FINANCE

Public sector planning and the path to performance

June 5, 2007

The government planning process – planning, budgeting, forecasting, and reporting – presents a formidable challenge to most government organizations, regardless of size.

When conducted effectively, however, it's a crucial component of financial management that contributes greatly to finding new efficiencies and agility in the public sector.

Panelists:

Andrew Maner, President of ABM LLC Advisory Services and former CFO, Department of Homeland Security
Andy Schoenbach, Budget Formulation and Execution Line of Business (BFE LoB) Policy Lead and Chief, Budget Systems Branch, OMB

Charles E. Cook III, Director, Fiscal Division Headquarters, US Marine Corps

At this panel session, held on May 2, 2007 at the fourth annual Cognos Government Forum, executives from leading government organizations shared how they address planning obstacles, improve processes, and leverage new technologies for faster, more accurate planning.

They shared the lessons learned along the way that helped them save time, reduce error, promote enterprise-wide collaboration, and foster a disciplined financial management culture that delivers true insight to staff and constituents.

Breaking bad habits

"Our greatest weakness is that we are habit forming in terms of budget."

Andrew Maner is the President of ABM LLC Advisory Services and the former CFO of the Department of Homeland Security. He shared how important the budgeting process was at Homeland Security and the issues they faced on a daily basis:

"Often times government agencies don't know where to start...The answer is to focus on creating a culture of accountability and take small steps."

"At Homeland Security the budget was everything. However, we really struggled with setting up the process and linking together 9 different agencies.

In years past, many agencies in government built budgets based on last year's budget and simply figured in cost of living. We knew this was not a best practice and knew we could do better."

For Maner, the key lesson learned was figuring out what to fix first. "Often times government agencies don't know where to start. They grapple with whether to focus on processes, people or systems. The answer is to focus on creating a culture of accountability and taking small steps."

"By focusing on real-time decisions, and moving to a balanced scorecard approach agencies can quickly realize their desired results."

Laying the right foundation

"The one size fits all approach to budgeting doesn't work, in fact, it's an absurd concept."

Andy Schoenbach, BFE LoB Policy Lead and Chief of OMB’s Budget Systems Branch described how the dynamic nature of Federal budgeting precludes rigid, standardized process approaches:

"Systems for budget formulation and execution must be capable of supporting policy-driven processes that are fast-paced and can change dramatically in response to political, economic, environmental, and global events.

They must also be able to accommodate the huge diversity among agencies in size, mission complexity, activity types, organization, funding type, and more."

"Systems for budget formulation and execution must be capable of supporting policy-driven processes that are fast-paced and can change dramatically."

As a result, the Budget Formulation and Execution Line of Business is focusing on developing automated tools that enhance core functional capabilities of budgeting that will have broad applicability, including identifying and "productizing" successful agency budget formulation approaches, budget performance integration, government-wide collaboration, and data collection and tracking.

This also includes a firm focus on document production (numbers and text), knowledge management, integrating budget formulation, execution, and financial management, and establishing a Community of Practice to improve the human capital of the budgeting community."

As for lessons learned along the way, Schoenbach shared the importance of agencies becoming smart consumers:

"Agencies need to avoid inflexible process-based approaches, complex software development projects, budgeting tools that are based on a financial management systems paradigm, and COTS software that requires significant customization through proprietary software code changes."

Instead, they should look for ways to extend the fundamental tools of budgeting – spreadsheets and word processing – such as adding database capabilities and Web-based interfaces that enable multi-person access, facilitate analysis, and allow flexible data exchange with Financial Management Systems.

Whenever possible, they should take advantage of Government-Off-the-Shelf (GOTS) and open software."

Streamline processes and train your people

"The hallmark of budgeting is consistency – in the systems, processes, and people that drive it."

"Traditionally, the Department of Defense has always requested budgets that support peace-time operations but one that is flexible enough to be ready for war," says Charles E. Cook III, Director, Fiscal Division at Headquarters, US Marine Corps.

"Since 9/11 this has been the case and we are constantly being challenged with supplemental requirements and planning for the unknown. The government can move when it has to, in fact, we were able to get $40 billion approved within 48 hours after 9/11.

However, since then, DoD has been operating on a cycle of three budget requests per year: the baseline budget, the bridge funding request to ensure the needs of war are met in the beginning of the fiscal year, and the "full" supplemental that presents the final cost estimate for that year's funding to support the mission needs of the global war on terror.

This pattern has taken its toll on the process, the systems that support the process, and the people who must make the process work."

"Our biggest lesson learned was to invest heavily in training our people to use the system effectively and accurately."

"The OMB is to be commended for setting the foundation for fixing a very inefficient process," says Cook.

"With too many people inserted in between the flow of systems information it is like filling a leaky water bucket with information from one system and spilling it along the way as you transfer the information to the next system.

In this sort of environment, people as intermediaries to information processing are a hindrance rather than a help. Systems today must be able to talk to one another and cut out the middle man."

"But even that's not enough. Agencies can have the greatest systems and streamlined processes, but they are useless unless people know what it means. Our biggest lesson learned was to invest heavily in training our people to use the system effectively and accurately."