FMIS, it says, can track financial events and summarise information; support adequate management reporting, policy decisions, fiduciary responsibilities; and prepare auditable financial statements.
FMIS covers core systems such as general ledger, accounts payable and receivable; which may include financial reporting, fund management and cost management. Non-core systems will include HR/payroll, budget formulation, revenue (tax and customs), procurement, inventory, property management, performance and management information.
The World Bank concludes investing in FMIS will reduce errors of multiple data entry, accelerate reporting, enable data-matching and error detection, enable more analysis, accelerate auditing and exception reports, and enable better oversight and management.
Tracking millions of claims<p/>
The Accident Compensation Corporation (ACC) has just upgraded its hardware and replaced various software systems for its 2300 employees working across 38 locations in New Zealand. ACC processes some 1.6 million claims a year and relies on some 30 enterprise applications.
Chief information officer Warrick Laing says most of the ACC applications are bespoke but the agency is moving towards packaged systems, such as Oracle Advanced Collection. Previously, the corporation used a SmartStream application with Oracle, but the licensing costs were unsatisfactory and Geac was withdrawing support for SmartStream. The software customisation was also in PowerBuilder, which requires skills that are increasingly becoming scarce. ACC also wanted improved disaster recovery capabilities for its systems.
In the past, ACC just received money from the Inland Revenue and Land Transport Safety Authority, but now collects money from 500,000 debtors, forcing a need for a complex system.
Thus, in 2003, ACC decided to use Oracle financials because of existing Oracle use, which also enabled ACC to gain good discounts. Oracle architecture also allowed for long-term growth and its openness meant it would work with other systems.
"We have implemented essential centralised accounts payable system, with invoice scanning, web-based reporting and advanced collection. You can take certain invoices and interact with other collection agencies. We also can benchmark ourselves and make sure invoiced are followed up quickly," says ACC chief financial officer Phil Burt.
Burt says the $12 million project cost, including hardware, will give $25 million of savings to ACC over several years. Using a Sun Solaris operating system, ACC claims server numbers are down 26 per
While the system is now working smoothly, Burt says the company had to work around the challenges of helping the staff train in using the new software. At the same time, the Oracle applications needed more storage space than expected, and this is something that is now being provided for.
Both Laing and Burt advise would be FMIS project implementers to investigate and plan well, and gain end-user acceptance.
The North Shore City Council has a different experience with its FMIS investment. This year, the council replaced its 20 year-old Total Corporate System from Geac, with Technology One's Windows-based financial management system.
CFO Roger Duncan says the council had to switch because support for the old system was ending, it lacked modern functionality and he wanted something more user-friendly for the 300 of the 800 council staff who will use the system for accounts, ordering goods and services, and producing management reports and budgets.
Electronic purchasing ability was a key requirement, Duncan continues, as this is the first record of a transaction. The council also wanted to finish its reports faster, and do away with the spreadsheets under the old system. The new system also had to integrate into the Pathway system, which collects rates and water bills.
The council decided to go for the Technology One system in December. Duncan admits the implementation program became "stretched" with certain parts delayed, though the "go live" date of July 1 was honoured. "We underestimated the amount of staff resource required but we were able to overcome it through hard work," he explains.
While staff are still being trained to use the system, the council, which serves 75,000 ratepayers, reports the system has met expectations and is working well.
With hindsight, Duncan offers this advice: "Don't underestimate staff requirements. It is important to have dedicated, permanent staff involved, so you don't lose the knowledge."
Coping with business expansion
Lake Taupo Forest Trust administers 60,000 hectares of land (including 33,000 hectares of forest), nine subsidiary companies and similar interests.
The Maori authority, with its 20,000 owners and five staff, was using MYOB but needed a new financial management system to cope with its expanding business. A consultant was hired to look at options, initially assessing 15 offers.
Sherry Tecofsky, trust accountant, says the organisation eventually chose ACCPAC because of its better consolidation capabilities. Today, the trust finds day-to-day administration and major end of year processes faster and easier.
She says the main implementation issue was time, largely from deciding how to set up the general ledger because there were so many different entities to deal with. ACCPACC is user friendly, but it took some time to get people up-to-speed.
The system has since performed well, but implementing it several weeks before the Christmas season meant some people had forgotten what they had learnt when they came back from the holidays.
From this experience, Tecofsky advises organisations moving to a new FMIS application to spend a lot of time deciding and documenting everything they need in a system, how it should work and what their priorities are and what they could live without. "Get everything in writing so there are no misunderstandings about what you have agreed to purchase. If you do the groundwork right, the implementation should be a breeze."
Opting for off the shelf
Auckland train operator Connex found itself needing to start from scratch, when it took over rail operations in Auckland in August 2004. French-owned Connex uses standard financial systems worldwide but the small Auckland operations and the lack of systems support in Australia meant it had to adopt a standalone system.
Financial controller Albert Giorgini says in setting up the Auckland operations and full corporate functionality, he had under four months to choose and implement a financial system so he needed one that was well supported, well referenced and off-the-shelf.
Giorgini had installed other systems and knew what he wanted. Following good feedback from IT providers about Greentree, he investigated the application further. Connex was a simple business, he explains, so an off-the-shelf product was fine if it is flexible and easy to upgrade.
He particularly liked Greentree for its flexible reporting tool, which would help if Connex restructured or changed its focus. Greentree's retailer Endeavour solutions also provided good and accessible service. Thus, he says, the implementation went without issue.
"The system has performed well and we have since implemented a scanning module for all accounts payable invoices which assists in reporting and budgeting."
"Being an off the shelf system, it does have some limitations," says Giorgini. "Adding new cost centres is time consuming as each account in the chart of accounts needs to be individually linked to the new cost centre. The system also has limitations in tracking special or project costs. It does not have sub ledgers. These issues did not weigh heavily in our decision to go with Greentree."