Sustainable Public Financial Management

Matthew Olivier, FreeBalance Director of Global Marketing and Alliances, opened the last day of the FreeBalance International Steering Committee (FISC) conference in Madeira Portugal. Day 3 includes customer knowledge-sharing presentations and panels.  Topics for the panels are government performance, capacity building and public sector reform.

Customer requests have adjusted the schedule for longer demonstrations of modules of the FreeBalance Accountability Suite, particularly the Transparency Portal, e-Procurement Portal and the Chart of Accounts Builder.

The key deliverable today will be the FISC vote on the FreeBalance product roadmap.  FreeBalance customers have analyzed draft plans and have added important feature requests. Voting this afternoon will adjust this roadmap to align FreeBalance product direction with customer goals.

FISC members will also select the Chair and the location for FISC 2012. The current FISC Chair is Mr. Lulzim Ismajli, Treasury Director, Kosovo Ministry of Finance & Economy, who was also elected in 2009.

About FISC

The annual FreeBalance International Steering Committee (FISC) conference runs from January 16 – 19, 2011 in Madeira, Portugal. 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 product vision to direct FreeBalance GRP solutions. Previous FISC events were held in Mt. Tremblant, Canada (2010); Prague, Czech Republic (2009); Cascais, Portugal (2008); and London, United Kingdom (2007).

Aldo Segastume, FreeBalance Director of New Product Development, demonstrated the FreeBalance Transparency Portal at the FreeBalance International Steering Committee (FISC) conference in Madeira Portugal. This new product shows government budget execution information on a publicly-available portal. Mr. Segestume showed how citizens can drill down to original budget, transfers, commitments, obligations and actuals. He was able to drill down through elements of the government chart of accounts to find budget execution information.

The FreeBalance Transparency Portal provides interactivity; unlike static PDF reports provided to the public my many governments.  He demonstrated 10 years of interactive data, and export to Excel, HTML, XML, PDF, Word. Machine-readable information in a consistent manner supports effective government transparency, according to Mr. Segastume. Governments are able to publish data in a single location at a lower cost. Everyone gets access to the same data.

FreeBalance Transparency Portal data is automatically pulled from the FreeBalance Accountability Suite to show budget transparency. Additional information such as text content and links to government documents is provided. The portal can be integrated within the government web infrastructure to allow for seamless navigation.

About FISC

The annual FreeBalance International Steering Committee (FISC) conference runs from January 16 – 19, 2011 in Madeira, Portugal. 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 product vision to direct FreeBalance GRP solutions. Previous FISC events were held in Mt. Tremblant, Canada (2010); Prague, Czech Republic (2009); Cascais, Portugal (2008); and London, United Kingdom (2007).

Pedro Jorge, Senior Software Development Specialist for FreeBalance described the workflow management and data access security functions in Version 7 of the FreeBalance Accountability Suite. Mr. Jorge exampled that workflow is available for any entity in the Suite that is “workflowable”. Any entity can have multiple statuses during the lifecycle.

Mr. Jorge pointed out how a process aggregates process stages, transitions and rules. Simple to complex processes are supported. The workflow functions supported automated and people tasks. This includes role-based tasks and task delegation for a defined period of time. Task re-assignment is also available. Tasks can be pooled to a group of users where tasks can be assigned based on number of open tasks. And, workflow is context-sensitive based on organizational structure. Tasks can be assigned with time limits at each workflow step.

Workflow is just one of the methods of adapting FreeBalance applications. All entities have parameters that can be configured. Custom domains support adding fields and validation rules. This enables changing configurations and meeting unique requirements without requiring software code customization. FreeBalance also supports customization through an Integrated Development Environment in the FreeBalance Accountability Suite. As described earlier, this Platform provides more functionality to create custom applications in government than traditional technical platforms.

FreeBalance provides a Workflow engine including workflow execution, execution step, workflow history and notes. The history shows when someone was assigned, who was assigned, and when the step was completed. Any workflow can send back to the previous step. Users are notified by the internal messaging system of the FreeBalance Accountability Suite.

FreeBalance workflow supports aggregating multiple approvals at once. Multiple workflow processes can be handled for the same workflowable entity.  For example, in the procurement application, the procurement document could be a Request for Proposal or an Expression of Interest. The workflow for each document is different.

Data Access Security

Mr. Jorge presented an overview of data access security. The FreeBalance Accountability Suite has this mechanism that inspects and filters any data coming in and out of the database to prevent users from receiving data they should not. Mr. Jorge demonstrated how this works for data retrieval and data update functions. This data access security functions outside of the business layer based on good software architecture design. This layer support the entire security context for every entity in the system. He described the different security dimensions used in the software and the definition of security groups.

About FISC

The annual FreeBalance International Steering Committee (FISC) conference runs from January 16 – 19, 2011 in Madeira, Portugal. 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 product vision to direct FreeBalance GRP solutions. Previous FISC events were held in Mt. Tremblant, Canada (2010); Prague, Czech Republic (2009); Cascais, Portugal (2008); and London, United Kingdom (2007).

José  Saldanha, FreeBalance Vice President of Research and Development, described and demonstrated new technology at the FreeBalance International Steering Committee (FISC) conference in Madeira Portugal. He described how FreeBalance uses open source middleware. Mr. Saldanha pointed out that the FreeBalance software is not open source.

Open Source

Vendors who sell a proprietary stack often means that the vendor has control over customers, according to Mr. Saldanha. The open FreeBalance system gives customers a wide choice in middleware and flexibility to change out components in the past. He described the differences in costs between open and closed source.  Mr. Saldanha described how open source middleware reduces the problem of “bloatware”.

Mr. Saldanha describing advantages of component Service-Oriented Architecture (SOA), and Servlet vs. Enterprise Java Beans to achieve a smaller technical footprint and better performance. He described how enterprise software is often tested in the “swimming pool” but open source tested in the “ocean”. He described the advantages of using the latest technology for security and quality.

Updated User Interface

José  Saldanha demonstrated the new user-interface functional design. This includes ability for users to develop custom menus.  Users can search for menu items by typing items. Breadcrumbs take the user to where users located.  This upgrade of usability also improved performance significantly with rapid page rendering.

Layered Design

Mr. Saldanha described the layered structure in the FreeBalance Accountability Suite and FreeBalance Accountability Platform.  He pointed out that this approach provides good reusability and extensibility. This also improves maintenance.  The layered technical design makes for ease of deployment and improves scalability. He described the de-coupling points in the software.

FreeBalance Accountability Platform

Mr. Saldanha described the differences in using the FreeBalance Accountability Platform to design government applications versus using traditional technical platforms. The FreeBalance IDE provides:

• Parameterization
• Form templates
• Report templates
• Internal messages
• Base government entities
• Security model
• Integration with FreeBalance Software
• Integrated Development Environment
• Technical Platform

The benefits of this approach include the ease of developing, integrating and maintaining software. This reduces costs.

Deployment and Scaling

Mr. Saldanha described horizontal and vertical scaling. He described the advantages of the new licensing functionality that support concurrent, named and enterprise users. The software can be licensed at very small components.  He described the license key to add users and modules.

FreeBalance Releases

FreeBalance will deliver one minor or major version of the software every year. Functional updates are released every year. Technical revisions are available on-demand. Version 7 supports upgrades from any version to any other version with no intermediate stages. FreeBalance produces four revisions of the software every day for continuous testing.

About FISC

The annual FreeBalance International Steering Committee (FISC) conference runs from January 16 – 19, 2011 in Madeira, Portugal. 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 product vision to direct FreeBalance GRP solutions. Previous FISC events were held in Mt. Tremblant, Canada (2010); Prague, Czech Republic (2009); Cascais, Portugal (2008); and London, United Kingdom (2007).

Aldo Segastume, FreeBalance Director of New Products, described how knowledge management tools could be used to augment capacity building in developing nation governments at the FreeBalance International Steering Committee conference.  Mr. Segastume described how training can be augmented by current FreeBalance products – Civil Service Management (Talent and Training modules), Capacity Building (e-Learning and Adaptable Help) and Performance Management (Document and Records Management). He described other modules that are in development available for roadmap voting tomorrow.

Mr. Segastume pointed out that people learn differently. It is important to capture courseware and use collaborative tools to accelerate capacity building. He emphasized that software vendors typically provide training systems only for their software. Developing nation governments require IT, accounting, human resources and management capacity building, as shown in the recent FreeBalance Customer Survey.

The product vision for additional modules was described in detail. Mr. Segastume described the technical vision that enables integrating the content across knowledge management tools and ease of navigation among these tools.

About FISC

The annual FreeBalance International Steering Committee (FISC) conference runs from January 16 – 19, 2011 in Madeira, Portugal. 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 product vision to direct FreeBalance GRP solutions. Previous FISC events were held in Mt. Tremblant, Canada (2010); Prague, Czech Republic (2009); Cascais, Portugal (2008); and London, United Kingdom (2007).

Doug Hadden, FreeBalance Vice President Products, presented the draft FreeBalance product roadmap. FreeBalance leverages   the 6 Thinking Hats linear thinking approach for product roadmap discussion and decision. The product roadmap includes modules, sub-modules and components aligned to the Public Financial Management Component Map. The status of every roadmap item was described including those that were completed in Version 7 in 2010. Numerous roadmap items represent the FreeBalance product vision. Some were proposed recently by customers. These were all described in detail with and discussed. Mr. Hadden reminded the delegates of recent PEFA assessments and results of the FreeBalance Customer Survey: current challenges and PFM priorities.

Delegates are presented the roadmap and select items that should be delivered in the short (2011), medium (2012) and long-term (after 2012). The voting occurs on the last day of FISC so that delegates have time to analyze all of the items.

There was a spirited discussion of how to handle off-budget management. Many FreeBalance customers have progressed from operational issues like cash management and controls to considering risk management monitoring and evaluation systems.

About FISC

The annual FreeBalance International Steering Committee (FISC) conference runs from January 16 – 19, 2011 in Madeira, Portugal. 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 product vision to direct FreeBalance GRP solutions. Previous FISC events were held in Mt. Tremblant, Canada (2010); Prague, Czech Republic (2009); Cascais, Portugal (2008); and London, United Kingdom (2007).

Matthew Olivier, FreeBalance Director of Global Marketing and Alliances opened the second day of the FreeBalance International Steering Committee (FISC) conference in Madeira Portugal.

The agenda for Tuesday is focused on product direction and technology.

• Detailed Product Roadmap, Doug Hadden, VP Products
• FreeBalance software for Capacity Building and Knowledge Management, Aldo Segastume, Director New Product Development
• FreeBalance Technology update, José Saldanha, Vice President, Research & Development
• FreeBalance Workflow, Pedro Jorge, Senior Software Development Specialist
• Migrating to Version 7, Matthew Olivier, Director Global Marketing & Alliances
• Solutions for Government Performance and Transparency, Aldo Segastume, Director New Product Development

About FISC

The annual FreeBalance International Steering Committee (FISC) conference runs from January 16 – 19, 2011 in Madeira, Portugal. 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 product vision to direct FreeBalance GRP solutions. Previous FISC events were held in Mt. Tremblant, Canada (2010); Prague, Czech Republic (2009); Cascais, Portugal (2008); and London, United Kingdom (2007).

The FreeBalance Customer Survey showed that human capacity is the primary challenge facing Public Financial Management (PFM) in developing nation governments.

Implementation Challenges

Human capacity in Information Technology, accounting and management was selected in 3 of the top 4 categories. A reliable and effective IT infrastructure was tied for first by FreeBalance customers.

On-Going Challenges

The FreeBalance Customer Survey showed that retaining qualified employees and building accounting capacity are the top on-going challenges in developing nation PFM. These results are consistent with other surveys and observations from PFM experts. A poll at the 2008 FISC about the sequence of PFM reform found capacity building to be important to very important at each stage of reform. Capacity building was found to be a critical component for system sustainability at the 2009 FISC poll.

The survey results enabled FreeBalance to provide a FISC session on how software can be used to augment capacity building. This session from later today will describe FreeBalance adaptable help, e-learning and the vision for knowledge management.

A panel discussion on Wednesday about capacity building is also planned.

The FreeBalance Customer Survey

The FreeBalance Customer Survey helps achieve a very important company mission: public financial management knowledge transfer, as a For Profit Social Enterprise (FOPSE). It also helps us improve customer-centric processes by gauging satisfaction and measuring trends.

More results of the FreeBalance Customer Survey will be presented on this blog during the FreeBalance International Steering Committee conference in Madeira Portugal. Many of the items on the agenda are built from the survey, so discussions here in Madeira will add more context to the survey results.

Aldo Segastume, FreeBalance Director New Product Development, described the reporting and analytics features in Version 7 of the FreeBalance Accountability Suite.  He provided an overview of reporting needs by role and described how these could be satisfied with Version 7.

Mr. Segastume emphasized the need for ease of use in report creation.  He described the parameters used to create built-in reports. FreeBalance currently supports over 300 reports with Version 7, ad-hoc reporting and On-Line Analytical Processing (OLAP).  Reports can be exported to numerous file formats.

Management reporting to assist decision-making is a key government requirement, according to Mr. Segastume. He described the use of the FreeBalance Data Mart to enable analysis based on the country context.

Mr. Segastume concluded his presentation by describing best practices in business intelligence. He also pointed out that Version 7, recently introduced, now has 50% more built-in reports than Version 6. He demonstrated the built-in reports with flexible query capabilities. He then demonstrated the On-Line Analytical Processing (OLAP) tool including drill down and drill up and integration with macroeconomic data. Mr. Segastume described how the flexible Chart of Accounts in the FreeBalance Accountability Suite acts as a multi-dimensional database. Scenario planning with what-if analysis is also supported by the tool. He demonstrated graphical tools. Mr. Segastume described how the FreeBalance multiple year Chart of Accounts is supported through reporting.

About FISC

The annual FreeBalance International Steering Committee (FISC) conference runs from January 16 – 19, 2011 in Madeira, Portugal. 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 Suiteproduct vision to direct FreeBalance GRP solutions. Previous FISC events were held in Mt. Tremblant, Canada (2010); Prague, Czech Republic (2009); Cascais, Portugal (2008); and London, United Kingdom (2007).

Doug Hadden, VP Products

Public Expenditure and Financial Accountability (PEFA) assessments have become a “gold standard” for analyzing Public Financial Management (PFM) progress.  How well have FreeBalance customers accomplished in PEFA assessments?  Quite well, using the measurements used by Paolo de Renzio in his paper published by the Oversees Development Institute, Taking Stock: What do PEFA Assessments tell us about PFM systems across countries?  This study examined 2007 results.

Of course, Government Resource Planning (GRP) software cannot generate good PEFA assessments without government commitment. This is a key point. There is no magic here. Government commitment for PFM reform is required. Our software just makes it faster and easier.

Most of the FreeBalance customers who have completed implementation and were assessed are post-conflict, yet have achieved assessments slightly lower than average for all countries. However, the average has been materially exceeded in the following four categories:

• PI-5 Budgetary Classification
• PI-10 Public access to key fiscal information
• PI-20 Effectiveness of internal controls on non-salary expenditure
• PI-24 Quality and Timeliness of in-year Budget Reports
• PI-25 Quality and timeliness of annual financial statement

How can post-conflict countries achieve good results?

It is important to recognize that governments should strive for PEFA Assessments that follow country priorities. So, many countries should not be concerned with lower ratings in some indicators. We believe that government ownership and effective computerized GRP improves governance. It is very clear that leadership and ownership has successfully leveraged automated systems (the green line). The FreeBalance Accountability Suite, in my humble but subjective opinion, seems to help – as witnessed by the purple line.

Where did we get these numbers?

The PEFA site shows many assessments. We’ve used the most recent assessment, 2007 to 2010 depending on the country. This doesn’t show the current benchmark in many countries. And, we have an unfavourable recent assessment of a non post-conflict country that brings down the average. This assessment is currently not on the PEFA site. Otherwise the red and purple lines would be higher.