Making PFM Technology Work: Lessons Learned

July 17, 2009

Doug Hadden VP Products

Most Commercial Off-the-Shelf (COTS) and custom developed financial systems fail to achieve government goals in Emerging Countries.

Success Rates, IFMIS in Emerging Countries
100% 90% 80%

70%
60% 50%

40%
30% 20% 10% 0% On Budget On Time On Time, On Budget Sustainable

FreeBalance Success Rates, Emerging Countries
100% 90% 80% 70% 60% 50% 40%

30%
20% 10% 0% On Budget On Time On Time, On Budget Sustainable

Under More Stressful Conditions?

World Bank Sample
60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Low Medium High Post Conflict 60.00%

FreeBalance Customers

*

50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Low Medium High Post Conflict

*

Human Development Index

Why is FreeBalance so much more successful?

Low success rates in developed countries! • 40% of enterprises exceed time and budget
estimates > 50% • ERP technology to business benefits rated D+ • 15% large implementations failed

• 51% were over budget, over schedule or
under delivered. • Half of all respondents incur additional costs after implementing financial applications • Fewer than a third of enterprise decision makers would recommend their ERP vendor to another company

The traditional model for software development that works (sometimes) in the West does not work for Emerging Countries.

Agenda
• What difficulties need to be overcome? • Where is the software development model broken? • How can governments increase the chance for success?

1. IFMIS Software takes too long to implement.

2. IFMIS Software does not adapt well to reform.

3. IFMIS Software cannot be sustained by the government.

What Happens When Things Go Wrong?

• Blame the victim
– Customer didn’t articulate business processes properly – Customer had unrealistic expectations for delivery – Customer changed requirements after the first phase – Customer did not dedicate enough staff to manage project – Customer did not train enough staff

Product Development Sales & Marketing

Typical

Product Management

Customer Support

Trainer Consultant User

Government is one of many “verticals” Product Development

Product Management Product often designed with different customers in mind Consulting firms generate revenue from customization.

Product developers have no expertise in government financials Salespeople want to sell to every possible Sales & market. Marketing

Typical

Customer Support

Trainer Consultant Consulting firms often do not have government expertise. Consulting firms may not want system to be sustained by government. Government needs User may not go into upgrades

The FreeBalance Solution

Company Summary
FreeBalance is a global provider of software solutions for public financial management (PFM). – Canadian software company ISO-9001/2000

– – – – certified Strong domain expertise in government financial management, 100% focus on government Integrated technology for budget formulation and public expenditure management Founded in 1984 De facto standard for fast implementations Global presence, implemented in every World Bank region

Customer Headquarters FreeBalance Development FreeBalance Support Centres FreeBalance Offices

100% Focus on Government Product Development

Product developers understand government financials Sales & Marketing

FreeBalance
Salespeople focused in government. Customer Support

Product Management Product designed with Emerging Country requirements.

FreeBalance provides consulting services – works as a member of all implementation teams

Trainer Consultant Government needs User ALWAYS go into upgrades

At FreeBalance, “success” is defined as sustainability.

Customer Centric Approach
Product Management Product Development Developers visit customers and are part of “SWAT” teams.

User Customers visited at least once every year. International Steering Committee sets product direction. FreeBalance consultants mentor customers to build capacity. Consultant

All problems & feature requests are tracked – management dashboard Local in-country support.

Customer Support Customers interact with FreeBalance staff and other customers on Customer Exchange

1. IFMIS Software takes too long to implement  Vendor should understand the government domain.  Product should be designed for rapid implementation – configured, not customized.  Products should be proven to implement quickly in countries with more stressful Average conditions. first phase
8 months

quickest implementation 26 days

2. IFMIS Software does not adapt well to reform.  All governments are reforming.  Product should be designed for progressive activation.  Progressive activation should be configured not customized.

3. IFMIS Software cannot be sustained by the government.  Product should not place a significant burden on the government.  Vendor should know how to build capacity.  Government should not be maintaining custom code and complex technology.

Lessons Learned
 Software design, implementation and support methodology critical to ensuring success  Advanced country governments have the luxury to buy expensive solutions with “nice to have” features  Governments around the world share your challenges  Some governments have more challenges

Lessons Learned
• Customer didn’t articulate business processes properly • Customer had unrealistic expectations for delivery • Customer changed requirements after the first phase • Customer did not dedicate enough staff to manage project • Customer did not train enough staff  Vendor should understand the government domain.  Product should be designed for rapid implementation.  Product should be designed for progressive activation.  Product should not place a significant burden on the government.  Vendor should know how to build capacity

Our mission
help governments across the world leverage robust government financial management technology to accelerate country growth.

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