# **SYSTEM IMPLEMENTATION**

# **_Finding 9: Taking a phased approach in FMIS implementation is an important factor of success. Fundamental modules necessary for budget execution and reporting should be prioritized._**

3.37 **Budget execution is central to the information architecture.** Although each system in the information architecture performs important functions in a government’s financial management process, the collection of modules that provides support to budget execution, accounting, cash management, and fiscal reporting (known as the budget execution or the treasury system) are regarded as the core elements of this architecture, considering their central place in the government’s financial management cycle (see World Bank 1998, Dorotinsky 2003, Hove 2010, or Hashim 2014 on definition). These systems are the centerpiece of the government financial management systems network and are used to conduct the budget execution process and monitor and evaluate overall budget implementation. They are the primary repository for financial data that are the basis of government financial management. The systems include information on resource levels expected to be available during the year and how to allocate these resources as the macroeconomic forecasting and budget preparation systems specify, and the balances available for use at a given time during the fiscal year. Other systems, such as fixed asset management, debt management, tax and customs administration, payroll, and pensions systems, though of vital importance to government financial management, support the core system by maintaining detailed data related to specific areas and providing these data to the core according to specified requirements for timeliness and detail.

3.38 **FMIS projects are more effective if implemented in phases.**<sup>**39**</sup> The Mongolia ICR notes that “expectations must be adapted to appropriate pace, sequencing and sophistication of the reforms. Basics should be considered a priority before more sophisticated reforms are attempted. If they take longer than envisaged, then the introduction of the sophisticated reforms should be delayed.” As such it is essential to implement modules catering to core budget execution processes first to achieve significant progress on budgetary control and cash management early in a project. For practical system implementation, it is crucial to sequence and develop various system elements in a modular way. Systems sequencing is vital for a successful implementation program. Simultaneously implementing all systems modules is in most cases neither practical nor required and instead likely to overstretch client capacity. After the initial

> 39 Combaz (2015) notes that “there is a consensus in the literature and among contributing experts that sequencing implementation is crucial to avoid the high risks associated with implementing too many components at once.” This finding is also corroborated by World Bank project documentation for FMIS operations in Afghanistan, Azerbaijan, Bangladesh, Chile, Colombia, Ghana, Honduras, Kazakhstan, Mongolia, Nicaragua, Pakistan, Sierra Leone, Russia Somalia, Tajikistan, Ukraine, and Zambia.

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