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Home » Archives » Business

State Treasury chooses platform

Record-setting IT tender moves forward

By Michael Heitmann
Staff Writer, The Prague Post
October 17th, 2007 issue

To get a better grip on state expenses, the Finance Ministry will soon centralize all of the government’s money into a single account flowing in and out of the Czech National Bank.
The ministry hopes that its State Treasury project will bring order to what was previously a chaotic system of national accounts, with individual state institutions holding bank accounts at commercial banks, making oversight a nearly impossible task.
Of course, overseeing this unified account of the state’s more than 1.36 trillion Kč [$70 billion] in expenses will cost a significant sum itself: an estimated 2.5 billion Kč by 2013. But that will be money well spent, analysts say.
“If we discover one significant opportunity for savings thanks to the new system, it will have paid for itself,” said Raiffeisenbank analyst Aleš Michl.
Last week, the tender for the largest component of the project took a major step forward, as the Finance Ministry chose software from SAP — Europe’s largest software company, based in Walldorf, Germany — as the platform for its integrated budget system.
The tender process for the budget system is still ongoing, but the second round, due in November, will accept applications based only on SAP software. The winner of the tender will receive the largest IT order in the country’s history, according to observers.
“It was necessary to choose a software solution that … has the capability to react to judicial and other changes on short notice and at low cost,” said spokesman Ondřej Jakob of the Finance Ministry’s selection.
The step was long overdue, because the budget lacks transparency, Michl said.
“If you take a look at current expenditure reports, it is a maze of numbers — and that’s why it has to change,” he said. “My favorite budget item is called ‘subsidies for companies and state-funded organizations.’ It earmarks 285 billion Kč.” But where this money actually goes remains unclear, he said.
While having an integrated budget system is not necessary for euro adoption or improving the country’s financial rating, it helps, Michl said.
“We’ll make financial flows more transparent, we’ll discover how to deliver savings — but it depends on the political leadership, whether it makes use of this potential.”
All of the Czech Republic’s neighboring countries have long implemented central control of public finances. The Slovak Finance Ministry has used a proprietary system called RIS since 1998, which cost an initial 80 million Sk ($3.4 million).

Michael Heitmann can be reached at mheitmann@praguepost.com


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