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May 13, 2011

Financial Management Information Systems: 25 Years of World Bank Experience on What Works and What Doesn’t

Posted by Cem Dener, Joanna Watkins, and Bill Dorotinsky

The World Bank Study "Financial Management Information Systems: 25 Years of World Bank Experience on What Works and What Doesn’t" (completed in December 2010) is now publicly available from the World Bank external web site.

The study seeks to identify trends in the design and implementation of Financial Management Information Systems (FMIS) solutions in World Bank funded projects in 51 countries since 1984, and share observed/reported achievements, challenges, and lessons learned with interested parties to assist in improving the performance of related Public Financial Management (PFM) programs. The study includes an analysis of project scope, cost, duration, design, objectives, and solutions. It also examines how such projects have performed over time and considers the key factors that contribute to the success and failure of projects. This study also suggests a methodology for the design and implementation of future FMIS projects, following a systematic approach to problem solving. This approach is expected to help clarify key ‘design parameters’ through a simple questionnaire and identify ‘which solution fits which problem in what situation’ during project design. If applied, such an approach may improve the quality and reliability of next generation FMIS solutions.

The findings of this study are primarily based on the 2010 FMIS Database, which includes 55 closed and 32 active FMIS projects implemented between 1984 and 2010 (7 pipeline projects are also analyzed in some sections). The data was gathered primarily from internal World Bank documents and sources, and complemented with interviews with project teams. The Database contains a rich set of operational data and performance ratings for the benefit of the World Bank task teams, government officials and other specialists involved in FMIS projects. The FMIS Data Mapper was developed on Google Maps in October 2010 for interactive visualization of all FMIS projects included in the database. Basic information about Treasury/FMIS projects can be displayed on Google Maps, and related project documents can be downloaded from the World Bank external web site using the links provided.

The key elements of an FMIS enabling environment are referred to as ‘FMIS prerequisites’. These prerequisites should be substantially completed before the contract signature with Information and Communication Technology (ICT) solution providers in order to reduce potential complications during system development and rollout. These elements are categorized in three groups:

  •   Functional Aspects
    • Improvement of budget classification
    • Development of a unified chart of accounts, integrated with budget classification
    • Improvement of treasury single account operations
    • Development of commitment control and monitoring mechanisms
    • Establishment of cash management functions
  •   Technical Aspects
    • Establishment of a secure countrywide communication network
    • Preparation of system/data centers
  •   Human Resources
    • Presence of a core team of ICT specialists within PFM organizations

In practice, country context will influence the degree to which these prerequisites should be met ex-ante. However, all of these prerequisites should be considered before any FMIS implementation to minimize the risks of cost overruns, delays and failure in meeting the design requirements and reform objectives.

The recommendations on how to improve the quality and performance in FMIS design and implementation are also presented, together with the suggestions on performance indicators, and quality and reliability of FMIS ICT solutions in this study. Key suggestions on the design and implementation of FMIS projects are provided in three main categories: (i) Identify the PFM reform needs of the government first (What? Why?); (ii) Develop customized solutions (How? Where? When?); and (iii) Strengthen institutional capacity to manage project activities effectively (Who?).

Based on the experiences of the last 25 years in World Bank funded FMIS projects, a number of useful conclusions are drawn in this study: 

  • The political commitment and ownership of the borrower matter.
  • Success depends on adequate preparation.
  • FMIS priorities and sequencing should be addressed carefully.
  • A focus on developing internal client capacity early in the process is crucial.
  • FMIS implementation is complex enough to deserve a dedicated project.
  • The type of FMIS solution influences implementation.
  • The presence of an ICT expert in the World Bank Team is important.
  • The total number and complexity of procurement packages influence project duration.
  • FMIS projects disburse late due to large ICT contracts, completed at later stages.
  • ICT related risks need to be clearly identified during project preparation.

FMIS projects in which the preconditions for reforms were assessed properly and a time-bound action plan was developed with realistic sequencing of reform activities tend to produce more effective solutions in relatively shorter time. Success also depends on adequate preparation before the approval of the project (realistic functional and technical requirements, cost/time estimates and procurement/disbursement plans).

Compared to the previously prepared draft FMIS report in 2003 (Dorotinsky and Cho), this study is based on a broader set of projects and documents in analyzing the performance and outputs of the FMIS projects, and presents more in-depth analysis of the success and failure factors. Based on the findings of the current study, the interventions of the World Bank in the design and implementation of FMIS solutions have been reasonably successful in most countries. The World Bank provides more advice than any other agency on the design and implementation of FMIS solutions globally.

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.


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