Three Steps to Improve and Modernize Government Financial Management Systems

02 Aug

Three Steps to Improve and Modernize Government Financial Management Systems

As the backbone of government operations, financial management systems are essential for driving productivity, accountability, and transparency. For years, serious financial management problems have been reported by auditors and by agencies themselves. For example, recent Government Accountability Office (GAO) assessments indicate that significant financial and related business management weaknesses are adversely affecting the Department of Defense’s (DoD) ability to control costs and ensure accountability. According to the GAO report, without accurate, timely, and useful financial information, DoD leaders are severely hampered in their ability to make sound decisions affecting the department’s operations. 

Successful modernization of financial systems is directly related to the government’s ability to absorb and put to use the latest business transformation best practices. Often, integrating disparate systems and processes in a manner that maximizes automation and consistency is a major challenge across government agencies. At the same time, recent government mandates such as the Federal Information Technology Acquisition Reform Act (FITARA) have created a race to remove cost and complexity and eventually reach higher return on investment out of government systems.

To respond to these rapidly evolving pressures, many government CIOs must drive a fundamental change to move away from transactional, patchy, and often underperforming management systems to more cost-efficient, effective, and forward-looking platforms.

Secure Cloud-based Solutions are the (Inevitable) Future

With the FedRAMP program in full gear, many government agencies have undergone massive waterfall implementations of cloud-based solutions. However, often due to the sensitive nature of the information handled, the financial services sector hasn’t been quick to embrace the cloud at a broad scale. Siloed, on-premise technologies and disparate management solutions can slow down innovation and inhibit an agency’s ability to anticipate and act on new trends. Needless to say, not every application is a good fit for a Cloud-First strategy. Government CIOs can easily start prioritizing their acquisition targets by leveraging low-risk FedRAMP-certified solutions first.

Modular Acquisition of Next-generation Platforms Drives Modernization

The idea of system modernization in government through more agile and modular acquisition is not new. For example, GSA’s concerted modernization efforts date back to 2010. The agency has made it a priority to invest in open, customizable, and extensible solutions. Instead of acquiring or building complex applications like those traditionally used for financial accounting and payroll, it is cheaper and more effective to acquire solutions that are 80 percent off-the-shelf and 20 percent customizable. As-a-Service platforms usually provide unique advantages as they can be acquired to address modest payloads and scaled as the needs of the agency grow. By contrast, large modernization projects often carry an all-or-nothing proposition that hinges on a huge upfront investment. In turn, the procurement cycle becomes long and unwieldy. Taking a modular approach to financial systems’ modernization using more shared services and creating a simpler applications portfolio.

Data Should be at the Core of Modernization Efforts

The government’s Open Data Initiative and Shared-First approach have demonstrated that the strategic usage of government data can help root out waste and duplication across the federal IT portfolio. Leveraging analytics and business intelligence technologies can help uncover areas of opportunity for shared services and shine the light onto leading practices. It can also be instrumental in assessing the maturity of agencies’ processes, management and reporting procedures. The next wave of IT modernization is directly dependent on a reliable view of where the biggest areas for improvement and opportunity are today. In order for government leaders to take actionable steps towards modernizing systems, they need a broader, more data-driven picture of how the current systems, programs, and IT-enabled processes are performing.

Strengthening financial management systems is core to the promise of a more efficient and transparent government. As government networks continue to sprawl with the addition of mobile devices and new applications, modernizing financial systems has become increasingly complex. Having access to technologies that are on par with trends like cloud computing, data analytics, and agile IT, is essential for breaking down the cumbersome modernization process into manageable transitions.

Laurel Fielding is part of the GovLoop Featured Blogger program. This blog first appeared on GovLoop.com on August 1st.