U.S. Agencies Told To Share Financial Systems

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Executive agencies will be required to consider the use of shared services for all future financial systems, according to a new Obama administration policy announced earlier this week.

Specifically, agencies will have to consider shared financial services -- including cloud systems -- in analyzing any proposal to upgrade their core accounting systems, payment and invoice systems, procurement systems, grant systems, property management systems, travel systems and other systems that support financial functions. The Office of Management and Budget, in turn, will look negatively on any agency-specific approach to upgraded or new financial systems.

Historically, individual agencies have tackled financial systems modernizations on their own, but those modernizations have often been plagued by cost overruns, delays, poor data quality and systems that are so complex that they are hard to upgrade after their initial deployments. The piecemeal approach to federal financial systems has also led to inconsistent data and a lack of interoperability.

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"New approaches are needed that will allow the government to lower the costs of new systems and realize more value from each implementation," Office of Management and Budget controller Danny Werfel wrote in a memo issued Monday to the heads of executive branch agencies. "The cost, quality, and performance of federal financial systems can be improved by focusing government resources on fewer, more standardized solutions that are implemented and operated by more experienced staff. This can be achieved through the federal government making wider use of shared services for common system and transaction processing needs," he said.

As part of the new effort, the Department of Treasury's Office of Financial Innovation and Transformation will evaluate agency proposals for new or upgraded financial management systems to ensure that they meet the White House requirements, and will work with other agencies to expand the capabilities and improve the governance models of existing shared service providers.

According to Werfel's memo, the new policy should: reduce the risks to new system development, keep development initiatives on track, improve data quality, make federal finances more transparent and "better enable the government to strategically source" service providers and vendors.

The push to use shared services for financial management in government dates as far back as 2004 and has been subject to numerous battles and only spurts of progress. Federal agencies have long shown reluctance to use shared systems, often pointing to the complexity and uniqueness of each agency's financial accounting.

However, the Obama administration has continued to work throughout its tenure to reform financial management systems, taking such steps as creating an Office of Financial Innovation and Transformation within the Department of Treasury to lead the government-wide push for federal financial reform and temporarily holding up new financial modernization efforts and forcing program reviews on 30 others to fix cost and schedule overruns.

The White House will issue additional guidance in coming months to provide more detail on technology, procurement and process requirements for financial systems stemming from the new policy.

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