Federal chief financial officers say finding efficiencies in their agency is among their top priorities. But moving to a financial management shared service provider or even to individual shared applications doesn’t rank high on their to-do lists.
In an exclusive Federal News Radio survey of CFOs and deputy CFOs conducted in August, 55 percent of the respondents rated spending money more wisely as their top priority. But at the same time, 36 percent rated moving to the Internet Payment Portal or other financial management shared services as their fourth highest priority, while only 9 percents ranked it as high as third overall.
Adam Goldberg, executive architect in the Office of Financial Innovation and Transformation (OFIT), said CFOs are showing a greater interest in shared services, but they haven’t fully committed to the concept.
“I’m finding that agencies aren’t willing to make that leap from paper automatically to digital information,” Goldberg said Tuesday during a discussion of the survey results on In Depth with Francis Rose. “There still is an intermediary step they want to take. A lot of agencies will come back and say, ‘Does your capability allow me to scan in the paper invoice, so I can have an image to look at?’ Really the point of electronic invoicing is to digitize the information upfront so you could display the information visually on a screen, but you don’t need it to be in the image of an actually invoice itself.”
Federal News Radio conducted the anonymous survey to find out how CFOs and deputy CFOs are dealing with and preparing for sequestration, budget cuts and other challenges. We sent the survey to 58 federal budget officers and received a 24 percent response rate. Out of those who responded, 46 percent were with a cabinet-level agency and 39 percent were with a large agency. All respondents said they are a career official and not a political appointee.
Strategy fails to give shared services a bump
This is the second survey of CFOs in 2012. The first survey also showed CFOs weren’t ready to move to shared service providers either.
But now nine months later and with the release of the Office of Management and Budget’s shared services strategy, agency budget executives remain uncertain about using these common systems.
Goldberg said CFOs are starting to come around to the idea especially as budgets shrink and their workforce retires.
“Shared services will be one of the key ways the workforce issue will be managed in the future,” he said. “I think it’s really reaching the realization that we can’ t do everything within the organization itself. So, in order to manage the risk of the retirements, I have to look at the possibility of transferring that risk to someone else to assist me.”
OFIT is leading an effort to develop several shared services, including electronic invoicing, centralized receivables collections and intergovernmental transactions.
Goldberg said there is greater interest to use these one-offs as opposed to moving an entire financial management system to a shared service provider.
OFIT is getting ready to start a two-year pilot with the centralized receivables collections application. The program will help agencies collect outstanding debts, which could be for a travel expense, a fine or a penalty. Treasury hired a contractor to act as a debt collector, who would take over the billing, the notices and the follow ups that need to take place.
Goldberg said agencies could save $300 million-to-$350 million annually when it is fully scaled across the government.
He said nine agencies have signed up for the pilot, mostly around administrative costs that federal employees incur and fees or fines that are due to the agency from external customers.
“The pilot is going to take place over a two-year period, and we will gradually be bringing on more programs into that and monitoring the increased collections and savings associated with that,” Goldberg said. “We went around and actually asked agencies who were interested. We spoke to about 20-to-25 who expressed a good amount of interest and we narrowed it down to the nine who would participate.”
In addition the debt collection initiative, OFIT’s e-invoicing program could save the government millions. Goldberg said at full capacity, agencies could save between $400 million-and-$450 million a year.
“That has been slow start in terms of getting agencies on board,” he said. “Treasury will complete its implementation for all bureaus, including the IRS, later this year and Interior also is using the program.”
Goldberg added Treasury expected agencies to move more quickly to the e-invoicing pilot because they can recover any costs quickly upfront and there are few costs on the back end as well.
Even without these shared services, CFOs say they are using data to make better decisions.
When asked how successful they are in using data to make financial decisions, 91 percent said either very or somewhat successful.
“We need to improve our ability to integrate financial and programmatic performance to achieve full benefit,” wrote one respondent.
Along with finding efficiencies, CFO respondents to the survey said hiring and retaining, and training their workforces were the next highest priorities. Two of OMB central initiatives — reducing improper payments and disposing of real property — received the lowest average ranking of fifth most important priority.
Budget cuts, not sequestration biggest worry
Many CFOs (46 percent) also said they’ve started planning for sequestration, mostly by figuring out specific program cuts.
“Our preliminary estimate is that the sequestration will have significant programmatic impacts, but we don’t believe it will require personnel cuts or furloughs. However, it is unclear how OMB will administer the cuts to agencies,” wrote one respondent.
Another wrote they are considering all options including people, program and acquisition cuts and efficiencies.
Sequestration, however, was not among the CFOs’ biggest concerns.
Just over a third said the continuing resolution and a third said the spending cuts coming when Congress finally passes a budget worry them the most.
“Uncertainty is the greatest concern,” wrote on respondent.