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**FINANCIAL MANAGEMENT**

**LINE OF BUSINESS**

***DRAFT***

**Common Solution White Paper v9**

[1. Overview / Executive Summary 3](#overview-executive-summary)

[2. Value Proposition 3](#value-proposition)

[3. Solution Scope 3](#solution-scope)

[3.1. Sub-Functions Included In Common Solution
3](#sub-functions-included-in-common-solution)

[3.2. Value-added Features to Meet Mission-specific Needs
3](#value-added-features-to-meet-mission-specific-needs)

[3.3. Participation 3](#participation)

[4. Operating Model 3](#operating-model)

[5. Business Processes & Management Structures
3](#business-processes-management-structures)

[*Funds Management* 3](#funds-management)

[*Payment Management* 3](#payment-management)

[*Receivable Management* 3](#receivable-management)

[*Cost Management* 3](#cost-management)

[*Reporting* 3](#reporting)

[6. Architectural Overview 3](#architectural-overview)

[7. Migration Strategy 3](#migration-strategy)

[8. Assumptions & Issues / Risks 3](#assumptions-issues-risks)

[8.1. Assumptions 3](#assumptions)

[8.2. Issues / Risks
3](#the-key-assumption-for-the-fm-lob-is-that-all-federal-agencies-will-adopt-the-common-solution.-future-funding-will-be-unavailable-for-agencies-to-modernize-their-fm-systems-on-a-stand-alone-stove-pipe-basis.-this-will-ensure-that-all-federal-agencies-follow-this-path-and-push-the-entire-federal-government-toward-a-common-fm-architecture-and-standardized-fm-data-and-processes.-additional-assumptions-include-but-are-not-limited-to-the-following)

[9. Implementation 3](#implementation)

[9.1. Implementation Approach & Timeline
3](#implementation-approach-timeline)

[9.2. Estimated Costs 3](#estimated-costs)

#  {#section .unnumbered}

# Overview / Executive Summary

In 2001, President Bush created the President's Management Agenda to
address the need for citizen-centered, results-oriented, and
market-based federal government initiatives. The success of the
President's Agenda depends on agencies working as a team across
traditional boundaries to better serve the American people and focusing
on citizens rather than individual agency needs. Building upon the
efforts of the Federal Enterprise Architecture Program to expand
E-Government, the Office of Management and Budget launched the Lines of
Business initiatives with a goal of finding projects that fall into
lines of business that were not originally identified as a part of the
24 e-government initiatives: financial management, grants management,
and human resources management. Each of the lines of business identified
core business requirements and processes that are the same.

The Lines of Business initiatives affords agencies an unprecedented
opportunity in a period of fiscal restraint to influence the direction
of specific core business functions for the Government through the use
of technology to adopt industry and government "Best Practices" and to
standardize and eliminate redundant stovepipe systems throughout
government.

The Office of Management and Budget and the established LOB Task Forces
are focused on a business-driven, common solution and target
architecture developed through an architectural framework. The
definitions of these key characteristics of the LOB approach include:

-   ***Common Solution*** -- End to end shared service capabilities
    needed to achieve the LOB Statement of Objectives through a Target
    Architecture that includes business process, technology solutions,
    and data standardization.

-   ***Target Architecture* --** End state toward which all efforts are
    directed; it will be the architecture for some future date and will
    be the target toward which integration efforts will be directed.

-   ***Business Driven (vs. Technology Driven)*** -- Solutions address
    distinct business improvements that directly impact LOB performance
    goals.

-   ***Developed Through Architectural Processes*** -- Solutions are
    developed through a set of common and repeatable processes and
    tools.

In order to gain further insight into the lines of business, The Office
of Government-wide Policy of the General Services Administration (GSA),
in conjunction with the Office of Management and Budget prepared a
Request for Information (RFI). The purpose of the RFI was to provide
industry and government service providers with a vehicle to describe
solutions and implementation approaches for achieving the goals of the
three lines of business through the development of common solutions and
a target architecture. The RFI intended to enable the LOB agency
managing partners to incorporate strategies, alternatives, and
experiences, representing industry's best practices in developing and
implementing transformational common solutions and a target enterprise
architecture, into business cases for these lines of business in time
for the FY 2006 budget process, with the ultimate goal of developing and
implementing common solutions for the government that provide
capabilities that achieve the LOB objectives. This requirement builds
upon the existing E-Government framework and facilitates a federal
enterprise-wide effort. Industry and government service providers
responded to the RFI with best practice information that was evaluated
by the FM LOB in order to develop a common solution.

The vision of the Financial Management Line of Business (FM LOB) is to
establish the framework for a government-wide financial management
solution that is efficient and improves business performance while
ensuring integrity in accountability, financial controls and mission
effectiveness. The Department of Labor (DOL) and the Department of
Energy (DOE) were chosen by OMB to lead an interagency team that is
managing the effort. The other partnering agencies on the interagency
team are: the Department of Homeland Security (DHS), the Department of
the Interior (DOI), the Department of Justice (DOJ), the Environmental
Protection Agency (EPA), the Department of Health and Human Services
(HHS), the Department of Housing and Urban Development (HUD), and the
United States Department of Agriculture (USDA). Several ex-officio
agencies have joined the FM LOB interagency team, including: the
Department of Defense (DOD), the General Services Administration (GSA),
the National Aeronautics and Space Administration (NASA), the National
Science Foundation (NSF), the Department of the Treasury (Treasury), and
the Department of Veterans Affairs (VA).

The FM LOB has several goals:

-   Achieve or enhance process improvements and cost savings in the
    acquisition, development, implementation, and operation of financial
    management systems through shared services, joint procurements,
    consolidation, and other means;

-   Provide for standardization of business processes and data elements;

-   Promote seamless data exchange between and among Federal agencies;
    and

-   Strengthen internal controls through real-time interoperability of
    core financial and subsidiary systems.

The FM LOB Project Management Office (PMO) has established three working
groups within the FM LOB: the Enterprise Architecture Working Group
(EAWG), the Business Management Working Group (BMWG), and the Business
Case Working Group (BCWG). These working groups are producing
deliverables that support the common goals of the FM LOB. The FM LOB has
evaluated the RFI responses and is developing a common solution and
target business processes. Please reference Attachment A for a
high-level overview of the RFI responses.

The purpose of this white paper is to develop a draft common solution
approach for the FM LOB and answer several high-level questions. The key
issue that this paper will address is the common solution and how this
solution fits into the overall context of what the government is trying
to achieve through the Financial Management Line of Business.

The FM LOB analyzed the 33 FM responses to the Request for Information
(RFI) from the public and private sectors. In addition, the inherent
expertise within the group itself was utilized to decide upon the best
solution. This group is comprised of financial management subject matter
experts from across the federal government.

***Common Solution***

A market-based model of shared services and cross servicing using
private and public sector "centers of excellence" is recommended. A
small number of Federal agencies and/or private sector vendors would
ultimately provide the entire Federal Government with FM services. The
common solution will be compliant with all federal financial management
laws, regulations, and requirements and must align with the vision,
goals, and objectives of the FM LOB. The software provided and
configuration implemented must also be Joint Financial Management
Improvement Program (JFMIP) compliant for core financial systems.

The FM LOB is recommending a "Center of Excellence" which will be either
a completely Federal Government entity providing the cross servicing and
operations (installing software, maintaining licenses, managing hardware
and software upgrades, etc.) OR a Government Managing Partner that
oversees the requirement for integration, develops service level
agreements (collaboratively), and establishes performance goals for the
service provider.

The key to the Centers of Excellence approach is buying financial
management services as a commodity through competitive procurements. The
movement to these centers would reduce redundant approaches currently
being taken in the management of financial systems across the Federal
government. The migration would occur in a phased approach and follow
the system development life cycle for FM. Agencies that are planning to
purchase a new financial management system or planning a significant
upgrade to an existing system in FY05 and beyond would instead be
directed to the common solution. Special emphasis on systems reporting
non-compliance audit results related to their current system solution
will be included in the migration planning.

Standardization of core business processes would occur for each agency
as they are converted to the new systems. The FM LOB is taking a
collaborative, cross-government approach to developing standard business
processes. Target business processes will be developed as a model for
standardization and integrated across the government. The definition of
standard data elements, data definitions, nomenclature, etc., and the
creation of standard interoperability among core FM and subsidiary
systems including other lines of business and E-Government (E-Gov)
efforts such as E-Travel, E-Payroll and the Integrated Acquisitions
Environment (IAE) will promote seamless data exchange and improve
internal controls by

1)  Developing additional requirements to support the standard processes
    and data requirements building on and enhancing the standardization
    efforts OMB (FACTS II), Treasury (FACTS I, USSGL, IPAC, etc.), GSA
    (CCR, IGTE) and JFMIP. (Currently, available solutions are highly
    configurable and depending upon the configuration chosen during the
    implementation, may no longer meet JFMIP requirements. The FM LOB
    common solution must comply with all Federal financial management
    standards, requirements, laws, and regulations.)

2)  Developing standard interoperability among core FM and subsidiary
    systems including the other LOBs and E-Gov solutions. (Vendors would
    be required to meet interoperability standards as part of their
    solution.)

3)  Allowing financial management personnel across the government to
    learn and speak the same "language", enhancing common core
    competencies, and providing "economies of skill".

4)  Building on and enhancing the standardization efforts of OMB (FACTS
    II), Treasury (FACTS I, USSGL, IPAC, etc.), GSA (CCR, IGTE) and
    JFMIP.

The development and implementation of these standards will, by
themselves, improve the integrity of financial management at both the
individual agency and government-wide levels and will ensure compliance
with financial management laws and regulations such as the Federal
Financial Management Improvement Act (FFMIA). However, there are
additional benefits. Standardization will also allow the development of
additional systemic internal controls (business rules) through the
development of required relationships among processes and data.

Since the FM workforce will use, perform and manage financial
information in a new manner, the management of change will be crucial to
the entire effort and must be introduced at the very beginning of the
process and managed throughout its entirety. Finally, one of the biggest
faults with current FM systems would be remedied -- management's
inability to retrieve pertinent financial information on a real-time
basis. A key task in accomplishment of the FM LOB goals is that timely
and accurate management information is relayed to decision makers
without the need for laborious data calls.

The solution proposed meets the vision and goals of the effort:

1)  Significant reductions in duplicative investment and redundant
    operating costs

2)  Reuse of best practices, proven approaches and methodologies for
    executing business processes within a given business function,
    especially where the agency has a current gap or need for
    improvement

3)  Faster and more consistent deployment of financial management
    capabilities

4)  Improved standardization of practices and processes, leading to
    improved accountability and auditability

# Value Proposition

The FM LOB analyzed the value proposition of the common solution and
detailed how the common solution achieves the financial management
statement of objectives. Where possible, specific details concerning
increased efficiencies, anticipated cost savings, improved services, and
elimination of redundancies have been highlighted.

The following objectives are addressed by the FM LOB "centers of
excellence" common solution:

[Cost Savings and cost avoidance]{.underline}

1.  Public/private partnerships leverage commercial IT outsourcing
    efficiencies and reduce deployment costs by centrally maintaining
    solution assets and reusing Federal and commercial subject matter
    expertise, thus creating "economies of skill"

2.  Costs reduced in IT infrastructure, application acquisition,
    interface development and application management

3.  Economies of scale are leveraged in hardware, software and business
    process management

4.  Central centers are established for efficient maintenance of
    solution assets and implementation expertise

5.  "Centers of excellence" deliver repeatable, proven transformation
    approaches and methodologies through predictable cost structures

6.  Redundancies in performing common business functions are reduced

7.  Competition is encouraged

8.  Software and hardware maintenance upgrades are centralized

9.  Software license fees are paid just once to a vendor

10. Interfaces to other systems are centralized

11. Hardware and software is reused by many agencies

12. Audit costs are minimized

13. Overhead achieved by decreasing the amount of IT sites supporting
    financial functions

14. FTE is reduced

[Standardization & Internal Controls]{.underline}

Processes and data are standardized incrementally through common
solutions and establishment of additional enabling standards. Vendors
will be required to modify their software to support the standard
processes, data requirements and common interoperability standards
within and across LOBs, thereby improving the integrity of financial
data at both the individual agency and government-wide levels. Key
subsidiary systems will be deployed consistently across agencies to
improve interoperability and internal controls. FM personnel across the
government will speak the same "financial language" eliminating to a
degree the need to retrain employees upon changing jobs within the
financial community. Financial information structures must support an
audit trail that links financial reporting and information with the
supporting financial transactions, events, standards, and laws.

Proven "best practices" are reused for transforming financial management
business processes. Data exchange between agencies is standardized.
Internal control "best practices" are established by organizing
government business function expertise in "Centers of Excellence" where
subject matter experts share lessons learned and establish best practice
processes.

[]{.mark}

[Mission Support]{.underline}

Provides real-time mission support information and establishes the
framework for a government-wide financial management solution that is
efficient and improves business performance while ensuring integrity in
accountability, financial controls, and mission effectiveness.

[President's Management Agenda]{.underline}

The common solution supports the President's Management Agenda by
promoting the goals of citizen-centric, results-oriented, and
market-based.

[Competition]{.underline}

"Centers of Excellence" are established; each based on public/private
partnerships, to preserve competition and innovation -- vendor and
application neutrality.

[Performance Accountability]{.underline}

Agency decision makers can draw the uniform data from disparate systems
to better assess, evaluate and measure quantifiable returns and
outcomes.

[Resource Management]{.underline}

Seamless interoperability of all lines of business allows agency
decision makers to better manage acquisition, human capital, and
disbursements.

[Implementation Timeframes]{.underline}

Re-use of existing systems, configurations, hardware, and facilities
leads to shorter implementation timeframes. The migration would occur as
a phased approach and follow the system development life cycle for FM.
Agencies that are planning to purchase a new financial management system
or planning a significant upgrade to an existing system in FY05 and
beyond would instead be directed to the common solution.

[Leveraging Monies/Time Spent]{.underline}

Several major agencies have FM modernization efforts underway, providing
the potential for future certification as a service center provider.

# Solution Scope

The common solution references the Federal Enterprise Architecture by
mapping the financial management sub-functions.

## Sub-Functions Included In Common Solution

All JFMIP recognized "core" functions are included in the Common
Solution -- core financial systems management, receivables, payments,
general ledger, reporting, funds and cost management. Since they are
mandated by JFMIP, they must be included. Interoperability to and from
other FM systems, e.g., payroll, grants, procurement, must be in place.
In addition, the core business processes will be reengineered to use
target financial processes and to enforce standardization both within
and across business lines.

Other candidates for future core sub-functions would be procurement and
budget formulation. Each of these functions is common to all Federal
agencies and integral to core financial management operations. In
particular, internal controls can be upgraded through real-time linkage
between an agency's procurement system and the core accounting system,
e.g., fund availability could be checked at the point of obligation of
funds (requisition process). E-procurement solutions could be leveraged
vs. the FM LOB solution to find a way to integrate them into an overall
solution.

## Value-added Features to Meet Mission-specific Needs 

Functions that require a very high degree of customization (something
that is costly and moves the agency away from common ground) will not be
included in the target business processes. Mission-specific FM functions
could be implemented utilizing the standard configuration as a baseline.
Companies responding to this in the RFI differed as to whether
commercial providers could offer services for these functions. In
addition to core, agencies can "bolt-on" anything they deem appropriate
to include value-added services assuming these changes do not alter the
government-wide common solution standards.

## Participation

The FM Line of Business initiative will affect the entire federal
government where core FM services are provided. All core financial
management functions throughout the government will be included.

# Operating Model

The FM LOB recommends pursuing a market-based approach based on a shared
services model that will maximize economies of scale, scope, and skill.
This approach is based in part on the RFI responses and past E-Gov
initiatives. The cross-servicing model has been problematic in the past,
but both technology and core federal financial management software
development (via JFMIP) has advanced to the point where it is now better
positioned to accomplish the goal. This model is currently being
deployed internally by several agencies to successfully consolidate
bureaus. The FM LOB plans to continue to examine this model as the
business case develops, but the model should produce favorable results
given certain constraints such as clean audit opinions, timely financial
reports, and JFMIP compliance. Consolidating FM services into multiple
service centers, whether public and private partnerships or strictly
public partnerships, reduces government-wide life-cycle costs and
improves business processes by transforming the delivery of
comprehensive FM services through cross servicing and "Centers of
Excellence".

Definition of "Centers of Excellence"

A "Center of Excellence" will be either a completely Federal Government
entity providing the cross servicing and operations (installing
software, maintaining licenses, managing hardware and software upgrades,
etc.) OR a Government Managing Partner that oversees the requirement for
integration, develops service level agreements (collaboratively), and
establishes performance goals for the service provider.

"Centers of Excellence" will meet the following criteria:

1)  Comply with the Federal Financial Management Improvement Act (FFMIA)

2)  Operate JFMIP approved financial management software

3)  Support "clean" audit opinions

4)  Align practices with E-Gov initiatives (e.g., Common vendor file
    usage, intra-governmental transaction processing using DUNS numbers,
    etc.)

5)  Develop common data exchange interfaces -- one set of interface
    development and support for all agencies (e.g., one common interface
    to the four E-Gov payroll systems providers)

6)  Provide hardware and other IT infrastructure required to operate --
    scalability, portability and interoperability

7)  Offer application management services to maintain and upgrade
    hardware and software for agencies serviced

8)  Use "best practice" approaches and methodologies for standardized
    implementation tasks, (e.g., change management, project management,
    training, data conversion and interface development)

9)  Offer data warehousing services for management information systems
    and cost accounting

10) Adhere to the requirements outlined in ISO 15489 by supporting an
    electronic records management system (ERMS) that has been certified
    under DoD Std. 5015.2.

11) Support the FM LOB goals

12) Follow the Financial Enterprise Architecture (FEA) Requirements

Selection of "Centers of Excellence"

In a statement to Congress in March 2004, David Walker, Comptroller
General of the United States, stated that only three agencies of the
current 23 CFO Act agencies are in compliance with FFMIA. These three
agencies will be the logical choices for a starting point for building
the new "Centers of Excellence". As more agencies reach this goal, they
can be considered for hosting other agencies.

Initially, the three hosting agencies can decide whether they will cross
service the entire operation or use a Private Sector partner to
outsource the operation. Within 2 years, small agencies requesting
monies for modernizing their financial systems will be converted to one
of the host agency services using the dollars that would have been
approved for their own "stove pipe" effort. It is imperative that the
first few efforts in a project of this magnitude be "small" in nature --
in order to produce "quick" successes and provide the host center with
experience using the new migration path. In fact, initial priority as a
host should be given to an agency that has recently consolidated "stove
pipe" systems within their own agency - given the similarities of that
effort.

In 3 to 5 years, other small agencies and some mid-level agencies will
be converted to the "Centers of Excellence". Any large agencies that
reach compliance with FFMIA during that time would be eligible to become
a service provider. These agencies can put more emphasis on outsourcing
the operations to the private sector as they become a Government
Managing Partner. Given the success of the road map, OMB will steer all
agencies requiring financial system modernization to this effort.

Agencies that operate their own "mission-specific" solutions will retain
control over these functions. The host service would provide data to run
these systems via an interface or provide the system solution (hardware
and software services) to the converting agency.

Data managing information capabilities will be provided by the service
centers in the form of data warehousing. Data will be stored in
aggregate form to allow "slicing and dicing" capabilities for
information retrieval. The warehouse will be kept "fresh" with nightly
updates. "Canned" reports will be developed for desktop retrieval -- and
can be reused by other agencies. Desktop tools will be provided to
create "on the fly" queries of information. Storing data in this format
and adding "mission specific" data will give managers access to
real-time information needs.

###### Standardization of Data and Processes {#standardization-of-data-and-processes .unnumbered}

There is a significant shortfall in government-wide standardization of
financial data and processes that may inhibit the successful
implementation of "Centers of Excellence". There are four areas of
standardization that must be addressed immediately:

1)  Transaction processing standards (JFMIP core data)

2)  Data exchange standards (interfaces)

3)  Data reporting standards (common reporting data -- financial
    statements)

4)  Standard business processes (JFMIP financial core functions)

The consolidation of government-wide financial systems will somewhat
enforce standardization; however, this area must be addressed before the
conversion of the first agency. A separate government-wide group should
be formed to address the business process and data standardization for
the FM LOB.

# Business Processes & Management Structures

[Organizational Structures and Governance -- Common Solution
Management]{.underline}

The FM LOB is currently employing a governance structure and a Program
Management Office (PMO) to manage the development of the common
solution. The Office of Management & Budget (OMB) is serving as an
executive sponsor. The Department of Labor and the Department of Energy
are the managing partners of the FM LOB and lead a group of nine
agencies that make up the FM LOB partnership (DOL, DOE, DHS, DOI, DOJ,
EPA, HHS, HUD, & USDA). Additionally, there are several ex-officio
members that are currently participating in the initiative including:
DOD, GSA, NASA, NSF, Treasury, & VA. Other agencies are encouraged to
participate in this process, and it is expected that the level of agency
participation will increase over time.

The FM LOB has established a Program Management Office consisting of
individual project teams and the agency-specific governance structure.
Project Management and system life cycles, processes, procedures,
methods, models and standards will also be established within the PMO.
The PMO works with the FM LOB partners, the partnering and ex-officio
agency partners, and the Federal Enterprise Architecture team among
others. The FM LOB PMO has established three working groups within the
FM LOB: the Enterprise Architecture Working Group (EAWG), the Business
Management Working Group (BMWG), and the Business Case Working Group
(BCWG). The FM LOB plans to use best practices from both public and
private RFI responses to structure the PMO and will further define the
PMO structure in the business case. The PMO office will have
responsibility for the vast roll-out and implementation of the FM LOB
effort as well as facilitating customer agency satisfaction with the
delivery of the common solution in a shared service environment.

[Performance Management Approach and Performance Metrics]{.underline}

The FM LOB would recommend a combination of service level agreements,
"smart buy" and "share-in-savings" approach whereby both the service
providers and the Federal government realize cost savings. Meeting or
exceeding certain established metrics would result in additional
payments to the service providers. This provides a "win-win" situation
since the government would benefit from the cost savings in productivity
gains and the vendor would have an incentive to provide exceptional
service. Failure to meet certain metrics would trigger fines or smaller
payments to the service centers. These monies would be shared across
agencies on a proportionate basis. Much more rigorous performance
measurement development and rigorous baseline processes will be required
and should be developed during the business case process. Performance
Metrics from the RFIs will be referenced as needed.

[Business Process Requirements]{.underline}

The following is a brief description of the major functions of a Core
financial system as defined by JFMIP, Core Financial System Requirements
published in November, 2001 and located on the JFMIP website
(<http://www.jfmip.gov/jfmip/>).

#### Core Financial System Management {#core-financial-system-management .unnumbered}

The Core Financial System Management function consists of all the
processes necessary to maintain the financial system in a manner that is
consistent with established financial management laws, regulations and
policy. This function sets the framework for all other Core financial
system functions. The Core Financial System Management function consists
of the following processes:

-   Accounting Classification Management

-   Transaction Control

####  {#section-1 .unnumbered}

#### General Ledger Management {#general-ledger-management .unnumbered}

General Ledger Management is the central function of the Core financial
system. The general ledger is the highest level of summarization and
must maintain account balances by the accounting classification elements
established in the Core Financial System Management function. For
example, account balances must be maintained at the internal fund and
organization level. Depending on the agency's reporting requirements,
some or all of the general ledger accounts may have balances broken out
by additional elements of the accounting classification. All
transactions to record financial events must post, either individually
or in summary, to the general ledger, regardless of the origin of the
transaction.

The General Ledger Management function consists of the following
processes:

-   General Ledger Account Definition

-   Accruals, Closing, and Consolidation

-   General Ledger Analysis and Reconciliation

### *Funds Management* {#funds-management .unnumbered}

Each agency of the Federal Government is responsible for establishing a
system for ensuring that it does not obligate or disburse funds in
excess of those appropriated or authorized. The Funds Management
function of the Core financial system is an agency's primary tool for
carrying out this responsibility.

The Funds Management function consists of the following processes:

-   Budget Preparation

-   Budget Formulation

-   Funds Allocation

-   Budget Execution

-   Funds Control

There has never been a formal development of the separate Budget
Formulation System requirements document. However, agencies have
processes that require Budget Formulation system actions. JFMIP presents
a number of suggested budget formulation requirements as value-added
requirements within the Core Financial System Requirements document.

### *Payment Management* {#payment-management .unnumbered}

The Payment Management function should provide appropriate control over
all payments made by or on behalf of an agency. Agencies initiate
payments to: vendors in accordance with contracts, purchase orders and
other obligating documents; state governments under a variety of
programs; employees for salaries and expense reimbursements; other
Federal agencies for reimbursable work performed; individual citizens
receiving Federal benefits; recipients of Federal loans; and to make
payments for other reasons. Designated payment organizations (specified
agency or Treasury organizations) accomplish payments. Certain agencies
that are authorized to make their own disbursements must comply with the
Provisions pertaining to "delegated disbursing authority" contained in
*Treasury Financial Manual* (TFM) - 4, and applicable requirements
below.

The Payment Management function consists of the following processes:

-   Payee Information Maintenance

-   Payment Warehousing

-   Payment Execution

-   Payment Confirmation and Follow-up

### *Receivable Management* {#receivable-management .unnumbered}

The Receivable Management function supports activities associated with
recognizing and recording debts due to the Government, performing
follow-up actions to collect on these debts, and recording agency cash
receipts. A receivable is recognized when an agency establishes a claim
to cash or other assets against other entities. This section also
addresses accounting for miscellaneous cash receipts.

The Receivable Management function consists of the following processes:

-   Customer Information Maintenance

-   Receivable Establishment

-   Debt Management

-   Collections and Offsets

### *Cost Management* {#cost-management .unnumbered}

The Cost Management function of the Core financial system attempts to
measure the total cost and revenue of Federal programs, and their
various elements, activities and outputs. Cost Management is essential
for providing accurate program measurement information, performance
measures, and financial statements with verifiable reporting of the cost
of activities. The term "cost" refers to the monetary value of resources
used or sacrificed or liabilities incurred to achieve an objective, such
as to acquire or produce a good or to perform an activity or service. A
"cost object" is any activity, output or item whose cost and revenue are
to be measured.

The level of sophistication of the Cost Management function needed by an
agency depends on the requirements of the agency and the operational
nature of the programs involved. For example, if an agency's primary
mission is to produce a product or service for sale, the costing
function typically will be accomplished in the Managerial Cost
Accounting System that is integrated with the Core Financial System.
However, in any Core system, certain basic functions must be present.

The Cost Management function consists of the following processes:

-   Cost Setup and Accumulation

-   Cost Recognition

-   Cost Distribution

-   Working Capital and Revolving Fund

### *Reporting* {#reporting .unnumbered}

The Core financial system must be able to provide timely and useful
financial information to support: management's fiduciary role; budget
formulation and execution functions; fiscal management of program
delivery and program decision making; and internal and external
reporting requirements. External reporting requirements include the
requirements for financial statements prepared in accordance with the
form and content prescribed by OMB, reporting requirements prescribed by
Treasury, and legal, regulatory and other special management
requirements of the agency.

The reporting function consists of the following processes:

-   General Reporting

-   External Reporting

-   Internal Reporting

-   Ad hoc Query

    A complete list of reporting requirements including mandatory and
    value-add requirements for each reporting function can be found in
    the JFMIP Core Financial System Requirements document published in
    November, 2001 and located on the JFMIP website
    (<http://www.jfmip.gov/jfmip/>).

[Change Management Requirements]{.underline}

A 2003 study conducted by the Change Management Learning Center based in
Colorado that included 288 companies from 51 different countries
provided a review of the best practices of change management over the
last five years. The most critical components found

-   The #1 contributor to project success is strong, visible and
    effective sponsorship.

-   The top obstacle to successful change is employee resistance at all
    levels: front-line, middle managers, and senior managers.

-   Employees want to hear messages about change from two groups:
    executive management or their immediate supervisors (and these
    messages are not the same).

-   When asked what they would do differently next time, most teams
    would begin their change management activities earlier in their next
    project, instead of viewing it as an add-on or afterthought.

-   The top reasons for employee resistance are a lack of awareness
    about the change, comfort with the ways things are and fear of the
    unknown.

-   Middle managers resist change because of fear of losing control and
    overload of current tasks and responsibilities.

An all-encompassing change management plan must be developed by the FM
LOB. The function should be placed under a PMO. Staff would be available
throughout the entire FM LOB life cycle to work with each federal agency
as required.

[Communications Requirements]{.underline}

This element dovetails with change management. A key component of
managing this large effort will be communication at all levels. The
change management team would assume this responsibility.

[Training Requirements]{.underline}

Consolidating FM systems will require extensive training and re-training
of employees. Business processes that are streamlined and compressed
will result in the re-definition of current jobs associated with the
process. Some employees will need to be trained to do other things.
Those employees continuing to support the streamlined processes will
need retraining based on modified financial management procedures, e.g.,
electronic work flow, elimination of paper, modified approval processes,
operational changes, etc.

# Architectural Overview

The target architecture for the Financial Management (FM) Line of
Business (LOB) common solution identified in this white paper is based
on an architectural approach created by the enterprise architecture
working group (EAWG). This approach facilitates a model of shared
services and cross servicing utilizing a combination of private and
public sector "centers of excellence" for the provision of financial
management services.

The approach supports the FM LOB objectives and takes into consideration
enterprise architecture requirements that must be met when designing the
common solution. Some of these requirements include alignment with the
FEA, legislative drivers, incorporation of JFMIP standards, and ensuring
support for FM component reusability across multiple agencies and LOBs.
To accomplish this, the common solution target architecture is being
constructed around four principle layers that align with the FEA;
business architecture, service component architecture, data
architecture, and technology/application architecture.

At the highest level, the business architecture establishes the
relationship between the FEA reference models and the core financial
management functions as defined by JFMIP. In order to support the shared
services model for the common solution, the target business processes
for each core financial sub-function is being defined by the FM LOB
business management working group (BMWG). These business processes will
be mapped to the Performance Reference Model and Service Component
Reference Model to ensure its alignment to the FEA. The business
processes will also be decomposed to highlight interaction points with
internal and external partners and will expose key activities that
trigger important events. Below is a draft of the high level
relationship between the JFMIP core FM functions, the BRM sub-functions,
and the SRM components. This describes some of the mapping being done
within the business architecture.

Table 1. High Level SRM Components Mapped to BRM and JFMIP Functions

+-------------+---------+------------+--------------+----------------+
| **JFMIP     | **FEA   | **SRM      | **SRM        | **SRM          |
| Function**  | S       | Service    | Service      | Components**   |
|             | ub-Func | Domain**   | Type**       |                |
|             | tions** |            |              |                |
+=============+=========+============+==============+================+
| General     | Acc     | Back       | Data         | Data           |
| Ledger      | ounting | Office     | Management   | Classification |
| Management  |         | Services   |              |                |
|             |         |            |              | Loading &      |
|             |         |            |              | Archiving      |
+-------------+---------+------------+--------------+----------------+
|             |         |            | Financial    | Billing &      |
|             |         |            | Management   | Accounting     |
+-------------+---------+------------+--------------+----------------+
| Funds       | Budget  | Back       | Financial    |                |
| Management  | and     | Office     | Management   |                |
|             | Finance | Services   |              |                |
+-------------+---------+------------+--------------+----------------+
| Payment     | P       | Back       | Data         | Loading &      |
| Management  | ayments | Office     | Management   | Archiving      |
|             |         | Services   |              |                |
+-------------+---------+------------+--------------+----------------+
|             |         |            | Financial    | Paymen         |
|             |         |            | Management   | ts/Settlements |
+-------------+---------+------------+--------------+----------------+
|             |         | Process    | Tracking &   | Process        |
|             |         | Automation | Workflow     | Tracking       |
+-------------+---------+------------+--------------+----------------+
| Receivable  | Coll    | Back       | Data         | Loading &      |
| Management  | ections | Office     | Management   | Archiving/     |
|             | and     | Services   |              |                |
|             | Rece    |            |              | Data Cleansing |
|             | ivables |            |              |                |
+-------------+---------+------------+--------------+----------------+
| Cost        | Acc     | Business   | Management   | P              |
| Management  | ounting | Management | of Processes | rogram/Project |
|             |         | Services   | Financial    | Management     |
|             |         |            | Management   |                |
+-------------+---------+------------+--------------+----------------+
| Reporting   | Re      | Back       | Financial    | Financial      |
| on Results  | porting | Office     | Management   | Reporting      |
| of          | and     | Services   |              |                |
| Operations  | Info    |            |              |                |
|             | rmation |            |              |                |
+-------------+---------+------------+--------------+----------------+

The defined business processes outlined in the target business
architecture are the cornerstone elements upon which the remaining
elements of the target architecture will be developed. When the business
processes are submitted by the BMWG, the EAWG will develop the
corresponding service components of the target architecture.

The service component architecture provides an inventory of FM service
components that support the shared services model and describes the
interaction between FM service components and external components to the
FM LOB. While the service components have not yet been designed, the
objective is to create a structure that will enable federal agencies to
consistently perform the work defined by the JFMIP sub-functions by
remotely executing a standard set of common processes. Details on the
components' structure, function, interactions and opportunities for
reuse will be further described in the target architecture document.

The target data architecture identifies at a high level, the data
objects that are needed for each target business process and its related
service components and will define when the object is created, used, and
deleted. The data architecture is currently being defined and is
dependant on the submission of target FM business processes.

The target technology/application architecture will comply with the
requirements outlined in the FEA Technical Reference Model. Furthermore,
the technology architecture will specifically address standards that
will be used to sustain the foundation of the common solution (i.e.
platforms, networking, hosting, etc.) in addition to the technology
standards needed to facilitate the use and execution of the service
components outlined in the service component architecture. In addition,
the recommended hardware/software platforms will comply with voluntary
consensus standards for interoperability. While the shared services
solution will not be dependant upon any specific hardware/software
provider it will at a minimum be comprised of enabling capabilities that
support the core FM functions and business processes described in the
business architecture. These enabling capabilities are derived from
existing agency based financial systems and from new center of
excellence hosted financial systems that are JFMIP compliant. The
technology architecture also includes the use of a service oriented
architecture that is capable of providing integration within and between
the different LOBs. A service oriented architecture represents a set of
design principles that enables units of functionality to be provided and
consumed as service components. The service oriented architecture will
provide access to FM services and facilitate the adoption of the shared
services model. Through the implementation of a service oriented
architecture, the common solution will also leverage existing
E-Government systems as services that are integrated into the common
solution architecture. The following is a list of E-Government
initiatives that, at a minimum, should be integrated into the common
solution:

-   eAuthentication

-   Enterprise Human Resources Integration (EHRI)

-   Integrated Acquisition Environment (IAE)

-   E-Records Management

-   Federal Asset Sales

-   Business Gateway

-   Grants.gov

-   G2B

-   Govbenefits.gov

While the security and privacy approach has not been fully defined, the
approach will aim to secure data at the business process and data object
levels pursuant with FISMA and other federal regulations. Specifically,
the approach will ensure that sensitive records are protected at the
individual record level. Securing the perimeter of the network is not
sufficient. A potential security and privacy approach may utilize the
concept of a security broker that secures the data and business
processes associated with each service component defined in the service
component architecture. The security and privacy approach is currently
being developed.

In conclusion, this section provides high level highlights for the
architectural approach that is being used to design the target
architecture of the common FM LOB solution. This approach is founded on
a tight integration with the federal enterprise architecture, a target
architecture that supports the core JFMIP FM functions, the
establishment of a service oriented architecture, and the subscription
to enabling capabilities at centers of excellence. Of importance are the
details required to define the target business processes, which is still
in process. However, utilizing the architectural approach described in
this section will yield a more complete common solution that directly
addresses the LOB goals.

# Migration Strategy

The FM LOB considered key migration considerations for the common
solution including: cost, resources required, timing, roll-out approach,
and cutover requirements.

The migration would occur as a phased approach and follow the system
development life cycle for FM. Agencies that are planning to purchase a
new financial management system investment or planning a significant
upgrade to an existing system in FY05 and beyond would be directed to
the common solution. An assessment of agency's financial management
system life-cycle and the system's level of security will be assessed to
develop a migration timeline. Agencies who have failed to complete their
security certification and accreditation process will be encouraged to
follow an accelerated migration schedule.

An assessment will be conducted to see if any of these migrations can be
completed concurrently -- providing quick "win" situations. The
conversion will consist of all core FM functions defined by JFMIP.
Agency-specific functions can be kept within the agency and receive
required data from the service provider thereby retaining individual
bureau identity. Migration approaches detailed in the RFI responses will
be evaluated and incorporated where applicable.

The migration process at a minimum will follow this path:

1)  Agency selected for migration

2)  Change management & migration team put in place

3)  Review of agency requirements

4)  Migration plan developed

5)  Center of Excellence review

6)  Data standardization adopted

7)  Process standardization adopted

8)  Migration software developed and tested

9)  Implementation plan developed

10) Training conducted

11) Pilot project implemented

12) Agency migrated in phased approach

An agency should migrate as an organization entity to the common
solution as much as possible and as quickly as possible. To have
agencies operating on multiple systems (old and new) will cause
disruptions and potentially have a negative impact. Migration
requirements should be included in an approved transition plan.

The centers of excellence will be evaluated prior to the migration
approach to ensure compliance with FM standards, laws, and requirements
and will facilitate formulation of service-level agreements to the
migrating agencies. The migration strategy will follow the guidelines
established in the Chief Financial Officers Act of 1990 for the 5-year
plans that are submitted to OMB. The migration team will consist of
members from the receiving agency, migrating agency, FM LOB change
management team, and contractors.

# Assumptions & Issues / Risks

## Assumptions

# The key assumption for the FM LOB is that all federal agencies will adopt the common solution. Future funding will be unavailable for agencies to modernize their FM systems on a stand-alone, "stove-pipe" basis. This will ensure that all federal agencies follow this path and push the entire federal government toward a common FM architecture, and standardized FM data and processes. Additional assumptions include, but are not limited to the following: {#the-key-assumption-for-the-fm-lob-is-that-all-federal-agencies-will-adopt-the-common-solution.-future-funding-will-be-unavailable-for-agencies-to-modernize-their-fm-systems-on-a-stand-alone-stove-pipe-basis.-this-will-ensure-that-all-federal-agencies-follow-this-path-and-push-the-entire-federal-government-toward-a-common-fm-architecture-and-standardized-fm-data-and-processes.-additional-assumptions-include-but-are-not-limited-to-the-following .unnumbered}

# The FM LOB common solution will comply with all federal financial management standards, laws, and requirements including the Chief Financial Officers Act, FISMA and privacy standards. 

# The software provided and configuration implemented will be Joint Financial Management Improvement Program (JFMIP) compliant for core financial systems. 

# This common solution will adhere to adheres to the FEA and FFMIA.

# This common solution will contain a security system.

# All federal agencies will adopt standardized aspects of the common solution unless there is a mission-specific reason to not do so. Justification for not using all elements of the common solution will be required. 

# A performance-based contract will be used during the procurement of the common solution's component systems and services.

# The common solution will be aligned with the other lines of business (i.e. Grants Management and Human Resources Management). 

# This common solution is based on architectural principles and frameworks.

# This common solution will provide the same or exceed the level of service & system functionality that is currently available to federal agencies (i.e. the centers of excellence). 

# This solution allows for E-Gov interoperability, portability, flexibility, and can scale based on the size of the agency.

# All FM LOB goals are addressed.

# Standardization of Data and Processes is imperative and will receive adequate attention. 

## Issues / Risks

There are several issues and risks to the common solution that have been
identified. The FM LOB expects to identify further issues and risks as
the common solution is defined at a more granular level. The current
list applies to the common solution for FM LOB rather than a generic
government-wide transformation and addresses a preliminary mitigation
strategy.

  ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
  **[Date                     **[Area of            **[Description]{.underline}**   **[Probability of           **[Potential            **[Strategy for             **[Current Status as of
  Identified]{.underline}**   Risk]{.underline}**                                   Occurrence]{.underline}**   Impact]{.underline}**   Mitigation]{.underline}**   date of the
                                                                                                                                                                    exhibit]{.underline}**
  --------------------------- --------------------- ------------------------------- --------------------------- ----------------------- --------------------------- ------------------------
  4-Jun-04                    Business              Agencies have unique            High                        High                    Include as many agencies as The detailed risk
                                                    requirements for financial                                                          possible during the         assessment will be
                                                    management                                                                          business case and           developed at a later
                                                                                                                                        requirements definition     date during the business
                                                                                                                                        phases. Ensure effective    case process.
                                                                                                                                        communication throughout    
                                                                                                                                        requirements definition,    
                                                                                                                                        acquisition, and            
                                                                                                                                        implementation phases.      

  20-Jun-04                   Business              Noncompliance with              High                        Medium                  Through government-wide     The detailed risk
                                                    government-wide financial                                                           efforts, business process   assessment will be
                                                    management standardization                                                          standards will be developed developed at a later
                                                    efforts (i.e. standard general                                                      to facilitate the move      date during the business
                                                    ledger deviations are                                                               towards a shared services   case process.
                                                    persistent across the                                                               model.                      
                                                    government)                                                                                                     

  20-Jun-04                   Business              Readiness of private sector     Medium                      High                    Gartner Group study will    The detailed risk
                                                                                                                                        cite potential              assessment will be
                                                                                                                                        cross-servicing providers   developed at a later
                                                                                                                                                                    date during the business
                                                                                                                                                                    case process.

  4-Jun-04                    Capability to manage  Adequate governance process is  High                        Medium                  A governance process        The detailed risk
                              the investment        in place to manage the FM LOB                                                       including OMB as the        assessment will be
                                                                                                                                        executive sponsor has been  developed at a later
                                                                                                                                        established.                date during the business
                                                                                                                                                                    case process.

  20-Jun-04                   Capability to manage  Protection of vital agency      Medium                      Medium                  Depending on the mix of     The detailed risk
                              the investment        resources, risks, & interests                                                       services in the common      assessment will be
                                                    post-migration                                                                      solution, agencies would    developed at a later
                                                                                                                                        maintain a federal presence date during the business
                                                                                                                                        at the service centers      case process.
                                                                                                                                        where appropriate. The      
                                                                                                                                        governance structure will   
                                                                                                                                        ensure that the agencies    
                                                                                                                                        will have a managerial role 
                                                                                                                                        in the centers of           
                                                                                                                                        excellence. Additionally,   
                                                                                                                                        service level agreements    
                                                                                                                                        will be developed that will 
                                                                                                                                        allow agencies to oversee   
                                                                                                                                        their financial activities  
                                                                                                                                        at the service centers.     

  4-Jun-04                    Data/Info             Agency financial information is High                        Medium                  Common business processes   The detailed risk
                                                    in multiple formats                                                                 and data elements are being assessment will be
                                                                                                                                        defined by the              developed at a later
                                                                                                                                        cross-government working    date during the business
                                                                                                                                        groups. Solution will be    case process.
                                                                                                                                        compliant with all Federal  
                                                                                                                                        Enterprise Architecture     
                                                                                                                                        standards.                  

  4-Jun-04                    Dependencies &        Missed opportunities to include Medium                      Medium                  Most of the RFI responses   The detailed risk
                              Interoperability      e-government initiatives                                                            did not address             assessment will be
                                                                                                                                        e-government (E-Gov)        developed at a later
                                                                                                                                        interoperability. This      date during the business
                                                                                                                                        initiative must take        case process.
                                                                                                                                        advantage of efforts in the 
                                                                                                                                        E-Gov arena where           
                                                                                                                                        initiatives are already     
                                                                                                                                        underway to provide common  
                                                                                                                                        solutions to government     
                                                                                                                                        needs. In fact, there will  
                                                                                                                                        be requirements to          
                                                                                                                                        integrate with E-Gov, e.g., 
                                                                                                                                        a common vendor file for    
                                                                                                                                        purchases and payments,     
                                                                                                                                        intra-governmental          
                                                                                                                                        transactions processing,    
                                                                                                                                        etc.                        

  4-Jun-04                    Feasibility           The likelihood that this        Medium                      High                    Engage all agencies during  The detailed risk
                                                    project can not be accomplished                                                     the planning and            assessment will be
                                                    technically                                                                         implementation of the       developed at a later
                                                                                                                                        program to ensure agency    date during the business
                                                                                                                                        requirements are met.       case process.
                                                                                                                                        Engage both private and     
                                                                                                                                        public industry in the      
                                                                                                                                        technical solution. Develop 
                                                                                                                                        and apply extensive testing 
                                                                                                                                        requirements and            
                                                                                                                                        verification.               

  4-Jun-04                    Feasibility           The likelihood that this        Medium                      High                    Engage all agencies during  The detailed risk
                                                    project can not be accomplished                                                     the planning and            assessment will be
                                                    politically                                                                         implementation of the       developed at a later
                                                                                                                                        program. Executive support  date during the business
                                                                                                                                        from OMB and other          case process.
                                                                                                                                        executive-level leaders     
                                                                                                                                        will help solve the         
                                                                                                                                        political issues. Develop   
                                                                                                                                        and apply extensive         
                                                                                                                                        cultural change strategies. 

  4-Jun-04                    Initial costs         Lack of funding                 High                        High                    OMB is solidly behind this  The detailed risk
                                                                                                                                        effort and will redirect    assessment will be
                                                                                                                                        the necessary funds to      developed at a later
                                                                                                                                        ensure its success          date during the business
                                                                                                                                                                    case process.

  4-Jun-04                    Life-cycle costs      Lack of full funding for each   High                        High                    OMB is solidly behind this  The detailed risk
                                                    project segment                                                                     effort and will redirect    assessment will be
                                                                                                                                        the necessary funds to      developed at a later
                                                                                                                                        ensure its success          date during the business
                                                                                                                                                                    case process.

  4-Jun-04                    Organizational and    Resistance to change            High                        High                    The biggest single obstacle The detailed risk
                              Change Management                                                                                         to the successful           assessment will be
                                                                                                                                        completion of the project   developed at a later
                                                                                                                                        is resistance to change. A  date during the business
                                                                                                                                        detailed, structured        case process.
                                                                                                                                        approach to change          
                                                                                                                                        management must be          
                                                                                                                                        developed. Contractors and  
                                                                                                                                        Federal agencies currently  
                                                                                                                                        in the process of           
                                                                                                                                        modernizing their FM        
                                                                                                                                        systems should be utilized  
                                                                                                                                        as they are familiar with   
                                                                                                                                        large-scale change          
                                                                                                                                        management practices and    
                                                                                                                                        can provide valuable        
                                                                                                                                        "lessons learned".          

  20-Jun-04                   Organizational and    Inability to address Union      Medium                      High                    Maintain interaction and    The detailed risk
                              Change Management     concerns                                                                            involvement with key union  assessment will be
                                                                                                                                        groups.                     developed at a later
                                                                                                                                                                    date during the business
                                                                                                                                                                    case process.

  20-Jun-04                   Organizational and    Agencies may be unwilling to    High                        High                    Agencies that migrate early The detailed risk
                              Change Management     migrate to the common solution                                                      in the process will be      assessment will be
                                                                                                                                        given the necessary         developed at a later
                                                                                                                                        resources to ramp up        date during the business
                                                                                                                                        quickly and will be given   case process.
                                                                                                                                        early adopter incentives.   
                                                                                                                                        Develop a migration         
                                                                                                                                        strategy that is validated  
                                                                                                                                        through the FM LOB          
                                                                                                                                        governance process and      
                                                                                                                                        approved by other agencies  
                                                                                                                                        and OMB. Ensure active OMB  
                                                                                                                                        participation throughout    
                                                                                                                                        the process.                

  20-Jun-04                   Organizational and    Non-FM LOB agency members may   High                        Medium                  All agencies are being      The detailed risk
                              Change Management     be adversely affected because                                                       encouraged to participate   assessment will be
                                                    they were not part of the                                                           in the FM LOB process as    developed at a later
                                                    definition process.                                                                 either partners or          date during the business
                                                                                                                                        ex-officio members.         case process.
                                                                                                                                        Communicate results with    
                                                                                                                                        cross-government councils   
                                                                                                                                        such as the President\'s    
                                                                                                                                        Management Council, Chief   
                                                                                                                                        Financial Officers Council, 
                                                                                                                                        Chief Information Officers  
                                                                                                                                        Council, etc.               

  4-Jun-04                    Overall risk of       Odds that the project will not  Low                         Medium                  Maintain strong             The detailed risk
                              investment failure    meet success criteria                                                               cross-government working    assessment will be
                                                                                                                                        groups throughout the       developed at a later
                                                                                                                                        process and ensure timely   date during the business
                                                                                                                                        and consistent              case process.
                                                                                                                                        communication to all        
                                                                                                                                        federal agencies. Leverage  
                                                                                                                                        best practices from current 
                                                                                                                                        E-Gov initiatives.          

  4-Jun-04                    Privacy               System information that is      High                        Medium                  Apply strong design and     The detailed risk
                                                    unprotected                                                                         testing procedures.         assessment will be
                                                                                                                                        Complete a Privacy Impact   developed at a later
                                                                                                                                        Assessment (PIA).           date during the business
                                                                                                                                                                    case process.

  4-Jun-04                    Project Resources     Insufficient government human   High                        Medium                  This is a very large        The detailed risk
                                                    capital                                                                             transformational effort and assessment will be
                                                                                                                                        will require government     developed at a later
                                                                                                                                        resources. Contractors can  date during the business
                                                                                                                                        be hired to provide support case process.
                                                                                                                                        such as system integrators, 
                                                                                                                                        but each agency must        
                                                                                                                                        provide some dedicated      
                                                                                                                                        resources to manage the     
                                                                                                                                        project.                    

  20-Jun-04                   Project Resources     The aging federal government    High                        Medium                  The common solution itself  The detailed risk
                                                    workforce and attrition within                                                      minimizes this risk. The    assessment will be
                                                    the federal government causes                                                       \'economies of skill\' that developed at a later
                                                    loss of institutional knowledge                                                     the common solution creates date during the business
                                                    within agencies                                                                     minimizes this risk as it   case process.
                                                                                                                                        allows for portability of   
                                                                                                                                        financial management        
                                                                                                                                        resources across the        
                                                                                                                                        federal government.         

  4-Jun-04                    Reliability of system Insufficient System Performance Medium                      Medium                  Reliability of the          The detailed risk
                                                                                                                                        service-center providers    assessment will be
                                                                                                                                        must not be in question. As developed at a later
                                                                                                                                        new agencies are migrated   date during the business
                                                                                                                                        to existing centers,        case process.
                                                                                                                                        hardware and software must  
                                                                                                                                        be upgraded to handle the   
                                                                                                                                        added volume. Response time 
                                                                                                                                        issues must be alleviated.  

  4-Jun-04                    Risk of monopoly      Potential limits on future      Medium                      Medium                  Following JFMIP             The detailed risk
                                                    procurements of software or                                                         requirements limits the     assessment will be
                                                    hardware                                                                            procurement to six systems  developed at a later
                                                                                                                                        for core functionality. The date during the business
                                                                                                                                        team plans to allow         case process.
                                                                                                                                        multiple solutions to be a  
                                                                                                                                        part of the common solution 
                                                                                                                                        based on their compliance   
                                                                                                                                        with the target business    
                                                                                                                                        processes. Ensure that      
                                                                                                                                        niche companies where       
                                                                                                                                        feasible and practical have 
                                                                                                                                        a chance to compete for     
                                                                                                                                        parts of the common         
                                                                                                                                        solution (i.e. technical    
                                                                                                                                        components and/or           
                                                                                                                                        implementation components). 
                                                                                                                                        The common solution is      
                                                                                                                                        providing an a la carte     
                                                                                                                                        solution for selecting      
                                                                                                                                        financial services (i.e.    
                                                                                                                                        reporting, etc.). This a la 
                                                                                                                                        carte solution allows niche 
                                                                                                                                        companies to be a provider. 

  20-Jun-04                   Risk of monopoly      Private Sector mergers and      Medium                      Medium                  Work with JFMIP and other   The detailed risk
                                                    increasing federal standards                                                        standards boards to ensure  assessment will be
                                                    may create a monopoly or                                                            vendors are able to meet    developed at a later
                                                    oligopoly situation                                                                 standardization             date during the business
                                                                                                                                        requirements and the shared case process.
                                                                                                                                        services operating model.\  
                                                                                                                                        \                           
                                                                                                                                        Through financial services  
                                                                                                                                        procurements, make sure     
                                                                                                                                        that several providers are  
                                                                                                                                        able to compete both from   
                                                                                                                                        an IT hosting and a         
                                                                                                                                        financial services          
                                                                                                                                        perspective.                

  4-Jun-04                    Schedule              Schedule slippage               High                        Medium                  Apply a phased              The detailed risk
                                                                                                                                        implementation approach;    assessment will be
                                                                                                                                        maintain effective project  developed at a later
                                                                                                                                        management practices.       date during the business
                                                                                                                                        Finish a realistic          case process.
                                                                                                                                        transition plan including   
                                                                                                                                        training and testing. Work  
                                                                                                                                        closely with OMB during the 
                                                                                                                                        implementation and          
                                                                                                                                        migration phases to manage  
                                                                                                                                        the agency migration        
                                                                                                                                        process. Escalate issues to 
                                                                                                                                        the FM LOB PMO and/or OMB   
                                                                                                                                        in a timely manner.         

  4-Jun-04                    Security              Safeguarding and securing core  High                        Medium                  Implement multi-layered     The detailed risk
                                                    financial management                                                                security strategy and audit assessment will be
                                                    information. Protect against                                                        its effectiveness, and      developed at a later
                                                    inappropriate use of or access                                                      obtain certification before date during the business
                                                    to the system. The following                                                        operation commences.        case process.
                                                    aspects of security are                                                                                         
                                                    critical for this area of risk:                                                                                 
                                                    reliability of system,                                                                                          
                                                    confidentiality, and                                                                                            
                                                    reliability.                                                                                                    

  4-Jun-04                    Strategic             Alignment with Administration   Low                         Medium                  Ensure alliance with LOB    The detailed risk
                                                    policy                                                                              goals throughout the FM LOB assessment will be
                                                                                                                                        process                     developed at a later
                                                                                                                                                                    date during the business
                                                                                                                                                                    case process.

  20-Jun-04                   Surety                Inability of service center to  Medium                      High                    Ensure that backup and      The detailed risk
                                                    develop and execute the coop                                                        recovery plans are          assessment will be
                                                    plan (i.e. recovery)                                                                developed and approved by   developed at a later
                                                                                                                                        the agencies prior to       date during the business
                                                                                                                                        migration to the service    case process.
                                                                                                                                        centers. Provide            
                                                                                                                                        contractual measures to     
                                                                                                                                        ensure the service center   
                                                                                                                                        can perform these duties.   
                                                                                                                                        Complete a full backup and  
                                                                                                                                        recovery test prior to      
                                                                                                                                        service center              
                                                                                                                                        certification.              

  4-Jun-04                    Technology            Service providers merge or are  Medium                      Medium                  Ensure that the contracts   The detailed risk
                                                    acquired by another company                                                         protect the investment in   assessment will be
                                                                                                                                        the case of a merger or     developed at a later
                                                                                                                                        acquisition.                date during the business
                                                                                                                                                                    case process.
  ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Implementation

## Implementation Approach & Timeline

The overall implementation approach and migration strategy ensures that
any agency that is planning to purchase a new financial management
system or planning a significant upgrade to an existing system in FY05
and beyond would instead be directed to the common solution. This
approach will be the defining principle for developing the
implementation timeline, but we are too early in the process to develop
exact timelines for implementation -- not enough is known at this point.
A generalized estimate can be made once the business case is completed.
As part of the migration plan, a study will need to be conducted to
determine how many FM systems each agency supports. This is not a
one-to-one migration. Some of the larger agencies, even mid-sized
agencies have multiple FM systems within their own agency. Each of these
internal agency FM systems and the core FM services provided would need
to be addressed, either with an initial consolidation within the agency
or multiple migration paths to the service provider. Implementation
details will be further defined in the FM LOB business case.

## Estimated Costs

The FM LOB will quantify estimated costs for the common solution for all
phases from implementation through the end of the life-cycle during the
business case process. Various RFI responses will be referenced where
applicable.

The common solution will address the various funding mechanisms that
agencies -- such as GSA -- will cling to as unique and therefore not
capable of supporting a migration to the shared service center. There
may need to be a service provider that addresses "specialized"
authorities like revolving funds, GSA's IT Fund, Working Capital Fund,
etc. The common solution for FM could adopt EREP implementations
substantially underway or already in place by suggesting moving to
service providers that are product oriented -- proving software
strengths that embrace different funding mechanisms.

#  {#section-2 .unnumbered}