Sustainable Public Financial Management

Doug Hadden, VP Products

FMI PD Week ends today. As always, interesting. And, a signpost for change in the Canadian Federal Governments. Here are some observations:

• The theme of risk and control generated many interesting discussions. The increase in financial control was sited by many speakers as limiting innovation and improvements in productivity.
• FMI did not tweet this year because of the lack of uptake last year. That didn’t stop us from tweeting and creating a hash tag #fmipd10.
• Government 2.0 was not a major topic of conversation. (Perhaps this explains the lack of interest in Twitter.) Nevertheless, my presentation: The Emperor has no Clothes: Risk and Results in an Increasingly Transparent Government 2.0 World was well-attended. (The presentation uploaded to Slideshare was a daily favourite and had some retweets).
• The development of a performance culture in government and the use of performance management techniques was very evident this year. Many public servants found lessons learned to be valuable. Although, based on my presentation last year, there does not seem to be a recogntion that Government 2.0 is critical for Government Performance Management.
• There were many excellent keynote speakers. Senator Jacques Demers, a former hockey coach, had attendees spellbound with his lessons on leadership, constant learning, growth and team building. Robert Blain of Cirque du Soleil had compelling thoughts of how Corporate Social Responsibility and strong values can lead to growth and profitability.

Doug Hadden, VP Products

Almost of full house for our Financial Management Institute of Canada (FMI) presentation on methodology, IT governance, risk in the age of transparency and Government 2.0 earlier today. The presentation is embedded here, complete with full script, hyperlinks and sources.

The FMI Professional Development Week is focused on finding the balance between risk and control. We’ve been tweeting about many of the sessions (check out @freebalance to learn more).

There are still 2 more days to go. My impressions so far:

• There is great concern that governance structures to support risk mitigation and control can reduce productivity and innovation in the Government of Canada.
• Risk-based processes where IT governance processes are proportional to risk are starting to gain traction.
• Government organizations are improving planning and performance management.
• There is an increasing recognition that IT investments need to be sustainable and the Total Cost of Ownership (TCO) has become a more important measurement.

Doug Hadden, Vice President Products at FreeBalance, to Present at Financial Management Institute (FMI) of Canada Professional Development Week

Ottawa, Canada (November 22, 2010) – “Governments are faced with a ‘new normal’ of responding to increased citizen demand with reducing budgets,” according to Doug Hadden, Vice President Products at FreeBalance. FreeBalance, a global Government Resource Planning (GRP) software company, will participate in the FMI of Canada Professional Development (PD) Week. The annual conference is taking place at the Hotel Lac-Leamy in Gatineau, Quebec, Canada from November 22 to 26, 2010. The FMI conference is focused on striking the right balance of risk and control.

Doug Hadden will host an interactive session on how transparency and accountability have become strong themes in government. Titled “The Emperor Has No Clothes” – Risk and Results in an Increasing Transparent and Government 2.0 World, this session will explore how social media and open government initiatives have introduced a new risk and reward paradigm for public servant careers and for government organizations. Transparency, in itself, has become a key performance indicator. An updated methodology on calculating open government value and improving governance structures will be discussed. The session will be held from 1:30 – 2:30 pm, Wednesday November 24, 2010 in the Hotel Lac-Leamy Krieghoff Room.

“Government 2.0 supports government economic incubation and services modernization,” said Doug Hadden, Vice President of Products at FreeBalance. “Innovation is alive and well in government and will be further transformed thanks to Government 2.0. How Government 2.0 technology enables managing for results will be discussed during the session.” Many of the subjects to be discussed are being expanded on the FreeBalance Sustainability Blog – www.freebalance.com/blog.

The FMI of Canada 2010 PD Week will trace government efforts to counter the effects of the global recession. It features a series of workshops and information sessions that elaborate on risk and control, striking a balance and public service renewal. The annual five-day conference draws more than 2,400 public financial management professionals to the National Capital Region of Canada. Panel discussions and exhibits provide an opportunity for participants to explore a range of new ideas, products and services.

Members of the FreeBalance team will be available for the duration of the conference to discuss and demonstrate FreeBalance web-based Government Resource Planning (GRP) solutions. FreeBalance Version 7 supports the unique and evolving requirements of government, including GRP, Government Performance Management, Government 2.0, Shared Services and Service Oriented Architectures (SOA). FreeBalance Version 7 covers the entire budget cycle and provides fiscal control over fund allocations, expenditures, appropriations, revenue administration, and human resources. FreeBalance Version 7 is a fully compliant J2EE solution. The n-tier architecture allows departments and agencies to leverage existing web, application and database clusters. Unlike traditional software solutions, the FreeBalance Accountability Suite is fully web based and has no hidden client/server technologies.

The FreeBalance Accountability Suite is one of the most widely deployed financial management systems inside the Government of Canada. More than 50 government departments and agencies use FreeBalance software for enhanced public financial management.

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Doug Hadden, VP Products

Two public servants speaking about Government 2.0:

Public Servant 1: “Now that we are open and transparent, the public is finding examples of our mistakes.”

Public Servant 2: “That’s better than the alternative. We’re not open and transparent. The public assumes that everything we do is a mistake because we’re trying to hide something.”

If authoritarian regimes can’t keep secrets from leaking, does the Canadian government have a chance of controlling the message and information? That’s one of the reflections about risk and results for Government 2.0 for my upcoming presentation at the Financial Management Institute. For all the risk of Government 2.0, the risk of not being transparent seems greater.

Not that governments can control the message because “little brother is watching”. Governments can engage citizens in dialog. They can become trusted.

It’s better to be “in-network” than “out of network”.

Bad News is Good News?

Mistakes and bad news might be good. Governments have been constrained by limited and faulty feedback loops – the ever-increasing sensational press, the odd letter from the public, the lobbyists. Government 2.0 can provide improved performance information enabling governments to increase effectiveness. At a low cost.

In the era of “doing even more for even less”, Government 2.0 is good news. This is a lesson that we’ve learned at FreeBalance. We seek out bad news so that we can improve our products, services and support.

So, feel free to comment right here on any bad news you’d like to share!

Doug Hadden, VP Products

There is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle than to initiate a new order of things.

Niccolo Machiavelli

Last year, a gentleman attending my Financial Management Institute presentation on government performance management sat attentively with a rather bemused look on his face. He’d heard it all before. The enthusiasm for some technology-driven change. Some technology adoption, but no change.

I reflected on this a few months ago suggesting that open government isn’t “getting any respect“. As I said about change:

Change is not easy for large organizations. We’ve written about the skills necessary to lead Government 2.0 change. And there any many examples of culture change and Government 2.0 adoption.  Change is unevenly adopted.  That’s why we talk about early adopters. There is a culture of expertise in large organizations. Knowledge is power in traditional organizational structures. So, we cannot expect widespread immediate culture change. At the same time, we cannot expect that no change will occur.

We’ve Got Government 2.0 All Wrong

The Government 2.0 adoption debate centers around assumptions for technology-induced change:

1. Narrow categorization view: we debate about the differences among technologies like Government 2.0, e-Government, and collaboration, so we don’t see the real trends
2. Narrow time view: we debate about cause and effect over very short periods of time, so we don’t register the change effects
3. Narrow technology view: we debate about the technology in isolation of other societal drives, so we don’t see the results in cumulative

Historical Perspective

Government structure, culture and mandates are in constant flux. Harold Innis described how empires were structured and developed based on dominant method of recording and communications whether stone, papyrus or velum. Marshall McLuhan described how the technology medium results in societal change.

Getting Government 2.0 Effects Right

It’s not a question of whether Government 2.0 will or will not be adopted. Or whether it will or will not have a material transformation on government. Government 2.0 is another signpost in government change. So, the question really is: Will Government 2.0 be able to keep up with the change or not?

Technology-Induced Change in Government

• Movable Type/Printing Press: generates rise of the “nation state” as languages become standardized and people begin to identify with ethnic and “national” characteristics
• Radio: generates rise of government dominance in communications from Roosevelt’s “fireside chats” to incendiary propaganda
• Television: increases the scrutiny of government from political debates to war reporting
• Photo-copier, fax, personal computer, mobile technology, blogs: gives individuals publication capabilities to extend discussion creating new pressures for government transparency and accountability. It also enables groups with affinities to self organize. (Also appears to enable the move to supra-national institutions and the devolution of the nation state to accommodate regional, ethnic, religious and language groups.)

The Trends of Change

Transparency has become a meme for government. It’s in almost every political debate and promise.Government 2.0 is one of may technology signposts in the long term change in government to:

• Higher levels of participation in policy and operational government by citizens, whether in participatory budgeting, idea factories or political campaigns.
• Increased focus on outcomes away from inputs and outputs as the main driver for government spending – away from what the money was meant to accomplish to what it really did.
• Collaborative government with multiple government tiers, international organizations and the private sector whether in response to fiscal crisis, trade liberalization or public-private partnerships
• Flattening of organizations to enable more efficient and effective public services whether through one-stop services, on-line services or shared services

Government 2.0 is a vehicle for higher levels of participation through on-line communities. The use of mashups and other techniques enables the focus on outcomes. (This was the main theme of my presentation last year.) Collaboration is enabled through Web 2.0 tools like wikis.

So, in the end, when we look back at this transformation in government, we may call it Government 2.0, or we may call it something else.

Doug Hadden, VP Products

Web 2.0 is about the continuous beta. Iteration. Constant tweaking. This seems to go against the typical project governance and enterprise architecture disciplines practiced by governments.

More agile development methods like extreme programming can be effective for the continuous beta. While considering methdology, risk management and IT governance for my upcoming seminar at the Financial Management Institute (FMI) in Gatineau – it occured to me that government might be ready for the extreme. Or, other forms of agile development.

Here’s a first draft on why this makes sense, with some generalizations that may not be true in all cases:

My analysis suggests that more agile implementation methods are likely to generate quicker success in Government 2.0 than traditional governance methods. My experience is that agile development can present problems when software architectural design or significant extensibility is required. However, these techiques are very effective for project development, adapting existing software and experimentations. Some benefits of these methodologies include:

• Short iterations to ensure meeting changing needs and user feedback
• Focus on creating the interface wireframe, so solidifies usability quickly
• Small improvements over time give quick wins rather than the traditional roll-out of complex new feature sets and usability changes

It stands to reason that this approach can enhance tools used for Government 2.0:

• Open source and commercial tools enable configuration and customization from changing templates to adding functionality like rich text editors
• Use of existing social networks such as Facebook, LinkedIn, MySpace or Ning
• Ability to add widgets and embed content without programming
• Integration standards such as RSS feeds and Web Services enables integration of data across applications
• General ease of deployment to mobile platforms
• Ability to monitor or beta changes to see usage through analytics

Doug Hadden, VP Products

What exactly is “government innovation’? Perhaps, like my presentation last year pointed out about “government performance”, many may see this as an oxymoron. Nada Teofilovic argues against the assumption that  ”bureaucratic administration lacks the prerequisites for innovation, namely creative thinking, idea experimentation and inventiveness.”

Innovation is an underlying theme for my upcoming presentation on Government 2.0.

Ms. Teofilovic describes  innovation using the Government of Canada as a case study:

In response to a range of economic, political and ideological demands, the structures and processes of governance are changing and modernizing. The traditional public service is developing creative ways to address fiscal restraints and citizen demands for efficient service delivery; conventional, process-oriented public administration is giving way to results-focused public management; and federal departments are collaborating and working horizontally to overcome the hegemony of central agencies. In view of these developments, innovation is becoming a reality in government.

Government 2.0 support government as an economic innovation incubator and as services modernization.

Innovation is alive and well in government and will be further transformed thanks to Government 2.0, as described in Steven Johnson’s  Where Good Ideas Come From: The Natural History of Innovation

Economic Innovator

Tim O’Reilly of O’Reilly Media, who invented the term “Web 2.0″, is a strong advocate of “government as platform“:

government is, at bottom, a mechanism for collective action. We band together, make laws, pay taxes, and build the institutions of government to manage problems that are too large for us individually and whose solution is in our common interest.

There are many who resist this notion of government as a “technology platform” or that “open data” can generate economic value. These are a bit hard to prove using legacy measurement tools. Nevertheless, there is compelling evidence of “government as platform” in the analogue world – the Internet, GPS, road and rails systems.

As Mr. O’Reilly sees it:

Government 2.0, then, is the use of technology—especially the collaborative technologies at the heart of Web 2.0—to better solve collective problems at a city, state, national, and international level.

Services Modernization

Governments are striving for services innovation. Reform of government to provide a better value to citizens has become a major political theme for the past 3 decades, according to Dr. Elaine Kamarack.

Government 2.0 promises to extend the value of citizen and business services beyond traditional e-government. E-government has focused primarily on computerizing service delivery and supporting transactions. Process-centric services. Structural. Not the services that can be enabled through collaboration, as I’ve described in a white paper about Knowledge Management 2.0 and Government 2.0.

Government 2.0 offers improved effectiveness in internal collaboration that can result in improved services.

Government application categories include:

• Internal: internal by governments
• External: external to government with government involvement
• Structural: follow government structure and mandate
• Social: enable collaboration

Our framework suggests that there are three classes of applications:

• Back-office: operational budget, financial and civil service management-transaction management
• E-Government: exposing government information and transactions
• Government 2.0: social networking whether exclusively internal or collaborating externally

Therefore, Government 2.0 has the potential to extend services innovation from back-office and e-government functions. And, it has the potential to provide innovation separate from structural applications.

Doug Hadden, VP Products

While working on my upcoming seminar at the Financial Management Institute conference in Gatineau (“The Emperor has no Clothes” - Risk and Results in an Increasing Transparent and Government 2.0 World), I began to reflect on the IT governance gap. Many governance methods are predicated on generally accepted axioms. Or: “what should work“.

My point in the upcoming seminar is that traditional IT governance structures that work in government for mature technologies need to change in order to take advantage of the Government 2.0 transformational promise. After reviewing Treasury Board Secretariat guidelines on IT governance, it occurred to me that this governance gap may exist with more traditional projects. That’s not to say that TBS governance guidelines are somehow antiquated – far from it, when compared to established IT methodologies.

IT professionals often live in a world where technology is abstracted. We hold many concepts dear to our hearts. We use conventional open-loop thinking rather than systems thinking for governance and risk management. This is described fully by Dr. Pallab Saha and team in a Microsoft funded project on Advancing the Whole-of-Government Enterprise Architecture Adoption with Strategic (Systems) Thinking.  What struck me was the view that conventional thinking is fragmented (Believing that really knowing something means focusing on the details) , rather than holistic (Believing that to know something requires understanding the context of relationships.)

The IT governance gap comes from specialization or, what Dr. Saha describes as “factors” and “straight line” thinking. The overall effect of any IT project comes from the relationship to other IT projects. Here’s where we see a gap in traditional IT projects, when we use conventional thinking like:

• Leveraging a proven software vendor with a large installed based and $Bs in revenue reduces risk.
• Large software vendors have proven ROI.
• IT Shared Services will save money.
• It’s only possible to meet requirements through customization
• IT failure is caused by process – it’s the client or integrator’s fault – not the software

We encounter this gap frequently where facts collide with strong axioms. Government 2.0 provides a compelling event for IT professionals to reconsider some of these axioms. IT governance can follow the ceremony of process yet fail to meet objectives because the project technology premise was faulty. How should IT governance adapt?

• Ignore vendor success stories (it’s marketing, not reality)
• Connect with practitioners to determine what works and doesn’t work
• Use technology analysts to identify issues and opportunities, but don’t take their word for “what should work” – remember, vendors have influence here
• Question the technical premise behind the project at the beginning – this could reduce the IT governance overhead
• Small projects first, avoid the “big bang:

Conference to explore the role of finance and public financial management reform to accelerate the transition out of fragility 

Ottawa, Canada (November 15, 2010) – FreeBalance, a global Government Resource Planning (GRP) software company, announced that it will be participating in the sixth annual conference on development finance and public financial management reform. The conference is jointly organised by the Centre for Aid and Public Expenditure at the Overseas Development Institute (ODI) and the International Monetary Fund (IMF) Fiscal Affairs Department. The sixth annual conference will focus on the practical and policy aspects of how to use finance to support fragile states in their transition out of fragility. The invitation-only conference will bring together government policy makers, international agencies, practitioners, and academics. The lessons learned will be captured in audio recordings, video footage and a conference report that will be disseminated after the conference.

Public Financial Management (PFM) discussion during the two-day event will be focused on delivering effective financial, developing local financial management capacity, the role of transparency and accountability, and lessons learned in PFM reform in fragile states. Guest speakers at the event include representatives finance ministries from FreeBalance customers including Afghanistan, the Democratic Republic of Timor-Leste, Sierra Leone, Uganda, and Liberia. Panelists and speakers will include representatives from the IMF, the World Bank, ODI, the African Development Bank and the Organisation for Economic Cooperation and Development (OECD).

“FreeBalance is pleased to have been invited to participate in the Cape Conference 2010 event,” said Manuel Pietra, President & CEO at FreeBalance. “Our mission as a company is to help countries around the world leverage technology to support economic growth and development. Many of our customers are participating in this event and we fully support the collaborative exchange of lessons learned and good practices.”

FreeBalance is a global provider of software solutions for PFM, where PFM is an essential part of the international development process. FreeBalance solutions support government modernization, fiscal decentralization, and public finance reform across all levels of government.

FreeBalance customers span the globe and the user community includes public financial management professionals in 18 countries, including Afghanistan, Iraq, Kosovo, Liberia, Mongolia, Namibia, Pakistan, Panama, Sierra Leone, Southern Sudan, Timor-Leste, and Uganda among others. FreeBalance operates in 15 customer time zones. FreeBalance has more than 60,000 users around the world. FreeBalance software manages a global civil service workforce of 1,500,000, and also manages a quarter trillion ($US) annual budgets worldwide.

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. For more information, visit www.freebalance.com.

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Doug Hadden, VP Products

I’ve been updating my Government 2.0 information sources in preparation for my presentation at the Financial Management Institute (FMI) Professional Development Week in Gatineau Quebec. The subject for the conference is “Risk and Control: Striking the Right Balance“. It seems apropos to talk about control and risk for new technology, particularly Government 2.0.

If you are like me, you appreciate when interesting analysis is put into Scribd or SlideShare format to enable quick browsing. Here are some of the sources that I’ll be using in the presentation, The Emperor has no Clothes - Risk and Results in an Increasing Transparent and Government 2.0 World presentation.

Hewlett Packard Government IT Survey

IBM Publication on Leveraging Web 2.0 in Government

Leveraging Web 2.0 in Government

Matthew Hodgson from WSG Web Standards Group

Australian Government 2.0 Taskforce

Australian Government 2.0 Taskforce Report

I was co-author with Martha Bartoski on this paper on Knowledge Management 2.0 in government

Embracing Government 2.0 Leading Trans Formative Change in the Public Sector

Additional good links from those with good content, but don’t seem to get the Web 2.0 deployment advanatages include:

• Deutsche Bank: How companies are tapping the benefits of Web 2.0
• Victorian Public Service: Government 2.0 Risk Register and Management Plan
• Deloitte: National Issues Dialogues, Web 2.0: The future of collaborative government
• McKinsey: E-Government 2.0
• Booz, Allen, Hamilton: Enterprise 2.0

My presentation is entitled: “The Emperor has no Clothes - Risk and Results in an Increasing Transparent and Government 2.0 World.”

Transparency and accountability have become strong themes in government. Social media and open government initiatives have introduced a new risk and reward paradigm for public servant careers and for government organizations. Transparency, in itself, has become a key performance indicator. This presentation explores the effects of social media on risk management in government and how Government 2.0 technology enables managing for results. An updated methodology on calculating open government value will be discussed.

For those interested in more, the presentation is on Wednesday, November 24, 2010, 1:30 to 2:30pm at the Krieghoff room.