Russian Treasury Modernization Project Implementation

Russian Treasury Modernization Project Implementation Experience Deputy Head of the Russian Treasury S.B. Guralnikov 1

TABLE OF CONTENTS - General Information about the Federal Treasury - Main Functions and Architecture of the Federal Treasury Automated System (FTAS) - Integrated Project - Lessons learned from the development stage - Experience of the Federal Treasury Information System Implementation - Architecture of Remote Financial Documents Flow System (SUFD) and specific features of its implementation - Further development of information systems on FTAS basis 2

General Information about the Federal Treasury 3

Overall Project Implementation Results 1998 - 2002 год (start of project preparation) 2012 No Single Treasury Account Spending units accounts opened in commercial banks No commitments control system Imperfect budget classification with no possibility to control expenditures Budget revenues and expenditures are accounted by independent agencies Multiple diverse independently developed information systems in FT offices Significant balances on budge accounts are not used Federal Treasury is one of the main financial management bodies in the country Operational STA Unified information system has been introduced, transfer to new FTAS nearly completed 23 607 budgets being serviced Over 78 000 bank accounts Over 220 000 client organizations Over 2 300 000 certificates for electronic signatures issued free of charged Over 40 000 000 payment transactions on average per month 27.1 trln rubles accounted budget revenues 19.6 bkn rubles revenues from interest on deposited budget funds 4

Main Stages of FTAS Development 2002 2003 2004 2005 2002-2004 – development of technical requirements and tender documentation 2004-2005 – two-stage tender 2006 Q1 2007 Q2 Q3 Q4 Q1 2008 Q2 Q3 Q4 Q1 2009 Q2 Q3 Q4 Q1 2010 Q2 Q3 Q4 Q1 2011 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Development Pilot implementation Roll-out Preparation phase – difficult comprehension of the system requirements Development – delays and debates on the system design and functionality, modification of legislation HOWEVER : significant time required for tender preparation, selection and design paid-off by relatively painless and rapid implementation 5

Main Functions and Architecture of FTAS 6

System Modules Cash expenditures planning Budget reporting Oracle Hyperion Oracle BI Publisher Oracle Discoverer Registration and delivery of budget data Commitments accounting and control Receipts processing Payments management General Ledger Maintenance of reference materials Electronic document flow, Client’s automated workstation, off-line local treasury office (LTO), security server Oracle E-Business Suite modules: Oracle Financials Oracle Purchasing Oracle Inventory System of electronic documents exchange (SUFD) RBMS Oracle 10g EE, Technological platform Oracle Developer Suite, Oracle AS 10g, Oracle Identity Mgt, Oracle Essbase 7

Project Integrity 8

Comprehensive approach to the system design Set of measures to improve methodological , legal and regulatory framework, training (!) New business processes Implementation of set of measures to ensure information security (separation of loops, hardware and software, organizational and technical measures), training (!) Infrastructure Modernization of IT infrastructure (communication system, engineer support system, operation management system, server equipment), training (!) FTAS Information security New software Application software development and implementation, training (!) 9

TRAINING TRAINING PROJECT COMPONENTS INTEGRATION Legislation Improvement Component 10

Lessons learned at Development Stage 11

Experience gained at development stage Important of thorough development of requirements at the tender stage No matter how thoroughly they are described, there will be misunderstandings with the supplier at the development stage – need for dispute resolutions mechanisms and for flexibility Importance of expert review for documents preparation and control over supplier (Integrator) Importance of comprehensive approach to system design – taking into consideration of all components (role of the World Bank) Importance of realistic planning, top-management’s expectations control (initially nonrealistic schedule for FTAS development) CONCEPTUAL choice – to develop the system for existing regulatory framework or to change regulatory base for the developed system At the design stage, it is important to clearly document all details of business processes for common understanding of the system functionality by the client and the supplier Planning and control of interrelated tasks deadline – the system quality will anyway depend on the weakest element 12

FTAS Implementation Experience 13

Overview of the System Implementation Activity Implementation stages Infrastructure preparation (communication, engineering systems, server equipment) (2006-2008); Comprehensive application software testing (2008) and fine tuning; Pilot implementation (4 regions) - 2009 Roll-out (5 waves) – 2010-2011. Implementation challenges Need to ensure continuous and high quality service for the FT clients; Changing legislation (moratorium only for one year); Transfer from decentralized system (over 2 500 data bases) to centralized one (83 regional data bases of the same structure). 14

Importance of Planning and Integration Planning – work plans for each contract, each site, and each project; Implementation procedures, regulations – key to successful roll-out (industrial approach); Alignment of activity schedules for all components at each site; Risk analysis for each component (identification of weak elements). Ид. 1 Task Name Основные результаты (по стадиям 2 и 3) Длительность Начало по плану проекта 414 дней Ср 25.04.07 Окончание (прогноз) Срок по Контракту Пн 24.11.08 НД Предшественники 2006 2007 2008 2009 2010 2 Кв. 1 Кв. 2 Кв. 3 Кв. 4 Кв. 1 Кв. 2 Кв. 3 Кв. 4 Кв. 1 Кв. 2 Кв. 3 Кв. 4 Кв. 1 Кв. 2 Кв. 3 Кв. 4 Кв. 1 Кв. 2 Кв. 3 Кв. 4 25.04 24.11 2 ППО готово к внедрению 0 дней Пн 17.03.08 Пн 17.03.08 НД 48 3 СИО внедрено для УФК пилотных регионов 0 дней Ср 25.04.07 Ср 25.04.07 НД 78 17.03 25.04 21.12 4 СИО внедрено для ОФК пилотных регионов 0 дней Пт 21.12.07 Пт 21.12.07 НД 82 5 ВТС внедрено для пилотных объектов 0 дней Вт 30.10.07 Вт 30.10.07 НД 96 6 Серверное оборудование установлено для пилотных регионов 0 дней Пт 21.03.08 Пт 21.03.08 НД 102 7 ППО установлено в пилотной зоне 0 дней Чт 07.08.08 Чт 07.08.08 НД 130 8 Опытная эксплуатация ППО завершена 0 дней Пн 24.11.08 Пн 24.11.08 НД 132 30.10 21.03 07.08 24.11 9 790 дней Пн 23.01.06 Пн 02.02.09 НД 23.01 11 Разработка и тестирование ППО 790 дней Пн 23.01.06 Пн 02.02.09 НД 23.01 49 191 дней Пн 19.03.07 Пт 07.12.07 НД 57 Закупка серверного оборудования и ПО для пилотных регионов Закупка общесистемного, офисного и антивирусного ПО 58 Создание ВТС - подготовка пилотного внедрения 10 59 60 61 62 Подготовка к внедрению системы Анализ результатов тестирования и уточнение характеристик ВТС Принятие решения по схемам реализации ВТС Аудит пилотных объектов и дооснащение Аудит документации и объектов 63 Подготовка ТТ для дооснащения пилотных объектов 64 Дооснащение объектов 65 Объекты готовы к установке серверного оборудования 66 87 дней Вт 22.08.06 Ср 20.12.06 НД 17 дней Пт 01.06.07 Пн 25.06.07 НД 7 дней Пт 01.06.07 Пн 11.06.07 НД 29 10 дней Вт 12.06.07 Пн 25.06.07 НД 59 297 дней Чт 30.11.06 Чт 17.01.08 НД 45 дней Чт 30.11.06 Ср 31.01.07 НД 22 дней Чт 01.02.07 230 дней Пн 05.03.07 Чт 17.01.08 НД 63 0 дней Чт 17.01.08 Чт 17.01.08 Пт 02.03.07 НД 64 02.02 02.02 19.03 07.12 20.12 01.06 25.06 11.06 25.06 30.11 17.01 31.01 02.03 НД 62 17.01 17.01 06.11 Проектирование и закупка СУЭ 408 дней Пн 06.11.06 Вт 27.05.08 НД Внедрение системы в пилотных регионах 712 дней Вт 11.07.06 Вт 31.03.09 НД 311 дней Пн 16.10.06 Пт 21.12.07 НД 16.10 16.10 27.05 75 76 77 78 Внедрение СИО для пилотных объектов 31.03 21.12 27.04 140 дней Пн 16.10.06 Пт 27.04.07 НД 79 Внедрение СИО для УФК Ульяновска 110 дней Пн 27.11.06 Пт 27.04.07 Ср 31.01.07 27.04 80 Внедрение СИО для УФК Саратова 134 дней Пн 16.10.06 Чт 19.04.07 Вс 10.12.06 19.04 81 82 83 84 85 Внедрение СИО в УФК 11.07 Внедрение СИО для УФК Самары Внедрение СИО в ОФК Внедрение СИО для ОФК Ульяновского региона Внедрение СИО для ОФК Саратовского региона Внедрение СИО для ОФК Самарского региона 86 Внедрение ВТС для пилотных объектов 88 дней Пн 04.12.06 Ср 04.04.07 Пн 19.02.07 147 дней Чт 31.05.07 Пт 21.12.07 НД 124 дней Чт 31.05.07 Вт 20.11.07 Пн 30.07.07 Пт 13.07.07 Пт 21.12.07 Сб 04.08.07 122 дней Чт 14.06.07 Пт 30.11.07 Ср 18.07.07 342 дней 116 дней Вт 11.07.06 Вт 30.10.07 НД 75 дней 97 Установка серверного оборудования в пилотных регионах Пн 10.12.07 Пт 21.03.08 НД 103 Пилотное внедрение ППО 213 дней Чт 31.01.08 Пн 24.11.08 НД 133 Проектирование и пилотное внедрение СУЭ 210 дней Ср 11.06.08 Вт 31.03.09 НД 140 дней Ср 11.06.08 Вт 23.12.08 НД 74ОН 10 дней 134 Обследование и проектирование 04.04 31.05 21.12 20.11 21.12 30.11 11.07 30.10 10.12 21.03 31.01 24.11 11.06 31.03 23.12 15

System Roll-Out 5 roll-out waves, 10-15 regions in each wave, clear roll-out schedule with identical activities set, separate team of supplier in each region working in cooperation with implementation team of regional treasury office (RTO) Preparatory activitis; Installation of application SW and user’s automated workplaces; Data entry/migration; Training of key users; Comprehensive testing; Testing operational days; Training of remaining users; Test operations (at pilot sites); System go live. 16

On-line SUFD architecture and its implementation 17

Interaction between FTAS and automated workplace “Other participant of the budget process”: SUFD, portal solution Интернет Подсистема информационного взаимодействия УБП СЭД (офлайн) УБП СУФД Портал БД Oracle e-Business Suite АСФК 18

Implementation of online SUFD 5 wave 17 RTO 4 wave 21 RTO FTAS 2011 Online SUFD June July August September 1 wave 22 RTO 2 wave 13 RTO 3 wave 19 RTO 4 wave 26 RTO October November Total: 79 RTOs within 4 months. Implementation period for one wave– 1 month based on standard implementation plan. SUFD-1 wave– 22 RTOs (including 21 RTOs of FTAS-4 wave). SUFD-2 wave– 13 RTOs. SUFD-3 wave – 19 RTOs. SUFD-4 wave – 26 RTOs (including 17 RTOs of FTAS -5 wave). Completed. Completed. Completed. Completed. 19

Increase of legal and information security with online SUFD Document with digital signature is received by FTAS data base and is stored there unchanged (with digital signature assigned at the client level). Compliance with legal norms and principles upon digital signature utilization : Compliance with conformity principle : 1 user– 1 digital signature Decrease of possibility to use several digital signatures by one employee Documents are not stored at the workstations/servers of other participants of budget process, there is no risk of unauthorized access to information. Connection with RTO user through safe VPN-connection. No interception of information is possible. 20

Further development of information systems on FTAS basis 21

Further development of information systems on FTAS basis Key Performance Criteria Development of information and analytical system of key performance criteria of budget execution in in the budget system of the RF Public Procurement Portal Development of official site for placing information about procurement of goods and services Technological support system Development of technological support system Accounting for individual payments Roll-out of the system allowing to account for each payment of individual Integrated public finance management IS Development and implementation of integrated management information system “Electronic Budget” public finance 22

New opportunities, new tasks for the FT Implementation of centralized system provides new opportunities; System of key performance indicators of budget execution– monitoring of the situation in the budget system on the basis of FTAS and other state systems. Пользователи: Office of the President of Russia; Office of the Government; Ministry of Finance; Ministry of Regional Development; Public Authorities; Other external users. 23

FTAS Interaction with Key Performance Indicators Учетные System системы ФК FTAS FTAS RTO -1 RTO -1 DATA DATASTORAGE STORAGE (updated (updateddaily) daily) FTAS FTAS FTAS FTAS Interregio Interregio nal nal operation operation deprtmnt deprtmnt Main Main Deprtmnt Deprtmnt FT FT External Data : External Data : MoF Rosstat RF constitutent entities etc KPI KPImulti-user multi-user system system: : MDFT Common form: Baseline indicators Key indicators Graphic display Additional analytical functions Desktop Indicators Alerts Pre-configured reports Statutory reports MinFin RTO Government authorities Other external users 24

Enhancement of efficiency: general approach Tasks: Objective: Efficient structure and efficient execution of functions/processes Ensuring common manageable work method Reduction of functional processes costs related to functional Prerequisites Administrative, budget, civil service reform to improve public administration efficiency Streamlining organizational and staff structure 25

Overall logic of the system operation Regulation Model “as it is” Statistics of operations Modeling Analysis of operations statistics Structure and size General efficiency analysis Technology compliance control Контроль, detection of bottlenecks Load optimization 26

Implementation benefits Optimization of processes Motivation enhancement Reduction of operations number (exclusion of redundant operations) Efficiency oriented, moral and material incentives Costs optimization Optimization of organizational structure and staff schedule Redistribution of functions between employees and units Restructuring of units and divisions 27

System for processing individual payments 3. Information on charges Unified portal Unifiedservices portal of public of public services 2. Information on charges 10. Acknowledged payments and charges 5. Query 6. Information on charges Federal Treasury Federal Treasury Payment systems, Payment systems, Credit institutions Credit institutions 7. Information on payment 9. Confirmation of paid amounts 1. Debt accrued with unique ID 11. Acknowledged payments and charges 4. Payment of services with Payers unique ID 8. Transfer of funds 11. Acknowledged payments and charges Revenue Revenue Administrator Administrator Bank of Russia Bank of Russia 28

29 Completion of FTAS Implementation – start for new projects Policy development and analysis Budget preparation Budget Execution [Treasury system FTAS] Public investments Budget allocations management Audit and control Budget reports and analysis FTAS Budget commitments Web-portal publications Procurements Payments and revenues management Public debt and aid management Cash management Payroll HR management Asset management 29

Completion of FTAS implementation– start for new projects Budget planning Procurement management Contract recording Contract execution Control Management of nonfinancial assets Cash management Maintenance costs calculation Cash planning Accounting of revenues from non-financial assets Cash placement Procurement planning Placement orders Development of programs/ subprograms Services cost planning Budget preparation Accounting and reporting Management accounting Accounting Expenditures management Efficiency monitoring Delivery of budget data and tasks Revenue management Cash expenditures execution and accounting Efficiency monitoring Subsidy agreement registration Control and audit Debt and financial assets management HR management 30

General scheme of official site functioning in the Internet for placement of the information about state and municipal institutions Federal Treasury Official site for placing information about state (municipal) institutions (official site) Reference materials,, classifiers FT bodies FT bodies FT bodies Closed loop Open loop Reference materials Search and reflection of information 2 Information placement Information placement Analytical information Entry into Personal Office DS certificates Information on the institutions In conformity with Registration Procedure Information about institutions 3 1 Authorized representatives of the institutions Internet users 31

Portal solutions for “Electronic budget” implementation Unified portal of the RF budget system Closed art of the portal Open loop of the portal Regulatory, statistical and analytical information on public finance management Users access to functional sub-systems through “Personal Offices” system in conformity with their authorites Open loop Closed loop Official site on public procurements Open loop Closed loop Key performance indicators information system KPI window Analytical loop of KPI FTAS Portal (online SUFD) Open loop Closed loop WEB-services of EB upon their implementation User accesses authentication and authorization services Official site with information about institutions 32

Thank you for attention! 33