Cashless Payment for Military Service and Basic and Voluntary National Service in the Armed Forces
Armed Forces Personnel Agency
Austria

The Problem

Based on a decision of the Austrian Government the accounting/pay departments of all ministries were integrated into one Federal Accounting Agency on 1 January 2005. As of that moment the individual ministries have not had accounting/pay departments of their own any more. Subsequently, on 1 January 2006 a specific computer programme was introduced to do the accounting and transfer the payments of all federal civil servants. This application makes it possible to do the accounts and transfer the pay of employees with the same types of employment contracts, like the ones of tenured and contractual civil servants, within all federal ministries, however, not those of the Ministry of Defence, which is characterised by universal subscription and the possibility of voluntary national service, incurring manifold additional defence-based claims.
Therefore, a large part of payments to basic national service personnel and personnel doing service recalls of the Austrian Armed Forces needed to be continued to be carried out in cash. This required numerous and complicated administrational procedures: The required cash needed to be requested and fetched, sufficient change for exact payment had to be kept ready and accounted with the Federal Accounting Agency. The process of hiring new personnel involved comprehensive correspondence with social security underwriters, which had still to be done with the help of paper documents, in order to ensure the entitled service members would have a health insurance. The recipients of the payments had to queue in order to receive their payments and the person handing the money to the soldiers, for reasons of the peculiarities of military training, often needed to repeat the process several times, mostly even working in shifts, on weekends and on holidays, until all entitled personnel were given their money in time. Since some components of the payment, such as family support and/or living allowance or indemnification for lost earning incurred by the personnel during exercises, for which the Armed Forces Personnel Agency had been responsible already before, were done via money transfer, there were several paying authorities.
For soldiers participating in the large number of international operations of the Austrian Armed Forces effected within the framework of the United Nations, the European Union, NATO or the OSCE, yet invariably on the basis of a UN Security Council resolution, cashless payment could mostly be provided, however with serious restrictions: as the accounting system is a standard software, as described above, the particular conditions of serving in international operations could not be considered to a sufficient degree. Since the accounting system provides for only one payment date each month and requires a relatively long lead time, soldiers repeatedly had to wait until they were finally paid, while the period until then could be cushioned by way of a far-reaching advance payment system and extensive information right at the beginning of operations preparation.
The new solution was intended to implement up-to-date, cashless and automated payments for virtually all claims arising from defence-based employments. In addition, comprehensive electronic interfaces to our beneficiaries and external partners as well as to a modern, dual system of document delivery were to be introduced. This was to improve the contentment of clients and employees alike.
This was the starting situation in effect for all entitled basic and voluntary national service personnel and their families, external partners, such as the social security underwriters, but also the administrators of such payments and benefits within the Forces as well as political decision-makers and the top officials of the ministry.

Solution and Key Benefits

 What is the initiative about? (the solution)
By introducing Cashless Payment for Military Service and Basic and Voluntary National Service within the Austrian Armed Forces and by entrusting the Armed Forces Personnel Agency with effecting the payments by way of this application, a unified and comprehensive payment and accounting system for all entitled soldiers was created. The application reduces the administrative effort of all units and, thus, frees human resources for the original tasks of the troops. Instead of taking care of administrational procedures upon entering, as it was the case before, the bulk of administration now takes place already before basic or voluntary national service is initiated, providing for additional training periods during service itself. This means for international operations that the complicated advance payment system is eliminated altogether and that instruction on payment issues can be planned and held during operations preparation in a flexible way without time pressure. By implementing Cashless Payment, the responsibilities have been regulated in a flexible and clear way. It guarantees the beneficiaries and their families that they need to address only one authority which will take care of their concerns fast, competently and in a friendly manner and which will deal with their requests in an uncomplicated fashion. The clients are also offered electronic legal communication with the authority and, moreover, documents of the Personnel Agency as an authority are primarily delivered electronically by way of dual delivery: In this way, for example, the soldiers serving in international operations are automatically delivered a monthly statement of their payment to an indicated e-mail account. By streamlining procedures, the processing and the pass-through times could be lowered significantly, double-processing was avoided and processing errors were reduced. By relying on IT systems as much as possible, contrary to the accounting mainly by hand, as is it had been done before, media breaks are avoided and, by way of unified processes and documents, best-possible legal security for the clients is ensured. The new system assures great flexibility when it comes to accounting, because it is not bound by strictly designated payment dates. Accounting can be done at any moment, due additional payments are transferred immediately, payments made in excess or valid disciplinary fines are counted against existing claims.
Cashless Payment applies unified user interfaces already familiar from the existing personnel information systems. This is why handling the system is easy and relatively little training effort is required for the employees working with the system, which also contributes to their job satisfaction.
For external business partners, such as social security underwriters, a central point of contact has been installed and via the new, exclusively electronic interfaces, cases can be resolved in a fast and unbureaucratic manner. From the political point of view the reduced amount of material and personnel resources as well as an eminent positive defence-political contribution to the image of the Austrian Armed Forces were welcomed.
Every year, the Personnel Agency processes over 800,000 transactions for some 35,000 beneficiaries by way of Cashless Payment. Since the beginning of 1998 the Personnel Agency has been analysing their clients’ contentment with the performance of the authority and its employees in a systematic and comprehensive manner.

Actors and Stakeholders

 Who proposed the solution, who implemented it and who were the stakeholders?
For quite some time the Armed Forces Personnel Agency had wanted to introduce cashless and unified accounting and payment in compliance with the defence-related legal provisions, via a specific paying department within the Personnel Agency. In this way, the numerous advantages highlighted above were to be implemented for each and every group involved. Massive support was rendered by both the so-called Militia Workgroup, in which mostly people are active soldiers as a second-profession, and the respective division within the Ministry of Defence. The claims for a new and modern payment system were reinforced because of the complaints made time and again in the context with payments in cash. Parallel to this, a pilot project on Cashless Payment was started for soldiers on 1 January 2006. In the end, all these efforts culminated in the decision by the Minister of Defence in 2006 that the Personnel Agency was to introduce Cashless Payment for military personnel and basic and voluntary national service personnel as of 1 February 2007.
Immediately following the issuance of this task a project team, the core of which was made up of employees of the respective ministerial department, the project head from the field of information technology and technical implementation with his programmers responsible for the respective part of the application and three employees of the Personnel Agency, was installed. The project team was subordinated to a steering committee, of which the director of the Armed Forces Personnel Agency was one member and which was directly located in the Ministry of Defence.
After numerous analysis sessions on a smaller level and based on the successful pilot project of the Personnel Agency, the respective Forces personnel and external partners were tied into the process. In parallel to this, negotiations towards private-public partnership regarding the pre-paid card, which was absolutely necessary for implementation, were carried out. Subsequently, during the test phase employees earmarked to work with the application in the future were also integrated into the development. The development process was concluded after conducting the theoretical and practical training courses for over 2,000 users before the operation of Cashless Payment was started and after elaborating a regulation on the respective procedures.

(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.
A relevant decision was to develop Cashless Payment as a project that was to be kept slim with regard to manpower, but which nevertheless ensured the participation of all relevant departments and disciplines from among the Personnel Agency. The superior echelon of the Ministry of Defence was represented by an expert lawyer, who could ensure that no laws and regulations were violated, while the technical part was covered by the Head of Development of Personnel Information Systems, from a different department from among the Ministry of Defence, who himself could draw upon the specialists he needed. In this way, the technical expertise of the participants regardless of their position within their own organisation was able to flow into the development. Since the superiors had vested their members of the core team with the power to take decisions, a multitude of impending decisions could be taken directly within the project team. This guaranteed highly flexible and immediate decisions in the team. The transition from testing to implementation was mostly a smooth process without protracted decision-making phases. In addition, there was also the possibility to submit problems, which the project team was unable to solve, to a superior steering committee.
Experiences from questioning clients and the reference number system existent since 1994 were also to enter into the development, just like suggestions and ideas of future users and external partners.
The goals defined at the beginning of the project included, aside from technical parameters, the improvement of client and employee contentment, the unification and speeding up of processes, the extension of the responsibilities and performance of the Personnel Agency and a clear cost reduction of accounting and transfer of payments. By reaching these goals an important contribution to improving the Armed Forces’ image was to be made, while also the standing of the Personnel Agency as a centre of competence of the operative personnel management of the Armed Forces was to be strengthened.

(b) Implementation

 b.      What were the key development and implementation steps and the chronology? No more than 500 words
The centralisation of the accounting/payment departments of the individual federal ministries and the fact that the existing specific software application was unable to deal with the specific accounting conditions of the Ministry of Defence resulted in the Minister of Finance’s acceding, as early as on 1 November 2004 and against the general centralisation tendency, to the Personnel Agency’s implementing a specific paying department for Cashless Payment, dealing with individual claims, which are clearly defined, such as family support and living allowance. The decision laid the fundament upon which the new, integrative, flexible, economic and secure accounting system could be built. In parallel to the ongoing accounting of claims a small project team initiated a pilot project named “self accounting”, aiming at paying a personnel group still small in number. The experiences thus gained provided an important basis for implementing the overall project of Cashless Payment for Military Service and Basic and Voluntary National Service, which was developed and implemented as of the beginning of January 2006. Since 1 February 2007 all claims of soldiers doing Military Service or Basic or Voluntary National Service have been accounted with this system according to the Armed Forces Payment Act. In 2007 the application was further developed, so that as of 1 January 2008 also the claims of persons undergoing testing of their eligibility for national service through an administrative authority as well as soldiers following reserve recalls can be effected via Cashless Payment. In 2008 Cashless Payment was extended to a group of persons already accounted with the help of a cashless system, which, however, had all the disadvantages of a rigid and inflexible system. As of 1 January 2009 also persons serving in international operations of the Austrian Armed Forces can enjoy Cashless Payment.
Moreover, also a programme on case-oriented processing has been initiated. To make this possible, unified case processes, which will later-on control the functioning of the application, have been pre-defined and will considerably simplify administration. In parallel to the development and the implementation of the project individual training sessions tailored to the respective user group were carried out. Additional electronic learning and training modules provided by the project team allowed for a homogeneous level of learning for all users all over Austria, and that with free time management and according to individual learning pace. A homepage was established on the intranet to provide electronic information on, and as a communication hub for, Cashless Payment in order to support the ongoing operation of the system.

(c) Overcoming Obstacles

 c.      What were the main obstacles encountered? How were they overcome? No more than 500 words
Most of the soldiers entitled to payments were basic national servicemen. Contrary to those who enlisted for voluntary national service, for whom it was an enlistment condition, basic national service personnel were neither required to reveal their bank data to the competent authority, so that their payments could be transferred to their individual accounts, nor were they forced to open up a new account, which invariably incurs bank fees. The possible solution, providing bank accounts free of charge by the Ministry of Defence for the duration of national service, did not work out due to the number of banks and their varying interests and/or the existing rivalries. Moreover, it was extremely questionable from the defence-political point of view to provide the young soldiers with a bank account that, subject to the respective interests, could be overdrawn. This entailed the danger that the account holders would amass debts during their national service and be discharged with huge debts. The solution of this problem was derived from a private-public partnership with an organisation owned by all Austrian banks, which also operates the automatic telling machines and the debit card machines in Austria. Upon payment of a relatively moderate lump sum to be paid by the Ministry of Defence for each card, the beneficiary is provided with a pre-paid card (“MAESTRO Allrounder”) limited in time and free-of-charge. All due payments can be transferred onto this pre-paid card. The lump sum paid by the Ministry provides the card holder with numerous functionalities, such as withdrawing cash, paying at points of sale and checking their account balance without any extra costs whatsoever. This card can only be used for the withdrawal of existing assets, overdrawing the account is not possible. The card is issued at the military units in an unbureaucratic manner and as required, the card number is directly registered as payment address within the accounting system. The bank providing the pre-paid cards has profited from the PR effect while the Austrian Armed Forces have turned into a reference for this card, which might also be useful to civilian enterprises.
Another possible stumbling block for the new system were initial concerns by quartermaster NCOs at the units, who had formerly conducted the payments in cash.
They feared that the new application would make them lose their jobs or at least some of their additional income derived from handling cash. These concerns were dispelled by timely and openly informing them about the possibilities of cashless payment and, hence, the importance the group of persons responsible for the system’s functioning had. The last remaining sceptics were managed to be convinced in the course of the comprehensive training courses tailored to the respective users and carried out by the developers of the project. This was complemented by tying in the personnel representation already at an early stage.
Another obstacle was also that many units were only scarcely equipped with information technology: in some locations there was no suitable hardware at all, in other locations a number of employees had to share computer stations. Thanks to clear decisions by the steering committee and in the respective ministerial departments the introduction of Cashless Payment initiated a modernisation advance. Since the functioning of the application required suitable hardware and efficient connections in all locations, all units were fitted with the needed equipment.

(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
Since Cashless Payment was developed as a project and the involved persons were employees of the Ministry of the Defence or the Armed Forces no additional personnel had to be hired. The paying department required for the accounting within the Armed Forces Personnel Agency was initially established without need for new personnel, as the additional requirement could be handled internally by swapping personnel. The technicians needed are employed in a command support facility of the Ministry and, before the new system was introduced, had been involved in the development of a modern personnel information system and another application used before by the Personnel Agency. Regarding the technical implementation, therefore, these existing resources could be drawn upon.
The development costs of Cashless Payment until its introduction on 1 February 2007 amounted to some 1.1 million Euros, moreover, there are annual maintenance costs of approx. 200,000 Euros as well as operating costs of about again that number. These investments are met by annual savings of some 4.2 million Euros, as handling cash is not necessary any longer and 5.7 million Euros are saved because the services of the outsourced Federal Accounting Agency are not needed any more. Existing and newly acquired infrastructure at the units are used proportionately by Cashless Payment. The costs cannot be defined exactly since cost and performance accounting is just starting there, however, Cashless Payment has not caused major costs in this field. The return on investment was established on the basis of the out-of-pocket costs and not as if on the basis of fictitious savings, like e.g. personnel savings to be realised only at a later stage. The return on investment of Cashless Payment was reached already within a few months.

Sustainability and Transferability

  Is the initiative sustainable and transferable?
Every one, from top officials to every single employee of the Armed Forces Personnel Agency, is convinced that any modern administration constantly needs to be improved. This is an integral part of our self understanding as an agency and also defined in the description of our guiding principles. By tying in political decision-makers, ministerial top officials, superior departments and the personnel representation, institutional and also legal sustainability was achieved. As the Armed Forces Personnel Agency traditionally has been focused strongly on the clients’ interests and contentment, when cashless payment was developed the focus was placed particularly on involving employees and future users as much as possible. This resulted in a strong identification with the finished product, from which was derived an excellent acceptance by the users. Training in this accounting/payment system became an obligatory part of every specialist training within the Armed Forces in this field. The organisational elements entrusted with the new application are laid down in the organisational plan kept by the Armed Forces Personnel Agency, while the specific inherent tasks are documented in the service regulation for the Agency. In order to control and improve the procedures control elements in charge of the processes were installed, as well as continuous process auditing.
The developed solution, which has already proven that it functions in practice, could also be applied to other administrations, also on the international level. What is more, in addition to the application the tools used during project development could be applied as well. Aside from the condition that all measures are to be directed at client effectiveness also the participatory strategy of the project has priority. Effectiveness towards the outside is measured by questioning clients over the course of several years, whereas effectiveness towards the inside is measured and evaluated by asking the employees periodically and in a scientific way. Also the slim and flexible project organisation, the modular structure, the efficient electronically-based training as well as the economical and quick implementation of the project could be transferred onto other administrations.

Lessons Learned

 What are the impact of your initiative and the lessons learned?
The initiative to introduce modern and cashless pay for Military Service and Basic and Voluntary National Service was a great success, because all goals set at the beginning of the project could be reached and the strategy selected was adhered to firmly. The satisfaction of all respective groups of interest could be raised considerably due to this new system. Because of the excellent performance of the elements implemented so far, the application is expanded every year. The measures taken and the acceptance by all clients ensure the sustainability of the application, which has been institutionalised in the meantime. Since the periodic evaluations carried out in the course of the continuous improvement process, improvements can be immediately implemented due to the compact organisation of the project and the fast decision-making. Information provided on web pages also includes comprehensive error management and knowledge management bases for the application.
This successful project extended the tasks of the Armed Forces Personnel Agency in important areas and strengthened its standing as a centre of competence of the operative personnel management of the Armed Forces.
A significant experience derived from the project is that any goal needs to be pursued persistently. Through dedicated engagement of the team members and appropriate strategies it is possible, even in our administrational structure subjected to strong outside influence, to obtain sufficient freedom of movement to develop and implement innovative solutions. As the development core team was kept compact and flexible, the occasional integration of interested clients provided further input, which again resulted in new and unconventional solutions. The friendly treatment among the team members made top performance possible, only to be achieved as a strongly committed unit. Because all decisions within the team were taken in consensus, a solid basis transcending organisational and hierarchical structures could be established for continued developments.

Contact Information

Institution Name:   Armed Forces Personnel Agency
Institution Type:   Government Agency  
Contact Person:   Michael Theuritzbacher
Title:   Head of Processcontrolling  
Telephone/ Fax:   +43 664 6221383
Institution's / Project's Website:  
E-mail:   theuritzbacher@aon.at  
Address:   Panikengasse 2
Postal Code:   1160
City:   Vienna
State/Province:  
Country:   Austria

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