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Thursday, May 21, 2009

Good Practices in Implementing Government Financial Management Systems

Wayne Job, Senior Director, Office of the Comptroller General of Canada, described the methods of implementing and managing financial systems in the Government of Canada.
Mr. Job described that the Government of Canada spends billions of dollars in IT. Some of these projects do not have positive results. He pointed out that clients are accountability for the effectiveness of their systems. Processes come first, technology second. Software costs can often be a small factor of the entire IT costs. He described key principles for success:
  • Government and departmental strategic IT plans.
  • Investment plans for IT with an oversight committee.
  • The total cost of ownership (TCO) needs to be analyzed.
  • Large projects can generate cost overruns that embarrass the government.
Finance and Technology for More Effective Systems

Mr. Job says that there are so many delays in procurement that systems get implemented quickly. Often the system does not integrate across multiple needs such as supporting financial and non-financial reporting requirements.

Good practices in strategic planning was described including a 3 to 5 year plan with clear performance measurement. Finance managers have a value for money perspective, so the strategic plan must demonstrate what will be needed to achieve success.

Mr. Job says that government financial systems must be owned by the functional users, not Information Technology personnel. He described some of the factors in government budgeting in Canada. Most budget funds cannot be carried over to the following year in Canada, so many often acquire IT equipment near year end. IT staff has ballooned over the past few years in government departments.

Mr. Job recommends that software should be thought of as an asset where there will be a limited life span. Upgrades will be needed. He also described many of the hidden costs that increase the total cost. Software effectiveness is 5 to 10 years. Computers are obsolete by the time they are put into place.

Cost overruns have been very embarrassing to the government. The practice in Canada for large projects is to hire a large systems integrator and a different integrator to provide oversight. Government departments are encouraged to buy standard systems. The cost for custom systems is very high and difficult to maintain. Mr. Job encourages government departments to use standard processes in the Commercial Off-the-Shelf (COTS) software.

The Government of Canada has reduced the number of financial systems in use from over 50 to 7. Mr. Job expects that this will be reduced to 2 or 3 in the future.

Mr. Job described how the Auditor General of Canada was consulted about risk, controls and reporting for the stimulus package in Canada. There is a bill in Parliament that will mandate quarterly financial reports. Accountability will become more targeted in Canada. He expects much more oversight by the press in June. This includes non-financial measurements like the number of job created by a stimulus program.

The current systems in place in the Government of Canada do not generate the quarterly financial and non-financial reporting needed. Many IT systems have failed in the Government of Canada, as they have in many other countries. "Don't treat IT as a black box solution." Mr. Job says that "just like stimulus money, IT spending must be clearly managed, understood and explained to all."

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