Bigger isn't Always Better
Date: February 5, 2018
We continually hear the importance and benefits of being big. We hear phrases like seeing the big picture; go big or go home; and the bigger the risk the greater the reward. In the world of federal financial management, leaders are attracted to the rewards of being big, but in some cases, bigger is not always better.
Having big, aspirational, goals can unify a community. The federal financial management community has historically established goals for its major initiatives. The goals have assisted agencies in prioritizing how and where they distribute their limited resources.
Goals have included improving the accuracy and quality of financial statements, making financial information publicly transparent, and eliminating improper payments. The existence of these goals has contributed to the year over year progress made by the federal government in achieving these objectives.
While big goals bring benefits by unifying a community around a shared objective, big financial system projects carry significant risk. Citizens and businesses rely on these systems to process tax refunds, collect fees, and reimburse medical providers.
Similar to consumer electronics, over time the government’s financial systems need replacement as the government’s needs and technology change. Because these financial systems reside within some of the biggest and most complex organizations in the world, the projects to replace them are also big and complex. Unfortunately, our experience is that bigger financial system projects do not make better or more successful projects.
Deciding whether to take a big or small approach can be complicated and confusing. One decision that financial leaders face today is whether to adopt shared services. A shared service exists when one organization provides common services, like payroll, to other organizations.
Big and small organizations have benefitted from this concept because they can be more efficient when joining with other groups. Joining or creating a bigger enterprise can make processes perform more efficiently. Still, there can be limits to the benefits of shared services depending on the providers’ size, customers’ size, and the offered/desired services.
Trying to make the right decision for an organization can be difficult. Having big goals, projects, or solutions may be right for one organization, but may not be the best for others. The Office of Financial Innovation and Transformation (FIT) has developed a Financial Management Self-Assessment to assist agencies in making the strategic decisions needed to become high performing financial management organizations.
A Chief Financial Officer (CFO) can self-assess his or her organization’s level of financial management discipline, effectiveness, and efficiency. Using the self-assessment, the CFO can create a customized improvement plan based on his or her agency’s needs. At FIT, we recognize that one size does not “fit” all and our self-assessment can assist agencies in developing a tailored improvement plan.