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The Future of Government Financial Management Information Systems


April 27, 2012

Looking back 5 years, looking ahead 5 Years

Doug Hadden, VP Products

While getting ready for my presentation next Monday at the International Consortium on Governmental Financial Management (ICGFM) conference in Miami, I had time to reflect on my predictions for 2007. The presentation Monday is on the Social Future of Public Financial Management. 5 Years ago, it was “New Technologies for Public Financial Management.”

Government Financial Management System Of Tomorrow
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Government Financial Management State of Affairs

The main difficulty with systems used for Government Resource Planning (GRP) in 2007 was:

  1. Inflexibility to adapt to reform and decentralization
  2. Financial sustainability and government self-sufficiency
  3. Integration between budget execution and accounting
  4. Integration between front and back office systems

Sadly, except for the FreeBalance Accountability Suite, all four remain problems today. Enterprise Resource Planning (ERP) software designed for the private sector has made little progress on items 1 and 2 and some improvements in 3 and 4. (High incidents of ERP failure for government financials seems to be an open secret.) Custom-developed software remains problematic on all four items. We’ve seen far too many governments with unsustainable custom solutions with poor integration and inability to adapt to changing government objectives.

Ten Technology Trends in 2007 for Public Financial Management

  1. Enterprise Software consolidation continues. Large vendors continue to acquire smaller vendors. It appears that many ERP companies lack the ability to innovate.
  2. Open Source software continues to gain acceptance in government, especially for middleware. Large vendors have acquired open source companies and more companies are placing code in open source. There have been significant moves to acquire open source software as an alternative to commercial software in governments like France and Russia. Many large COTS vendors try to use FUD (fear, uncertainty, doubt) about open source security and reliability. Yet, leading open source middleware software has been found to be more secure and reliable. That’s why the largest users of open source software in the US government are DoD, CIA etc.
  3. Software stack commoditization continues with less and less value for software infrastructure, nevertheless big companies continue the approach of trying to “own the customer”. Database and business intelligence vendors have been acquired.And, there is an attempt to put proprietary middleware in hardware boxes to give customers less choice.
  4. Decentralization continues in governments around the world. There is great interest in extending public financial management to sub-national governments and enabling local discretion to improve results. For example, the Government of Kosovo has decentralized budget execution and purchasing.
  5. Business process management (BPM) has become an integral part of larger enterprise software suites. There has been some consolidation in the market although many best of breed vendros remain. It seems like every year is to be the year of BPM but generally isn’t. My sense is that business process management is often a solution to a problem, it’s just that BPM products are not necessarily the right tool to use.
  6. Software as a Service has exploded. Huge growth. It’s even woken the ERP giants who struggle with the “cloud” business model. As predicted in 2007, the uptake in government has been limited, especially for financial management despite well-publicized usage for e-mail and other services. Governments are now re-branding shared data centres as “private clouds” – which doesn’t really give governments cloud benefits.
  7. Web as Platform. There has been an explosion of open government and open data. The Open Government Partnership shows that transparency and Government 2.0 is alive and well. This has extended to less developed countries like Timor-Leste who have implemented budget, aid, procurement and results transparency portals
  8. Wireless government has picked up especially in developing countries. What’s new here is the impact of civil society and innovation outside of government. Governments can use crowdsourcing or be crowdsourced – as we saw with the Arab Spring. Tools like Usahidi have proven highly effective for election and crisis mapping.  Arab Spring. The explosion in mobile technology usage in Africa, Asia and Latin America is slicing through the digital divide.
  9. Performance management integration is as slow as expected in 2007. Solutions for the private sector remain inadequate for government because these tools are not tied to budget preparation or on the complexities of outcomes. (We’ve made a lot of progress in the last 5 years with government performance management with some success stories.)
  10. SOA adoption is also slower than I expected. Many vendors try to hoodwink us into thinking they have Service-Oriented Architectures. It is difficult to fully support SOA, particularly with granular objects with legacy ERP code. It’s got to the point where SOA is just a noise word that vendors use rather than something customers can use.

Government Financial Management System of the Future: Prediction and Reality

I predicted that the GRP of the future would be modular, de-centralized, integrated, non-monolithic, multiple vendors products, mobile, commodity and innovative. How does this compare with the 2012 reality?

Not so good predictions: yes, major vendors have put barriers to modular and non-monolithic software architectures. There’s some hope as vendors seem forced to, at least, support integration. This has created some space for multiple products to work together for customers. Large vendors are creating “ecosystems” for partner products. That increases choice – but not optimal choice because it relies on monolithic products.

Scorecard for 2007 Predictions

Better predictions: Mobile technology – now with the Consumerization of IT (CoIT) with tablets and smart phones is disrupting the market and giving users better tools. This is one of the innovations that we are seeing that provides governments with IT-enabled innovation. Others: social media, crowdsourcing, big data, visualization.





Good predictions: decentralization

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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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