A private sector solution for an enduring public sector problem?(ONLINE BUDGETING TECHNOLOGY)(corporate performance management helps government in budgeting)(Cover story)

Budgeting has been traditionally one of the most difficult of government business processes for technology to support. Each government's budget process is distinct, making it a challenge for vendors to develop one software solution that will work across many environments. Further, the government budgeting process has an indispensable political element to it. By its nature, this political side to budgeting is difficult to encapsulate within a software package. The purpose of this article is to explore briefly the public sector's experience with technology for budgeting and, primarily, to examine the applicability to the public sector of a technology commonly used in the private sector for budgeting and planning called "corporate performance management" (CPM).

PUBLIC SECTOR EXPERIENCES WITH BUDGETING TECHNOLOGY

The most common technological solution applied to public sector budgeting has been the ubiquitous spreadsheet program, Microsoft Excel. The familiarity of most users with Excel, its low cost, and its adaptability to many data entry and calculation requirements makes it a natural initial choice for a solution. However, Excel has a number of limitations as a government-wide budgeting solution. Foremost is that Excel was designed as an individual productivity tool, not a collaborative budgeting and planning application. Hence, it is difficult for users to share work, often necessitating a series of complex (and fragile) linkages between different spreadsheet files. A related point is security Again, because Excel was not designed for collaborative work, the features for securing elements on sheets to which users share access are limited. Additionally, Excel does not contain certain technological features that are very useful for budgeting. For example, Excel lacks powerful reporting and drill-down (1) features that would be useful for budgetary analysis, it cannot easily provide powerful statistical calculations for long-term forecasting, and it is does not provide the ability to monitor and manage submittal processes.

The limitations of Excel have prompted governments to look for other solutions. For some governments, a common place to turn is the vendor that provides the government's financial management and accounting system. In many cases, the budgeting modules of financial management systems have proven to be a significant improvement over Excel and have satisfied the government's needs. However, sometimes these solutions have been found wanting. Perhaps the most important problem has been that the budget systems offered by some financial system vendors not surprisingly are developed similar to accounting systems: they are designed to emphasize transaction processing efficiency This efficiency comes at the expense of process flexibility and data accessibility.

A mantra of financial management system implementations is to "change your process to fit the software"--in other words it is better to conform the government's business process to that supported by the software than to customize the software. While this may be acceptable for administrative support processes like accounting or purchasing, it may not be acceptable for budgeting where a government's distinct process features may exist for reasons of legal or political necessity or due to financial management preferences. For example, park acreage might be a key variable in how a city budgets for park operating costs. If park acreage is not supported as a budgeting variable by the budgeting module, then the module would have to be customized (possibly leading to complications with technical support) or the budget staff would have to develop a series of complementary spreadsheets outside of the module to track this variable, thereby fragmenting the information used for decision making.

To take another common example, budgeting modules often are tightly coupled to the accounting module and the chart-of-accounts string. This requires budget submitters to formulate their requests by accounting entity. However, the organization may prefer to budget by program, goal, or other entities that are not part of the chart-of-account string. Hence, a government may find that the budgeting process supported by a financial management system module is simply not compatible with its requirements.

Some of the technical features of transactional-oriented budget modules also limit their utility for budgeting. They often lack a spreadsheet-like user interface that allows manipulation of multiple cells of data simultaneously Also, transactional systems are not typically designed to maximize accessibility to data, which can complicate reporting and analysis during the budget season. Finally, because these budgeting solutions are designed as modules of larger financial systems, they sometimes are not suitable as stand-alone solutions. Thus, it may not be practical to procure the budget ...