How to Avoid FMIS Procurement Failure
As a Public Financial Management (PFM) and Government Resource Planning (GRP) specialist, FreeBalance has worked on hundreds of government procurement proposals. Understandably, governments are skittish when it comes to the implementation of a Financial Management Information System (FMIS) as there are indisputable risks to the project. Often this results in complex procurement processes that ostensibly reduce risk, however, in reality it becomes a Greek tragedy: in the process of reducing failure risk, failure becomes a certainty.
In this blog we share our learnings from the front row seat with a set of considerations that governments should include in their thinking when planning a financial management information system procurement and implementation.
What Are the Common FMIS Procurement Problems?
The most common problems are linked to the ‘risk mitigation’ practices that governments use in FMIS procurement processes, namely:
- The use of external consultants to build the tender requirements
- Strict functionality specifications
- Stringent project management methodologies and milestones
Each of these are riddled with their own set of risks.
External Consultants
When hiring external consultants to build tender requirements, recognize that the:
- May not have the full PFM context in your government, especially about informal practices
- Rely on interviewing public servants, some of whom may be resistant to change
- Leverage external assessments like Public Expenditure and Financial Accountability (PEFA) that may no longer be accurate
- Have experience which will have created bias and prejudices that may not apply for your government
- May not be familiar with different FMIS solution types that are appropriate for your government
- Rarely possess both PFM and IT proficiency leading to contradictory requirements
- Often copy requirements from other tenders that may not be appropriate for your country
FMIS Functionality
When designing FMIS requirements, recognize that:
- Many PFM ‘best practices’ may be inappropriate for your government – while many requirements may be anchored on inappropriate legacy processes that ought to change
- Some implementations ‘rip and replace’ too many legacy systems too quickly
- Many vendors may be unwilling to bid if the tender has vague requirements and when requirements are not tied to clear government objectives
- Requirements often make vendors non-compliant even though these vendors can fully satisfy all underlying needs
- Some changes to PFM processes require legal reform while others do not – this distinction often does not go into the design
- The level of precision and accuracy for requirements are rarely good, many needs are exposed during implementation
- Some requirements are too rigid while others are so vague that scope is not well-understood leading to high bid prices because of perceived risks
- Depth requirements often differ, with some critical public finance functions described at too high a level
- There are limits to the amount of change and reform that can be consumed by governments in set periods of time
- Your government could also suffer from reform fatigue and unable to sustain the pace of change
- Phases for PFM reform and financial systems could be out of sequence from the real government needs
- Project design sometimes leaves little room for capacity building and change management – very critical factors for government
- Existing IT infrastructures are inadequately described leading to unexpected performance and reliability problems
- Expensive middleware and proprietary systems are often preferred in the design over open systems and open source that gives government more choice
- Post-implementation reform and modernization is rarely considered in tender analysis leading to FMIS that cannot support modernization
- Modularity, cloud deployability, metadata management and extensibility are also rarely considered in tender analysis that limits flexibility to meet new requirements
Project Management
When specifying methodology and milestones, recognize that:
- Most vendors have proven methodologies that will not necessarily align with that specified in a tender
- Qualified experts struggle to implement when vendor methodologies are not tuned to government and the vendor has limited knowledge in the public sector
- Government project teams are sometimes unaware of good project management practices
- Waterfall processes and ‘big bang’ approaches are associated with poor success rates, while agile processes are associated with good success rates
- Inflexible contracts lead to vendors working to the contract, rather than to the true government needs
- Code customization is associated with slowing time to results and increasing long-term costs or the Total Cost of Ownership
- Some manufacturers of Commercial-Off-The-Shelf (COTS) make inaccurate and extravagant claims about ease of adaptability with little customization
- Separating expertise in silos, like treasury, procurement, software and IT consultants often leads to silos and disconnected implementations
- The incentive for some systems integration vendors is to increase billing through unnecessary code customization or generating large amounts of documentation
Conclusion
The bottom line is that when acquiring a financial management system governments must enable consultants to better understand their requirements, determine what’s most important to success by defining high priority, critical needs tied to the government and country context, and leverage implementation practices used successfully in governments that share similar circumstances.
See our next blog for recommendations on how to overcome the issues raised here
For more information on how FreeBalance can help you to avoid an FMIS procurement failure, please get in touch.