MRSC has joined with Toni Nelson, Small Cities Specialist, State Auditor's Office, Gayla Gjertsen, Finance Director, City of Tumwater, and Mike Bailey, Finance Director, City of Redmond, to bring you the "Finance Advisor" column. The "Finance Advisor" will feature a new article each month with timely local government finance information and advice you can use.*

Technology – Good or Bad?

April 2007

By Mike Bailey, Administrator of Finance and Information Services, City of Renton

You may be asking why we are spending a column of the coveted “Finance Advisor” talking about technology? That is a good question and we will come back to it later. You may also be wondering about the title. Is it just intended to be provocative or is there more to it than that? We will start there.

Technology is a tool. It should help us. It is best at helping us do relatively simple tasks lots of times. However, as technology has gotten better at this very straightforward role (simple things - lots of times) we have asked more and more of it. We were initially quite pleased that a computer could produce paychecks from time entry and various calculations concerning rates of pay, taxes and deductions. We took the next step and asked it to keep track of the expenses resulting from writing pay checks. We went on to budgeting for payroll based on rates of pay and dozens of tax and deduction calculations. Not stopping there, we next asked our computer to send the money generated from these calculations directly to the bank in the name of the payees (including all the deductions as well). Add to that keeping track of all the complex choices for the deductions that our employees need and insuring that these transactions occur routinely for dozens, hundreds or even thousands of employees every two weeks – well, now it is complicated.

Complex payrolls are able to be completed on a fairly routine basis and in this regard technology serves us very well. We have accounting systems, budget systems, cash receipting systems, and many more that are able to help us accomplish the hundreds and thousands of daily tasks required of a modern day government finance operation. That presumes that these have been designed properly for our needs, installed properly in the context of our operation; that our staff has been trained on their use; and that the hardware (the actual computers themselves) is up to the task. All of this does not happen on its own.

In this situation, technology is good. It enables improved productivity and accuracy. Good technology helps us with accountability by making it easy to provide information in meaningful ways. In these ways, technology is serving the needs of local government and therefore the citizens we serve. On the other hand, technology can be less good (and even bad at times) if we are serving it more than it is meeting our needs. Examples of bad technology include: working overtime to get the “bugs” out of the “new system” you’ve been installing for the last five years; having to do more work manually than you should (such as feeding information from one computer system into another manually); creating work that provides less value than its benefits (such as when a purchase order is required before you can pay a bill, but a PO serves no real purpose); or not being reliable enough to count on it when you need it!

Often the difference between good (reliable) technology and bad (unreliable) technology is how it is managed. “Information technology governance” (IT Governance) is an area that is getting a lot of attention these days. The Government Finance Officers Association (GFOA) is beginning an initiative to provide tools to local governments which are intended to help us with these issues. Along with several articles in their most recent monthly magazine, there will be sessions on IT governance and related topics at the annual conference. The Technology Resource Group of the GFOA will be posting “white papers” sharing best practices and helpful lessons learned on the topic as well.

Many finance officers are directly responsible for the technology within their local governments. However, even in those cases where it is not part of our direct responsibility, I would argue that it is part of our overall responsibilities to our organization. I’ve illustrated examples where our abilities to do our jobs is directly affected by IT Governance. In addition, as stewards of the public’s treasury, we are interested in the success of IT projects throughout the entity. An appropriate IT Governance structure is an important first step which will help you with clarifying:

• How do you identify opportunities for improvement through technology
• How you make IT investment decisions
• Finding the right balance between the “back room” technology needs (such as the network) and the applications that directly serve front-line staff
• Who is responsible to manage an IT project and then “own it” after implementation
• How do you leverage the investments you’ve already made for the greatest benefit

Technology represents a greater share of local government budgets each year. It can be a great way to leverage the efforts of staff and to enhance the interaction with the community. Technology can address the growing needs and wants of our community as well. In this era where you can use an Internet service to find and book hotels and restaurants in a city across the country as well as get driving directions between them downloaded to your cell phone, technology is providing better tools for living. However, technology can also represent risks, on-going costs and failed promises. Take a look at your IT Governance structure today and make sure you have the right approach to this important task. Make sure you have good technology serving the needs of your community in a technological age.

Resources:

GFOA’s Technology Resource Group Web site

Latest Issue of GFOA’s Government Finance Review

Mike Bailey is currently the Administrator of Finance and Information Services for the city of Renton. Previously, he worked as the Director of Finance for the city of Lynnwood for six years. Mr. Bailey also served as president of the Washington Finance Officers Association and is the Vice Chair of the GFOA Budget Committee. An experienced CPA and GFOA budget reviewer, Mr. Bailey co-founded the annual Budget and Fiscal Management Workshops held each summer. Mr. Bailey conducts numerous workshops and has authored various articles on local government finance, including Effective Budgeting in Washington State Cities published by the Association of Washington Cities.

*The Articles appearing in the "Finance Advisor" column represent the opinions of the authors and do not necessarily reflect those of the Municipal Research & Services Center.