Term Ppr Mis in Finance[1]

8/2/2019 Term Ppr Mis in Finance[1]

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MOI UNIVERSITY

SCHOOL OF INFORMATION SCIENCE

COURSE: MASTER OF PHILOSOPHY (INFORMATION TECHNOLOGY)

UNIT: ICT MANAGEMENT

Lecturer: Mr BOIT

NAME: Rotich Bernard

REGISTRATION NO: IS/MPHIL/057/11


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Table of contents. Misfeasor

TOPIC: Use of mis in finance.

1. 1 INTRODUCTION1.1. what is finance? What are the processes?1.2. What is financial management1.3. What is the role of MIS in financial management1.4. What are the benefits?

Introd what is finance? What are the processes? What is the role of mis? What are the benefits?

Case scenario of Kenya

What system is there? Structure infrastructure it runs on

What are its functions?

Area of coverage

Impact on Kenya governorship

Comparison with other countries in Africa

Ghana

TZ

Benefits of mis systems

Conclusion

references


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Table of Contents

1. Overview ............................................................................................................................................. 4

1.1. Introduction ...................................................................................................................................... 5

1.2. Objectives of Financial Management ........................................................................................... 5

1.3. Functions of Financial Management ............................................................................................ 6

1.4. Role of mis on the above functions .............................................................................................. 7

1.5. Role of MIS in Management: ....................................................................................................... 7

1.6. Uses of MIS in Management:....................................................................................................... 8

2. Financial information implementation in Kenya. ................................................................................ 8

The Kenya government has implemented a financial management system that help the central

government in managing it financial processes. The system is widely known by the term IFMIS. ...... 8

2.1. Introduction of IFMIS .................................................................................................................. 8

2.2. Core Functions ............................................................................................................................. 92.3. Objectives of IFMIS ................................................................................................................... 10

2.4. Functional Areas in IFMIS ......................................................................................................... 10

2.5. Components of IFMIS Project ................................................................................................... 13

2.5.1. Application Solution ........................................................................................................... 13

2.5.2. Infrastructure .......................................................................................................................... 17

2.5.2.1. Determinants for Infrastructure Design........................................................................... 17

2.5.2.2. Centralized vs. Decentralized Implementation ............................................................... 19

2.5.2.3. Primary and Backup Data Centers .................................................................................. 19

2.5.2.4. Wide Area Networks (WAN) .......................................................................................... 21

2.5.2.5. Local Area Networks (LAN)........................................................................................... 23

2.6. Security & Access Control ......................................................................................................... 24

2.7. Support & Maintenance ............................................................................................................. 26

2.8. Change Management .................................................................................................................. 26

2.9. Communications......................................................................................................................... 28

2.10. Funding ................................................................................................................................... 30

2.11. Quality Assurance................................................................................................................... 31

3. Benefits of IFMIS to Kenya .............................................................................................................. 31

4. CONCLUSION ................................................................................................................................. 32

5. Reference .......................................................................................................................................... 33


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1. Overview

This paper discusses the subject of Management Information System(MIS) in Finance in providing

critical financial management solution for a country. Improve governance by providing real-timefinancial information that financial and other managers can use to administer programs effectively,

formulate budgets, and manage resources.

Over the past decade, developing, transition and post-conflict countries have increasingly embarked on

efforts to computerize their government operations, particularly with respect to public financial

management (PFM). Most common among these have been efforts to introduce integrated financial

management information systems (IFMIS) that computerize and automate key aspects of budget

execution and accounting operations across the institutions of government. IFMIS can enable promptand efficient access to reliable financial data and help strengthen government financial controls,

improving the provision of government services, raising the budget process to higher levels of

transparency and accountability, and expediting government operations. Donors and international

institutions like the International Monetary Fund (IMF), the World Bank, and USAID have played a

critical role, and will continue to do so, in supporting and shaping developing countries financial

management systems through projects that provide a combination of technical assistance, training,

financial resources and procurement support to partner governments.

Sound IFMIS systems, coupled with the adoption of centralized treasury operations, can not only help

developing country governments gain effective control over their finances, but also enhance

transparency and accountability, reducing political discretion and acting as a deterrent to corruption

and fraud.

Political will is crucial to this process. Once the decision has been made to implement an IFMIS, the

battle is half won. Garnering support from those who will use the new system, and overcoming

resistance from those who stand to lose from its implementation, can be an equally daunting challenge.Change management is therefore an important part of any IFMIS project.

This paper will look at a case study of Kenya government on implementation of its financial system

(IFMIS). The benefits Kenya government has attained since it implementation and also the challenges

in implementing the system.


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1.1.IntroductionFinancial Management means planning, organizing, directing and controlling the financial activities

such as procurement and utilization of funds of the enterprise. It means applying general management

principles to financial resources of the enterprise.

Collection of sufficient resources from the economy in an appropriate manner along with allocating

and use of these resources efficiently and effectively constitute good financial management. Resource

generation, resource allocation and expenditure management (resource utilization) are the essential

components of a public financial management system.

Public Finance Management(PFM) basically deals with all aspects of resource mobilization and

expenditure management in government. Just as managing finances is a critical function of

management in any organization, similarly public finance management is an essential part of the

governance process. Public finance management includes resource mobilization, prioritization of

programmes, the budgetary process, efficient management of resources and exercising controls. Rising

aspirations of people are placing more demands on financial resources. At the same time, the emphasis

of the citizenry is on value for money, thus making public finance management increasingly vital.

1.2. Objectives of Financial Management

The financial management is generally concerned with procurement, allocation and control of

financial resources of a concern. The objectives can be-

1. To ensure regular and adequate supply of funds to the concern.2. To ensure adequate returns to the shareholders which will depend upon the earning capacity,market price of the share, expectations of the shareholders.

3. To ensure optimum funds utilization. Once the funds are procured, they should be utilized inmaximum possible way at least cost.

4. To ensure safety on investment, i.e, funds should be invested in safe ventures so that adequaterate of return can be achieved.

5. To plan a sound capital structure-There should be sound and fair composition of capital so that abalance is maintained between debt and equity capital.


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1.3. Functions of Financial Management1. Estimation of capital requirements: A finance manager has to make estimation with regards tocapital requirements of the company. This will depend upon expected costs and profits and future

programmes and policies of a concern. Estimations have to be made in an adequate manner which

increases earning capacity of enterprise.

2. Determination of capital composition: Once the estimation have been made, the capitalstructure have to be decided. This involves short- term and long- term debt equity analysis. This will

depend upon the proportion of equity capital a company is possessing and additional funds which have

to be raised from outside parties.

3. Choice of sources of funds: For additional funds to be procured, a company has many choiceslike-a. Issue of shares and debenturesb. Loans to be taken from banks and financial institutionsc. Public deposits to be drawn like in form of bonds.Choice of factor will depend on relative merits and demerits of each source and period of financing.

4. Investment of funds: The finance manager has to decide to allocate funds into profitableventures so that there is safety on investment and regular returns is possible.5. Disposal of surplus: The net profits decision have to be made by the finance manager. This canbe done in two ways:

a. Dividend declaration - It includes identifying the rate of dividends and other benefits likebonus.

b. Retained profits - The volume has to be decided which will depend upon expansional,innovational, diversification plans of the company.

6. Management of cash: Finance manager has to make decisions with regards to cash management.Cash is required for many purposes like payment of wages and salaries, payment of electricity and

water bills, payment to creditors, meeting current liabilities, maintainance of enough stock, purchase

of raw materials, etc.


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7. Financial controls: The finance manager has not only to plan, procure and utilize the funds buthe also has to exercise control over finances. This can be done through many techniques like ratio

analysis, financial forecasting, cost and profit control, etc.

1.4. Role of mis on the above functionsManagement Information Systems (MIS) provide regular information to managers to allow them to

make decisions based on data rather than guesses. Certain data and analysis can play a very useful role

in making good decisions about where and when to use human and other resources to achieve the

mission of an organization. Managers with quality MIS are able to make decisions from an informed

stance rather than a haphazard one. MIS can answer questions such as: Would it be better to add staff

at the beginning or end of a manufacturing process? How do we choose the most efficient way to use

our space? Do we need more patient exam rooms or a bigger lab? How much inventory should I store

and when do I order more stock? What hours have the most customers, so I'll have an adequate staff to

serve them?

1.5. Role of MIS in Management: The role of the MIS in an organization can be compared to the role of heart in the body. Theinformation is the blood and MIS is the heart. In the body the heart plays the role of supplying pure

blood to all the elements of the body including the brain.

The MIS plays exactly the same role in the organization. The system ensures that an appropriatedata is collected from the various sources, processed, and sent further to all the needy destinations. The

system is expected to fulfill the information needs of an individual, a group of individuals, the

management functionaries: the managers and the top management.

The MIS helps the clerical personnel in the transaction processing and answers their queries onthe data pertaining to the transaction, the status of a particular record and references on a variety of

documents.

The MIS helps the middle management in short them planning,target setting and controlling thebusiness functions. It is supported by the use of the management tools of planning and control.


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The MIS plays the role of information generation, communication, problem identification andhelps in the process of decision making. The MIS, therefore, plays a vita role in the management,

administration and operations of an organization.

1.6. Uses of MIS in Management:1. It deals with transaction processing such as answering the questions, ststus of a particular recordand variety of documents.

2. It gives operational data for planning, scheduling and control.3. It helps in decision making and to correct an out of control situ ation.4. It helps middle management in short term planning, target setting and control the businessfunctions.

5. It helps top management in goal setting, planning business planes and its implementations.6. It helps in generating information, communicating of the generated information, problemidentification and helps in the process of decision making.

2. Financial information implementation in Kenya.

The Kenya government has implemented a financial management system that help the central

government in managing it financial processes. The system is widely known by the term IFMIS.

2.1. Introduction of IFMISGenerally, the term IFMIS refers to the use of information and communications technology in

financial operations to support management and budget decisions, fiduciary responsibilities, and the

preparation of financial reports and statements. In the government realm, IFMIS refers more

specifically to the computerization of public financial management (PFM) processes, from budget

preparation and execution to accounting and reporting, with the help of an integrated system for

financial management of line ministries, spending agencies and other public sector operations.

The principal element that integrates an IFMIS is a common, single, reliable platform database (or a

series of interconnected databases) to and from which all data expressed in financial terms flow.1


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Integration is the key to any successful IFMIS. In a nutshell, integration implies that the system has the

following basic features:

Standard data classification for recording financial events;

Internal controls over data entry, transaction processing, and reporting; and

Common processes for similar transactions and a system design that eliminates unnecessary

duplication of data entry.

Integration oftentimes applies only to the core financial management functions that an IFMIS

supports, but in an ideal world it would also cover other information systems with which the core

systems communicate, such as human resources, payroll, and revenue (tax and customs). At a

minimum, the IFMIS should be designed to interface with these systems.

2.2. Core FunctionsAn IFMIS stores, organizes and makes access to financial information easy. It not only stores all the

financial information relating to current and past years spending, but also stores the approved budgets

for these years, details on inflows and outflows of funds, as well as complete inventories of financial

assets (e.g., equipment, land and buildings) and liabilities (debt).

The scale and scope of an IFMIS can vary, from simple General Ledger System to a comprehensive

system addressing Budget, Revenue, Expenditure Control, Debt, Resource Management, HumanResources, Payroll, Accounting, Financial Reporting, and Auditing processes across central

government or even including local government and other public sector and quasi-governmental

agencies and operations.

A more comprehensive, well integrated system will:

Provide timely, accurate, and consistent data for management and budget decision-making; Support government-wide as well as agency-level policy decisions;

Integrate budget and budget execution data, allowing greater financial control andreducing opportunities for discretion in the use of public funds;

Provide information for budget planning, analysis and government-wide reporting; Facilitate financial statement preparation; and Provide a complete audit trail to facilitate audits.


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By recording information into an integrated system that uses common values, IFMIS users can access

the system and extract the specific information they require to carry out different functions and tasks.

All manner of reports can be generated: balance sheets, sources and uses of funds, cost reports, returnson investment, aging of receivables and payables, cash flow projections, budget variances, and

performance reports of all types. Some systems have libraries consisting of hundreds of standard

reports. Managers can use this information for a variety of purposes: to plan and formulate budgets;

examine results against budgets and plans; manage cash balances; track the status of debts and

receivables; monitor the use of fixed assets; monitor the performance of specific departments or units;

and make revisions and adjustments as necessary, to name a few. Reports can also be tailored to meet

the reporting requirements set by external agencies and international institutions like the IMF.

2.3.Objectives of IFMIS

An IFMIS system focuses on alleviating challenges from an operational perspective. It is not and

cannot be a solution for every problem associated with budget formulation or execution. The

implementation strategies of an IFMIS as a tool have to therefore be based on objectives which can

assist governments in overcoming operational challenges.

2.4. Functional Areas in IFMIS


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The key areas that can be targeted for coverage under an IFMIS Project can be listed as follows:

Budget formulation at the macro level. The key areas for consideration are the ability to define

overall objectives based on policies and programs and distribute resources based on the approximate

requirements and overall resource envelope. The process is iterative with continuous negotiation

requiring numerous trials and requires capability to record data and manipulate the same to arrive at an

optimum outcome reducing the need for extensive manual work associated with such an exercise.

Budget formulation at the micro level. This requires the ability to allow allocation of assigned

resource ceiling to various levels e.g. cost center, program, sub-programs, objectives, activities. The

process should lead to the production of the budget document for legislative approval. Subsequently it

is equally critical to be able to conduct budget performance monitoring.

Allocation of Funds. A critical process allows for allocation of funds based on the final budget to

various entities (authority to spend) and needs the ability to track all allocations & sub-allocations.

This also forms the basis for commitment control and should facilitate reallocation and withdrawal of

funds (if required).


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Procurement. This covers all areas from requisitions, request for quotations, purchase order

processing, contract administration, receiving of goods & services, recording of supplier invoices and

associated authorizing procedures. Commitment control forms a major component of this process

ensuring compliance to the budget.

Revenue Accounting. Provide for billing (invoicing) and recording of receipts for tax, non-tax and

any other revenue including banking of the revenue and reconciliation.

Payment Accounting. The area focuses on processing of procurement and non-procurement

payments (salary, debt etc.) issuing cheques and bank transfer instructions.

Bank & Cash Management. This entails managing various bank accounts (in multiple currencies)

and reconciliation capabilities. The tasks also include cash flow planning based on income &

expenditure budget, revenues, commitments, planned procurement etc.

Inventory Management. This requires tracking of inventory items from procurement stage to the

issue stage in a number of warehouses and storage locations.

Asset Management. Assets are constantly being procured by governments and it is essential to track

assets from procurement stage and able to carry out asset management functions such as allocation,

changes to assets, movements and disposal including all accounting for the same.

Asset Maintenance. Typically asset maintenance management is essential for vehicles, structures,

computer systems etc. There is a need to plan and execute maintenance and track costs and make

decisions such as when to retire high maintenance assets.

Sourcing. This is different from procurement as it focuses on the procedure for sourcing of goods and

services. Typical tasks include tendering, tender publication, receipt of bids, evaluation, award and

publication of outcomes.


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Payroll. Human resource costs form a major component of government expenditure and needs to be

well managed. Most governments have large number of employees and payroll processing poses a

major challenge due to the need to regularly update data and process payroll on a tight fixed schedule.

Public Debt Management. Public debt forms a substantial component of governments financial

operations and requires effective management of all public debt, terms & conditions and repayment

plans.

Human Resource Management. This deals with the entire human resource process like recruitment,

employment, appraisal, promotions, disciplinary actions, transfers, leave administration, competency

assessment, succession planning, capacity planning and capacity building etc.

2.5. Components of IFMIS Project

IFMIS is very comprehensive system with a wider coverage of financial operations. In view of this the

system is designed in modules, with each module representing a particular financial operation.

This paper will try to look at each module as implemented by the ministry of Finance.

2.5.1. Application Solution

The term application solution refers to the Application Software. This is generally a suite of program

modules designed and developed to facilitate operations for the functional areas identified in the sub

sequent section detailing a list of potential solutions to the target functional areas. The module names

and facilities are generic and could vary from product to product. Depending on the product chosen the

number of features and functionality would vary. Low end solutions would have limited capabilities

but lower cost and simpler to implement, whereas high end solutions would be extensively

customizable, offer extensive features & functionalities and would require extended timeframe to

implement and would obviously cost more.

Budget Module: The systems available can be used to define overall objectives based on policies

and programs and distribute resources based on the approximate requirements and overall resource

envelope. The process is iterative with continuous negotiation requiring numerous trials. The tools

make it easier to record data and manipulate the same to arrive at an optimum outcome reducing the


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need for extensive manual work associated with such an exercise. The Budget Module allows

allocation of assigned resource ceiling to various levels e.g. cost center, program, sub-programs,

objectives, activities. The process leads to the production of the budget document for legislative

approval. Subsequently the system also allows budget performance monitoring with information from

the budget execution sub-systems.

General Ledger Module: Forms the base of the systems and provides for definition of

organizational structure (and hence operational and reporting structures), chart of accounts and is the

repository for all transactions for production of a wide range of operational and statutory reports by

organizational unit as well as at the entire government level.

Fund Management Module: The module allows for processing of fund allocation based on the final

budget to various entities (authority to spend) and track all allocations & sub-allocations. This also

forms the basis for commitment control. Facilities exist for reallocation and withdrawal of funds.

Procurement Module: This covers all areas from requisitions, request for quotations, purchase order

processing, contract administration, receiving of goods & services, recording of supplier invoices and

associated authorizing procedures. The system also facilitates input and storage of all documents

associated with the procurement process. Commitment control forms a major component of this

process ensuring compliance to the budget. Most processes are automated reducing manual

intervention and ensuring compliance to procurement procedures.

Revenue Accounting Module: The system enables billing (invoicing) and recording of receipts for

tax, non-tax and any other revenue including banking of the revenue and reconciliation. The system

also facilitates input and storage of all documents associated with the revenue process. Most processes

are automated reducing manual intervention and ensuring compliance to revenue accounting

procedures.

Payment Accounting Module: The system enables processing of procurement and non-procurement

payments (salary, debt etc.) including printing of cheques or automatic payment transfer to banks as

required. The system also facilitates input and storage of all documents associated with the payment

process. Commitment control forms a major component of this process ensuring compliance to the


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budget. Most processes are automated reducing manual intervention and ensuring compliance to

payment accounting procedures.

Bank & Cash Management Module: The focus is on managing various bank accounts (in multiple

currencies) and tracking all transactions with full reconciliation capabilities which can be automated

subject to banks providing requisite data. The cash management function enables cash flow planning

based on income & expenditure budget, revenues, commitments, planned procurement etc.

Inventory Management Module: The system enables tracking of inventory items from procurement

stage to the issue stage supporting any number of warehouses and storage locations. There is support

for bar-coding to reduce manual processes while receiving and issuing. It enables tracking of

consumption and also valuation of inventory (essential for full accrual accounting).

Asset Management Module: The system facilitates tracking of assets from procurement stage and

enables all asset management functions such as allocation, changes to assets, movements and disposal.

There is full support for all accounting procedures associated with asset management. Assets can also

be bar-coded to facilitate easy management.


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Asset Maintenance Module: The capability allows defining requirements and capturing of all asset

maintenance costs. Typically maintenance management is used for vehicles, structures, computer

systems etc. There is support for elaborate planning and execution of maintenance tracking all costs

and making decisions such as when to retire high maintenance assets.

Sourcing Module: This is different from procurement as it focuses on the procedure for sourcing of

goods and services. Facilities include tender definition, tender publication, receipt of bids, evaluation,

award and publication of outcomes. All of this is done in a transparent manner over web based

systems allowing registered suppliers to access the system over the internet. Confirmed contracts then

pass on to the procurement system for further processing.

Cost Accounting Module: A major system integrated into an IFMIS system is the cost accounting

capability that allows most costs to be apportioned to cost centers, programs etc. which allows

elaborate cost accounting analysis. The process is automated once defined.

Payroll Module: Human resource costs form a major component and are managed in the payroll

system which manages details of personnel pay & deductions elements including pension related

processes. A elaborate organization structure management facility allows grouping personnel and

analysis of costs across the entire organization structure. Most processes are automated reducing

manual intervention and ensuring compliance to payroll procedures.

Public Debt Management Module: Public debt forms a substantial component of a governments

financial operations and the system allows recording of all public debt, terms & conditions and

repayment plans. It interfaces directly with the financial system for payment processing.

Human Resource Management Module: This deals with the entire human resource process like

recruitment, employment, appraisal, promotions, disciplinary actions, transfers, leave administration,

competency assessment, succession planning, capacity planning and capacity building etc. The system

allows storage of all documents associated with employees and allows personnel to manage some of


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their data by themselves through self service capabilities. A comprehensive workflow control ensures

compliance with all Human Resource Management procedures.

2.5.2. InfrastructureInfrastructure refers to the hardware, network and system software required to implement an

application solution. It also includes solutions to overcome problems associated with poor power

supply and frequent power outages.

2.5.2.1. Determinants for Infrastructure Design

The design and provision of infrastructure depends on the following key aspects:

Application Software and Modules implemented. This assists in determining a number of key aspects

such as:

Transaction volumes (directly related to target areas to be covered based on modules to beimplemented);

Deployment Approachthis will depend on supported technologies such as clientservermodel, web based model, terminal emulation model etc.

Processing requirementslow end systems have lower processing requirements compared tolarge high end complex systems which have very high processing overheads;

Databases to be supportedwhich will assist in determining processing and storagerequirements;

Features and Facilitiesneed to be closely studied especially when implementing aspects thattarget extensive automation. Examples are use of MICR cheque printing, bar code printers &

readers for inventory / asset management, use of biometric identification systems, automatic

interface to banks.

Number of Institutionse.g. number of ministries, departments, regional offices etc. to be catered for

in the project This will have an impact on transaction volumes and number of users;


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Geographical Location of Institutionslocation of each site, potential number of users and

anticipated volume of data flow at each site will determine the manner in which the sites need to be

connected to a central site where the main systems will be located. It is important to note that it may

even transpire that sites cannot be connected due to limitations of available connectivity options and

hence alternative implementations models may need to be contemplated;

Transaction Volumesthe term generally applies to all transactions to be processed on the system

(inputs and outputs). Examples are numbers of requisitions, purchase orders, payments, cheques,

receipts, funds transfers, inventory issues & receipts, asset transactions, number of personnel etc.

Transaction volumes need to be specified in relation to time e.g. daily, weekly, monthly and annually.

The key infrastructure aspects determined based on transaction volumes are:

Processing Capability - should be able to handle the number of transactions at any one time andprovide users with a reasonable response time;

Online Storage Capabilityshould able to store data and documents online for a defined periodof time (710 years);

Offline Storage Capabilityshould be able to handle storage of data and documents outside thesystem on backup media for long term storage;

Printing Capabilityshould be able to cater for printing of various documents generated by thesystem including various reports;

Scanning Capabilityshould enable scanning of documents for processing and storage on thesystem;

Number of Usersrequired to handle the processing of various transactions. It should be notedthat this is not the only criteria and many users will also be added based on roles &

responsibilities e.g. managers, authorizing officers, senior directors. This helps to determining

the following important infrastructure components:

Number of workstations; Number of printers; Number scanners; Number of various software licenses (concurrent / named users ..); Furniture requirements


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Details of Existing Infrastructure (hardware, network, software, power backup) - would essentially

assist in establishing whether any components can be used as they are, through upgrades or would

need replacement. It also assists in establishing integration requirements with the proposed system.

PowerInfrastructure requires power to operate and the availability of stable power supply is

critical. Evaluation of power situation is essential to establish interventions necessary. This would be

in the form of:

o Uninterruptible power supply units to safeguard against transient outages, under / over voltages ..

o Generators or invertors (with battery banks) to safeguard against extended power outages;

o Solar power for remote sites with limited requirements;

Planned or Anticipated Growthwould apply to additional applications, institutions, transaction

volumes, number of users .

2.5.2.2. Centralized vs. Decentralized Implementation

Infrastructure can be designed using two fundamental approaches namely centralized or decentralized

systems.

A centralized system is designed on the basis that all data (for the whole organization) is stored in a

central system and is stored and processed by users located in dispersed geographical locations. All

application software necessary for processing and storage of data also operates on the central system.

A decentralized system on the other hand is designed on the basis that each geographically dispersed

location has its own system for processing and storage of data including application softwarenecessary for the same.

2.5.2.3. Primary and Backup Data Centers


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The data centers are the nerve centers of a centralized infrastructure approach. In essence it entails

installation of high capacity computer and storage systems to enable to cater for the entire

organization. The key components of a data center can be summarized as follows:

Servers (single processor to multi processors computers of varying speeds and operating

capabilities);

Operating System Software (manages computer operations, security, enables administration of

infrastructure ...);

Application software (provides all IFMIS functionality);

Database Software (for organizing and storage of data);

Online Storage Systems (disk units from single to multiple disks of various configurations);

Backup Storage Systems (offline storage systems like tape backup units.)

Uninterruptible power supply units (to provide continuous & stable power and backup power during

transient power outages);

Generator (to provide continuous & stable power during extended power outages);

Cooling systems (to maintain environment at optimum operating temperature);

Local Area Network components (to enable connectivity between data center computer systems and

other computers at the location);

Wide Area Network components (to enable connectivity to geographically dispersed locations);

Physical Access Control system (to control and manage physical access to the data center);

A Fire Protection system (to enable rapid response to fires);

Though modern computer systems are highly reliable and can operate non-stop for prolonged periods

of time, it is common to include redundancy in the design. To ensure rapid recovery from component

failures it is common to have redundant components for critical systems such as servers, storage units

and network components. These are installed and configured so that in event of a failure of any one

component, the redundant component automatically takes over and enable uninterrupted services.

While specifying requirements and selecting any technology, consideration must be given to the

following aspects:


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Compliance to Standards equipment that complies with industry standards is highly desirable. Not

only does it ensure that equipment will perform to specified standards, it also implies that it will

interoperate with other equipment which is compliant to such standards;

Equipment Track Record hardware changes rapidly and it is increasingly difficult to have long

term performance results, however selecting untried technologies increases probability of operational

problems;

Vendor Track Record vendor support in terms of implementation guidance, resolution of problems

and supply of spares is essential.

2.5.2.4. Wide Area Networks (WAN)

The term wide area network is used to describe connectivity between geographically dispersed

locations. These could be locations within a city or in different cities and even countries (e.g. embassy

offices).

Sometimes a network connecting locations within a city is also referred to as a Metropolitan Area

Network (MAN) but in essence refers to the same concept.

Numerous options exist for connectivity but before exploring the same, it is important to first consider

desirables features of a connectivity option. These can be outlined as below:

Available for Deployment the solution must be available for deployment at all sites to be

connected. It is common to find that availability is restricted to certain locations only and this requires

implementing hybrid solutions (using multiple connectivity options based on availability);

A Guide to IFMIS Project Implementation Harish R Bhatt Soft-Tech Consultants Ltd. Page | 24


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Reliable the connectivity solution must be reliable i.e. it must be operational at all times. Frequent

breakdowns adversely affect operations and leads to frustration amongst users.

Capacity this refers to the data communication throughput of the connectivity option. Depending

on key determinants defined in section 3.2.1 the required throughput capacity can be computed. This is

normally specified in bits / second (bps). Throughput capacity available with commercial connectivity

solutions ranges from 64 kilo bps to multiples of mega bps.

Consistent is different from being reliable as it refers to continuous availability of required

capacity. A connectivity option may be available and reliable but may not be consistent i.e. throughput

varies over a period of time. This is common in shared networks commonly deployed by many service

providers. The alternative would be dedicated networks but would carry cost implications.

Cost there are many cost components and each must be clearly outlined and computed to arrive at

the total cost (further elaborated upon in section 4.6).

The major options available in most countries for connectivity are as outline below:

Cable Connectivity by Service Providers all countries have at least one telecommunication service

provider and in many countries there are more providers. This option entails use of cable based

physical infrastructure provided by the service provider. Common problems include availability (not

all locations are covered), capacity and consistency. In countries where there is only one service

provider costs tend to be very high and services tend to be poor.

Wireless Connectivity by Service Providers due to the very high costs of deploying fixed cable

based networks many services providers use alternative wireless technologies to provide connectivity

solutions. Advantages are lower costs and rapid deployment, where as common problems include

availability of frequency spectrum, congestion (as most networks operate on shared basis) and

interference associated with uncontrolled deployments.


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Hybrid Networks by Service Providersthis implies a deployment that consists of a combination of

fixed cable and wireless networks.

Cable Connectivity Private Networksome governments have decided to invest in their own

infrastructure especially within the city where majority of government offices are located. The best

option is to install fiber cables which are highly reliable and provide large capacity. Common

problems are time to deploy and huge implementation costs of such an option with the largest

proportion of costs being taken up by civil works associated with laying of such cables. Since the

network is private due consideration must be given to maintenance costs.

Wireless Connectivity Private Networksan increasingly common option which offers the

advantage of rapid deployment and lower cost. Key constraints are availability of frequency spectrum

especially in highly competitive environments but regulators do make exceptions for government by

allocating frequency spectrum reserved for government and military use. The key benefit of this option

is that there is no capacity usage cost though there is a maintenance cost and there is usually a fee

payable to the regulator for use of frequency spectrum.

2.5.2.5. Local Area Networks (LAN)

The term LANs is used to refer to the connectivity of computers within a location (within buildings).

This enables connectivity for all personal computers / terminals and even printers & scanners. Properly

structured, LANs can cover large buildings (internally) or a cluster of buildings (in close proximity);

There are two primary options for LAN connectivity, these are:

Cable based connectivity which involves laying cables from a pre-determined location to various

offices (where users operate from). The network consists of cables, switches and termination points

(where computers can be plugged in). Key benefits are reliability, high throughput and consistentperformance while common problems are need to lay cables across the buildings and time required to

install;

Wireless Connectivity this entails positioning of wireless access points at strategic locations and

would enable personal computers (equipped with wireless access hardware) to communicate through


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the access points. Key benefits are rapid deployment while common problems are congestion at access

points (if not properly planned), security (if not properly managed), problems with consistent

performance and reduction of signal strength while passing through walls. The problems can be

overcome by proper planning of access points;

2.6.Security & Access Control

Security needs to be considered at various levels but is generally split into two major categories

namely physical and logical.

Physical Security focuses on securing assets (computers, network devices, printers, scanners, storage

devices ..) against unauthorized access. Common approaches are:

Limiting access to central data centers to authorized personnel only and keeping track of all activities

and movements. This can be achieved in variety of ways including using biometrics (fingerprint or iris

scanning and recognition), using access cards (which need to be swiped), using combination locks,

using locks that require passwords, manual control by security guards .. It is important to note that

some of the access controls can also be used to control access to computers e.g. use of cards and

fingerprint recognition is quite common;

Tracking Activities this is normally achieved by means of various forms that need to be filled for

all tasks being performed and also by means of CCTV cameras that can be strategically located to

continuously record all movements (cameras can be triggered by movement).

Physical security at remote locations (i.e. in offices where users work) is more difficult to achieve and

the most effective method is for users to secure the rooms where they work by conventional means. It

is not unusual to find personal computers / laptops missing from offices or at times components are

stolen from personal computers with items like hard disks and memories being most popular.Logical Security on the other hand focuses on securing the system from unauthorized access to the

data and software on the system (assuming the person had physical access to a computer or network

device). Logical security is controlled at the hardware and software levels on the system. Typical

approaches are:


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Configure hardware systems to only allow a pre-determined list of equipment (uniquely identified by

means of addresses that are built into hardware by manufactures and are unique) to connect to each

other. Example a LAN can be configured to reject attempts to connect from devices not defined on the

network, a wireless access point can be made inaccessible by means of requiring specific keys and

passwords to access, routers can reject traffic from devices whose addresses are not pre-defined on the

router ..;

Restrict access to devices on the network this approach assumes a user has legitimate access to the

network but limits the user to access only certain computer systems on the network. This avoids users

gaining access to all computers and thereby eliminating their ability to cause problems on such

computers;

Restrict actions a user can perform on a system this is implemented at the operating system

software level which controls what users can and cannot do on the system. Normally all users except a

few members of the technical team working at the data centers are prohibited from accessing any

component of the operating systems and therefore eliminating possibility of changes to configuration

settings on the system;

Define access restrictions to application software this level of security is implemented at the

application software level which controls what each user of the system is allowed to access. Normally

this limits users to only access functionality directly related to their role and responsibilities and

prohibits access to all other functionality. Further, even in areas where access is allowed, additional

restrictions can be imposed on whether the user can enter, change, delete or just view data on the

system. All application systems maintain extensive logs of all actions and each activity is tied to a

user, date and time thereby making it easier to track actions to a user;

Restrict access to databases this is where all the data of the system is stored and normally direct

access to the database is prohibited to all users except the support team responsible for database

maintenance. Users can only access data through application software which tightly controls user

activities and maintains extensive data integrity checks;


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Logical access control is managed by defining each user who is authorized to access the system and

assigning them passwords to access the system. Each user has a profile and access rights assigned

which the computer systems use to regulate and log all user activities. Based on the security policies

users are required to set passwords according to specific guidelines and are also required to frequently

change passwords.

2.7. Support & Maintenance

Infrastructure requires regular maintenance. Maintenance programs could be any one of the following:

Regular cleaning of equipment;

Replacement of consumable items (e.g. toners, ribbons, cartridges, print heads, UPS batteries );

Repair of faulty equipment, cables ..;

Some maintenance tasks can be carried out by end users (replacement of toners, ink cartridges ..) while

others require skilled technicians and for high end hardware systems experienced engineers.

2.8.Change Management

Successful implementation of an IFMIS system can bring clear benefits to the government in terms of

compliance, reporting, utilization of resources, planning etc. (please refer to section 2.2 on Objectives

of an IFMIS). The implementation however also brings along significant changes in operations and

roles & responsibilities of personnel.

Key changes from the operational procedures point of view can be summarized as follows:

Automation of procedures; Introduction of new procedures;

Changes to existing procedures; Elimination of procedures; Correspondingly changes to roles and responsibility are: Introduction of new roles and responsibilities; Changes to existing roles & responsibilities; Elimination of roles & responsibilities;


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Under change management, the objective is to establish consequences of such changes and to manage

them effectively in a manner that will cause least amount of disruption, reduce probability of

resistance & sabotage, foster greater ownership and ensure long term sustainability.

Managing change in a conventional business environment is difficult and to do the same in

bureaucratic organization like government is even more difficult. It requires strong political and

administrative will.

3.4.3 Risk Assessment and Management

Just as change management issues are identified, it is important that associated risks are correctly

identified so that they can be managed. In order to deliver the project objectives it is important to have

a system of issue reporting that will enable the key risks that need to be managed to be easily

identified, categorized and mitigating measures implemented. Risks can originate from various areas

and some of these are defined below:

Project Organization and Reporting - project organization is the key to establishing the vision,

determining the most appropriate strategies to be adopted, assigning responsibility and ensuring tasks

are executed properly. Where for any reason this is not happening as expected the risks should be

flagged for attention.

Project Commitment from various stakeholders -This should be assessed on an ongoing basis since

the commitment of all stakeholders is crucial if the project is to realize its benefits.

Project Resourcing this includes People, Technology and other infrastructure, other logistics.

Assessment should capture any people issues, attendance at meetings, lack of competencies,

unavailability of end users to be trained, delays in infrastructure setup etc.

Communication an essential component for dissemination of information which requires frequent

briefings and appropriate disclosure of information to stakeholders through various communication

channels including intranet, web, newsletters, meetings etc.

Process Changes - the most evident impact of an IFMIS implementation is from changes in business

processes and hence it is important that associated risks involved in changing these processes are

correctly identified so that they can be managed.


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The result of risk assessment is a Risk Log wherein:

Project risks are defined;

Rated;

Reasons are provided for the rating;

Required actions to mitigate risks are specified;

Responsibility is assigned;

Timeframes for actions are defined;

The evaluations are best made at an operational level wherein workgroups are expected to flag and

categorize their own issues, rate them and indicate the reason for the rating, the action required to

resolve the issue and the impact of not resolving the issue.

Once the action has been determined, it must be assigned to a group or individual. That group or

individual is then responsible for ensuring the mitigating steps are implemented. Each action once

determined, should be given a specific completion date.

Where the approach to resolving the issue is protracted, the full strategy should be stated on how to

resolve the problem and the date of the first deliverable stated.

As a dynamic activity, risk assessment and management is expected to be done weekly at the very

least. Critical issues should be left on the worksheet even after they have turned green. Issues that stay

as high risk issues for more than a month must be escalated to the project steering committee so that

they are fully aware of the potential impact of the situation and where possible can intervene as

appropriate.

2.9. Communications

An organization relies on its people thinking as a single cohesive unit to maximize the attainment of

set goals. For change to be enduring and effective, it is essential that an integrated approach be

adopted in transforming, the organization, its systems and processes and most importantly the people

whose efforts will culminate in the achievement of the desired improvements and efficiencies. There is

no point making changes to systems and processes if the people are not prepared to accept and


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maximize those changes. Thus people and not processes are the central focus of change management

and communications approach.

The strategy should be aimed at supporting those who will be affected by the implementation of the

IFMIS to understand the changes to their day to day tasks as a result of the IFMIS implementation and

to foster acceptance, involvement with and commitment to the IFMIS implementation project. A

central principle of the approach should be recognize and acknowledge the differing needs of

individuals and groups of individuals and to create the conditions that encourage all stakeholders to

engage with and enact the change through consultations and collaborations between all relevant

stakeholders.

A two way communication and participative approach is essential. Following are the phases that occur

in relation to the communication life cycle and change management of a project. The phases do not

necessarily occur in a sequential manner for all stakeholders.

Awareness - Stakeholders develop knowledge of the change. This process should begin with

presentations and consultations with various stakeholders within the government. This process

continues throughout the project lifecycle.

Understanding - The various stakeholders need to understand what the changes brought about by

the implementation of the IFMIS means for them. It is essential at this stage that people understand the

change and are given the opportunity to provide as well as receive feedback. This is normally

addressed through presentations to stakeholders, team briefings and fora. The focus should be on

smaller groups and allow for question and answer feedback sessions. The training program for the

implementation is a key component of engendering internal stakeholder understanding of what the

changes mean for them in the performance of their day to day duties and provides the opportunity for

these stakeholders to practice the changes in a learning environment with active support from

experienced trainers.

Acceptance - People need to accept change for that change to be enduring. They may not necessarily

agree with the change, but it is important that they accept the need for the change as well as the

rationale behind that change. Communications to engender acceptance should be both formal and

informal in nature and should largely be driven by change agents and champions. Communications

should be designed to address individual concerns as far as practicably possible and may be delivered


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on a one-to-one basis by the change agents to bolster understanding of messages delivered through

other communication media.

Involvement - People are more receptive to change if they are involved in making the change

happen. Consistent with a participative approach to project implementation, emphasis should be

placed on skills transfer throughout the project lifecycle and the training program for the project

should be designed to be interactive and hands on, allowing users and other stakeholders who directly

interact with the system to familiarize themselves with the system and gain practical experience of

how the IFMIS will affect them in the performance of their day to day duties as well as an appreciation

of the importance of each of their roles within the bigger picture.

Commitment - Ultimately people need to become committed to the change if the change will be

successful and commitment is best achieved through ownership. Throughout the lifecycle of the

project the key message that, the IFMIS is owned by the government through all the stakeholders,

must be emphasized and a range of both formal and informal communications should be provided to

reinforce peoples understanding of the change and what it means for them individually.

The result of a communication formulation exercise is a communication plan that defines the

following: o Event or strategy;

o Timing

o Stakeholders Targeted;

o Purpose of communication;

o Method of communication;

o Feedback Mechanism;

o Communicators;

2.10. Funding

Every component of the project requires funding and provision must be made for the same to ensure

project activities are completed on schedule. Projects are financed in various ways. Commonly found

options are:

Financed from government budget;


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Financed through bank loans;

Financed through single or multiple donor grants;

A combination of government budget, bank loans and donor grants;

2.11. Quality Assurance

Quality Assurance is a continuous process and all key project deliverables including all scheduled

documentations and meetings must undergo quality reviews. Project activities have to be designed

with quality standards to facilitate project management and quality control.

The QA strategy should identify planned interventions and milestones within the project cycle during

which critical quality checks have to be conducted and approved by the client as a pre-requisite for

ongoing project activities. The strategic activities envisaged under the interventions should involve the

constitution of relevant purchaser and supplier teams, conducting tests in accordance with pre-defined

acceptance criteria and identify issues in order to arrive at mutually acceptable conclusions.

These tests should be carried out in accordance to agreed Acceptance criteria and test plans which

should be developed and documented by supplier and client Teams. Any defects identified during the

tests should be marked and prioritized for resolution.

3. Benefits of IFMIS to Kenya

The objective of implementing a FMIS system is to increase the effectiveness and efficiency of state

financial management and facilitate the adoption of modern public expenditure management practices

in keeping with international standards and benchmarks. The main benefits that a government should

seek to harvest include the ability to:


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Improve service to citizens through improved decentralization, reduction in bureaucracy and betteraccess to information.

Improve citizen confidence through increased transparency, improved predictability in budgetexecution and better monitoring and evaluation to reduce fraud and corruption.

Increase government revenue through improved collections. Reduce costs through improved expenditure control leading to reduced borrowing and debtcancellation.

Improved decision making and planning through better access to accurate, timely information. Enable government reform and enhance political stability through improved financial discipline,reduced bureaucracy and increased public accountability.

4. CONCLUSIONdmap should cover immediate, medium- and long-term tasks and objectives of the IFMIS project. It

should clearly define parameters including the system objective and scope; expected impact and

benefits; critical milestones and success factors; project implementation methodology; risk assessment


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and mitigation strategy; estimated cost breakdown by phase; and the financing arrangements.

Agreement on these and other parameters should lead to a written commitment the cooperating

government and corresponding commitments from donors and other external institutions engaged in

the reform process.

The Roadmap (and the needs assessment) should be revisited regularly to ensure that the situation has

not substantially changed, as the time spans involved in implementing an IFMIS are so long that

Government changes are inevitable and these will often lead to structural changes, which will have an

effect on the Roadmap.

Once this phase has been completed, a realistic timeframe has to be worked out through each

successive milestone. There should be no overlapping. Each milestone should follow on from the next.

Here is where the tender process should come into play. Each milestone should become a specific

package, but with provisos, for if the offeror has successfully completed Milestone 1, it should be

allowed to go to the next step automatically for a previously agreed price. If it has completed the

milestone but outside parameters, then the subsequent milestones should be put out for tender anew.

5. Reference


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1 Source: Transparency International Source Book 2000, in Casals and Associates, Integrated

Financial Management Systems Best Practices: Bolivia and Chile, funded under USAID Contract

AEP-I-00-00-00010-00, Task Order No. 01 Transparency and Accountability, 2004.

2 INTEGRATED FINANCIAL MANAGEMENT INFORMATION SYSTEMS: A PRACTICALGUIDE

Documents

Term Ppr Mis in Finance[1]