Developing an enterprise architecture, establishing IT investment  management policies, and addressing information security weaknesses are  critical to ensuring successful system implementation. The predictable result of not effectively addressing these three areas has  been numerous agency systems throughout the federal government that  did not meet their cost, schedule, and performance objectives. Disciplined Processes Have Not Been Fully Used

From our review of over 40 prior reports, we identified a number of key  problem areas in disciplined processes related to requirements  management, testing, data conversion and system interfaces, risk  management, and project management activities. Human Capital Management Problems Impede Financial Systems Development and Deployment

Effective human capital management is critical to the success of systems  implementations. Federal Initiatives Under Way to Improve System Implementations

As the federal organization with key responsibility for federal financial  management systems, OMB has undertaken a number of initiatives related  to acquiring and implementing financial management system capabilities. Some of these initiatives are in collaboration with the CIO and CFO  Councils and are broad-based attempts to reform financial management  operations across the federal government. Notably, OMB has developed and continues to evolve governmentwide  Federal Enterprise Architecture products and has required a mapping of  agency architectures to this federal architecture as part of the budget  review process. Another key OMB initiative is referred to as the lines of  business and promotes streamlining common systems to enhance the  government’s performance and services, such as establishing centers of  excellence to consolidate financial management activities for major  agencies through cross-servicing arrangements. Furthermore, certain activities and responsibilities performed by JFMIP  prior to its termination have been reassigned to OMB’s OFFM, the  Financial Systems Integration Office, and a CFO Council Committee  providing guidance and oversight. The financial  management line of business raises a number of issues that have far- reaching implications for the government and private sector application  service providers. Broad-Based Actions Needed to Implement Financial Management Systems Governmentwide

The key for federal agencies to avoid the long-standing problems that have  plagued financial management system improvement efforts is to address  the foremost causes of those problems and adopt solutions that reduce the  risks associated with these efforts to acceptable levels. Although OMB has  articulated an approach for reforming financial management systems  governmentwide under its financial management line of business and  JFMIP realignment initiatives, implementing these initiatives will be  complex and challenging. OMB has correctly recognized that enhancing  the government’s ability to implement financial management systems that  are capable of providing accurate, reliable, and timely information on the  results of operations needs to be addressed as a governmentwide solution,  rather than as individual agency stove-piped efforts designed to meet a  given entity’s needs. Based on industry best practices, the following  four concepts would help ensure a sound foundation for developing and  implementing a governmentwide solution for long-standing financial  management system implementation failures: (1) developing a concept of  operations that ties in other systems, (2) defining standard business  processes, (3) developing a strategy for ensuring that agencies are  migrated to a limited number of application service providers, and   (4) defining and effectively implementing applicable disciplined processes. We also interviewed key  Office of Management and Budget (OMB) officials and had discussions  with other interested parties such as Chief Financial Officers (CFO)  Council representatives. To provide our views on actions that can be taken to help improve the  management and control of agency financial management system  modernization efforts, we analyzed the GAO and IG reports we had  identified as relevant to the topic to highlight the actions called for in  those reports. Implementing  a New Financial Management System. 2. Human Capital: Key Principles for Effective Strategic Workforce  Planning.
Why GAO Did This Study

Billions of dollars have been spent governmentwide to modernize financial management systems that have often exceeded budgeted cost, resulted in delays in delivery dates and did not provide the anticipated system functionality when implemented. GAO was asked to identify (1) the key causes for financial management system implementation failures, and (2) the significant governmentwide initiatives currently under way that are intended to address the key causes of financial management system implementation failures. GAO was also asked to provide its views on actions that can be taken to help improve the management and control of agency financial management system modernization efforts.

What GAO Found

GAO's work has linked financial management system implementation failures to three recurring themes: (1) disciplined processes, (2) human capital management, and (3) other information technology (IT) management practices. The predictable result of not effectively addressing these three areas has been numerous agency systems throughout the federal government that did not meet their cost, schedule, and performance objectives. Problems related to disciplined processes included requirements management, testing, data conversion and system interfaces, and risk and project management. Human capital management issues included strategic workforce planning, human resources, and change management. Other areas of IT management identified as problems included enterprise architecture, investment management, and information security. The Office of Management and Budget (OMB) has undertaken a number of initiatives to reduce the risks associated with acquiring and implementing financial management systems and addressing long-standing financial management problems. Some of these initiatives are in collaboration with others and are broad-based attempts to reform financial management operations governmentwide. First, OMB has developed and continues to evolve Federal Enterprise Architecture products and has required a mapping of agency architectures to this federal architecture. Another key OMB initiative is referred to as the financial management line of business which established centers of excellence to consolidate financial management activities for major agencies through cross-servicing arrangements. Finally, certain financial management activities and responsibilities have been reassigned to OMB, the Financial Systems Integration Office, and a Chief Financial Officers Council Committee. OMB's initiatives for reforming financial management systems governmentwide could help address the key causes of system implementation failures, but further actions are needed to fully define and implement the processes necessary to successfully complete these initiatives. OMB has correctly recognized the need to implement financial management systems as a governmentwide solution, rather than individual agency stove-piped efforts designed to meet a given entity's needs. Based on industry best practices, GAO believes that four concepts are integral to OMB's approach and key to successfully implementing financial management systems: a concept of operations provides the foundation, standard business processes promote consistency, a strategy for implementing the financial management line of business, and disciplined processes to help ensure successful implementations. GAO recognizes that implementing these concepts is a complex undertaking and raises a number of issues that have far-reaching implications for the government and private sector application service providers.