Creative Use of IT Systems in the Budget Office: Collaborative Budget Formulation Systems Show Promise
Posted by Sandeep Saxena
Automation of budget formulation processes has had limited success compared to the strides taken by many countries in computerization of budget execution and accounting functions. There have been fewer successful examples of computerized budget formulation. This anomaly may be partly attributed to the absence of standards in the budget formulation process. Unlike accounting systems that have rather well established processes and standards, the budget formulation process varies from country to country. The country-specific peculiarities mean that in order to succeed, a budget formulation system has to be much more flexible and adaptable to the local requirements.
A recent study by the IMF’s regional technical assistance center in the Caribbean (CARTAC) explores the potential for use of a content management system (CMS) for operating the budget formulation process. The study, “A Collaborative Budget Formulation System: Concepts and Options,” John Moore, July 2011 (found here) concludes that information management products like Alfresco and MS SharePoint, among others, can offer rapid, flexible development of new business applications, including a budget formulation system, without having to depend on scarce ICT support resources.
A CMS is a collection of procedures used to manage work flow in a collaborative environment. CMSes are typically used for management of large and voluminous Web or Intranet sites.They typically help organizations in creation, management, distribution, and publishing of corporate information. CMSes manage the entire life-cycle of web/Intra-net pages from their creation to archival. They usually come with a template-based authoring tool that can be used even by non-technical staff with some basic training.
The distinctive features of a CMS include a central repository of data and an in-built workflow management system. Content created by users is stored in the central repository, which is also used to track changes to the content, as well as who changed what and when. Data in a CMS can be defined as nearly anything: documents, numbers, statistics, graphics, and so on. The workflow mechanism manages the approval process, pushing the content through the pre-defined levels of approvals, before finally publishing it on the Web/Intranet. Version control is another important feature of a CMS. The versioning capability allows information development through an iterative process. The entire operation is managed in a controlled environment by clear definition of access rights.
The main advantage of a CMS lies in its adaptability and easy-to-use front-end tools. A CMS can be easily adapted to an organization’s work-flow and business process requirements. Its user-interfaces are generally easy to work with and the system does not require advanced IT skills for management. It is typically administered by non-technical staff. This allows the business units to retain the functional control of the system.
The usefulness of a CMS is particularly seen in bringing order to a lengthy and complex process involving numerous people within or outside the organization. A CMS allows for a large number of people to simultaneously contribute to and share stored data in a controlled environment. It is designed to facilitate storage and retrieval of data; reduce duplication of inputs at successive stages of a process; and significantly improve communication among users.
The CARTAC study views the budget formulation essentially as a collaborative information creation process: information is created by a number of widely dispersed set of contributors – the budget users – synthesized, approved through an iterative process, and finally published and presented by the Budget Office. Drawing parallels with a typical content management operation, the study suggests using the workflow capabilities of a CMS to collect, review, collate, and process budget data; its versioning capabilities can be used to generate and compare alternate scenarios; and the approval process could support dynamic iterations by allowing budget data to move either way in the approval chain.
A CMS, the study suggests, would be a “capable, low-risk, cost-effective way to gain experience and build confidence” among the participants. A gradual evolutionary approach has been recommended. To begin with, a simple proof of concept could be implemented, which should be allowed to grow in complexity and functionality with each passing budget cycle, with the objective of gaining full maturity in the medium term.
The main challenge in implementing a CMS-based solution will perhaps be in selection of the right tool. There are hundreds of CMS available in the marketplace at present, all possessing different capabilities and strengths, and there is not much consistency between vendors. It is one of the most rapidly evolving software technologies. Therefore, the selection must be based on a comprehensive and careful evaluation of the tool. The CARTAC study evaluated Alfresco and found no critical shortcoming that would prevent it or similar products from being used effectively in supporting a typical budget formulation process.
It appears that CMS-based applications may be particularly useful in introducing IT in an organization and getting a large set of people to come together on a common platform in a relatively short span of time. Compared to the traditional ERP system, CMS-based solutions are likely to be less proficient in functionalities and data processing capabilities. To some extent these deficiencies could be overcome by use of well known analytical tools such as MS Excel, which are usually well integrated with most CMSes. They, however, would score over ERPs in adaptability as well as ease of use and administration: aspects that are critical for initial success. Use of CMS-based solutions has the potential to bring a paradigm shift in the approach to budget process automation. The concept, however, still needs to be further developed, piloted, and successfully tested in a budget environment, before it can really be recommended as a fully functional solution.
Note: The posts on the IMF PFM Blog should not be reported as representing the views of the IMF. The views expressed are those of the authors and do not necessarily represent those of the IMF or IMF policy.