ICGFM Miami Implementing an IFMS Guidance on IFMS

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ICGFM Miami Implementing an IFMS Guidance on IFMS Implementation May 2007

ICGFM Miami Implementing an IFMS Guidance on IFMS Implementation May 2007

Setting the scene • You are the Secretary, Department of Finance in Country X

Setting the scene • You are the Secretary, Department of Finance in Country X • You have just signed a multi million dollar contract with a Supplier to implement the IFMS across the whole of Government • You are happy! • But now what do you do? imcl ICGFM – IFMS Implementation - 2 May 2007

You start worrying! • Why? – Because most IFMS projects to some extent fail

You start worrying! • Why? – Because most IFMS projects to some extent fail • And – Because you should already have made a series of preparations • But mainly – Because this is where the work really begins! imcl ICGFM – IFMS Implementation - 3 May 2007

Major stages of an IFMS implementation imcl ICGFM – IFMS Implementation - 4 May

Major stages of an IFMS implementation imcl ICGFM – IFMS Implementation - 4 May 2007

Configuration design • Vendor has to configure their package to meet specification – Configuration

Configuration design • Vendor has to configure their package to meet specification – Configuration must be within system options – Hence carried through to system upgrades • Budget classification/chart of accounts – Most critical and most difficult aspect of configuration – This establishes the accounting and reporting structure • A task for accountants not IT specialists – Each package has own constraints and terminology • Workflow – – imcl Defined in most packages Changes to package workflow may cause major problems Balance against need to adhere to government procedures and practice Ensure Financial Rules/Regulations are either complied with or amended ICGFM – IFMS Implementation - 5 May 2007

System architecture • Central database or • Distributed databases Central database Central general ledger

System architecture • Central database or • Distributed databases Central database Central general ledger Ministry A Ministries & other agencies enter data locally but all processed on single database Ministry C Distributed databases Ministries & other agencies have own ledgers and databases but managed centrally Ministry A ledger Ministry C ledger Ministry B imcl Central consolidation & management ICGFM – IFMS Implementation - 6 May 2007

Hardware & network requirements • Development site – For vendor to develop & test

Hardware & network requirements • Development site – For vendor to develop & test systems • Training site • Production servers – Depends on system architecture – Likely to be multiple servers for different functions – If distributed databases replication at each site • Backup & disaster recovery arrangements – Balance of cost and risk • Networks linking sites – Wide area and metropolitan area networks – Technology options • E. g. fibre optic, wireless, satellite • Networks at individual sites – Whose responsibility? imcl ICGFM – IFMS Implementation - 7 May 2007

Testing • Testing – Extensive testing of live data – Likely to be a

Testing • Testing – Extensive testing of live data – Likely to be a series of modules which will developed and tested separately, e. g. • Budget, commitment, general ledger, revenue, reporting, payroll, etc • Requires – Test scripts – Development of output formats – Compliance with IPSAS • Must be project structure for testing – User teams to carry out tests – Sign off required at series of stages • Configuration design, pilot system tested, live system(s) imcl ICGFM – IFMS Implementation - 8 May 2007

Organisational changes • Implementation IFMS typically requires organisational change – Often ignored or underestimated

Organisational changes • Implementation IFMS typically requires organisational change – Often ignored or underestimated • Typical changes – – Business rules enforced by system New workflows Electronic authorisation Must be consistent management structures • IFMS changes across government requires whole of government “ownership” – Other Ministries, Departments and Agencies must be involved as early as possible – An exercise in change management imcl ICGFM – IFMS Implementation - 9 May 2007

Training of users • Can only start when system configured • Training laboratory with

Training of users • Can only start when system configured • Training laboratory with copy of system • Training for: – Users – Managers – Technical support • Capacity for ongoing training – – imcl Needs of new/transferred staff Training management structure Training of trainers Permanent training unit ICGFM – IFMS Implementation - 10 May 2007

Migration of data and balances • Simpler under cash accounting – Only bank and

Migration of data and balances • Simpler under cash accounting – Only bank and cash balances - must be reconciled • If moving to modified or full accrual – Loan balances, advances and prepayments - reconcile – Other assets & liabilities balances under full accrual • Map budget to new coding structure – Budget will have been prepared under old codes • Consider creating a Statement of Affairs – If no reliable brought forward balance • Will previous years’ data be entered for comparison? imcl ICGFM – IFMS Implementation - 11 May 2007

Merits of different architectures • Central databases typical of IFMS – Ensures common coding

Merits of different architectures • Central databases typical of IFMS – Ensures common coding and standards – Easier to manage – Data automatically consolidated for analysis • But – – Bigger = more complex Expensive software & hardware Critically depends on network linking sites Difficult to cater for sector specific requirements in a centralised system • e. g. public works, health care, education each have unique information requirements imcl ICGFM – IFMS Implementation - 12 May 2007

Go live • Critical stage when system “goes live” - beginning of operational use

Go live • Critical stage when system “goes live” - beginning of operational use of system Go live likely to be phased, e. g. • 1. By module 2. By phasing • Ideally go live at start of financial year – Whole years transactions processed on one system – Same coding structure for whole year – No need to transfer balances part way through year imcl ICGFM – IFMS Implementation - 13 May 2007

Need to plan for overlapping operation of IFMS and legacy systems • Inevitable situation:

Need to plan for overlapping operation of IFMS and legacy systems • Inevitable situation: – IFMS at some sites – Old (legacy) systems at other sites • Legacy systems may be manual or computer based • Legacy systems must be operated and maintained for several years: – As IFMS is rolled out – To provide access to historic data • Problems with maintaining legacy systems: – May use old technology – May use different chart of accounts – How to consolidate data for reporting imcl ICGFM – IFMS Implementation - 14 May 2007

IFMS rollout • IFMS will be progressively rolled out across government • Horizontal or

IFMS rollout • IFMS will be progressively rolled out across government • Horizontal or vertical slicing? Vertical slicing Horizontal slicing Phase 1: all Ministries Phase 1: whole of Ministry A Phase 2: whole of Ministry A Ministry B Phase 2: Departments Dep’t 1 Dep’t 2 Phase 3: Projects & agencies Project Agency imcl ICGFM – IFMS Implementation - 15 May 2007

Rollout Plan – for each group of sites imcl ICGFM – IFMS Implementation -

Rollout Plan – for each group of sites imcl ICGFM – IFMS Implementation - 16 May 2007

Other issues • Security – Who owns the information and controls security? • Should

Other issues • Security – Who owns the information and controls security? • Should be users, e. g. Ministry of Finance, not IT Department – Access rights • Levels of access and controls – Physical security – Backup and disaster recovery • Records management – Will records on legacy system remain accessible? – Retention and control over records • Electronic and paper imcl ICGFM – IFMS Implementation - 17 May 2007

Project Management • IFMS implementation is a major project – Needs structured project management

Project Management • IFMS implementation is a major project – Needs structured project management – Preferably use a standard project management methodology • E. g. PRINCE (Projects IN a Controlled Environment) developed for UK government • IFMS implementation managed by government not supplier – Major contract management exercise – Project management may be sub-contracted imcl ICGFM – IFMS Implementation - 18 May 2007

The PRINCE II Project Components imcl ICGFM – IFMS Implementation - 19 May 2007

The PRINCE II Project Components imcl ICGFM – IFMS Implementation - 19 May 2007

Project organisation Project Board Senior user Executive Supplier Project assurance Project Manager Project support

Project organisation Project Board Senior user Executive Supplier Project assurance Project Manager Project support imcl Team 1 Team 2 Team Leader Team members ICGFM – IFMS Implementation - 20 May 2007

Balance between supplier & government roles imcl ICGFM – IFMS Implementation - 21 May

Balance between supplier & government roles imcl ICGFM – IFMS Implementation - 21 May 2007

Matrix of roles Role Gov’t Supplier Comment 1. Project management 2. Legal and regulatory

Matrix of roles Role Gov’t Supplier Comment 1. Project management 2. Legal and regulatory framework 3. Software delivery & configuration 4. Hardware and networks May be separate contracts or combined with software - turnkey 5. Initial user training Should be training of trainers 6. Ongoing training 7. Preparing data for migration to IFMS 8. Organisational changes and change management 9. Ongoing system operation Could be operated by supplier or other contractor – out-sourcing Could be outsourced 10. Ongoing support imcl May be sub-contracted Could be continued by supplier or outsourced ICGFM – IFMS Implementation - 22 May 2007

Ongoing sustainability of IFMS • Many IFMS are proving: – Difficult to sustain and/or

Ongoing sustainability of IFMS • Many IFMS are proving: – Difficult to sustain and/or – Only cover part of government • Major problems – Cost • Ongoing operational costs • Maintenance costs • Software licenses – Organisational • Inadequate technical support structure • Inadequate training resources • Shortage/turnover of skilled staff – System design • System design inadequacies become increasingly apparent over time imcl ICGFM – IFMS Implementation - 23 May 2007

Realising the benefits of an IFMS • Better fiscal management – Only if information

Realising the benefits of an IFMS • Better fiscal management – Only if information is utilised • More optimal resource allocation – Only if budget system is linked to strategic objectives • Improved management of resources (value for money) – Only if managers utilise financial information • Reduced fraud and corruption – If system is designed and used to improve controls • Improved transparency and accountability – If system information is published in a useful format, e. g. • IPSAS compliant financial statements on Government we site imcl ICGFM – IFMS Implementation - 24 May 2007

Conclusions • An IFMS can lead to real benefits • Implementation is challenging –

Conclusions • An IFMS can lead to real benefits • Implementation is challenging – Must be recognised as a major project impacting across government – Requires substantial resources – Do not underestimate time • Sustainability issues must be addressed from the start • IFMS benefits are not automatic – Must be a strategy to realise the benefits imcl ICGFM – IFMS Implementation - 25 May 2007