Miami, USA (May 21, 2013) – FreeBalance, a leading vendor of Government Resource Planning (GRP) software, today released a white paper describing how technology can assist governance reform in developing nation and emerging economy governments. The white paper was released at the 27th Annual International Training Conference of the International Consortium on Governmental Financial Management (ICGFM) in Miami.
The Automated Good Governance white paper consists of a framework with use cases. “Some observers believe that technology has a limited impact on governance,” said Doug Hadden, Vice President of Products. “Our experience shows that effective financial management software designed for government improves governance through automated controls, IT security and transparency. GRP is a necessary tool for critical institutional reforms to take hold.”
A set of four (4) use cases were released at ICGFM addressing important governance opportunities of:
The white paper augments FreeBalance PFM good practices documents and follows the company’s mission, as a For Profit Social Enterprise (FOPSE), to share lessons learned with the global PFM community. The Miami conference is focused on good PFM practices “in a period of global adjustment.”
About FreeBalance
FreeBalance helps governments around the world leverage robust Government Resource Planning (GRP) technology to accelerate country growth. FreeBalance is a recognized as 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. For more information, visit www.freebalance.com.
We’ve been tweeting from 27th. Annual International Consortium on Governmental Financial Management (ICGFM) conference in Miami. You’ll find the chronological “storified” version of these tweets from each presentation posted on our storify site We’ve also summarized some of the themes from the conference.
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
Is foreign aid effective? Is money better spent domestically?
There is probably no public debate so much dependent on bad information and confirmation bias than foreign aid. Polls consistently show that public perception of aid spending is orders of magnitude larger than it is. And, press reporting about aid focuses far more on the bad news than the good. As the video from Save the Children UK shows.
This video from Development Initiatives shows the need for transparent information to advance development and improve governance.
That’s not to say that foreign aid can’t be improved. And, there has been significant work to find evidence of what works and what doesn’t. And, for transparency thanks to the International Aid Transparency Initiative (IATI). We are on the cusp of leveraging “big data” analytics to improve aid effectiveness and development. It’s time for the aid debate to move from “narrative” to “visualization”. To leverage data for insight. To test our preconceptions.
What about the other 99.3% to 99.9% of government spending?
The rest of government can take a page from the aid community to leverage open data to improve performance. Let’s compare spending effectiveness on aid versus other government programs.
Government open data advocates are shooting themselves in their collective feet. Skeptics suggest that there is little value in some, many or all open data initiatives. These pragmatists and curmudgeons demand to see the Return on Investment (ROI) calculation.
What do they get from open data advocates?
Anecdotes. Often the same anecdotes.
I had intended to review a recent study on open data. But, it’s just a bunch of attractive pictures with anecdotes. Some anecdotes stretch to an entire page and are presented as “case studies”.
A page does not a case study make.
I also got the impression that the information was stretched out to fill the page. Of course, with just enough information to determine that the conclusions are dubious.
I think that it’s time to take these frameworks for a spin. Let’s see what the numbers say. Let’s question and learn. Let’s help early adopters to measure risk and return.
Towards Pattern Recognition
Don’t get me wrong, open data anecdotes are not useless. They provide patterns. The patterns could demonstrate where early market effectiveness is highest by comparing:
Local vs. national government initiatives
Government-driven vs. citizen driven initiatives
Public financial management domains: budgets, procurement, human resources, revenue etc.
Information types, standards and accessibility
Regions, digital penetration, political systems and human capacity
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.
We’re on the front-lines helping those governments with political will to improve fiscal transparency and accountability. I encountered this recent Ted talk from Afra Raymond on the
We started a Three Myths about Corruption: Some Lessons from Trinidad. He speaks about his experience with freedom of information, transparency and corruption. Well worth viewing to gain a good perspective, especially if you don’t view corruption as a serious governance problem today.
I was most strucl by Mr. Raymond’s corruption calculation :
PUBLIC EXPENDITURES
minus TRANSPARENCY
minus ACCOUNTABILITY
equals CORRUPTION
The other important food for thought, in my view, was the contribution of “government to government” funding relations to overall corruption.
Conferences organized by the International Consortium on Governmental Financial Management ( ICGFM ) are the best value in Public Financial Management (PFM). I’ve been participating in the organization for the past seven years including two years as volunteer VP of Communications. And, our President and CEO, Manuel Pietra, was elected ICGFM President for 2013-2014.
I’m not suggesting that ICGFM is an awesome organization because we’re involved.
We became involved in ICGFM because of the quality of PFM knowledge sharing.
The recent conference in Washington DC of Fiscal Transparency (“storified below”) held at the IMF demonstrates why ICGFM should not be missed by PFM professionals!
I attended the International Consortium on Governmental Financial Management( ICGFM _ DC Forum last month where Marcela Rozo from the World Bank described the Open Contracting initiative. Her presentation is available and some of my notes are located below via Storify.
Ms. Rozo pointed out that even a 1% improvement in government costs through procurement transparency is material because total annual government procurement is $9.5T. Procurement transparency leads to increased competition and reduced corruption. Jorge Claro, formerly of the InterAmerican Development Bank, and an expert in government procurement at a DC Forum in 2008 suggested that Public Sector Procurement accounts for approximately 15% to 20% of GNP in many countries Procurement has traditionally been poorly managed with inefficiencies adding anywhere between 15% to 20% to the cost of the works, goods and services being procured. Corrupt practices add an additional 15% to 20% to the cost of those works, goods or services In other words, inefficiency and corruption combined could account for 2.25% to 4% of GNP in most countries, thus negating growth – yet there seems to be little concern about this loss of GNP in most countries.
These are staggering figures.
We’ve been delivering government procurement automation including e-procurement portals and transparency for a few years. Many governments have initiated e-procurement portals – but without direct integration to back office procurement and commitment accounting systems. I think that this integration is critical to reducing corruption because it eliminates a point where data can be “treated” manually. It also improves efficiency and ensures that the procurement opportunity was posted only after meeting all fiscal discipline rules. (It’s not unusual to hear about the disconnection between systems so that Ministries of Finance are caught unawares of budget arrears.)
I wrote about performance procurement last year and the need to integrate front and back office processes. Yes, open contracting is an important step towards government value for money. But, tight integration with back-office systems will provide significant improvements in procurement performance.
The FreeBalance International Steering Committee (FISC) conference was held last week in Ottawa. FISC, as I’ve written before , differs in many ways from traditional user conferences. Typical enterprise software companies leverage conferences to sell more software – to tell customers what features they are going to get. FISC, on the other hand, enables customers to change our product roadmap. They also tell us how to change our customer support processes.
One FISC attendee mentioned that he had learned more about good practices in public financial management at FISC than through Public Financial Management (PFM) conferences or donor technical assistance. This generated an interesting discussion. Yes, there was a bit of “beating up the donors.” Primarily about the subjective nature of technical assistance. How advice is often contradictory depending on the consultant. And the extent to which person experiences in the consultant’s home country affects advice.
The difference at FISC is the sharing of what works in countries in similar circumstances. What has often called “South-South” cooperation” . The emergence of BRIC countries has put some doubt into the “Washington Consensus” approach to development.
FISC is also different from traditional user conferences because each customer presents on lessons learned in PFM reform. That’s right: no fluff about how they used our software to overcome some challenge. This year presenters described good practices in budget formulation, problems in identifying and removing ghost workers, improving cash and liquidity management, and capacity building. Turns out that there are common solutions to common problems.
2. Transparency has become a Competitive Sport
Transparency is no longer a sport of kings – for developed countries. Emerging economies are following the lead of Brazil and the Open Government Partnership. Fiscal transparency is facilitated in less developed countries by leveraging GRP systems. Unlike more developed countries with multiple financial systems, many governments in emerging economies – even so-called “fragile states” – have single GRP systems. We have seen some interesting innovation:
3. Interest in Government Performance Management on the Increase
The roadmap process used by FreeBalance is somewhat unique in the industry. We provide a list of current and potential Government Resource Planning (GRP) modules based on the PFM Component Map. We show what modules are currently available and those modules that we are committed to completing. We also show proposed modules. Customers add ideas for new modules then vote on the 2 year roadmap. This can adjust our roadmap significantly.
The takeaway over the past 4 years is the increasing interest in government performance management tools. This might seem somewhat strange that performance management has a significant interest in emerging economy governments. My sense is that the resilience of some countries to the financial crisis, critical linkage of revenue to economic factors and increasing oversight of civil society organizations has generated this interest in performance tools.
4. Achieve Control by Giving up Control
Our competitive environment with so many ERP vendors seems daunting to many observers. As is our insistence to position FreeBalance squarely in the government space – GRP. Anti-ERP (especially given so many ERP failures in government.) How can a smaller yet global company compete effectively?
The secret is to let customers drive product and service improvements. To operate within the PFM community rather than broadcast PR as the main mechanism of engagement. This is how we learn and leap ahead of our competitors – give up control to customers.
5. Sharing is the New Power
Information is power. Holding on to that information is no longer as powerful as sharing what you’ve learned. Sharing results in learning more. Our customers find this outcome as part of FISC. We find that providing our research into PFM and technology is valuable. That’s why we share what we’ve learned with governments who are not our customers.
Sharing becomes an annuity. It provides a feedback loop between the theoretical and the practical. It helps us prioritize what is important for government customers.
6. Software Architecture Design Matters
Many observers believe that there is nothing particularly different when comparing software architectures among enterprise vendors. The large ERP vendors, for example, have a broad functional coverage across many business domains. It’s often thought to be six of one and half a dozen of the other when comparing technology.
This is a myth.
We find that our software architecture, the FreeBalance Accountability Platform, has enabled us to respond much faster to changing customer requirements. To meet the priorities set at FISC. Why? The architecture does not contain any legacy client/server code, is a modern design supporting component reuse and was designed for government to provide extensibility.
7. Having a Conference in Ottawa in January might not be a Good Idea
This was the first FISC where the attendee picture was shot indoors. It also seemed to confirm virtually every stereotype of Canadian winters as the temperature dipped below -30C.
Lesson learned: FISC 2014 should be closer to the equator!
The FreeBalance International Steering Committee (FISC) conference was held last week in Ottawa. FISC, as