalance International Steering Committee Meeting (FISC) in Prague in January 2009 focused on sustainability and new technology. Sustainability is a holistic process. And, a long journey to the destination according to FISC members from five countries around the world.

The barriers to sustainability among FISC governments were similar, particularly for rolling out financial management to all government entities. This includes technical infrastructure implementation delays, human capacity limitations and resistance to change.

Governments are continuously reforming to enhance controls, stewardship, policies and efficiency to improve citizen quality of life. These include civil service, fiscal reform, and accountability reforms. Governments need systems that can easily be adapted to their new or updated processes, policies and controls. FreeBalance as leader and focused in Public Financial Government System leverage a highly configurable and adaptable Commercial Off the Shelf  (COTS) system. FISC members appreciated the fact that cost of adapting the FreeBalance system to their new processes is minimal. FreeBalance software can be progressively activated through configuration changes while other options need to be customized as a result of not being dedicated to Public Sector

 Enhancing Human Capacity

Enhancing human capacity for financial and systems management is a challenge for many governments. Sequenced roll out of PFM functionality was sited as a good practice. Training programs have been able to enhance financial management capacity for FreeBalance customers.

The lack of capacity and high turnover was identified as the most important challenges to sustainability by FISC members during a brainstorming event.

There was significant client input about ease-of-use. FreeBalance software has been described as easier to use than typical Commercial Off-the-Shelf (COTS) applications. Improving the user interface and further simplifying functions assists in capacity building. FISC member agreed that there can be too many unneeded features that make it difficult for users to navigate software.

Emerging country governments have been challenged to enhance data centre knowledge for systems management and database administration within Information Technology (IT) departments. PFM applications with an optimal technical footprint can reduce the burden on IT to support the technical infrastructure.

 There was a discussion about vendor support. Many vendors in the PFM market generate significant after-sales revenue from emerging country governments by providing high-priced consultants. This approach reduces capacity building and self-sustainability. It also increases the Total Cost of Ownership (TCO) and can make the financial management system financially unsustainable.

 The FreeBalance business model is to help governments make their systems self-sustainable. However, many governments experience difficulties during software and hardware upgrades, system roll-outs and employee turnover. FISC members were happy to learn about the opening of local FreeBalance offices to augment government capacity and assist in training and knowledge transfer.

Sustaining the Technical Infrastructure

Decentralization requires the appropriate technical infrastructure or country-wide connectivity and enhanced data centres. Many PFM applications can add significant technical overhead by requiring always-on networks and large server farms. Many countries have a lack of reliable power and network connectivity. Some countries require low bandwidth connections such as dial-up and VSAT.

The upgrade of networking including security enhancements to support web-based applications requires planning. Secure PFM applications that can be centrally or regionally deployed is a requirement for many emerging country governments. FreeBalance presented a roadmap that supports the optimal technical footprint.

The lack of an appropriate IT infrastructure to roll out financial management across countries was cited as an important challenge during the brainstorming session. Nevertheless, FISC members have successfully rolled out FreeBalance applications to line ministries and sub-national governments. FreeBalance customers are accomplishing this feat with limited or no assistance from FreeBalance or consulting organizations.

Modernization and Reform

Many government organizations encounter resistance to change among civil servants. Modernizing processes such as moving from paper-based to fully automated controls or from centralized to decentralized controls can generate concern. Many FISC members believe that more benefits can accrue through more fully adopting FreeBalance modules and functions. Capacity building through training and mentoring was seen as the critical in overcoming resistance to change.

FreeBalance customers identified improvements in fiscal controls, segregation of duties and quick generation of reports and audits as factors that increased donor confidence including having donor funds channelled through the Treasury. FISC members also reported success with improved PEFA assessments.

Other Successes Enjoyed

The computerized Integrated Financial Management Information System (IFMIS) utilized by governments is an enabler of PFM reform and modernization. FISC members identified PFM successes that resulted from the combination of improved processes and leveraging FreeBalance Financials. All FISC members pointed to improved efficiency and productivity through PFM reform.

One government pointed to two years of fiscal surplus. The use of a Treasury Single Account (TSA) has improved cash and debt management for most FISC members. One FISC member pointed out that the momentum gained through the successful IFMIS implementation has encouraged further reforms.

Good Practices Identified

Many managers believe that trained staff is likely to leave. Employee turnover is a concern to many FISC members. However, all FISC members agreed that the worst alternative is to not train staff and have them stay! One FISC member pointed out that losing staff to the private sector can help enhance general capacity within the country.

Continuous training, including enhanced skills training was considered a good practice for ensuring government self-sustainability. The technical infrastructure including data centre capacity and network bandwidth should be analyzed on an annual basis.

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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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