federal ministry of Science and Research

The Problem

Ineffective budgeting processes within the Austrian Federal Ministry of Science and Research (FMSR) and a complete reversal of the legal framework necessitated the implementation of a Budget Information System (BIS) for a better management of the ministry’s approx. 3.7 billion euros. Before the start of the project, aspects like the demands for new ways of thinking, transparency, a smart solution in a hostile economic climate and for democratization of knowledge were identified.
The reform of the legal framework included the need to plan budgets four years in advance, and it completely changed the technical structure of the budget to a much less stringent system, so that for being able to keep full control of the ministry’s finances, a new approach for managing the budgets had to be found. The old way of budgeting, using simple Excel-spread sheets or plain emails was not able to cope with the coming challenges.
There was a lack of knowledge in several ministerial departments concerning legal, technical and organizational proceedings about budgeting, accounting and clearing; there were neither standardized control processes nor standardized forecasting methods, supporting the management with valuable information. Due to the legal necessity of operating with line items and accounts in budgeting and clearing, a lot of relevant information for comprehensive steering was lost or hidden behind a secretive technical budget structure, which only a handful of experts was able to handle by making the use of budgets for controlling the ministry unnecessarily difficult.
Due to the lack of standardization in the sphere of budgetary planning, there were lots of negotiations and adjustments to finalize the budgets. Because neither a standardized controlling nor forecasting were implemented, the distribution of resources during the year was less than perfect, leading to shortages on the one hand and unnecessarily tied-up resources on the other hand. Furthermore, as a standardized reporting was not implemented, many budgetary decisions were often based on ad-hoc analysis or even without a valid database, which made a comprehensive steering of the organization harder.
Furthermore, in many cases there was no zero based budgeting, which tempted people to just continue the budgets from previous years without going through the pains of a profound task review. Finally, budgetary planning was very short-sighted, focussing only on the following year, which showed up in massive decreased planning security on the longer term.

Solution and Key Benefits

 What is the initiative about? (the solution)
The BIS implementation pursued five main goals to support the ministry’s activities to meet upcoming challenges.
1st: Introducing a transparent and standardized budgeting process to provide a higher planning quality: The implementation of the BIS aimed to realize an efficient, standardized and sustainable budgeting process, which is adaptable to future changes. This way, it was created in a simple way for all specialists departments and the budget department to speed up the budgetary planning and to make the hitherto necessary numberless rounds of adjustments obsolete. Furthermore, to allow an annual review of the provided tasks or services, there should be zero-base budgeting by prohibiting updates of the previous year’s budgets.
2nd: Introducing a business performance management system as a precondition for efficient and transparent accounting: BIS should make it possible to ensure the accuracy of budgeting and to provide cost and activity accounting as well as centralized data storage. Having this, the quality and accuracy of data improved enormously, making the budget allocation during the year much better for the sake of many stakeholders in Austria’s scientific environment, shifting money from lagging projects to thriving ones.
3rd: Introducing newly acquired knowledge: To improve the quality of the budget, the department’s as well as the specialty department’s expertise on projects should be united. This decentralized budget planning causes a sense of identification with the budget and results in a strengthened self-management. For this action, the collaboration of all people involved is required and at the same time, knowledge is exchanged and transferred to a big extent which strengthens the intra-organizational knowledge and removes isolated knowledge silos. This empowers the whole organization to manage budgets better.
4th: Introducing a basis for high-quality budgeting and efficient budget planning: With this standardized and transparent process privy purses of Directorate Generals should be eliminated. This idea aims at a higher efficiency by means of a centralized treasury and supervision. A democratized and comprehensible budgeting, in which all ministerial departments are involved, should be possible, benefitting either the specialists departments as the improved transparency makes visible performance and achievements , and the management by heightening the transparency on the proceedings in their scope. Thus the public administration should be more independent from the discretionary power of politics.
5th: Introducing a framework for the Austrian Federal Budget Reform (AFBR): The AFBR requires a 4-year medium-term expenditure framework and consequently requires the implementation of a system of performance-based and outcome-oriented budgeting by 2013. Hence, the implementation of the BIS should support performance-based budgeting in an efficient and comprehensible manner, fitting for the first time programmes, projects etc. together with monetary values, making the tracking of cost-drivers and value-bringers easier in a transparent and sustainable way.
Although the project is a completely internal affair, massive gains can be made by the whole science- and research community in Austria.

Actors and Stakeholders

 Who proposed the solution, who implemented it and who were the stakeholders?
The urgent need was identified primarily by the Budget Department of the FMSR, as of all threads converge in budgetary matters, and the different needs were channeled. The solution was designed by the Budget Department and supported by the ministry’s management. The implementation “in-house” involved, the budget department and the IT department and a second budget and legal department. Most of the technical implementation was carried out by external experts.
Concerning the involved stakeholders, there must be a separation between the internal and external stakeholders of the ministry. Externals have the benefit of a much better allocation of budgets and more flexibility inside the ministry. The internals are the specialists departments, who get more security in their planning and are able to show their accomplishments in a much more transparent way. Furthermore the ministry’s management, which for the first time gains perfect oversight over the ministry’s performance in budgetary matters and finally the budget department itself, which is able to benefit from improved data quality and availability, making the hitherto often difficult process of allocating budgets before and during fiscal years much more precise.

(a) Strategies

 Describe how and when the initiative was implemented by answering these questions
 a.      What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
The implementation of the BIS represents a revolutionary approach within the Austrian public sector as the FMSR established a state-of-the-art standard software system, which allows a transparent, consistent and efficient high quality budget planning. This was done by the integration of all relevant stakeholders (budget department, management, IT department, department for legal and budget issues of Directorate General II) into the project.
To guarantee a wise use of the public funds, the BIS implementation used PRINCE2, an international high-quality project management approach. This method supports a structured realization of the entire project.
During the implementation of the BIS the project management team put great emphasis on a resource-saving compliance. This was conveyed by the use of modern technologies and methods, e.g. MS Share Point, Remote Desktop Connections or Rapid Prototyping. Before the final implementation, a friendly user run together with the IT department took place to reduce failure costs by non-working functionalities. Immediately afterwards, a feedback-loop took place and useful tips and results were considered in the final solution. There was a second feedback-loop subsequent to a key user training session during which the users planned a budget by applying the newly implemented budgeting process.
There were several success factors for the implementation. First of all, at an early project stage, the involvement of the whole IT department as well as key users of the BIS helped to design a novel system, which totally supports the needs of the ministry. The FMSR was able to increase in-house knowledge as well as maintain and adapt the BIS for the future.
A further success factor of the project was the Proof of Concept (PoC) before the project had started. Two suppliers were invited to hand in a PoC. The covering of functionalities of planning and reporting, the availability of qualified support for the technical implementation in Austria, a positioning on the Austrian market for public sector solutions in the long run together with a long-term product strategy and existing contracts with the “Federal Procurement Agency) were responsible for the limitation of suppliers. After the PoC the project management team accepted the bid of SAP AG. In addition to the criteria catalogue, the decision was made on the basis of the following aspects: the already available SAP systems, the perfect usability and, finally, the existing knowledge about SAP handling within the ministry. Hence, a system was chosen which allows a wise use of resources with respect to dwindling budgets and uses the existent knowledge. Furthermore, a Data Warehouse (DWH) was set-up and a test and productive system was installed.
To sum up, the BIS implementation excels in its structured and systematic project execution, supported by an open communication strategy and a profound, collaborative solution deviation.

(b) Implementation

 b.      What were the key development and implementation steps and the chronology? No more than 500 words
Early in 2009 the idea was born by the head of the budget department to bring up a completely new system, which was in a first step only considered to be a help for budgetary planning. This was approved by the Federal Minister for Science and Research in April 2009, which triggered the work on the definition of the processes and the technical environment immediately. After an analysis of the software market, two relevant software developers were identified to meet the needs of the new system and were invited to provide a proof of concept (PoC) based on predefined technical specifications. The PoCs were provided during June 2009, followed by the acceptance of the SAP solution in July 2009 and the order for licenses and consulting in August 2009.
The concrete development of the software started after the setting up of the technical environment by the beginning of 2010, with several workshops held to develop the software, fine-tune the processes and integrate new requirements into the conceptual framework.
By 1st of October 2010 a first friendly user test was held, identifying open issues and potential failures and creating first experiences of how users would react and interact with the new system. The initial planning with real data was held after a two week short but intense phase of end-user training, resulting in the first round of planning starting with October 25th 2010.
The reporting of planned data was activated immediately afterwards, however the second stage of reporting (including actual data was set live with 1st of February 2011, as no data on actuals in the granularity of budget components was available before this date.
Nearly one year after the introduction of the BIS, in November 2011 an analysis of user’s satisfaction was carried out, collecting feedbacks, ideas and criticisms throughout the ministry. As the project has been designed to facilitate further developments, completely new elements including controlling and forecasting are going to be implemented into the system by 2012.

(c) Overcoming Obstacles

 c.      What were the main obstacles encountered? How were they overcome? No more than 500 words
It was obvious right from the start that the most challenging issue concerning risks or obstacles was the intra-organizational acceptance of the project. Projects that touch many core processes and responsibilities are often subject to refusal or even entire disapproval, so the FMSR was always conscious to have both the support from the management (comprised of the minister and the head of Directorate General and to communicate the plans to the specialist departments, e.g. via an official kick-off event. Furthermore the project team was tirelessly emphasizing the advantages that were brought to the specialist departments, such as the transparency and the user friendly software implemented.
The second major risk was, that the project could turn out to be too complex to handle. As it was always intended to have a smart, lean project that can be operated and administrated by the budget department, the various designs were always very carefully implemented to reduce unnecessary features on the one hand and keep the information flow from external consultants to the FMSR as steady as possible.
The third major risk was security for investment. As the FMSR was investing substantial amounts into software, it insisted on guarantees, that SAP would continue offering services and even develop the software further. All SAP roadmaps showed the strategic relevance of the software to the company and guaranteed security of investments to the FMSR..
Another challenge was that the re-design of the budgeting process. A new and complex process with the help of five steps representing a ground-breaking top-down and bottom-up approach was implemented. The process consists of: the creation of the budget component, a comparison to budget allowance, the adjustment of planning, the budget approval, and a reporting and controlling. According to the bottom-up approach the specialty departments in every Directorate General start the budget planning with the creation of budget components. Then a certain amount of money is allocated to each budget component.
With the top-down approach, the defined budget components are compared to the budget allowance. Since an exceedance of the budget allowance is prohibited by the system, an adjustment of planning is necessary and oversized projects plans need re-calculation.
To sum up, the standardized, consistent and repeatable budgeting process with a collaborative bottom-up and top-down decision making is unique within the Austrian public sector and positions the FMSR as a pioneer in high-quality budget planning.

(d) Use of Resources

 d.      What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
The goal was to have a concise, streamlined project with an efficient working project team. This was realized by a little core-team of motivated specialists rather than a big number of team members coming from the whole organization. However, a serious effort was made to get the most important stakeholders of the budgetary processes as well as the members of the IT on board as soon as possible to ensure a smooth and unproblematic course of the project process. A high commitment from the ministry’s management underlining the strategic importance of the project was very helpful in activating all resources necessary and keeping the core team’s motivation on a high level.
To sum up the inputs, an investment of about 60 man-days by the software-producer, 80 man-days by a consulting firm (which also implemented the data-warehouse) and 100 man-days by members of the organization were made to get the project running.
This input is bound to have a payback period of a reasonable time-span, as the planning of the budgets is now often done with a few mouse-clicks, making time-killing rounds of adjustments unnecessary.
Furthermore, 4 servers (two for development, two for production) were set up (in a completely virtualized environment) and software licences for 100 users had to be bought.
Listing measurable, quantifiable results of the project is a big challenge as there are so many outcomes. However, some of these mainly qualitative key benefits of the project are:
improved organization, increased budget quality, increased knowledge, modern technologies in use and ensured sustainability.
To ensure an efficient use of public money, a PITAF (Public IT Assessment Framework) analysis was made. PITAF is a standardized, science-based evaluation of public IT investments and provides an ex-ante and ex-post analysis of IT benefits. The ex-ante analysis, which was made before the project kick-off, will be compared to the ex-post results two years after the implementation and shall show the success of the BIS due to several key performance indicators. According to the PITAF-analysis the key benefits within the BIS-project are practicability of information, abidance by the law, internal communication, quality of instructions and quality of decisions.

Sustainability and Transferability

  Is the initiative sustainable and transferable?
Due to the high flexibility of the solution (budget components may be defined completely according to one’s needs), a transfer into other sectors, ministries or agencies can be done without adoptions, and there has indeed been a high rate of interest by other ministries in the system.
As the main carrier of all the processes, the budget components, are completely flexible to handle, they can be used in every kind of environment – from depicting scientific projects to assets management, man-day-planning or personnel costs, they can be utilized for almost everything. The high flexibility of the frontend (simple Excel-Sheets) allows an easy adoption to individual needs without massive programming.
The concept of sustainability is based on transparency, a standardized budgeting process and intra-organizational learning. Transparency within the budget process is achieved by budget components. These innovative features allow a detailed representation of the budget, as the person responsible for each budget component is known and the history of origins is comprehensible throughout the planning process. These aspects enable a business performance management and guarantee transparency.
The novel standardized budgeting process ensures that the budgeting within the ministry follows the same procedures and is traceable each year. The budgeting process combines an innovative top-down and bottom-up approach. Therefore the final budgeting can be seen as a decision negotiated and agreed upon by the specialty departments and the Directorate General. With the expert knowledge within the specialty departments the resources are precisely allocated to the right place. This makes an outcome-oriented budgeting possible with a bigger benefit for the citizens in the long run.
Budgeting now requires and supports an open communication of all people involved fulfilling the requirements of the top-down and bottom-up approach. This enhances intra-organizational learning not only about the project itself but beyond that and, in the long run, will enable the FMSR to create a common organizational knowledge. Therefore the project team puts great emphasis on the employees´ training during the project in order to achieve an added value for the ministry and to make in-house maintenance possible for the future.
As the BIS is based on a standard solution of an international vendor this ground-breaking system is applicable not only within Austria´s public sector but also to other European countries by adapting local frameworks and complying legal conditions.
Organizationally, responsibility for budgets was regularized with clear and concise processes, and embedded institutionally. Budgeting now requires and supports an open communication of all people involved fulfilling the requirements of the top-down and bottom-up approach, completely done in one system. This enhances intra-organizational learning not only about the project itself but beyond that and, in the long run, will enable the FMSR to create a common organizational knowledge. Therefore the project team put great emphasis on the employees´ training during the project in order to achieve an added value for the ministry and to make in-house maintenance possible for the future.

Lessons Learned

 What are the impact of your initiative and the lessons learned?
Summing up, the most important impact was a more precise, concise budgetary planning, an improved distribution of resources during the year via controlling and forecasting resulting in the reduction of unnecessarily tied-up money and an optimized allocation of resources in the extremely important policy of science and research.
Another impact was the creation of a better understanding of budgetary processes and much better knowledge about budgetary data (planning, controlling, forecasting), including a standardized reporting for all levels of hierarchy. Given this, the quality of the budget management of the approx. 3.7 billion euros that the ministry administrates has been raised to levels unseen before, ensuring the best use of the possible resources.
Within the BIS-project factors for success were a high flexibility of software, an idea with regard to contents in budgeting, a coaching-oriented implementation to increase know-how-transfer, the commitment of leadership, the integration of all stakeholders and a very engaged team which is eager to learn.
Three main lessons learned can be identified when talking about the BIS project: First of all, make sure to have a small core team of people directly involved, ensuring a low-friction transfer of knowledge and making decision processes and adjustments fast and simple. It is also very helpful if the core users are convinced, that the project they are working on is very useful and worth trying to overcome upcoming resistance. Such persons are especially important as main drivers of a project.
Secondly, define a clear problem, and a clear idea how you want to solve the problem. It is important to know right from the start (that is, before you look at the software market etc.) to know the methodology you want to implement, and how those methods are assigned to solve your problem. And finally: Communicate, communicate and communicate. As such a project touches many core processes, it is important to address fears and doubts openly to get the rest of your organization on board as frictionless as possible.

Contact Information

Institution Name:   federal ministry of Science and Research
Institution Type:   Government Department  
Contact Person:   philipp otto
Title:   referatsleiter  
Telephone/ Fax:   (+43) 01/53120-9311
Institution's / Project's Website:
Address:   Teinfaltstraße 8
Postal Code:   1014
City:   Vienna
State/Province:   Vienna
Country:   Austria

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