Public Sector Governance and Accountability Series: Budgeting and ...

336 Stephen B. Peterson
developing countries and seven to nine years in Africa (Dorotinsky 2003). It is
frequently claimed that OTS IFMISs can be rapidly introduced, especially if
little or no customization is to be undertaken. However, these claims do
not appear justified in most developing countries. Of the four major stages
in an automation reform—procurement, design, implementation, and
handover—the first and last seem to have the most risk for OTS IFMISs. An
IFMIS, especially a high-end OTS solution, is a complex and costly project
and involves a lengthy procurement process that can take several years. 20 If
customization is limited, the design phase can be relatively rapid, but as a
consequence, the implementation schedule is extended because procedures
need to be rewritten and staff must be retrained. At the other end of the
process, handover seems to have been neglected, and it takes considerably
longer with an OTS IFMIS, if it occurs at all. Such systems are proprietary,
and contractors are often unwilling to give up source code to the government.
The complexity of the systems exceeds the capacity of most governments
and local computer firms to manage.
The virtue of an iterative approach is that it continuously develops an
operational system. Risk is lower because disruptions of daily operations are
limited and continuous improvements can be verified.
Budget
When asked why his government did not procure an elaborate OTS IFMIS,
a senior government official from a Mexican state recently remarked, “We
could not afford one so we built a custom system.” 21 Without concessionary
foreign aid, most developing countries would also be faced with a hard
budget constraint for their automation projects and would have to adopt a
low-cost solution. The absence of a hard budget constraint means that the
scope is excessive and that overruns in budget and schedule are tolerated.
Effective project management is undermined, which leads to overly complex
designs that fail or underperform.
Why are these systems typically so expensive, and why do they often
overrun their generous budgets? Failure to contain scope leads to costly customization
and long time frames. Information systems specialists command
high salaries, and contractor management fees are based on multiples of
these salaries. The applications are expensive, and vendors are moving to
new pricing mechanisms that escalate costs (for example, license fee per user
rather than blanket site licenses). Contractors often have links to application
vendors, which means that low-cost options are not adopted (Parry 2005).
Frequent upgrades of OTS IFMISs, which are marketed as a virtue in keeping