Central Financial System (CFS)
Ministry of Finance

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
Prior to the implementation of Oracle E-Business suite across the Government Ministries, a legacy system was used which allowed the Ministries to spend more than the allocated Budget. Suppliers were not properly communicated about their Invoice payments. Period closing and reporting and other information was not available on time. These issues were a major concern for the Ministry of Finance (MoF). MOF’s main role is to control, maintain and provide all Government’s financial records as well as to provide budget information to the Ministries at any time. MoF was using batch processing system using mainframe technology which cost millions and was not capable to produce required reports as requested in a short period of time. Non availability of the required information resulted in conflict between ministries expenses and funds availability which was mainly controlled by the MoF. The key procurement process; purchasing-receiving-delivery and payment was delayed which led further delays of key projects undertaken by the Government of Bahrain. In the absence of online system, the flow of work was depending mainly on paper. Movement of paper from one desk to another not only resulted in process delays but lot of sensitive information was also compromised. Most of the Ministries took the initiative of computerization on their own which resulted in standalone systems being run all over Government of Bahrain. Homegrown systems were not in sync with each other and gave birth to Interface development projects which resulted in more complications and waste of financial and human resources. Planning of funds and purchases for new year was always a big challenge as historical data was not in place. There were no systematic records and controls for Assets and Inventories of the Government. It was discovered that 50 Million worth of Inventory existed but was not recorded.

B. Strategic Approach

 2. What was the solution?
The Ministry of Finance is responsible for the formulation and control of the Country’s budget. To facilitate this control, the Ministry of Finance provides Oracle E-Business Suite applications to Ministries and Government Organizations for the purpose of managing their operational, financial and budgetary affairs. Ministry of Finance invited key stakeholders for a brain storming session. In 1991 an initiative titled ‘Financial Management information System’ (FMIS) was launched which was later renamed as Central Financial System (CFS). Oracle applications and their associated data are collectively referred to as “CFS” (Central Financial System). The initiative of the Ministry of Finance to implement Oracle E-Business suite across all the Government Ministries was to ensure that the funds are spent for the activity for which it is supposed to be spent, exercise absolute Budgetary Control, monitor variances if any, stream line the procurement process, manage the Inventories and fixed assets. The main objectives of the project were • The allocated Budget for the project/program is spent only for that project/program. • Purchasing can be done by each Ministry for the allocated budget. • Ministries cannot spend more than their allocated budget. • Payment to suppliers is made centrally by the MoF. • Suppliers to be sent Remittance Advices electronically. • Fixed assets of each of the Ministries are recorded, maintained and depreciated. • Manage the Inventories in a better way using Min-Max Planning levels, Perpetual Inventory, Lot control. Over stocking of items is reduced and wastage of material is reduced by alerting users to use material well before its expiry. • Cash Management and Forecasting. The successful implementation of CFS resulted in unifying all financial systems in the Government. The MOF directed all Ministries to use official accounting standards (Standard Finance Manual) through CFS, which lead to improvements in the accounting practices in the Government. Homegrown systems became obsolete which resulted in lot of savings on IT spending by each ministry. CFS also saved users from double keying of data which lead to users concentrate more on business. The availability of online data for decision makers benefited in controlling the spending and budgeting for important projects and future Government programs. The accuracy of the data helped inventory controllers plan their inventory levels more efficiently and effectively. Oracle E-business suite which is an integrated financial system solved the issue of process delays in Purchasing/ Material Issue/ Payment. The CFS implementation was very instrumental in implementing GO Green Policy of MoF. The new system has also reduced opportunities for incorrect practices, improved the interaction between supplier and government departments, Inventory levels are optimized saving millions of dollars in obsolete inventory.

 3. How did the initiative solve the problem and improve people’s lives?
The CFS system is hosted and administered by The Ministry of Finance. It is accessed on-line by 42 Ministries and Government Organizations. Connectivity is achieved through the Government Data Network (GDN) which is provided by the Central Informatics Organization (CIO). In total the system currently supports around 2000 users in 72 locations within Bahrain. The supplier maintenance and payment process is centrally controlled and managed by Treasury Directorate at the MoF. The initiative under the patronage of His Excellency the Minister of Finance is unique across the region as no Government in the region has embarked on such massive project bringing about all Ministries of Government to be connected to one single integrated system. There is greater accountability since the electronic records/documents can be retrieved at any given time and all users’ activities are undertaken online. The key features of the implementation are  Single Instance hosted on twin database servers using Oracle Real Applications Cluster (RAC) Technology.  Single Ledger helped consolidated reporting.  Ministry level data access security is set.  Centralized Payment by the Ministry of Finance.  All payments are made by Electronic Funds Transfer.  Ministries originate all documents except payments.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
Adopting a rigorous methodology i.e. Ernst & Young/Navigator System SeriesSM - Release 2.1 (E&Y/NSS). Extensive study of the system also knows as As-is-Analysis (Baseline) was made. An Agreement called charter was signed between the user Ministry and implementer. The solution was proposed through a designed document “Conceptual Design”. A detailed Implementation plan was given with each minute detail of the system implementation approach. Each stage deliverable was reviewed and approved by the FID Quality Assurance Committee. The chronology of the events follows: • Baseline study review and final approval by user community • Implementation Project Charter to be jointly signed off by MoF & User Ministry. • Physical System Design & Set-up report. • Site Implementation Plan jointly approved by the MoF and User Ministry. • Setting of User Environment. • Extensive Training of Users. • Production System Go Live. • Post implementation Support. • Review of the system by User Ministries. The following modules were implemented: General Ledger, Account Payable, Purchasing, Inventory, Order Management, Fixed Assets and Cash Management.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
The core management and control structure of the CFS Project implementation is based on 4 teams: • CFS Steering Committee • FID Quality Assurance Committee • Project Management Group • Implementation Team The structures, roles and responsibilities of these 4 teams are described in the following sections. CFS Steering Committee: The CFS Steering Committee is the group whose primary function is to provide overall direction to the project and to review and approve the results of the project teams' work. Composed of Financial Affairs at the MOF, the CFS Steering Committee coordinates the utilization of the resources supporting the project. It works to ensure that the resulting information systems meet the business requirements and are developed according to acceptable standards. Working with the project management group, the CFS Steering Committee has the additional responsibility to ensure that all major issues of significant risk which impact the project are resolved promptly and efficiently. FID Quality Assurance Committee: All documents are reviewed and approved by FID Quality Assurance Committee. Project Management Group: The CFS Project Manager is responsible for delivering the project to the User Ministry but at the same time is responsible for the CFS budget and resources which belong to the MOF. The role also involves balancing the demands of the User with the available resources which MOF is prepared to commit. Implementation Team: The role of the Implementation Team is to implement the systems under the direction of the CFS Project Manager. The implementation team co-ordinates with the User Ministry’s coordinator.
 6. How was the strategy implemented and what resources were mobilized?
The Ministry of Finance sponsored the Project and it has funded the project from the Project Budget. USD 20 million was spent by the MOF over the past 15+ years for buying the hardware, software, licensing costs and manpower costs. Approximately 20 member team was formed who gathered the requirements of the Ministries, designed the pilot system, trained the Users and supported the users over the life cycle of the project. The implementation team comprises of Oracle consultants, MOF key Users and Key Users from the Ministries.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
Implementation of an effective Central Financial System enabled the Government to overcome the major financial and inventory related problems. The most successful outputs can be summarized as follows: - The ministries belonging to the Government of Bahrain have a very effective centralized online system which can provide accurate information on time. The authorized users are able to generate the required reports on their own and they do not have to depend on the EDP/IT department for generating reports. - Budgeting and Funds Control are effectively in place and overspending is totally eliminated. This enables the Government to manage the funds very effectively. - The critical ‘Procure to Pay’ related processes have been streamlined and the Ministries are able to procure the materials and services on time and are in a position to make payments to the suppliers on time. This has improved the Ministry-Supplier relationship to a great extent. - The ministries are in a position to monitor and track the Stock items and Fixed Assets whose value is more than billions of dollars. A very effective inventory planning system is also in place which enables the Stores to procure & issue the items on time and this has improved the Ministry-End User relationship. Since the material is available on time, the end users are in a position to complete their work on time. - Since the reports can be generated and transmitted on line, usage of paper has been reduced to a great extent and the Government has made a step towards Go Green policy

 8. What were the most successful outputs and why was the initiative effective?
Regular meetings were held between the Ministries and the Project Management team at Ministry of Finance. All the activities were monitored by a detailed Project Plan with milestones. All problems and issues were logged and resolved by Project Leaders or by support from the Oracle Corporation. A monthly Project Status Report was prepared and sent to the Steering Committee and the Ministries Management. A Newsletter was produced quarterly to inform the users about any new features and inform about any new Ministry being implemented. Surveys are conducted regularly to obtain the User feedback which facilitated introduction of new features or services to the Ministries. Yearly audits were conducted for the successful implementation of the strategy.

 9. What were the main obstacles encountered and how were they overcome?
The implementation of Oracle E-Business Suite may require some changes to current working practices (workflows). Experience shows that users and middle managers will generally resist these changes and attempt to "bend" the system design to preserve their old practices. Resistance of this nature becomes a drag on the progress of the implementation and is morale sapping. The main obstacles encountered were; Acceptance of new system by top management: In the new system approving an invoice for payment is done online, but some managers want their signatures on hard copy papers rather than online and they refuse the new system. Fear of technology “technophobia” creeping into their offices leads to this resistance. The MOF designed and implemented the system that will minimize the changes in their existing system and maximize the benefits of the new system. CFS adopted evolutionary change that is gradual, incremental and specifically focused. CFS recommended the CFS to be implemented in phases which will gradually remove the old system. Fear of redundancy by lower staff: Biggest resistance from user was mainly due to fear of losing jobs as result of CFs implementation. Adequate training, workshops, and one to one meetings with ministry staff removed this false concept. Staff was motivated by rewarding for being part of successful change effort. Before any technical training the CFS staff gave a comprehensive introduction to the CFS system, its objectives and reasons for change which helped in positive understanding of the users. Lack of qualified staff: CFS launched massive training program for end users. Courses were customized for users based on their jobs and responsibilities. Programs such as train the trainer were introduced to provide effective training to local staff for each ministry. Around 5000 users across the government of Bahrain were trained to use the system in effective way. With each new implementation Onsite support was given to provide required comfort levels for each user.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
The initiative has the positive impact as follows: Budgetary Control: The CFS system prevented over spending and maintained the liquidity position of the Government. Accountability and Responsiveness: Tracking of information online made the Government staff more accountable for Government spending. Workflow Automation has reduced the time taken for procurement process. Quicker Periodic Reporting: Because of the online availability of the accurate information, periodic reporting became an easy process. Inventory and Asset Management: The CFS has reduced the blockage of funds in huge inventories, reduced the wastage of medicines because of expiry and, assets were properly tracked and controlled. Technological Improvements: A secured and scalable infrastructure hosts the Government’s ERP system which is going to be used to implement even for the Semi-Government Organizations. Cost Savings: Since the system is maintained centrally, there are huge savings across the Government by eliminating costs of owning multiple servers, multiple maintenance costs, maintaining multiple technical teams at different Ministries. Centralized upgrade and maintenance has resulted in reduced costs. Human Resource Development: Continuous training on the latest technology lead to training more than 5000 Users and there by increased the availability of techno-functional professionals in the Country.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
The CFS is running over the past 15+ years successfully and new organizations have been added as and when a new Ministry is added to the Government. Though majority of the employees in the team that implemented the system left the MOF, new employees have been recruited and trained to maintain the system. The MOF hosts the system and provides the service to all the Ministries within the Government of Bahrain. A help desk system was developed in parallel, to record the User problems and requests and KPIs were developed to monitor the services of the MOF. The real challenge is to maintain the system when the organizational merger/split happens. This has been successfully managed over the past 15+ years. MOF has rolled over the system to 42 Ministries located across the Kingdom of Bahrain. The success story of the CFS has brought new customers such as Bahrain Airport Company, Isa Cultural Center, Bahrain Internet Exchange and 25 Government Funded Organizations for whom the implementation is in progress. The similar system has been replicated for the Ministry of Interior on a separate instance. Various Finance Ministries across the region visited the MOF to know about the system and learn from our experience.

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
The important lessons learnt should guide other countries in implementing country wide ERP solution. The key elements that lead to success includes:  Clear mandate from the top leadership leading to highly motivated team and co-operation from the User Ministries.  Top management support for resources.  Well defined framework for project governance and qualified project team.  Engaging all the stakeholders.  Continuous training to the Users to adapt to the system easily.  Effective helpdesk system to resolve User’s issues.  No parallel runs to force the Users to use the system.  Customization kept to the minimum to avoid the delays in support and upgrades.

Contact Information

Institution Name:   Ministry of Finance
Institution Type:   Government Agency  
Contact Person:   Hassan Abdulla
Title:   Acting, FID Director  
Telephone/ Fax:  
Institution's / Project's Website:  
E-mail:   hassan@mof.gov.bh  
Postal Code:  

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