With new financial management systems, speed is key
Rolling out new, increasingly complex financial management systems has been a struggle for most agencies, but it is necessary as older financial systems outlive their usefulness.
Traditional wisdom held that agencies should operate two financial management systems at once: Keep the old system running in case there's a glitch — or failure — in the new one. In fact, the governmentwide body responsible for setting standards for agency financial management systems promoted this dual approach in 1995.
But now, the Joint Financial Management Improvement Program is taking a different tack. According to new JFMIP guidelines, agencies need to move away from legacy financial systems as soon as possible when they are implementing new systems.
The new guidance, issued in a JFMIP white paper, "Parallel Operation of Software: Is It a Desirable Software Transition Technique?," says that operating two systems is expensive, ineffective and may even hinder an agency's ability to shift to a new system.
The earlier JFMIP guidance, contained in the 1995 document, "JFMIP Framework for Federal Financial Management Systems," suggested that running both the new and existing systems reduced risk if the new system did not work. The two systems working in conjunction with one another — referred to as parallel operations — "allows operations to continue in the old system while errors are corrected in the new system," the older document said.
However, times have changed, said Karen Cleary Alderman, executive director of JFMIP.
In the past, agencies moved from one customized financial management system to another. But today, agencies are replacing stovepiped, legacy applications with commercial off-the-shelf (COTS) packages that necessitate a more significant business-process reorganization.
"In [a] COTS environment, parallel operations probably is not the best method," Alderman said. It is better to have a well-developed risk-mitigation strategy in place and shift to the new system as soon as possible, she said.
"The cost of parallel operations, and the difficulty in reconciling old and new system results when business processes have been re-engineered, generally make operations an undesirable risk-mitigation strategy," the document concludes.
Instead, agencies should use a "focus your efforts" approach, said Angela Carrington, a partner with PricewaterhouseCoopers' Washington, D.C., consulting division. "Resources are already constrained," she said, so agencies should focus on getting the new system to operate correctly and testing that system so they are confident it will work, rather than trying to run two systems.
The legacy systems are typically mainframe-based systems that were highly customized and developed in-house in a stovepiped design. But modern financial management systems integrate data from across the organization.
Furthermore, the risk has shifted away from core financial processing and toward implementation, particularly the integration and enhancement of the system, according to JFMIP.
Modern financial management systems are designed to provide more rich and contextual data than legacy systems. Therefore, it is not accurate to use the legacy as a benchmark for the new system, the JFMIP document said.
In fact, using the legacy system can hinder the transition to the new system. "Inherent in the requirement for parallel operations is an unstated belief that the legacy system produces correct results," according to the white paper. "The legacy system may also contain bad data or have systemic data integrity problems."
Making a commitment to the old system could have unintended consequences in the "change management" efforts, JFMIP says, furthering the resistance to the new system.
"If problems arise in the parallel system operations, the organization will tend to spend resources on keeping the current system operational, rather than on solving problems in the new system," the document suggests.
Instead, JFMIP recommends agencies have a strong plan for testing the new financial management software that will help it mitigate the risks during planning and implementation of a new financial management system.
Avoid the risk
There are dangers in running parallel financial management systems, according to the Joint Financial Management Improvement Program.
* What is the real — data?: With business process re-engineering inherent in most financial management systems, the legacy data may not be accurate.
* Undermining support of the new system: A commitment to the legacy system can raise doubts about the viability of the new system.
* Costs: Parallel operations are complex and require formidable resources, both in funding and staff.
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