Posted by Gerardo Uña
In a previous blog article, I spelled out some of the reasons why the performance of FMIS systems in developing countries around the world has been generally disappointing. These reasons include the lack of well-crafted conceptual design, sufficiently strong leadership by the ministry of finance, financial and technical capacities within the government, secure financing, good project management, adequate testing of the systems before they are implemented, and a feasible maintenance strategy. In this second article, I consider the question of whether there is an alternative path for implementing FMIS that would be more cost-effective, and could lead to improved results.
Looking back historically, we can see that the implementation of FMIS went through two main phases. In the first phase, from about the early-1980s until the mid-1990s, the dominant approach was to implement a comprehensive IT system that supported core PFM business processes, including budget preparation and execution, cash management, accounting, and debt management. In addition, “peripheral” functions such as public procurement, payroll, and asset management also used the same technological platform. This approach broadly replicated the so-called Enterprise Resource Planning (ERP) systems that were widely used in the private sector to support companies’ resource management business processes.