Federal agencies should take a portfolio management approach to financial management system modernization in which components that make up the totality of financial systems operate together even while existing in different stages of their lifecycle.

The paper, publically released June 29, was prepared at the request of the Office of Management and Budget by a financial management working group of the Fairfax, Va.-based industry association.

Report authors say federal officials should replace a world view that views financial management as a "system" for one that views automated components and manual processes together as providing a "capability."

Capability can be provided through improvements to legacy systems, new systems, upgrades or other initiatives.

Rather than attempt to replace an entire system, some components "may be in the process of being implemented and rolled out, some maybe be in 'steady state' operation, while others may be approaching major upgrade or retirement," the report says.

Utilization of a data fusion engine that synthesizes data from a variety of systems would permit an agency operating in such a hybrid environment to nonetheless have an unified view of its financial data, the report adds.

Effective portfolio management does require an organization to have a business enterprise architecture, knowledge of system component costs, in general, a strong governance process, the report says. It suggests using a balanced scorecard to inform decisions of which components should get modernization priority.

Modernization efforts should be decomposed into smaller chunks that permit "early wins" that keep energy and momentum going, the report says.

"Early wins can also be important if the agency does not have a successful implementation track record or an element of mistrust or doubt exists between IT, the integrator and the rest of the organization."

Agencies should not necessarily adopt a software-as-a-service--i.e., applications delivered via a cloud--the report also says. While SaaS might work well for one agency, "it could be highly risk and unsatisfactory in another agency that has deeply integrated financial and program systems."

For more:
- go to an ACT/IAC announcement of the paper

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