Accounting to the people

How the public sector goes about managing its financial management systems could be interesting for the private sector to watch. Darren Greenwood reports.

Amalgamations, more rigorous financial reporting rules and inevitable budget restraints are fuelling a move by local councils to share the delivery of services to their constituents. And don’t forget the ongoing web-enablement of information and services and their armies of mobile workers. How the public sector goes about managing its financial management systems could be interesting for the private sector to watch. Darren Greenwood reports.

Barely a day goes by without some public sector body — be it a council, health board, SOE or government department — crying that it is short of resources. And like private sector businesses, they too find themselves increasingly having to do more with less.

Fortunately, new technologies like IT make this possible, offering process efficiencies as they shift from manual paper to work by PC or online.

Like the private sector, the state sector also faces the increasing demands of “customers” demanding instant gratification — reports, figures, surveys, data.

And while the memory of the Police’s failed Incis project lingers, at least in the mind of state IT managers and journalists, the record of IT in the state sector appears fine, with financial management systems commonplace and facing regular upgrades.

IT research firm IDC has no specific figures for the public sector IT spend on financial management software, but suggests it may be in the “tens of millions” a year.

It estimates the ERP software “solutions” market, covering the software, implementation and associated hardware, at $368 million. The market is growing faster than the overall IT market as organisations outsource projects as a whole saying: “We want this. It’s up to you as to how it’s delivered.”

Peter Winder, chief executive of Local Government New Zealand, says the amalgamation of local authorities in 1989 drove the purchase of many systems in the 1990s as they consolidated their business systems. Changes in financial reporting rules gave a further need for new systems and councils “became more rigorous in their asset management and rating process”.

With councils varying in size from the $2 million annual turnover of the Chatham Islands Council to major cities like Auckland and Christchurch City Councils spending hundreds of millions, they adopt a “horses for courses” approach with their systems.

However, the ongoing drive for efficiency is leading councils such as North Shore, Waitakere and Rodney to look at providing “shared” services, which will mean a need for further new systems. For instance, all of the councils in Auckland are collaborating on a web portal, Winder says.

E-government will change business processes as local government products and services go online. The Landonline information system will see resource consents going online and that will need linking in with council systems, he says. Mike Manson, president of the Association of Local Government Information Management, confirms this.

Manson describes the public/local body financial systems market as “mature”. He says the major vendors are GEAC, SAP, Origen, Fujitsu, Accent Computer Services, Sanderson and Napier Computer Services. Large councils, like the Auckland Regional Council, go for vendors like SAP, the small to medium-sized ones opt for Napier and Accent, and the midrange councils go for Fujitsu, GEAC and Origen. The market has also consolidated a little with GEAC taking over Praxa, producer of Gems. Manson says a major issue facing councils is integration — obtaining modules to deliver on consents, building applications, dog registration, health licenses and the like that integrate around the core financial system.

Web-enablement as part of local e-government strategies is another impending issue — what will councils do with e-commerce and e-procurement, and how will it all integrate back into their financial systems? Mobile devices further complicate matters, with building inspectors, parking wardens and health inspectors sending back their data, and how will that be integrated into core systems?

And more change is imminent, with the latest Rating Act looking at the kind of levies councils can impose.

Despite such upheaval, Manson says because of the huge costs involved, councils tend to keep their systems for five or 10 years, instead of the few years in the private sector. And he is full of praise for financial systems vendors. “There are excellent companies that we have in New Zealand. We can be grateful that we have choice and such good vendors supporting us,” he says.

Meanwhile, the health sector has also seen a lot of restructuring. After Y2K issues drove many upgrades and implementations, the Incis debacle led to the government in 2000 taking tighter reins on IT projects.

A so-called “freeze” on IT development, which is still in force, means direct approval from the minister is needed for projects costing more than $5 million, says Ray Delany, group manager of NZ Health Information Services. Financial systems are not “a huge issue” in the health sector, he says, but “everybody is doing something”.

For him, the most interesting thing is the Health Alliance, involving Waitemata and Counties Manukau district health boards.

“They have the ability to deliver services in different places and a good potential to deliver as an ASP,” Delany says.

Sidebars

Taking the lead from the private sector

The cost of change

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