OMB urges shared services for financial management

Having witnessed the struggles that come with large-scale, complex financial management systems, the Office of Management and Budget now wants agencies to opt instead for shared service providers. The plan is to make greater use of common systems, transaction processing and their providers' expertise.

"Traditional approaches to financial systems implementations have left agencies exposed to significant risks in cost, quality and performance," Danny Werfel, federal controller, wrote in a memo March 25. "The cost, quality, and performance of federal financial systems can be improved by focusing government resources on fewer, more standardized solutions."

His new memo directed agencies to use a shared service provider for future modernizations of core accounting systems. When agencies share services, they can strategically source software providers and hosting services by buying in bulk, he wrote. Sharing also reduces the risks and delays that can come when agencies implement their own systems.

"OMB's guiding principle will be to support plans that offer the best value for the federal government," Werfel wrote.

Finally, by using shared service providers aligned with common standards and systems, the government can get better quality data about federal finances, including auditable financial statements on a governmentwide level.

"The highly fragmented nature of financial management systems across the federal agencies has contributed to inconsistencies in financial data, making it challenging to provide transparency into federal finances," Werfel wrote.

In the coming months, OMB will send out guidance on technology and business requirements for current financial systems as related to the new memo's changes.

Werfel expects it to take several years for service providers to become capable of meeting all agencies' needs, but OMB and Treasury Department officials will be expanding what's available while enhancing technological and service-oriented capabilities.

Meanwhile, OMB will support agencies that need to invest in their own systems, when officials can justify the course of action and it costs less than a shared service, Werfel wrote.