The Lines of Business were developed to increase efficiencies in Government and to save tax payer money. The Financial Management Line of Business (FM LOB) addresses one of the most duplicated systems across the Government. Every Agency and Department has Financial Management obligations, but are these obligations something that every Department and Agency should allocate valuable resources to develop and maintain?

The FM LOB assumes the answer to this question is no. To save money and to offer the best and most modern solutions, the FM LOB goals are to reduce non-compliant systems (i.e., most legacy Financial Systems) and move the work to several dedicated public and private centers of excellence that would compete for the chance to host and maintain the Financial Management systems for Government Agencies.

Spend a Little, Save a Lot

In principle, this makes perfect sense. Billions of dollars can be saved by using economies of scale to maintain just a few common COTS Financial packages that offer uniform solutions to the whole Government. This would also free up resources that Departments/Agencies would have to devote to the maintenance of legacy financial systems, and really take away from the core mission the Departments were created to do.

So why is there is so much resistance to something that just makes sense? Control may be part of that answer. Many large Departments may not be willing to give up control of something they consider - "theirs." Additionally Federal Agencies may believe they have a unique mission, and it would be ludicrous for another Agency to understand their unique needs. An added facet of the problem is some Departments don't act in one voice; they still need agreement from all of their constituent Agencies before outsourcing their whole FM systems to a SSC.

All Roads Lead to Consolidation

Even with this resistance, the consolidation trend will continue, if not under the name FM LOB, then something similar. The cost savings and the access to common compliant solutions are too practical to simply ignore. The Office of Management and Budget is committed to this initiative and under their guidance, when the upgrade cycle for a legacy systems comes up, Agencies will have to take a look at the SSCs. We may not arrive at the end goal of the initiative in the currently anticipated time frame of just a few years, it may take a decade. But one thing is certain, the future is consolidated.

Download the full report: Financial Management Line of Business: Market on the Move