March 5th. was World Read Aloud Day. FreeBalance staff read across the globe, once again.
Doug Hadden, VP Products
Many technologists see FreeBalance as a provider of Enterprise Resource Planning (ERP) software for government. That may have been the thinking, a few years ago, when I was asked to step in for a cancellation at a conference to present the business case for ERP in government. The notion that implementing software designed for the private sector in government had gained significant traction by 2009. And, the advantages of Commercial-Off-The-Shelf (COTS) compared to custom developed was well understood in developed countries. Yet there persisted integration and flexibility problems in ERP government implementations.
We had been presenting Government Resource Planning (GRP) as a different category of software from ERP. Our position that ERP provides a poor value for money for core budget, financial, procurement and human resources functions in government has been gaining traction. ERP in government failure examples continue to mount.
Three Business Case Measurements
I did present the case as articulated by leading ERP vendors and technology analysts in 2009 around three concepts:
- Potential benefits: tangible benefits that could accrue through the use of technology to meet current and future needs
- Total Cost of Ownership (TCO): long-term costs to achieve benefits (More on for ways to measure TCO)
- Project Governance: methods in which ERP projects are managed including managing ERP vendors (More information on project governance)
My view at the time was that ERP vendors were over promising on benefits, delivering high costs to government and operating outside project governance structures in order to remain unaccountable.
Dubious State of the 2009 ERP Value Proposition in 2014
Much if the value hyped by ERP vendors last decade has turned out to be just that: hype.
- Portfolio Management: notion that the cost to manage a product suite from one vendor is much lower than managing a portfolio of ‘best-of-breed’ applications. Reality: governments have been unable to effectively use a single suite of ERP software to cover Public Financial Management, ERP applications lack budget awareness across the suite, integration is not built-in (requiring complex metadata management), and so-called ERP suites are now made up of so many acquired products and technologies. Yet, ‘integration’ remains a cornerstone of ERP vendor marketing hype!
- Improved Decision Information: It is somewhat ironic that ERP vendors were touting information visibility in the last decade as a critical non-tangible benefit. That’s because after doing so, the two largest ERP vendors announced the acquisition of Business Intelligence companies. ERP vendors have escalated the hype to real-time reporting and in-memory analytics, all of which can be accomplished with alternatives!
- Benefits at Scale: The notion that significant benefits accrue only after a number of years through improved business processes coupled with expanding ERP footprint. This is perhaps the most intellectually dishonest element of ERP hype. It provides a justification for increasing commitment to a poor business case as costs mount and benefits do not accrue.
ERP as Transformational?
ERP costs continue to mount, partly from improved visibility into areas that were once difficult to measure, and partly from managing legacy technology. Yet, ERP vendors have entered new realms of marketing hyperbole.
ERP vendors, as I described a few years ago, are marketing as enablers of government transformation and agility.
It’s awesome how vendors are able to say this with straight faces. Sadly, this hype is deluding government decision-makers and costing taxpayers.
- Legacy proprietary ERP technology was not designed to support 21st century government transformation, it was designed to automate manufacturing, retail and other private sector functions
- Technology that relies heavily on software code customization (proprietary code, especially) reduces organizational agility
- Process ‘standardization’ has diminishing returns in complex organizations like government while reducing the opportunity for innovation
What happens when the hype implodes? It’s the equivalent of a taxpayer bailout. With ERP vendors likely to escape justice.
And, Sustainable Public Financial Management (PFM) reform?
Doug Hadden, VP Products
By most people's measure, FreeBalance is a software company. We build budget, financial and HR software for governments. Some would say that we're in the general 'ERP' category although we don't build software for the private sector. So why are we focusing on solutions for organization change at our annual conference?
(I follow the themes from ERP company conferences. The main theme: we're the best. The message: buy more software.)
Power Shift to Customers
The software industry has evolved through short acronym eras. Innovative new software is introduced that defies current categories. Experts and analysts see the trend and define new categories. We've seen the recent rise of 'augmented reality', 'collaborative commerce', 'Internet of things', 'consumerization of IT' and 'big data' among others. The underlying theme to many of these new technologies: customer empowerment.
That is: the empowerment of consumer and business customers in the commercial and government relationships.
Don't be fooled by how new technology is leveraged by providers of products and services. This is a temporary stage, a pattern common to digitization. (For example, the music industry made huge profits by digitizing analog music for CDs. Look at what has happened since.)
The Complete Solution Set
Companies define their categories. It becomes a mindset. The definition of categories can be very narrow. (For example, most software companies try to reduce services revenue as a ratio of overall turnover. And, companies find international expansion difficult when defined categories make no sense globally.)
The customer problem with 'categories' is that they are required to integrate product and services sets to arrive at solutions. Many high technology firms are so obsessed with optimizing categories that they fail to realize how products are really being used – the problems being solved, and the burden to make all this happen.
Customers are looking for comprehensive solution sets. (Any software company struggling to be a "product company" doesn't get the new dynamic.
The Governance Problem
FreeBalance builds software. The sea change at FreeBalance occurred when we realized that our business wasn't software: it was enabling country growth through sustainable reform. Software is one cog in the solution to the governance problem of how to sequence reform based in the country context. The design of the FreeBalance Accountability Suite enables progressive activation. But, governments need to know what processes should be modernized, in what order, and how to help the public service adapt.
Organizational change management is critical to PFM reform. That's why we're talking about it. And, why we brought in international experts to provide context. And, why we've added internal expertise and partnered with firms who specialize in organizational change in government. And, why we're running workshops on the subject so customers can share good practices.
(Subjects include capacity building, security and reputation, change and project management, impact of post 2015 MDGs, transparency and open government.)
This was our 8th FreeBalance International Steering Committee (FISC), our 3rd Minister's Roundtable and the first Host Country Workshop. FISC has evolved over the years from a conference focused on resetting our product roadmap to one focused on sharing good practices. The customers still reset our roadmap. (I know of no other company that does this.)
The challenge for us is to keep our ears open this week to better understand the customer context. To talk less about ourselves – to talk less in general – which is hard to do when you're excited about what you're doing.
That's our organizational change challenge.
Listening is one thing – analyzing the other. Our PFM focus facilitates analysis on one hand, but can limit thinking on the other because there is a lot of orthodoxy in the domain.
This is the real challenge for customer-centricity: corporate hubris. Thinking that you know more than your customers.
Session Related to Change Management
We blogged and tweeted during FISC. Some sessions related to organizational change included:
- Special Workshop for Government of Antigua and Barbuda
- Change is Not Soft or Easy
- Project Management Good Practices
- Transition to Citizen-Centric Governance
Doug Hadden, VP Products
The annual FreeBalance International Steering Committee (FISC) conference is the most important milestone on my product calendar. Annual vendor conferences are important in the life of any typical software product manager because it is the time when customers learn about new features, changes and new products. Software companies create a demand for this conference by holding back announcements and creating a sense of excitement. This manipulation is clever but far from customer centric. In fact, it’s all about the vendor.
We sought to change the dynamic from product-centric to customer-centric events in 2007. This meant that much of the ceremony associated with vendor conferences had to change:
- Company to Customer needs: switch the focus from what the company needs to what customers are concerned about regardless of what the FreeBalance contribution towards solutions might be.
- Selling to Engagement: switch the business emphasis from selling by staffing the conference with executives and managers rather than salespeople. Engage customers so that we can improve products and services.
- Dictate to Collaborate: switch the dynamic from dictating what products will be provided when to customers changing product priorities, adapting the roadmap and working together for common objectives.
- Controlling to forum: switch the communications paradigm from slick and controlled presentations to a forum where customers engage other customers, external speakers and FreeBalance staff to learn what works in Public Financial Management (PFM) reform.
— FreeBalance (@freebalance) February 8, 2014
The FreeBalance product team provides an updated roadmap at every FISC event. New modules that have been created in the previous year that were selected for development by FISC are demonstrated. The roadmap that consists of modules for which there are contractual commitments are described. Modules that have not had customer commitment are also described. This second set of roadmap items consists of modules that may be anywhere in the development lifecycle from vision to beta-quality. FISC is able to change the roadmap such that modules that are close to completion are put on hold in favour of other modules.
The pattern of customer needs has changed over the past 8 years. It doesn’t make sense for us to complete modules that may have had value in the past but no longer. Most software companies, in my experience, believe that they have more clever staff and better analysis of technology trends than customers. As a result, product managers set product priorities, rarely customers. Our product managers and business analysts are embedded in the PFM discipline so that we are able to predict upcoming trends. The requisite skill that needs to be developed for product managers in a customer-centric company is to be able to use domain knowledge and customer engagement to hone in on these trends. We leap at the outliers and ask the questions that let us understand the context.
This year was no exception in roadmap voting – one class of Government Resource Planning (GRP) modules that had received moderate votes in past years moved to near the top. This was something fascinating because there had not seemed to be a major demand and the needs seemed to be satisfied by other vendors. It turns out that this GRP domain, like many in government financial management, is under-served by incumbent vendors. The technology is dated and inflexible. And, high cost.
I engaged our global staff through one of the internal social media tools that we use at FreeBalance. This generated a lot of nuanced insight that forms a compelling picture of needs. In particular, the need to reform and update processes – something that is constant and relentless in government. This is one of the critical aspects of making PFM reform sustainable: technology that enables, rather than inhibits, process modernization.
Technologists might wonder how FreeBalance has a sustainable software development model if we are constantly changing the product roadmap. Customers expectations have been set by large enterprise software vendors to expect 3 to 5 year product roadmaps with only minor changes. How can the roadmap change yearly? (Trust me, it changes far more frequently than this because we have some effective customer engagement processes.
Legacy Enterprise Resource Planning (ERP) software requires long roadmap processes. (By “legacy”, I mean the top tier ERP packages from the largest four of five vendors.) The technology problem faced by these vendors differs from that faced by FreeBalance:
- Government Platform: FreeBalance has developed a technology platform that forms the foundation for the government platform. All applications are built using reusable “business objects” that provides extensibility across the product suite. (We call these “government entities” to eliminate the word “business” as much as possible in our standard marketing material because we do not provide software to the private sector). This approach means that the development of net new applications leverages the entities for rapid development. And, any work accomplished for modules on hold have generated new entities that can be used elsewhere. Legacy ERP is developed on monolithic structures that prevents this reuse. (We often find that we can develop a net-new module faster than it takes to code-customize an off-the-shelf application designed for the private sector.)
- Unifed: FreeBalance uses the platform as the fundamental metadata system of record for the entire suite. There is no need for complex integration among modules because the modules are already unified. There is no confusion in managing expenditure and revenue modules with core accounting. Budget and commitment controls are respected in every application. (This is somewhat unusual in the market where there are payroll, assets and procurement applications that have little or no idea of commitment controls. This results in non-compliance to government processes and frequently exceeding budgets.) This unified approach means that additional functionality does not provide an increased integration burden on FreeBalance as developer or government customers.
- Open: Major software vendors attempt to build value through the use of proprietary technology. They seek to provide options in the software stack, particularly in middleware, that are more feature-rich than competitors. They fill product gaps by acquiring smaller firms, which adds to complexity and reduces economies of scale for vendors and customers alike. These vendors support some open standards, but are focused on adding perceived value across their product portfolio. When encountering a new opportunity, these vendors are predisposed to building from scratch or buying another vendor. FreeBalance, on the other hand, has an open system. We’re not in the business of having customers fund unneeded development. We’d rather integrate with open products, often open source (mostly the commercially supported versions of these), to keep costs affordable for customers. This also gives us choices to determine what approach we should take to meet requirements giving us economies of scale.
— FreeBalance (@freebalance) February 6, 2014
— FreeBalance (@freebalance) February 6, 2014
— FreeBalance (@freebalance) February 6, 2014
My sense is that we’ve got an inherently socially responsible approach to this market. We’ve evolved these processes over time and continue to seek better ways of embedded our government customers in our product decisions.
Doug Hadden, VP Products
We were very excited last year when the Government of Antigua and Barbuda committed to hosting our FreeBalance International Steering Committee (FISC) conference for 2014. We also organize a separate Ministers’ Roundable every two years. FISC for 2014 included this roundtable.
The Government of Antigua and Barbuda facilitated event planning and gave our attendees from governments around the world the full VIP treatment. The opening ceremonies were spectacular.
We provided the government with a custom 1 day workshop on Friday. It was somewhat bittersweet for us as we realized that we would soon be leaving the island.
Change management has been a major theme of the 2014 FreeBalance International Steering Committee (FISC) conference this week. Dr. Susan Evans of Evans Incorporated facilitated a well-received discussion on change challenges in the public sector.
Project management skills and processes help ensure Government Resource Planning (GRP) success. Government organizations often do not have sufficient project management skills or processes. Erwin Ryan from FreeBalance, arrived at the 2014 FreeBalance International Steering Committee (FISC) in Antigua a few days ago from the GRP project in Suriname.
Governments are transitioning from functional to citizen-centric approaches. Maryantonett Flumian of the Institute on Governance described the drivers for new ways of service delivery.
Dr. Susan Evans to Discuss Sustainable Organizational Change at 2014 FreeBalance International Steering Committee EventFebruary 6th, 2014
Presentation at FreeBalance-sponsored event to discuss human-centric practices for transformational change in government
Ottawa, Canada (February 6, 2014) – FreeBalance, a leading vendor of Government Resource Planning (GRP) software, is pleased to announce Dr. Susan Evans as a guest speaker at the annual FreeBalance International Steering Committee (FISC) event taking place between February 2-6, 2014 in Antigua & Barbuda. Dr. Evans’ presentation, “Sustainable Organizational Change,” will describe how governments can effectively achieve objectives through human-centric design.
Dr. Evans will be presenting at FISC on February 6, 2014. This will be a highly interactive session designed to elicit attendees’ experiences in achieving sustained changes in behavior while implementing Public Financial Management (PFM) processes and technology. “The unique format of this event provides an opportunity to share innovative change management approaches and lessons from other public sector reforms,” said Dr. Evans. The FISC event will focus on how participating countries have leveraged technology to drive sustainable government reform and modernization efforts.
Dr. Evans is the President & CEO of Evans Incorporated. She founded Evans Incorporated over 20 years ago with a passion for ensuring that the human factor is central to transformative change in complex organizations. She developed Evans’ CAARMATM methodology for change and has seen its application realize significant performance results for clients. She has led organizational assessment, business reengineering, change management, and IT strategy projects for government agencies, Fortune 500 corporations, and not-for-profit organizations. She has published and presented extensively, including at NATO Symposia and International conferences on Organization Design and Management. Dr. Evans’ Ph.D. is in Industrial Engineering from The University of Michigan.
FreeBalance helps governments around the world leverage robust Government Resource Planning (GRP) technology to accelerate country growth. FreeBalance is recognized as a leader in fast, adaptable and successful GRP implementations. FreeBalance provides software solutions for public financial and human resource management, and supports reform and modernization to improve governance, transparency and accountability. Good governance is required to improve development results. For more information, visit www.freebalance.com.
The annual FreeBalance International Steering Committee (FISC) conference runs from February 2-6, 2014 in St. John’s Antigua & Barbuda. FISC provides an interactive forum to exchange Public Financial Management (PFM) good practices among international customers and PFM thought leaders. FISC drives the FreeBalance Accountability Suite Government Resource Planning (GRP) product direction. Previous FISC events were held in Ottawa, Canada (2013); Istanbul, Turkey (2012); Madeira, Portugal (2011); Mt. Tremblant, Canada (2010); Prague, Czech Republic (2009); Cascais, Portugal (2008); and London, United Kingdom (2007).
The design behind the FreeBalance Accountability Suite was described by Doug Hadden, VP Products at FreeBalance, during the 2014 FreeBalance International Steering Committee (FISC) conference on Tuesday.