FreeBalance is a medium-sized Independent Software Vendor (ISV) with considerable success competing against very large Enterprise Resource Planning (ERP) vendors. We are sharing 16 lessons learned by bucking conventional wisdom to encourage industry innovation and creativity.
Conventional View
Enterprise Software companies introduce new features with every new release through an interesting ceremony: gathering analysts, customers, partners and music stars at a large event. Saturate the market with press releases and hyperbole. Claim each and every new feature presented is “innovation”. And, go so far as to define integration among acquired products as innovation.
Symptom
Enterprise Software customers are reluctant to upgrade to the newer versions because of the introduction of complexity or changes in the user interface that users have become familiar with.
Emerging Trends
The Enterprise Software market is undergoing significant change where new “features” often reduces perceived value by users, as pointed out by Alan Cooper , features often get in the way of usability.
We’ve seen the elimination of feature noise in popular products such as in Microsoft Office
As Clayton Christiensen has identified the “Innovator’s Dilemma” where incumbent vendors are reluctant to implement disruptive innovation that disrupts the business model.
FreeBalance Approach
Feature bloat in software – bloatware is a scourge – it makes software less financially sustainable by customers: harder to learn and remember features and increases the required technology footprint. Our “features” approach includes:
We attended a 2-day conference at the Inter-American Development Bank, Innovation in Government Week: Strengthening the Institutional Capacity of the State to Deliver. The conference was focused on lessons learned in Latin America but has wider applicability.
There are some very interesting trends in Latin American governance discussed:
Latin American governments are leveraging citizen engagement and transparency to show significant improvement in outcomes
Some of the most effective and innovative reforms are occurring at the sub-national level of government
High use of social media in Latin America has created more demanding citizens
Latin American governments seem to be on the forefront of changing political and public servant incentives
Open procurement improves government costs and reduces corruption. That’s the theory that was discussed last night at an open house at the OpenGovHub sponsored by the Open Contracting initiative. The discussion was focused on ‘fragile states’.
As you can see from the ‘storify’ from last night, the discussion was somewhat derailed by yours truly when I was asked to comment during the panel. It has been my impression that many in the development community tend to give the effects of technology short shrift. And, to conclude that transparency via technology does not have positive effects because technology is not fully inclusive. Our Governance Framework describes the net positive effects of technology and the force multiplier of institutional characteristics such as autonomy, capacity and political will. My point is that technology does have a governance effect even when some institutional factors remain sub-optimal:
Controls in back-office systems prevent many inefficient and corrupt practices through IT security, workflow, approval cycles etc.
Transparency in public finances, especially when there is no data manipulation capabilities between the back-office systems and the front-office portals, changes behaviour.
Audit trails and reporting tools make corruption and poor practices easier to identify. This also changes behaviour.
We also must have a pragmatic approach to sequencing governance. We should expect that foreign businesses, international rating agencies, the diaspora and academics will be the first operational users for an e-procurement portal. And, that use of portals will become more inclusive as capacity is built in civil society and mobile technology becomes more affordable.
I also find that some in the development community expect that transparency initiatives have failed to achieve benefits because there has not been a rapid improvement in an outcome such as service delivery. Government initiatives take time to have measurable affects. And, an initiative such as an e-procurement portal may not have been conceived to improve service delivery. Perhaps improved prices through competition and reduced collusion through transparency are the expected results. And, an improvement in service delivery to businesses via an e-procurement portal is not likely to have any effect on a citizen survey about service delivery.
Therefore, we should not curb our enthusiasm for open contracting and open procurement. Transparency is a governance enabler, and it’s up to the development community to help phase-in governance initiatives based on the country context.
I remember when Pierre first went to Haiti during medical school. He’s also working in India and Kenya so has significant practical experience. There is no question that child mortality is a critical problem for Haiti. The approach of health capacity building as a key objective of the EMAS Canada program shows how development can be sustained. As Pierre explains, improvements in health care has economic advantages as does improvements in the economy improve health outcomes.
The Truth about Dr. Pierre Plourde
Pierre began his capacity building life by trying to explain Grade 13 calculus to me. I reciprocated by tolerating his irrational desire for performing in public. My sense is that my capacity building work turned out more successfully. But, Pierre has had enough time to perfect his training abilities. He can also be very convincing. For example, he did convince tourists, while on vacation in the Caribbean that his brother was a member of the Canadian national hockey team. He was expert in convincing his brothers to take less time in the shower by turning off the hot water heater.
One of my enduring memories of Pierre was his studying methodology during medical school. He stacked books in his room on the floor – well over a meter high. He studied from left the right and the stack on the right would slowly build. Meanwhile, he wrote notes with his compact script that he called “writing”.
Pierre also speaks French and has spent sufficient time in Haiti to speak Creole.
FreeBalance to be accredited by the Chartered Institute of Public Finance and Accountancy to deliver international public financial management training
Ottawa, Canada (October 11, 2012) – FreeBalance, a leading vendor of Government Resource Planning (GRP) software, is pleased to announce a new alliance with the Chartered Institute of Public Finance and Accountancy (CIPFA) that will help to strengthen Public Financial Management (PFM) in FreeBalance customer countries. FreeBalance will be accredited to provide training to students who enrol on CIPFA’s International PFM courses.
As the world’s only professional accountancy organisation to specialise in the public services, CIPFA’s qualifications are the foundation for a career in public finance. They include the benchmark professional qualification for staff working in public finance. “CIPFA is the leading provider of specialist PFM qualifications in the world and we’re excited by the opportunity to introduce the CIPFA certification program to our customers,” said Manuel Pietra, President & CEO of FreeBalance. “FreeBalance and CIPFA are in a unique position to help some of the most progressive countries in the world build the necessary PFM capacity to support good governance and improve public services.”
The CIPFA certification program courses consist of the following suite of progressive qualifications:
Certificate in International Public Financial Management (Cert IPFM)
Financial Accounting, Management Accounting, and Country-Specific Public Financial Management
Diploma in International Public Financial Management (Dip IPFM)
Public Sector Financial Reporting, Audit and Assurance, Managing Organisations, and Managing Finance
Advanced Diploma in International Public Financial Management (Ad Dip IPFM)
Public Policy, Governance and Ethics, Public Finance, Corporate Financial Reporting, and Strategy
Professional Qualification in International Public Financial Management (PQ IPFM)
Strategic Leadership and Strategic Financial Management
Students who complete the Professional Qualification in International Public Financial Management will be entitled to apply for membership of CIPFA and to use the designation Chartered Public Finance Accountant (CPFA). “CIPFA and FreeBalance are committed to helping strengthen PFM in countries around the world. FreeBalance customers will benefit from having staff trained to the highest standards, certified by CIPFA”, said Alan Edwards, International Director of CIPFA. “CIPFA and FreeBalance recognize that a key component of an effective PFM system is the existence of properly trained and qualified PFM practitioners working in government.”
About FreeBalance FreeBalance helps governments around the world leverage robust Government Resource Planning (GRP) technology to accelerate country growth. FreeBalance is a recognized leader in fast, adaptable and successful GRP implementations. FreeBalance software manages a global civil service workforce of 1,500,000, and a quarter trillion ($US) annual budgets worldwide. 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.
About CIPFA CIPFA is the professional body for people in public finance. Its 14,000 members work throughout the public services, in national audit agencies, in major accountancy firms, and in other bodies where public money needs to be effectively and efficiently managed.
As the world’s only professional accountancy organisation to specialise in the public services, CIPFA’s qualifications are the foundation for a career in public finance. They include the global benchmark professional qualification for staff working in public finance. The qualifications are taught by CIPFA’s in-house Education and Training Centre as well as by accredited training partners around the world.
Globally, CIPFA has launched a campaign – Fixing the Foundations – calling for sound public financial management and good governance. CIPFA works with donors, partner governments, accountancy bodies and the public sector around the world to advance public finance and support better public services.
As I described a few days ago, FreeBalance has been instrumental in bringing good public financial management practices through Government Resource Planning (GRP) automation to countries ranging from post-conflict to G8.
FreeBalance and Substantial PFM Progress
The Synthesis Report follows a World Bank Economic Premise note last year. Both show that countries that implemented the FreeBalance Accountability Suite have shown substantial PFM progress.
These studies provide some validation that we’re on the right track in enabling sustainable public financial management reform. These studies mention FreeBalance but provide no endorsement of our software or implementation methodology. (That being said, it’s a far sight better than recent analysis of ERP implementations in the United States Department of Defense.)
The closest to an endorsement is the following: “”The revision of the chart of accounts has often been linked to revising budget classifications as well as the introduction of a FMIS as experienced in Afghanistan, Kosovo, Liberia, and Sierra Leone.“
Sequencing PFM Reform with Capacity Building
Nevertheless, there is ample evidence in the studies to support the notion that countries should implement a financial management system first (my assessment above on the FMIS approach may not be entirely correct) and sequence reforms as capacity is built.
The report concludes that “reforms of organic budget laws tend to happen over a period of time rather than early in the process, so rushing adoption of new laws too early is not necessary in many cases.” Long reform cycles prior to the adoption of financial management software does not seem to be a good practice.
The report concludes that “while capacity can be short-circuited through substitution (such as donor-funded staff in line positions), developing sustainable capacity remains a challenge and needs greater and more sustained attention.” We’ve seen some excellent examples of capacity building in Afghanistan and Kosovo. The key lesson here is to progressively activate financial software functionality as capacity is built. Systems can be first installed with basic controls and progressively modernized to support the entire government financial lifecycle with more complex accounting functions and decentralization.
And, capacity is not associated with progress according to the report. “Afghanistan and Sierra Leone, with very low per capita incomes and at the very bottom in terms ofhuman development indicators, have progressed further and faster than Cambodia or Tajikistan with relatively higher per capital incomes as well as human development indices.”
Budget Execution Lesson Learned
Budget execution was found to be the PFM area of greatest improvement. The report concluded that “budget execution reforms tend to be more successful, while some rethinking of reform approaches targeting budget planning on the one hand, and control and accountability on the other hand may be needed.” This validates the experience of Steve Symansky as presented the Overseas Development Institute in 2010.
It really should come as as no surpise that budget preparation lags behind budget execution progress. This is similar in developed countries where multi-year budgeting, program and performance measures are not adequately used.
New Dynamic for PFM Reform
I’ve made the argument that donors pushing for reform is but one force for PFM reform. The report touches on the impact of Official Development Assistance for reform. It’s clearly a factor because donor funded the FMIS implementations in Afghanistan, Kosovo, Liberia, Sierra Leone and the West Bank. And the report concludes that “the provision of budget support also seems to be an incentive for governments to pursue PFM reform, and it can provide a more continuous incentive.” That’s despite the lack of direct budgetary support and the continued use of off-budget funding.
My sense, based on conversations with government officials around the world, is that globalization has created incentives for good governance. Government leaders understand that businesses have choices of where to do business.
Real Governance Outcomes Achieved
It is difficult to make sweeping conclusions from studying a handful of post-conflict countries. The report is clear about this limitation and calls for further study. Some insight was gained such as “progress on overall government effectiveness and control of corruption broadly correlates with the degree of PFM progress achieved in most of the cases.” That’s good news for all organizations promoting the use of government financial management systems tied to PFM reform.
La conferencia CLAD promueve la discusión y el intercambio de experiencias y conocimiento en reforma estatal y modernización de la administración pública. Tópicos de presentación incluyen: Presupuestos de Participación en Latino América; y Experiencias y Reflexiones sobre la Responsabilidad de las Actividades del Personal y Mejorando la Calidad del Gobierno. Oradores principales incluyen: Nuria Cunill Grau, Académica en la Universidad de Chile; Manuel Villoria, Director de Administración Gubernamental y Políticas Públicas, Instituto Universitario Ortega y Gasset, España; y Robert Putnam, Profesor Malkin de Políticas Públicas en la Universidad de Harvard (EEUU), y Profesor Visitante, Universidad de Manchester (UK).
“FreeBalance espera con interés discutir con los asistentes en el XVI Congreso Internacional CLAD la reforma estatal y modernización de la administración pública permitidas por la tecnología,” dice Manuel Pietra, Presidente y CEO en FreeBalance. “Los gobiernos a nivel mundial están modernizando y reformando soluciones de software gubernamentales para entregar eficiencias operacionales. FreeBalance trabaja con los gobiernos para mejorar la transparencia, gobernación, y responsabilidad, lo que conlleva a un crecimiento en el país del desarrollo de capacidad, mejora de la actividad económica, y mejor prestación de servicios a los ciudadanos.”
El FreeBalance Accountability Suite ofrece una plataforma totalmente basada en la web que ha sido optimizada para un despliegue rápido y para que sea efectiva operacionalmente. Es ideal para todos niveles de Gobierno porque el FreeBalance Accountability Suite ha sido diseñado específicamente para la gestión de finanzas públicas. El FreeBalance Accountability Suite cubre el ciclo presupuestario completo, incluyendo preparación de presupuestos, ejecución de presupuestos, y gestión de servicios civiles e incluye transparencia de finanzas y recursos humanos que mejora la gobernabilidad y la confianza. Innovaciones recientes de FreeBalance incluyen portales de Transparencia y Adquisiciones para mejorar la responsabilidad gubernamental.
Acerca de FreeBalance FreeBalance ayuda a los gobiernos alrededor del mundo a tomar ventaja de la robusta tecnología del software de Planeación de Recursos Gubernamentales (GRP) para acelerar el crecimiento del país. Las soluciones de software de FreeBalance para el manejo de las finanzas públicas y los recursos humanos, apoyan la reforma y la modernización para mejorar la gobernabilidad, la transparencia y la responsabilidad. Una buena gobernabilidad es requeridad para mejorar los resultados de desarrollo. Las soluciones de FreeBalance están activas en 19 países manejando más de un cuarto de trillón de dólares americanes in presupuestos anuales. Para más información, visite www.freebalance.com.
The CLAD conference promotes the discussion and exchange of experiences and knowledge on state reform and modernization of public administration. Presentation topics include: Participatory budgeting in Latin America; and Experiences and Reflections on Accountability of Staff Activities and Improving the Quality of Governance. Key speakers include: Nuria Cunill Grau, Academic at the University of Chile; Manuel Villoria, Director of Government Administration and Public Policy, Instituto Universitario Ortega y Gasset, Spain; and Robert Putnam, Malkin Professor of Public Policy at Harvard University (USA), and Visiting Professor, University of Manchester (UK).
“FreeBalance looks forward to discussing technology-enabled state reform and the modernization of public administration with attendees at the XVI International Congress of CLAD,” said Manuel Pietra, President & CEO at FreeBalance. “Governments worldwide are modernizing and reforming government software solutions to deliver operational efficiencies. FreeBalance works with governments to improve transparency, governance, and accountability, which leads to increased in-country capacity building, improved economic activity, and enhanced service delivery to citizens.”
The FreeBalance Accountability Suite offers a pure web-based platform that has been optimized for rapid government deployment and operational effectiveness. It is ideal for all levels of Government as the FreeBalance Accountability Suite was designed specifically for public financial management. The FreeBalance Accountability Suite covers the entire budget cycle, including budget preparation, budget execution, and civil service management and includes financial and human resources transparency that improves governance and trust. Recent innovations from FreeBalance include Transparency and Procurement portals to improve government accountability.
About FreeBalance FreeBalance helps governments around the world leverage robust Government Resource Planning (GRP) technology to accelerate country growth. FreeBalance software solutions for public financial and human resource management support reform and modernization to improve governance, transparency and accountability. Good governance is required to improve development results. FreeBalance solutions are active in 19 countries managing more than a quarter trillion ($US) in annual budgets worldwide. For more information, visit www.freebalance.com.
Congratulations to the Government of Antigua & Barbuda.
Good article from 15 June 2011 on the CARIBARENA Antigua website titled, “Treasury Centralizes Payroll Processing“. The article describes how the Antigua & Barbuda Treasury Department has successfully added all weekly-paid government employees to its automated payroll system, effectively centralizing payroll processing. Automating payroll improves governance through electronic funds transfer rather than cash payments. It provides more effective decision information on improving capacity by showing costs and civil service talent. Civil service expenditure is often the highest cost in many government departments, so it has become critical to automate civil service management to improve efficiencies. You can read the full article here.
Accountant General Dr. Gittens of Antigua & Barbuda said “complete payroll automation would bring a number of advantages, including a more secure payroll process, the ability to accurately track employment in the government system, and production of a comprehensive list of government employees.”
Antigua & Barbuda uses the FreeBalance Accountability Suite as it modernizes the payroll system. The article mentions that, “The automation began five years ago with monthly paid established workers and pensioners being added to the payroll module of FreeBalance, the government’s integrated financial management system.”
This process eliminates the need for manual preparation of salary sheets and improves the Government’s record-keeping by ensuring the timely payments of all workers, after making the appropriate deductions. It provides improved linkages between the strategic outlook, planning and the allocation of scarce financial resources in Antigua & Barbuda. It also consolidates Government accounts at various commercial banks, strengthening the Treasury Department’s ability to better monitor its cash accounts. Elimination of manual preparation of salary sheets enables Government employees to focus their time and efforts on strategic projects and less on administrative duties. And, re-deployment of government human resources and accounting expertise to other ministries, departments, and agencies strengthens capacity and financial management leadership. The FreeBalance Accountability Suite also provides audit trails and reports with the ability to identify the originator of each transaction.
What’s also interesting are the people’s comments at the bottom of the article. If the comments signify anything, it is that the people/citizens are supportive of the initiatives the government is taking to reduce fraud, improve efficiencies and focus on important things.
As the article says, it has taken time to collect and input all the data required. But the good news is that it appears the data is close to being finalized. So now all the hard work will begin to pay dividends. Great news!
Edilberto C. de Jesus just wrote an excellent piece about Timor-Leste in the Philippine Daily Inquirer. Published on 14 May 2011, the “Natural Resource Wealth Management” article describes both the author’s personal experience visiting Timor-Leste and the manner in which Timor-Leste has avoided the resource curse, known as the “Dutch Disease.”
The article also describes the challenges the government faces as it manages the revenue from its natural resources in a transparent manner to develop the capacity of its people and build a sustainable economy for its citizens.
A highlight of Timor-Leste’s achievements since gaining independence in 2002 includes:
The Revenue Watch Institute and Transparency International placed Timor-Leste in the group of countries most transparent with government revenues
In 2010, Timor-Leste achieved full compliance with the Extractive Industries Transparency Initiative (EITI), only the third country in the world to meet this standard
An improvement of
14 places in the Human Development Index rankings
19 places in the Corruption Perception Index
7 places in the World Bank Doing Business Report
And, between 2007 and 2009, Timor-Leste reduced the poverty incidence from 50 percent to 41 percent
Doug Hadden, Vice-President, Products at FreeBalance recently presented “Strengthening Public Financial Management through Transparency in Timor-Leste” at the 25th Annual International Consortium of Government Financial Management (ICGFM) conference in Miami.
This presentation describes how the Government of Timor-Leste employs the FreeBalance Transparency Portal and other mechanisms to create public financial management transparency to assist civil society, build infrastructure, set education goals, involve citizens, and improve government performance. The presentation describes how transparency was sequenced with other government reform.
