How can Seamless Public Finance Interoperability Empower Government COVID-19 Pandemic Responses?

It’s High Time to Reintroduce the “I” in Integrated Financial Management Systems for Government, but Let’s Get Beyond “Integrated”

Context : PFM experts coined the term “IFMIS””to refer to government systems that integrated core financial functions. Only problem? Very few were truly integrated. Integration is in a horrible state in many countries with multiple silos, legacy systems, and manual processes.

  • Multiple custom subsystems with different technologies and classifications 
  • The combination of custom and Commercial Off-The-Shelf (COTS) 
  • It’s difficult to integrate modules from a single ERP system (despite the marketing noise from these vendors) 
  • We all seemed to give up on the “integrated” aspiration for Government Resource Planning: “FMIS” it is 

Enter  the COVID-19 pandemic, with governments:

  • Reallocating spending 
  • Procuring PPE supplies and medical equipment 
  • Assisting businesses and citizens 
  • Supporting public servants to deliver citizen services 
  • Tracking spending 

Challenge:: how can governments successfully manage the pandemic response when:

  • Revenue, debt, and expenditure systems are separate, with different classifications, so liquidity information is stale? 
  • Procurement and core financial systems are separate so tracking spending alignment is difficult? 
  • Controls differ among procurement, relief, and other payroll, so many non-compliant spending occurs?

Reality check is that “integration” as originally conceived with “IFMIS” is not enough:

  • Integration at the database level is a poor IT practice because there is no metadata and interfaces will break 
  • Integration at key points in the budget cycle, usually with vouchers, is superficial and prone to error 
  • Integration without metadata management generates many versions of the truth, compromises decision-making and audit 
  • Integration through APIs and web services lack resilience to software changes, especially when these integration methods are not commercially supported 
  • Integration without shared budget, commitment, and approval controls introduces compliance risks 

An alternative view is that “integration” is just Information Technology “plumbing”.

  • It’s very complex “plumbing” with a range of tools including: stored procedures, scripts, ODBC/JDBC calls, flat files, Extraction-Transformation-Load, Remote Procedure Calls, proprietary methods, metadata management, web services, and APIs 
  • Many integration methods are error-prone 
  • It’s difficult to validate data completeness, data validity, controls compliance, and user authorization at government transaction scales

Legacy Approach Integration
That’s why it’s high time to think “interoperability”: seamless and unified integration

  • where all core (and some non-core) are built on the same functions 
  • not just building modules with the same technology deployed as silos where classifications and controls can differ 
  • a single environment where all modules share the same metadata and controls 
  • change the Chart of Accounts, change a process, transfer an employee, depreciate an asset: once 
  • no need for a metadata management system or integration callisthenics

Postmodern Approach Interoperability
Why it matters for public finance?  Consider the following scenario (that happens far too often):

  • a government ministry attempts to procure something when the procurement system is not interoperable with core financials 
  • the ministry can procure based on different classifications than described in the core financial system 
  • the ministry can skip over segregation of duties in the procurement 
  • the ministry can record the procurement as anything in the financial system COA 
  • and, it can show up in government accounts as an emergency COVID-19 expenditure, when it isn’t

What is different  about the legacy COTS method vs. the postmodern “unified” approach?
Unified Integration
Example: debt, capital, development, operating & public sector budget planning integration, procurement integration, payroll integration

  • Legacy: large monolithic components assembled as module silos, includes modules from mergers, has proprietary integration with some support for open standards, requires metadata management to interoperate 
  • Postmodern: granular components shared across the suite that inherently interoperate with a single point of metadata management 
  • In other words, don’t be fooled when legacy ERP vendors talk about integration

What about  custom-developed financial applications in government? Integration has proven to be elusive in governments who think simple bespoke systems will cost less and have similar benefits to COTS.

  • Mind you, some COTS implementations have as much code customization as custom-developed software! 
  • Many governments using custom-developed systems cannot provide timely information to decision-makers 
  • The amount of overnight batch processing for consolidated reporting or transparency portals in some countries is impressive: high complex transformation, validation and loading 

What’s really needed for government resource planning or FMIS environments is an evaluation method to determine integration and interoperability risks and opportunities.

  • That’s another service that FreeBalance can provide, remotely, to any government organization

The ideal Government IFMIS: Interoperable Financial Management Information System
Governce Objects, Controls and Making Enables Transparency

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