Modernizing Legacy Financial Management Systems takes More than Technology Alone

Legacy financial management systems aren’t going away anytime soon, but modernization is mandated and necessary to their missions. How can federal agencies ensure their work gets done while actively transitioning — and will they ever be able to retire legacy systems?

The military healthcare system offers insights into the upside of modernization, with lessons for any agency. As a former Army hospital CFO, I know first-hand that financial operations leaders need to be aware of everything related to service delivery. I needed to pay attention not just to the costs of personnel, utilities and supplies, but to the full range of factors that impact patient care. I had to consider the time doctors and nurses spend with patients along with treatment metrics and the effects of healthcare on readiness.

Modernization is Well Under Way

Section 702 of the 2017 National Defense Authorization Act centralized military health under the Defense Health Agency (DHA). This legislation created opportunities to reduce redundancy and shift resources to improve care and readiness — while still allowing for operational differences among the armed services. DHA is moving systems quickly to the cloud, which will provide more flexible access to core systems and greater manageability and measurement. Still, the data and tools that people depend on must be available. For now, much of this capability resides in legacy applications and systems.

Legacy Systems: Familiarity and Risks

Why not just leave those tried-and-true solutions in place? First off, many legacy systems are too siloed to move information around quickly, which burdens patients and caregivers to share records manually. Also, all too often, multiple stovepiped systems are only connected by a person in the middle, rather than automated connections that can access and analyze shared data and move processes along efficiently.

Many older systems have become too expensive to maintain; they create ongoing costs for licensing, hardware maintenance and platform upgrades, even for rarely used systems. Some systems have been patched so many times, to keep up with new compliance standards or demands for functions, that they are no longer useful or fully functional.

More critically, the knowledge of how to support them is rapidly disappearing. As technical personnel retire, the skills needed to work with older programming languages leave with them, and newer recruits aren’t familiar with those out-of-date languages. For all these reasons, plus factors such as cost control, scalability, remote access and security, modernization is inevitable for the government.

Unintended Consequences

Still, it isn’t always a straightforward move from legacy to modernized systems. When the General Fund Enterprise Business System (GFEBS) was first fielded for the Army, it provided the needed transparency and controls, but its business processes weren’t managed in the same way as the legacy systems it replaced. This meant that users needed to adapt their workflows to the system, instead of the other way around.

The good news is, cloud-based and Software-as-a-Service approaches can — and do — evolve. As new systems are fielded, people become more adept at using them, business processes catch up and stakeholder training matures to meet the needs of each organization.

Navigating the Transition Phase

Modernization is a process, which begs the question: can cloud-based and legacy systems co-exist successfully during the transition period? The answer for many agencies is a qualified “yes,” but it will take some effort. Often, this involves keeping both old and new systems running for some period of time — several months to as long as 5 years when dealing with financial systems — to ensure accuracy and make any needed adjustments.

Meanwhile, users may have to make duplicate entries in both systems — which can introduce errors if manual entry is needed, as opposed to automated feeds from other systems. OVerall, financial reporting is a heavy lift during a transition. Data cleansing requires strict attention to detail to ensure accuracy across multiple data sets.

Limiting errors takes careful planning, organization, and focus and can benefit from the appropriate use of automation — along with an industry partner that can identify the challenges and implement effective solutions.

How the Right Industry Partner Can Help

An industry partner should complement and enhance your own technical expertise — they should be experienced in dealing with legacy systems and current and emerging technologies, including cloud, SaaS and artificial intelligence-based tools.

But the right partner should also bring a thorough understanding of workflows, regulations and agency culture, to define the best solutions to move your mission forward. That’s why an ideal partner will help optimize your processes to ensure everyone can get the most from your new capabilities. This empowers stakeholders to focus their efforts on making decisions, rather than chasing numbers across systems.

Change management is also crucial. As agencies transition from legacy systems to modern ones, it’s essential to help them understand the impact of their new workflows. Ongoing training is an integral part of that transformation.

Most of all, an insightful industry partner can help agency personnel understand the entire process and how it affects operations and business functions. If, for example, you only manage supply requisitions, you may not see the ramifications of that one step on downstream processes. Your partner should help everyone see — and improve — the big picture.

Hands-on Experience Makes the Difference

With our years of hands-on experience, MDC is that partner. Our financial management and technical experts have learned the value of everything that can affect modernization, from resources and budgets to workflows and processes. We also understand the practical impact of automation, and how and where to use it for maximum effectiveness. More importantly, we work side by side with our customers to ensure a seamless experience, from planning to implementation — and into the future.

To learn more about how MDC can help enable a successful digital transformation for government agencies, contact us today.