The AGA Weblog

Preparing Your Agency/Entity for an E-Commerce Application

By: Teresa L. Pullen

Teresa L. Pullen is E-Commerce Fiscal Coordinator, State Controller's Division, State of Oregon

“PLASTIC” was the single-word career advice given to Benjamin by a family friend in the 1967 American classic film The Graduate. Plastic meant something very different then.

People want to conduct their business with government the same way they do with the private sector—fast, efficient, cheap and 24/7 using their plastic, meaning their credit cards. Government agencies at all levels have been accepting electronic payment for years, but many still do not. Why not? It’s just like cash or a check. Or is it?

Here in Oregon, the State Controller’s Division has a citizen-centric mission to improve the quality of life for all Oregonians by making government work better. Our version of Joe the Plumber would define government working better by convenience to him: “Make it cost less and get me out of a waiting line to get necessary business licenses, pay fines, fees, registrations, taxes, citations and recurring bill payments.” He wants to do business online—and government should want that, too. 

Oregon processes more than $1 billion in professional, business, recreational and personal license fees. The state of Oregon decided to transform business processes and automate key systems, boosting productivity and providing citizens with more self-service options. Results are faster with online delivery.  Administrative and operational costs go down. Online credit card payments reduce manual check processing. Checks are handled on average six times between the customer and their bank, and bad ones repeat. Cash only needs to be mishandled once. Processing an online request costs approx. $1.60 compared to $6.60 for an over-the-counter transaction. The online process offers improved internal controls through preset banking times and automated posting of the accounting information.   

Making the leap to plastic can be risky business. We’ve experienced some key issues in building effective e-government transaction portals:

• Agencies must understand and document their business practices.
• Agencies must fully comprehend their authorizing legislation.
• Agencies must learn the intricacies of this new sales channel.
• Opportunity to rethink and re-engineer their business processes.
• Automate the transaction end-to-end; customer to accounting.
• Agency should position themselves for a new product delivery model.
• Plan, document, build, test, execute and integrate.
• What do customers need now and what do they expect in the future?  

What are the barriers? Major causes of project failure are bad communications between relevant parties. Other challenges include:

• Agency needs legislative authority. 
• Program, fiscal and IT suffer communication deficiencies.
• Knowledge, skills and abilities in this new environment.
• Lack of planning and scheduling resources and activities.
• Lack of testing to ensure quality control.
• Staff struggles to implement new technology, new processes and new software while simultaneously performing their daily work.
• Level of vendor assistance for licensing software sometimes offers challenges.
• Archiving data, data security, PCI compliance, Oregon Consumer Identity Theft Protection Act, etc. Know your security regulations. 

We’ve formed a central support group that has performed these processes with numerous agencies numerous times. This can be a BIG HELP. Study your demographics and encourage adoption through incentives, such as a discount or a longer time to pay. Convenience fees will be accepted by some customers but prevent adoption by others.

In times of limited budget and IT resources, e-payment projects can slow. Some are entrenched in their current processes and resist change despite the efficiencies in database management and accounting that electronic payment could bring. 

Career advice in 2008? PLASTIC. Government knows and authenticates our customers in selling our products. The risks are low and the benefits high. What are you doing in your agency to promote this citizen-centric payment option? I want to hear your stories and I’ll tell you mine about the wonderful world of e-commerce.

Hands Free? Or Security Free? You Decide

By: Mark Abraham

Mark Abraham is an Information Technology Specialist II with the Network Security Unit, Division of State Government Accountability, Office of the State Comptroller, State of New York. He is DoD IACND Level III Certified.

The other day my father asked me to help him connect his new hands-free Bluetooth headset to smart phone so he could safely speak on the phone while driving to and from conferences. It only took a minute to get it connected and he thanked me and proclaimed, “Now I’ll be safe when I use my cell phone!” This made me think about the information security or “safety” of Bluetooth on cell phones and smart phones.

I agree that while hands-free is surely the way to go when it comes to driver safety, a few minutes on the Internet was all it took to reveal that there are a few “bugs” with Bluetooth. Within 30 minutes I had downloaded a few nifty little programs that lets me do almost whatever I want with YOUR cell phone from MY laptop, PDA, or even my own cell phone. Using freely available software, I was able to scan for and find my dad’s cell phone, bypass the password, and take complete control of his phone from outside the house. (Note: I asked his permission before “hacking” him; otherwise it would be illegal.)

Once I gained control of his cell phone I was able to see and copy his address book, view his recent call activity and text messages, and even make calls using his minutes. What are those phone companies thinking? A little more tinkering revealed that I could turn on his microphone and listen to everything that was going on in the room. The implications were nauseating. Not only can hackers steal your company’s information and your minutes, now they can eavesdrop on you too.

After a couple hours I had figured out how to extend this spy capability to the headsets themselves and I was even able to tap his car’s hands free system and listen to conversations taking place in the car. Here comes the scary part. There are freely available plans to make an antenna that will let you do all of these terrific things from up to a mile away. A MILE.

Naturally my next question was, how in the world can I prevent this? Well the two main things you can do are to disable Bluetooth until you really need it, and make sure to keep your phone software up to date.

Questions

Do you have good controls over who has access to your Bluetooth devices?

Have you audited your organization to see how Bluetooth security is being implemented?

Transparency is the Battle Cry…Is the U.S. Government Ready to Deliver?

By: Lisa Miller

Lisa Miller is the president of Dynaxys LLC, which offers strategic and tactical accounting solutions. She was a director in the federal consulting practice of PricewaterhouseCoopers (PWC) and served in senior management positions at the Federal Savings and Loan Insurance Corporation (FSLIC) and the U.S. Department of Housing and Urban Development (HUD). She led the first U.S. government implementation of XBRL to improve legacy system interoperability.

In the turmoil that we saw last week in the financial markets, one resounding note in the cacophony of voices was the failure in transparency. Neither the private sector nor the regulators understood the complexity of what had occurred or why. Government buy-outs represent only a short-term solution. In contrast, transparency is a long-term preventive.

Markets, technology and global operations are advancing so rapidly and in so many new ways that government must take steps to understand how the markets are functioning if it is to provide effective regulation. This includes, for example, the scope of business activity, the complexities of the market operations, the roles of the various players and the risks being assumed. Data from a wide variety of sources needs to be available in ways that can quickly and easily be shared with all the stakeholders in the market, including the public—thousands of people with equal access to information, evaluating from their own perspective or the government’s.

XBRL can help the government to deliver transparency

XBRL is an international standard for automated processing of business information by computer software, cutting out labor-intensive and costly processes of manual re-entry and comparison across multiple financial systems. Computers can treat XBRL data "intelligently." They can recognize the information in an XBRL document, select it, analyze it, store it, exchange it with other computer systems and present it automatically in a variety of ways for users. XBRL enables dramatic savings in time and cost while producing standardized, accurate results that can be easily shared. Human effort can switch to higher, more value-added aspects of analysis, review, reporting and decision-making. In this way, analysts can save effort, greatly simplify the selection and comparison of data, and deepen the analyses.

By itself, XBRL does not ensure transparency but it provides the necessary platform on which transparency can be built. For example, using XBRL enables analysts, the regulators or the public to quickly identify missing vital information that sends up red flags. Failure to standardize data from disparate sources and give equal access to a host of users leads to delays in critical analysis and decision-making, including the very data mining that can be used to course correct in a real-time global marketplace—whether by the market itself or by market regulators.

Almost every industry has used some form of standardization to revolutionize performance—transportation (shipping containers, for example), retail (bar codes, for example). And now with XBRL, standardization is available for data.

In fact, there is evidence that the U.S. is moving slowly in this direction, using XBRL surgically with excellent results. The FDIC used XBRL to modernize bank system data collection leading to dramatic improvements in data quality and significant time and money savings. Hopefully by the time this blog is published, the SEC will have issued its final rule establishing an XBRL filing program for publicly traded companies. With digital disclosure and increasing transparency, information will be available directly to the public for many more eyes to see—better, faster, cheaper—a large step toward transparency.

Non-federal government officials also see the writing on the wall…

“Governments today compete for capital around the globe electronically. Our XBRL investments in an efficient global marketplace today will help sow the seeds for lower interest costs tomorrow,” said the Oregon State Controller John J. Radford, CGFM, CIA, CFE.

Internationally, there are many implementations—stock exchanges, tax collectors, central banks and regulators. The Netherlands is well along with a broad XBRL implementation with an estimated savings of $350 million. Australia’s implementation is in progress with six or more deployments and has moved within the public sector to embrace XBRL.

But we are moving at a snail’s pace. If we know the answer, why isn’t our government enforcing the solution?

Clearly we need more champions—like Radford and SEC Chairman Christopher Cox—executives that understand and promote XBRL to bring transparency into the market and to operations. The AGA is yet another voice in support. Others are needed.

I leave the reader with these questions.

How can we move to overcome governmental inertia and get adoption started?
What should be the priorities for advancing XBRL in the government sector?
What more can the AGA and members do to make this happen?

Using Web 2.0 to Learn: Prospects for a Clinical Model

By: Kenneth A. Smith, Ph.D., CPA

Kenneth A. Smith, Ph.D., CPA, is a founding member of AGA’s Mid-Willamette Valley Chapter, a founding member of the Oregon Public Performance Measurement Association (OPPMA.org) and an assistant professor of accounting and information science at Willamette University.

…Have you heard about that next great technology? They say it is going to solve so many problems, be easier to use and the cost is coming down quickly. Soon it will be everywhere…..

Most of us have learned to be skeptical of such claims. Yet, we have also seen the world change in wondrous ways over the past few decades. In spite of the flops and over-promises, new ideas and technologies routinely invade our lives. The questions today:

• Is Web 2.0 the next great technology?
• Can we use Web 2.0 to more efficiently or effectively learn about financial and performance management?
• Does Web 2.0 facilitate the “clinical” model of teaching and learning?

Is Web 2.0 the next great technology? A common confusion with Web 2.0 is that it relates to upgrading a particular software. Web 2.0 is more about how people use technology to relate to other people and less about the multiple underlying technologies like XML, RSS and APIs. Let’s focus on two pieces of Web 2.0: wikis and blogs.

According to Wikipedia, a wiki is a “collection of Web pages designed to enable anyone who accesses it to contribute or modify content.” To my knowledge, no publicly available wikis are solely dedicated to topics within government accounting, government finance or government performance. Wikipedia is very popular and has articles on GASB, the CGFM and government performance auditing. Several topics, however, are noticeably absent, such as an entry on the AGA itself. (Anyone can propose an entry, so we might see AGA there by next week).

Each article has four tabs across the top: article, discussion, edit this page and history. The discussion for performance measurement shows the entry started in 2007 as a class project. Surely the academic readers of this blog can directly encourage students to write more articles on relevant topics. And all of us can make suggestions and corrections to existing articles. Wikipedia notes when articles are limited in some fashion, such as due to disagreements, lack of text or lack of citations.

Blogs are defined by Wikipedia as “a website, usually maintained by an individual, with regular entries of commentary, descriptions of events, or other material such as graphics or video.” Most of us are familiar with blog websites of varying quality and content. We recently started a blog in connection with the annual meeting of the Oregon Public Performance Measurement Association (OPPMA) held on July 17, and welcome your participation.

A newer blogging model (to me at least) is used by NewTalk.org. A panel of 10 to 14 experts discuss a topic from Tuesday morning until Thursday afternoon. The public is also allowed to comment—in essence joining the conversation. The June 19 discussion on “Is it possible to fix government?” included former Comptroller General of the United States David Walker and his views on the financial crisis. The Feb. 14 discussion on using test results in school reform might also be of interest to AGA members.

I am intrigued by the untapped potential of wikis and blogs for both government financial management and performance management. Do you think these tools are the next great technology? What concerns do you have?

Can we use Web 2.0 to more efficiently and effectively learn? My recent fascination with Web 2.0 came as we prepared for the OPPMA annual meeting. The objective for the day-long event was to improve our collective understanding of the challenges and questions surrounding performance measurement and performance management from the 100 attendees. Our desire for “after-the-event” learning is to create a Web 2.0 space where we collaboratively work toward finding solutions and answers.

We face some pretty severe challenges in creating an efficient and effective learning space. This was driven home as I prepared for the section on how to display performance data and was taken on a journey that felt like Dorothy swept up to Oz or Alice falling down to Wonderland. The journey started at a celebrated website for displaying data, the state of Washington’s Transportation Improvement Board—or TIB (quite popular as the site came up as No. 3 on my Google search on “TIB”). One part of the TIB website has links to other sites and blogs.

One of these links led to Dashboards by Example, which has a funky video on TIB by someone or something called “Dashboard Spy.” I found the TIB website a bit confusing, and the links provided more insight and background. Then I stumbled onto a huge alphabetic list of more than 400 dashboard examples. (It took me a long time to find the link (http://www.enterprise-dashboard.com/sitemap/ ) to the list when I went back.) I do not remember how I found this one on using heat maps in Excel to do automatic “stop-light” coding of data into red/yellow/green or other color schemes. I am now a big fan of “Mr. Excel” in the second video. (Note: crisp, cool and creative videos are very Web 2.0)

Boy did I ever learn a lot, but it time-consuming and hard to retrace my steps. My experience was effective but not efficient. What are your comments and suggestions on how to increase the efficiency and effectiveness of our Web 2.0 experiment? Have you had similar experiences? Some high-quality examples?

Does Web 2.0 facilitate the “clinical” model of teaching and learning? As noted in my June 5 AGA blog, I believe we should make greater efforts to use a clinical model of teaching and learning: watch/listen, do, teach others, discuss, repeat. This model requires a high level of collaboration and interaction between the teacher and the student, so Web 2.0 concepts are potentially valuable.

Another aspect of the clinical model is the desire to connect the insights from the “laboratory” and quickly translate them into usable solutions in professional practice. Similarly, the clinical model desires a rapid communication of “real-world” problems from the practicing professionals to the researchers who may study them. We are hoping that our website will evolve into something that facilitates this fast sharing. Web 2.0 certainly seems to have “potential revolutionary effects” for our clinical model along with several challenges. What do you see as our biggest challenges? Opportunities? Any advice?

This entry benefited from discussions with my colleagues Elliot Maltz, Steve Maser, Nicole Thibodeau and Fred Thompson.

NEXT WEEK: Watch for updates from AGA's 57th Annual Professional Development Conference & Exposition in Atltant. The blog resumes regular daily posts on Aug. 8.

Improving Cash Management in the Battlefield

By: Juan De Jesus

Juan De Jesus, a member of AGA’s Indianapolis Chapter, is the Director of E-Commerce for the U.S. Army Finance Command. He has more than 35 years of military and civilian government service. He is the recipient of AGA’s 2008 Achievement of the Year Award.

The President’s Management Agenda asserts that, through electronic means, government can both reduce costs and provide better services. Has the Army done such by partnering with the U.S. Department of the Treasury? Answer: Yes! How?

The Technology

Since 1999, the Office of the Deputy Assistant Secretary of the Army (Financial Operations), the U.S. Department of the Treasury, Financial Management Service and the Federal Reserve Bank of Boston (FRBB) have partnered on smart card chip and kiosk technology to support the soldiers serving in contingency operations (Afghanistan, Iraq, Kuwait, etc).

Deployed soldiers located in contingency operation areas and other locations can use EagleCash Stored Value Card (EC SVC) as "electronic money." The EC SVC is the size of a standard plastic credit card, is embedded with a microprocessor chip that holds various types of information in electronic form and is equipped with a sophisticated security mechanism.

The SVC is “reloadable” and is issued by OCONUS finance offices or at CONUS at pre-deployment locations. The soldier can load the card by cashing a check, receiving a casual payment, or at a cashless kiosk. The SVC is used at post offices, Army and Air Force Exchange Services (AAFES—retail stores on base), concessions, finance offices, morale welfare recreation (MWR) activities and dining facilities in the area of operations.

EagleCash Cashless Kiosk. The finance office loads a soldier’s financial institution’s information (routing and account number) onto a SVC and issues a personal identification number (PIN).

The user is able to use a kiosk to:
• Load value onto an SVC from his/her checking account
• Unload value from an SVC into his/her checking account
• Transfer funds from an SVC to another SVC
• Perform balance inquires;
• Change the PIN

A kiosk has a smart card reader which reads the PIN and the financial institution’s information on the SVC.
The user selects a transaction type he/she wants performed, along with the amount of transaction funds. When the transaction is complete, the SVC is revalued at the kiosk and transaction funds are ready to use immediately. Funds are debited or credited to the applicable checking account within 48 hours of the completed transaction via batch-encrypted files to the FRBB. No “ATM-like” fees are associated with using the kiosk.

Successful deployment

In 2007, the partnership planned, coordinated, and led the full deployment of the EC SVC and cashless kiosks throughout Kuwait and Iraq. Deployments included finance offices, AAFES facilities, postal offices, dining facilities (for contractors buying meals) and MWR activities, as well as local and U.S. retail vendors on base. The combined teams of soldiers, civilians, and contractors from the Army, Treasury and FRBB completed all deployments ahead of schedule.

The EC program, particularly after the introduction of the kiosk, has received a full endorsement and praise from soldiers, commanders, civilians, finance elements and retailers. The commanding generals of both the Coalition Forces Land Component Command—Kuwait and the Multi-National Corps-Iraq have given written endorsement of the program to their subordinate commands.

The cashless kiosk greatly enhanced the overall value of the program by providing soldiers access to their funds 24 hours per day, seven days a week. It eliminated the time soldiers previously spent waiting in lines to cash checks or receive casual payments at deployed finance offices while reducing the number of finance soldiers required to support deployed operations. By building the kiosks to use batch processing to the FRB, the machines could be installed in remote locations in a theater of operations where the communications infrastructure won’t support credit cards, debit cards or ATMs, which require online processing.

The EC program supports not only soldiers, but also members of every service, as well as government civilians and contractors. In May 2007, the Army also assisted with the first deployment for the Air Force in Qatar.

Results

By December 2007, monthly kiosk transaction volume in just the Iraqi theater had increased from 12,000 to 190,000 (1,442 percent) since October 2006. This has resulted in a 68 percent decline in local military “casual” payments from over 80,000 to 25,000 and a 28 percent decline in checks cashed from 24,000 to 17,000. Overall 61,601 less soldiers stood in line for a cashier transaction in December 2007 compared to October 2006 while 24-hour kiosks transactions increased by 178,337 for the same months.

Since the first limited fielding in Kuwait and Iraq in the summer of 2006, more than 183,000 stored value cards have been issued for the theater and $341 million have been loaded on those cards. The kiosks have processed 1.6 million transactions while the retailers have processed 5.6 million sales on the cards and the post offices have processed 166,000 sales.

Bottom line: The EC SVC program reduced and continues to reduce cash on the battlefield, streamlines processing for retailers (AAFES) and military postal operations, reduces workload for finance units, decreases mission time lost to administrative processes, and increases service to the user.

Should the Department of the Army migrate the EC card to the Department of Defense Common Access Card (CAC) with has a smart card chip? Should the EC program be expanded to overseas military bases using US dollars?

TOMORROW: Ken Smith, Ph.D., CPA, Assistant Professor of Accounting and Information Science, Willamette University, on "Using Web 2.0 to Learn: Prospects for a Clinical Model?"

IT Modernization: Does it have a Business Architecture?

By: Mark Odell

Mark Odell is a senior technical leader for Northrop Grumman guiding in the application of advanced enterprise architecture. Throughout the past 23 years, Mr. Odell has designed and guided the implementation of large-scale enterprise information systems for government and commercial industry in a variety of vertical markets.

Today’s corporations and governments invest in information technology (IT) automation for a variety of reasons under the banner of IT modernization. The most frequent reasons for IT investment include:
• take advantage of new technology (including tech refresh),
• reduce costs of performing business,
• to improve operational efficiencies or solve some problem with the existing IT solutions.

Often there are other reasons stated for the IT investments, but in general, they are variations on these themes. Based on the above noted reasons, the real motivation is not technical, but is oriented towards a business concern.

As new IT investments are considered many aspects across the enterprise should be included in the development of the business case and ultimately frame the business solution space. Typically the IT solution space is ‘engineered’ from a technical perspective (with a systems engineering discipline), while there are other considerations that should be addressed for well rounded and mature enterprise decision making. Traditionally, architecture focuses on hardware, software, and communications.

These other enterprise considerations span technology, operational, cost, market space, performance and collaborative arrangements with partners, just to name a few. In addressing these various dimensions of the business solution space, it is often helpful to look at the proposed IT solution from a business viewpoint and not weigh the considerations on the technical elegance of the solution. In contrast, technical solutions have been evaluated and developed for decades based on requirements that are perceived to be necessary to accomplish the business objective. The requirements are frequently focused on the acquisition of a perceived technical solution and the requirements do not necessarily balance the other business perspectives needed for better investment decision-making. For example, several key questions illustrate some of these other dimensions and how a proposed technical IT solution may fit within the business solution space.
• What purpose does the IT provide? Does the IT have an impact on the business? (performance, efficiency, operational costs, time to market, competitive advantage)
• When was the last time that the IT solution (old or new) was evaluated to determine if the IT was supporting the business activity?
• Have the business needs changed as a result of the IT?
• Does the business still need to perform this legacy function?

These questions point to an emerging domain of enterprise understanding that is becoming more important as executive leadership attempts to optimize their organizations and business operations to produce their products and services and generate revenue and or benefit for their constituent market space. This enterprise wide understanding must address and define the enterprise business and the accompanying technical solutions infrastructure needed to sustain and grow the operation.

In order to achieve a greater understanding of the interplay of business and technical IT, an Enterprise Architecture (EA) is often claimed to be the solution. Assimilation and analysis of all the information across the perspectives requires some mechanism to account for all of the enterprise complexities. Only recently (relatively speaking) has the practice of EA begun to capture and model these other nontraditional dimensions of the enterprise condition such as business, technical, financial, operational and informational viewpoints. Evidence of exploration in these additional enterprise viewpoints can be seen in the Open Distributed Processing (ITU-T Recommendation X.906 | ISO/IEC 19793) and DoDAF version 2.0 development efforts within the last two years. It appears that EA practices are beginning to address the broader concerns of business strategic planning rather than limit to the technical IT solution planning. This suggests the emergence of a Business Architecture that is coupled with a more traditional technical and systems architecture to capture the broader scope of the enterprise to which EA is often advertised.

The Business Architecture includes a spectrum of enterprise dimensions that are usually not addressed sufficiently in traditional EA models. These include the definitions, relationships, and interactions of business operations, capabilities, policies, organization, mission objectives, and mission/market space as being the blueprint or model that represent how the business is intended to operate. This type of blueprint has the potential to guide several organizational and developmental strategic planning activities which may include a broader spectrum such as;
• functional organizational structure,
• data and information structures including the exchanges between business operations and supporting applications,
• business process refinement and supporting software application development and or configuration of composite software applications,
• supporting technology infrastructure.

Unfortunately, most organizations practice traditional architecture as a mechanism to document the IT system that is being proposed or has already been built. In fact the majority of the broader spectrum of enterprise dimensions outlined above, considers the business operations and how the IT should support the business.

This suggests that the practice of architecture may be overlooking the importance of a non-traditional IT centric model for the business so that strategic budget planning for IT investment, portfolio management, operational performance tuning, and capabilities based analysis, may be conducted to streamline and improve the enterprise operation. We may be looking at the dawn of a new era for Business Architecture modeling and analysis to support and leverage new management techniques.

TOMORROW: Juan DeJesus, Director of Electronic Commerce, U.S. Army Financial Command, U.S. Department of Defense, recipient of AGA's Achievement of the Year Award

Successful Large Scale Federal Financial Systems Modernization Using the Big Bang Approach and Enterprise Architecture

By: Anna Dixon

Anna Dixon, a member of AGA’s Northern Virginia Chapter and the Emerging Issues Committee, is a Senior Managing Consultant for IBM. She also is a retired federal executive where she held federal financial management positions at OMB, DoD, DHS, Treasury and HHS.

In today’s environment many federal financial managers are working diligently to consolidate and modernize disparate systems that often contain data redundancy and inaccuracies. This state of play compromises an agency’s ability to provide reliable, useful and timely financial data that is needed to manage day-to-day operations efficiently and effectively. In turn, achieving the “clean” unqualified financial statement often becomes increasingly elusive.

This is frequently due to:
• non-integrated financial management systems;
• inadequate reconciliation procedures;
• lack of accurate and timely reporting; and /or
• non-compliance with the standard general ledger.

Over the past five years, several agencies boldly moved forward to modernize their financial management systems. These modernization efforts range from large undertakings like the eclectic and complex establishment of the Department of Homeland Security (DHS) or the Department of Defense (DoD) to homogenous consolidations like the Department of Transportation. Regardless of the size or complexity of an agency, the consolidation into a single integrated application software involves core financials (i.e., budgetary resources, receivables, payables, general ledger, cost and funds balance with Treasury) and the host of feeder systems. Also, in the current federal enterprise architecture environment, federal agencies must develop “as-is” and “to be” architecture, business processes, and detail transition strategies.

According to the former Secretary of Education, Richard Riley the top 10 jobs that will be in demand in 2010 did not exist in 2004. Moreover, the amount of new technical information is doubling every two years. A close colleague, Glenn Davis, having worked in the IT industry for over 17 years, just started his second master’s in the management of IT through the University of Virginia within four years of achieving his first master’s in business administration. He appreciates the rapid changes in technology and the close tie that must exist to enterprise business processes for those technology implementations to be successful. His staff ranges from a brilliant chief architect who speaks in parables to new hires who established and maintained their own websites when they were pre-teens.

Similarly, federal financial managers must understand how employing robust technology will help enable transformation to succeed in today’s rapidly changing and dynamic environment. It not just the chief information officer’s (CIO) job. The federal financial manager must understand the key aspects of technology and the benefits it will provide. The financial manager can leave the understanding of the technical architecture (hardware and the network) to the CIO, but financial managers must understand the key capabilities of application software and the role it plays in solving agencies many financial challenges. Application software is critical to transforming existing business processes, data structures, the organization, and ultimately the ability of the chief financial officer to manage the agency’s finances. GAO recently reported OMB and federal agencies have identified approximately 227 IT projects—totaling at least $10.4 billion in expenditures for fiscal year 2008—as being poorly planned (on the Management Watch List), poorly performing (on the High Risk List with performance shortfalls), or both.

Long-term phased implementation strategies involve module-by-module implementation of financial management modernization and they tend to be costly and vulnerable to becoming obsolete prior to full implementation. The fact some agencies encountered financial modernization mishaps when they chose the “big bang” approach to implementing a financial management modernization project should not immobilize, or unduly hamper, others from proceeding similarly when planning financial modernization transformation. Loosely speaking, the “big bang” implementation encompasses virtually all functionality for virtually all users at the same time. (Phased implementation could be a “mini-bang,” functional, or process form of enterprise resource planning solution.) In all instances, the cost and risk associated with financial management modernization are enormous. Today’s federal financial managers, however, have the benefits of lessons learned, proven best practices, templates for developing business processes, and most important, a sea change of new technological capabilities. The “big bang” implementation strategy is comprehensive and complex and it generates significant returns on investment earlier. In this context, the “big bang” involves corporate or enterprise-wide development of business processes that will become the basis for the enterprise architecture and the resultant IT solution. The development would be incremental (spiral) and the financial mangers would be involved through out the development phase—perhaps even “teamed” with the developer to ensure close integration of IT and business.

Successful enterprise-wide solutions generally drive down the total cost of ownership while gaining the ability to have one source of real time online data that is available when needed. Cost avoidances range from elimination of software licenses and maintenance for a single user to access multiple applications to elimination of data redundancy and inaccuracy or the avoidance of building and maintaining the integration between multiple applications.
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Federal financial managers must keep pace with the accelerating rate of technological change and harness the capabilities. It is not easy…but it is doable. The traditional challenges of enterprise vs. mission organizational orientation, program aligned funding processes, constraining and/or inflexible budgetary cycles and process, will continue but the full use and application of enterprise architecture will help agencies rapidly reconfigure their business and more easily position IT resources to serve it. An enterprise architecture, or modernization blueprint, provides a clear and comprehensive picture of an entity, whether it is an organization (federal department or agency) or a functional or mission area that cuts across more than one organization (financial management). This picture consists of snapshots of the enterprise’s current “as is” operational and technological environment and its target or “to be” environment, and contains a capital investment road map for transitioning from the current to the target environment. The architecture also includes a transition or sequencing plan, which is based on an analysis of the gaps between the “as is” and “to be” environments. This plan provides a road map for moving between the two environments, and it incorporates such considerations as technology opportunities, marketplace trends, fiscal and budgetary constraints, institutional system development and acquisition capabilities, legacy and new system dependencies and life expectancies. The failure comes when we build solutions for business processes that are not well understood.

So, let’s move forward smartly but boldly applying the big bang approach when implementing enterprise-wide financial management software solutions.

TOMORROW: Jeff Steinhoff, CGFM, CPA, CFE, on "If You Think $4 a Gallon is Bad, You Haven't Seen Anything Yet"

Blogging for Government Dollars: Can Internal Blogs (or Wikis) Add Value to Traditional Financial Indicators and Improve Competition?

By: John Sacco

John Sacco, associate professor of Public and International Affairs at George Mason University, integrates substance, philosophy and information technology in his teaching and research.

He is assisted in this AGA blog by Professor Gerald Bushee, also of George Mason, and Professor Odd Stalebrink of Penn State, Harrisburg, PA.

This short essay discusses the role that blogs (or Wikis) internal to the organization may play in adding value to government information. Particular emphasis is placed on the traditional financial indicators, given that ratio and trend analyses such as the current ratio for a four- to six-year period have become more widely used with GASB 34 and the online placement of CAFRs. Nonetheless, without a context for the jurisdiction, for example, any set of ratios and trends can lead to problems of interpretation.

Consider these current ratios for a city over a four-year period produced from CAFR analysis. Assuming it is best to have more current assets than liabilities, this city had a current ratio of .96 in 2003, down to around .65 in both 2004 and 2005, a nice jump to 1.16 in 2006.

Does this indicator tell whether the city is doing well or poorly financially? On a rule of thumb basis, the current ratio is above 1 in 2006, that is, they presumably can pay bills that come due. Not the case in prior years. But is the current ratio or its trends all that informative without context? Adding other financial indicators can provide greater insight, but which ones? And when might information overload enter the equation?

While blogs are often associated with virtual social networks, often populated by friends with light-hearted and not-so-light-hearted comments, blogs offer a potentially productive tool when combined with organizational data such as CAFRs, spreadsheet templates for ratio and trend analysis and information that those who were responsible for the financial report might not have considered. This philosophy suggests that the untapped power for information is the tacit knowledge of employees. For example, an employee, using Lexus-Nexus, might have come upon articles about other cities and how they dealt with liquidity problems. Another employee may have never heard of Lexus-Nexus and thus this further expands the information horizon beyond the organization. When employees are placed into the equation with some tools, such as a blog, information collection becomes more robust and extensive. Wikis are of potential value since they are often more structured than blogs. An employee might define millage for calculating property taxes and provide historical data on it. Since a wiki can be edited, the accuracy can be improved. Studies of Wikipedia show it is not really less accurate than encyclopedias and Wikipedia is more up to date.

Broad or visionary ideas about the direction of governments might result from blogs and wikis.

As an example of a city financial blog and the logic behind it, see
http://allentownblog.wordpress.com/
Students in an MPA finance class were provided with the CAFR information and a template for calculating ratios and trends. While doing the paper on financial conditions, they also injected their own information often material of extreme interest but not provided in the course. My reaction to 60 to 80 comments made by the students was: I found the “facebook” generation. These solid and voluminous contributions appeared in all the blogs, including a Peace Corps blog on village financing.

These are some questions to consider in assessing the value of the blog-wiki idea in the context of government organizations.

1) Are blogs and wikis part of the flatting of government hierarchies as is the case of contracting out, public private partnerships and privatization?
2) Will members of a hierarchical organization feel that openness begets more punishment than reward?
3) Will time spend on blogs and wikis actually take time away from assigned work?
4) What security problems are posed if an employee posts classified information?
5) Is democracy enhanced by increased competition of ideas?
6) Is government primarily about the dilemma of equity and efficiency with organizational reforms and IT innovations playing a secondary role?
7) Might blogs and wikis produce too much poorly organized information?

TOMORROW: Sam Mok, CGFM, CIA, CEO, Condor International Advisors, LLC, and AGA National President-Elect, on "The 21st Century CFO"

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