Early results from Federal agencies’ financial transformation initiatives have yielded benefits including improved citizen service and decision-making capabilities, but fewer than half of Federal IT and finance leaders believe their systems are very effective in critical areas such as financial planning, compliance, and data integrity, according to a recent MeriTalk survey conducted in partnership with KPMG.
Federal financial management systems manage more than $6 trillion in annual spending. Finance transformation can help ensure that taxpayer dollars are used efficiently, strengthen financial reporting, modernize financial interactions with the Federal government, and make internal systems more efficient and scalable, according to “The Future of Federal Financial Management,” published by the Treasury Department’s Bureau of the Fiscal Service.
To explore the state of finance transformation, results to date, and top priorities, MeriTalk surveyed 150 Federal financial systems managers and decision-makers across finance and IT departments.
Just 21 percent of respondents said their current financial management systems are primarily modern and integrated. One in five said they rely largely on manual processes or systems with limited automation, significantly hampering financial planning and compliance capabilities. Three out of four respondents said the overall pace of Federal financial transformation is too slow.
Beyond funding, respondents said they face numerous barriers to implementing modern financial solutions, especially a lack of alignment between finance and IT teams, followed closely by cybersecurity and data quality issues.
“It is critical that finance transformation takes a business-led approach, which means the functional and technical organizations must be in lockstep in building the solutions,” observed Jonathan Edge, managing director, Federal Advisory, KPMG US. “Organizations where CFOs and CIOs are not tightly integrated often experience inefficient technology delivery that results in manual and error-prone processes.”
In addition, “a common pitfall is assigning financial management subject-matter experts (SMEs) to technology transformation initiatives when they are double- or triple-booked against other duties assigned, often making successful agile delivery impossible,” he said. “CFOs need to account for this during planning so they can make the appropriate financial management SMEs available to support the transformation initiative fully.”
MeriTalk’s research found that about a third of financial systems managers and decision-makers have a finance transformation strategy in place, and another third are working to identify specific initiatives and timelines.
“It is important to sequence your top-down and bottoms-up approaches so they meet in the middle with a pragmatic, realistic, and achievable plan,” Edge advised. “Finance transformation requires a significant investment from leadership, a dedicated financial management expert, and broad agency support to ensure that all stakeholders are aligned and accountable.”
As IT and finance leaders pursue finance transformation, they are investing in technology modernization, data governance, workforce training, and process improvements, the survey found. How they prioritize investments depends on each organization’s specific needs, infrastructure capabilities, and readiness for change.
“The cost savings and efficiencies associated with modernization and automation are widely recognized. But the approach to modernization is not one-size-fits-all,” Edge noted. “It is important to construct a modernization plan through the lens of your stakeholder community. Deliberately engaging key constituents through the transformation builds support, engagement, trust, and excitement. And by designing and developing quick wins in the transformation, the probability of continued success increases substantially, particularly as the problem sets become more challenging.”
For more insights, download the full report, “Finance Forward: Accelerating Federal Finance Transformation.”