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6/10/2010
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White House Eyes Financial Systems Overhauls

Federal financial systems upgrades are too costly, complex, and poorly executed, White House says, as it announces major changes.

The memo would also subject agency projects to a heavy review process. The most immediate effect would be to put a temporary stop to any pre-acquisition financial system modernization effort with $10 million or more in planned spending and any task orders worth over $500,000 pending OMB review. Moving forward, agencies will have to present revised project plans for all such projects, which will be reviewed by OMB. OMB will also assess whether investments should receive funding for subsequent segments.

The memo requires project plans to detail the oversight of senior agency officials for the project. "To establish senior-level engagement in program sponsorship is one of the biggest opportunities for improvement," says Tim Young, senior manager with Deloitte's federal practice and a former deputy administrator of e-government at OMB during the Bush administration, adding that the increased involvement of OMB can only add to the benefits. "Transparency leads to clarity leads to accountability leads to results."

In addition, the White House is pushing agencies to adopt shared services and tasking the Department of Treasury's new Office of Financial Innovation and Transformation with piloting shared services for transactions processing. In so doing, however, the White House notes failures of previous such efforts.

The memo also sets up a new mechanism for standards-setting and software certification to fill a void left by the dissolution of the Financial Systems Integration Office and not yet filled by Treasury's Office of Financial Innovation and Transformation. The memo says that OMB will soon update financial system requirements, initiate a "performance-based approach to assessing compliance," and develop a self-certification scheme for financial systems software and hardware.

Despite its scope, the forthcoming White House memo likely won't be a panacea. Some of the problems with financial systems overhauls are cultural, and those can't be overcome with a simple stroke of the pen. "The challenge is that efforts often are transformational in nature," says Tab Warlitner, principal in Deloittes federal practice. "There are silos that cause cultural problems in any financial system modernization because they often cause consolidation of control and power, and that creates resistance."

Other problems deal with the age and complexity of existing systems. "These systems don't exist in a vacuum," GCE's Lucas says. "They all have to integrate with legacy systems. You can do every other thing right and have the integration still fail, and I'd like to see more recognition of that."

Lucas would like to see more teeth around standards requirements. As it stands now, the draft memo says that the standards process will place an emphasis on flexibility. "I'd like to see a requirement that if agencies deviate from federal standards, they should have to give a business case for doing so," Lucas says.

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