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Financial analytic systems help simplify government management across agencies.
by Tim Duning, Chet Robinson and Patrick Smith
Government organizations and leaders struggle under intense legislative, regulatory, budgetary and public pressure to find better ways to manage their programs, including finance and human resources. Enterprise financial analytic systems can help ease this pressure. These systems allow organizations to integrate and extract information from diverse databases, then analyze it with an enterprise-wide view to determine the answers to complex operational and budgetary problems.
The operational reporting maintained by enterprise financial analytic systems offers organizations potential savings by enabling them to track spending and determine how best to use assigned resources. It also satisfies reporting requirements for the government and the public and ensures transparency of actions taken and the impact/results of these actions.
To realize the promise of such systems, the right data foundation must be in place. Structured properly, a robust data environment can reduce the risk of implementing new analytical engines while providing much-needed federal financial and operational analytics. Once the system is installed, managers can obtain clear, consolidated views of each organization’s financial and performance information to facilitate day-to-day decisions and long-term planning.
Government obstacles
To understand the challenges faced by government agencies and managers, take as an example the U.S. federal government. The scale alone is daunting; the government processes billions of transactions annually, spending trillions of dollars. Every type of transaction, from welfare checks to contractors’ payments, must be processed and appropriate records stored for seven years to ensure accountability. These transactions take place constantly at all levels of every government organization.
The U.S. government is divided into departments/agencies, bureaus, offices, divisions, branches, etc. The president sets the political agenda, but Congress controls the actual programs through the annual appropriations/budget process. Individual agencies have separate data and processing systems that do not communicate with other agencies. Each bureau/office/division of an agency performs a different mission with its own requirements and processes. They all have separate, often multiple, best-of-breed database systems. These are typically data silos disconnected from the rest of the agency.
To further complicate matters, the feeder data is rarely compatible, with varying formats, customized naming conventions, and so on. Meanwhile, the agency head is still responsible for making decisions, even if a single view or a clear report of what is happening programmatically, financially or operationally is unobtainable.
A robust data foundation gives users a unified view of the agency, rendering a business intelligence (BI) backbone for decision making.
ERP inadequacies
Many federal agencies have turned to enterprise resource planning (ERP) systems as the solution. However, these are designed for transaction processing, not analytics, and do not evolve easily with changes in organizational structure. They cannot offer the integrated data and analytics capabilities required to manage today’s complex federal programs and environment; furthermore, because of the intricacy involved, most traditional financial and ERP systems can require years to integrate. As a result, they are often a poor fit for BI applications, given their inability to deliver fast, tangible operational results that maintain executive support across changes in leadership or administrations.
ERP systems may require significant customization to reflect the various agency and bureau structures and meet the multiple requirements. When they don’t work despite the investment of significant time and resources, they often get taken apart, with segments replaced by other solutions; consequently, the silo problem reappears.
"A robust data foundation gives users a unified view of the agency, rendering a business intelligence backbone for decision making."
Provide the answer
Finance lies at the heart of every agency. The accounting and budgetary systems enable an agency to control its money, understand the financial implications of its ongoing performance, and determine the funding required to accomplish its objectives. ERP systems can’t facilitate these processes, but enterprise financial analytic systems can.
These financial systems are the tools that allow agencies to integrate and extract information from diverse databases, analyze and compare data from various bureaus and functions, and determine the answers to complex problems. In addition, they deliver analytic data views at speeds superior to those that most ERP systems can achieve on their own.
An enterprise financial analytic system can accelerate the transformation of ERP data into actionable analytics and reporting. Conjoining the solution with the ERP data allows organizations to identify patterns of financial fraud and abuse, improve resource allocation and procurement processes, measure performance, and ensure adherence to regulations. Additionally, the analytic system can assist with migrating to new common government-wide accounting codes used for transaction tracking.
To equip government agencies with effective decision support, an enterprise financial analytic system must be based on a robust platform capable of integrating all of the agency’s financial and related data across all components. This presents managers and agency heads with a single view of agency performance. The solution must feature ERP support capabilities that allow the ERP system(s) to focus on transaction processing instead of also trying to bear the weight of analytic queries and reporting.
The conversion of multiple disparate systems to a single ERP system is not necessarily quick—depending on the scope, it can take a year or even a dozen years—yet during this time, the organization must be able to continue reporting and processing transactions. A well-structured data repository and financial analytic solution can furnish the required backup, facilitating data migration to allow consolidated reporting and a single view of the organization during the implementation process.
The system should also provide the flexibility to allow integration of enterprise financial data with its underlying operational drivers, regardless of function, department or bureau. Finally, it must be compatible with best-of-breed ERP and federal software BI products and tools such as those from Oracle, PeopleSoft, SAP and CGI.
Meet the challenge
The government environment is a challenging one. A robust data foundation and comprehensive financial analytic solutions enable agency-wide visibility, extracting and consolidating information and analyzing data to allow managers to make informed day-to-day decisions while guiding their organization to achieve its long-term goals.
Tim Duning is solutions development director for the Teradata Finance and Performance Management (FPM) program.
Chet Robinson is communications and deployment manager for the FPM program.
Patrick Smith is director of Federal Financial Solutions at Teradata.
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