Sustainable Public Financial Management

Doug Hadden, VP Products

FreeBalance committed to a customer-centric approach in late 2006. We adapted our processes in product management, development, support and implementation to achieve this objective. This resulted in achieving ISO-9001 certification in late 2007. We implemented a customer portal and scorecard in 2007. The scorecard was automated in March of 2008. There is the view that companies can only improve those things that are measured. We measure customer cases. Customer cases include:

• Software problems that could be defects in the code.
• Data problems that may be caused by software defects, database or hardware issues
• Software enhancement requests
• Service requests – looking for implementation assistance or advice

All cases are rated by severity and priority by customers. Customers determine whether a case is considered an emergency.

The results from this approach are:

1. Reducing the number of open cases by 70% since March 2008
2. Reducing the number of open emergency cases by more than 97% since March 2008 compared to rolling average over the past year
3. Achieving “green” on emergency cases- 2 or less  since July 2008
4. Achieving “green” on total open cases – 200 or less October 2009, except for a peak in April 2010

There are some other observations that are relevant:

1. The trend shows a gradual reduction in case loads even though FreeBalance is growing the number of customers and modules in use by current customers. It will be very challenging for us to continue to achieve “green” with three large implementations scheduled to go live this year.
2. Case loads tend to peak in the autumn of each year. Case loads may increase starting in September.
3. Many long-term customers have remarked that our service has improved. (This was a bit of a surprise because I wasn’t asking about support.)
4. Many cases take weeks to resolve. Most FreeBalance customers have mature software that requires effort to reproduce problems. And, FreeBalance manages customer data securely to meet Canadian privacy laws and Government of Canada security regulations.
5. The distribution of case types has changed over the past 2 years. Software and data problems represented less than 50% of total cases in 2008. It now represents roughly 60% as processes for service requests have accelerated.
6. Many long-standing enhancement requests have been satisfied in Version 7 of the FreeBalance Accountability Suite.
7. The frequency of SWAT Teams – where FreeBalance staff from multiple groups get together to solve a significant customer issue, has reduced significantly. There has been only SWAT team over the past 12 months.
8. There is no question that regional offices with local staff are required to achieve better support.
9. The number of problems or enhancement requests that occur outside the system through e-mail or informal channels has been reduced over the past 2 years. This is a good sign because it ensures that FreeBalance management is paying attention to the right things! 

Doug Hadden, VP Products

Phasing of Public Financial Management (PFM) “reform, through achieving gradual manageable steps (DFID 2005)” is considered a good practice. In fact, if any thing in PFM is considered a best practice – it’s the phased implementation of PFM reform and supporting information systems as we’ve pointed out before and validated at numerous conferences.

The sequence of reform depends on the country context. “Implementing public finance reforms of any kind requires an understanding of the entire public finance system in place in that country. It requires an understanding of the institutional arrangements (Rodin-Brown 2008).” As a vendor specializing in the government domain, Government Resource Planning (GRP), FreeBalance has developed a methodology called progressive activation that enables governments to modernize over time. That’s because, unlike the private sector, technology solutions like GRP need to follow reform. A company can easily change a chart of accounts to improve performance tracking or adopt secure electronic cheques with electronic signatures. Governments often need to change the law to support these “business process” improvements.

There is no established sequence of reform (Allen 2009) except at a fairly high level. David Nummy from Grant Thornton provided a good PFM framework at our FreeBalance International Steering Committee meeting in 2008.

It is rather frustrating to government PFM practitioners to determine the sequence of technology adoption to follow reform. Some technology adoption does not require legal reform. As I discovered in the Kyrgyz Republic, there is an appetite to understand the benefits of financial, budget and civil service automation to help determine priorities for legal reform. We have always identifed the three dimensions of sequencing GRP technology:

1. Modules or functionality that is implemented by governments. We’ve created a PFM component map that provides an overview of general modules used in government GRP.
2. Decentralization or the rolling out of functionality to other government entities.
3. Modernization or reconfiguration of existing modules to support reform.

We have our first draft of a simplied scorecard to help identify the level of maturity of a government financial management software system. I’d very much like input and ideas. This will help all PFM practitioners regardless of software technology used.  The items in the “modernization” column may imply the acquisition of additional modules or it could be activating functionality that already exists. Governments can utlize the scorecard to show what is current implementd and what could be implemented in the future.