On to Transparency

Agencies already have the tools to take the next step toward data-driven decision-making.

President Obama's emphasis on achieving management transparency places high expectations on executives who run agencies, programs and administrative functions to engage in data-driven decision-making. They can expect to be asked to analyze what their agencies spent and the results achieved. They will be under pressure to respond quickly with hard data that can facilitate tough choices.

Thanks to their investment in financial management systems, many agencies are well-positioned to respond. The 1990 Chief Financial Officers Act and follow-on legislation spurred agencies to automate financial operations using enterprise resource planning software. This created a disciplined process of data entry, internal controls that standardized operating procedures, and accurate and useful financial reports delivered on defined and tightly controlled timelines.

Agencies now use this infrastructure to produce comprehensive financial statements and supporting documentation. In fiscal 2008, 20 of the 24 major agencies earned clean audit opinions-a testament to how far government has come in automating and standardizing financial management.

Executives have an excellent opportunity to gain deeper insight into their programs and administrative functions by updating their systems and using ERP software to consolidate data on finances, grants, purchasing, program performance and outcomes. The tools are available to turn such data into actionable information-or management intelligence.

Modernized systems can help agencies look deeply into and across operations to make them more effective and more transparent. But like the national infrastructure, the federal information infrastructure needs investment before it can deliver the transparency that will lead to efficiency and savings. The management framework must be integrated across programs and back-office functions. IT systems must be updated and linked. Performance systems require better information.

Accomplishing this will take planning. Agencies should better integrate management and oversight among executives leading programs and those in charge of functions such as finance, information technology, acquisition and human resources. Senior leaders also must scrub the performance process to make sure metrics focus on outcomes, programs align with missions, and IT systems produce sufficient information to gauge effectiveness and the cost of achieving it.

Following the Office of Management and Budget's Feb. 18 Recovery Act guidance, agencies already are surveying the disparate legacy systems for programs involved in the stimulus. They are to report to OMB's Office of E-Government and Information Technology about any that are "currently unable to make [Recovery Act] information available to the public." At the same time, leadership teams should inventory all systems supporting key programs. If the systems fail to facilitate operations and provide the right data in a timely fashion and useful form, they should be updated or retired. IT modernization should be prioritized based on the importance of the program a system supports.

Those changes will result in better tools for answering inquiries about programs and operations, but we cannot wait until tomorrow to analyze and report on what we are doing today. Fortunately, management intelligence is possible with tools such as data warehouses and data marts that draw from legacy systems to combine and present data to managers on dashboards and other easy-to-use, real-time displays.

The Centers for Medicare and Medicaid Services, for example, is linking program and spending data using its financial management ERP system. CMS needed to know how well the Medicare appeals process was working and to identify trends. The agency combined business intelligence software with an appeals tracking system. The analytic capability allows CMS to see whether similar claims are treated equally, identify adjudicators in need of training, and give contractors information to manage workloads. Health care providers and Medicare beneficiaries can track real-time status of appeals, and the time and cost of transferring cases have been reduced.

Agencies also need to take a hard look at their back-office functions-finance, budget, grants management, accounting, timekeeping, payroll, human resources, procurement, property, travel and asset management-to make sure they, too, are supported by the most modern, efficient systems and produce the right data at the right time for the right decisions.

These functions must be able to share data seamlessly. There should be just one point of data entry. Internal controls at appropriate levels must guarantee that operations always are handled with integrity and consistently without overburdening management. Data and transactions should be fully visible online. ERP systems that produced significant improvement in financial management can bring together back-office businesses. By integrating procurement, asset management and financial systems, for example, agencies can automate or even eliminate redundant and inefficient processes that divert employees from mission-related work. That, in turn, will free back-office staff to support program managers and their teams.

Building on back-office integration by using it to combine financial data with that of key programs will begin to truly answer the call for management transparency. Now is the time to identify where program systems, business processes and the management framework can benefit from planning and new investments to integrate operations more fully and produce true management intelligence.

Patricia Healy, former deputy chief financial officer at the Agriculture Department, is an executive consultant with CGI.

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