Improving the operations of public administrations in Finland
Created in 2010, the Finnish Government Shared Services Centre for Finance and Human Resources (HR) merges the activities of four separate shared service centres that previously existed to support individual ministries of the central government and the judiciary. The Centre employs some 770 experts who provide financial administration and HR support for approximately 110 central government agencies, departments and funds and approximately 80,000 private employees. Services in the area of financial administration cover expense management, revenue processing, payment transactions, accounting, reporting and the processing of travel expenses. The Centre's HR experts offer payroll services and supply relevant reports, statistics and data management. They also maintain records on sick leave and annual holidays.
The net revenue is approximately 53 million euros annually. The Centre handles payments related to some 1,500,000 purchase invoices, 300,000 claims for reimbursement of travel expenses, 1,300,000 salary payments and manages 175,000 sales invoices on behalf of its clients per year. The total volume of payments processed annually amounts to some 80 billion euros (2010).
The Finnish Government Shared Services Centre for Finance and HR Single Euro Payments Area () project - questions and answers
Newsletter: When did your organisation decide to set up the implementation project?
Mikko Grönman: The Finnish Government Shared Services Centre carries out the activities previously performed by four separate administrative branches. These were the Administrative Service Centre for the Judicial System, the Service Centre of the Ministry of Defence, the Shared Service Centre of the Ministry of the Interior, and the Service Centre operating as a unit of the State Treasury. These four entities had already kicked off their individual SEPA implementation projects in 2009. Following the creation of the Finnish Government Shared Services Centre in 2010, we integrated these separate implementation projects into one SEPA project. After that, the project was coordinated centrally by the Centre.
Newsletter: What motivated your organisation to set up a implementation project despite the fact that to-date there is no legal obligation for customers to implement payment schemes and standards?
Mikko Grönman: The Finnish State Treasury is the steering body which directs relevant central government agencies in the area of payments and payroll services, including the systems used to provide related services. The State Treasury therefore determined the timelines to be observed at the level of individual administrative branches to become -compliant. These guidelines provided by the State Treasury set the framework for the implementation project plans of the Finnish Government Shared Services Centre for Finance and HR.
Taking into consideration the complexity of our operating environment and the fact that we offer custom-tailored service packages for individual government agencies, implementation was considered a challenge. It was necessary to coordinate implementation across the entire process chain, across our side as well as on the customer side. These challenges actually increased our motivation to engage early. We were ambitious to manage the project in a controlled manner and according to the schedule established by the State Treasury.
Newsletter: Did your organisation opt to implement Credit Transfer () and Direct Debit ()?
Mikko Grönman: We implemented . We do not yet use .
Newsletter: Did you set up a implementation team? If so, which departments of your organisation were involved in the project?
Mikko Grönman: The project was managed in-house. As mentioned, the implementation process was already initiated by the four administrative branches whose responsibilities we assumed. At this first stage, the project was led by the units responsible for payment processing. Following the merger, the 'Change Management and Service Solutions' department at the new Finnish Government Shared Services Centre for Finance and HR took on the coordinating role. The project team also included in-house experts responsible for adapting the systems supporting our core business; those related to financial management and HR services. In addition, we identified those implementation issues which were addressed by external service providers, who operated under the supervision of the in-house team.
We also cooperated closely with the State Treasury and our payment service provider throughout the process. The project management process included regular reports to the State Treasury on progress achieved and next steps.
Newsletter: Is implementation viewed as a stand-alone project or is it part of a review of processes and applications beyond payments?
Mikko Grönman: We handled implementation as a stand-alone project, however we did take into consideration other IT projects in the pipeline.
Newsletter: Did your organisation opt to upgrade the existing IT architecture or to implement new IT applications and enterprise resource planning (ERP) systems?
Mikko Grönman: As instructed by the State Treasury, we opted to implement conversion services wherever possible to achieve -compliance of existing systems. There is a specific reason why this approach was chosen: in the years 2011 through 2014, the Treasury's so-called 'Kieku' IT programme is being introduced across all central government administrative entities. The Kieku IT Programme will standardise the procedures, processes and data structures of government financial and HR administration. The objective of the Kieku IT system is to improve the efficiency and quality of operations with the help of uniform and streamlined processes, as well as to support the service centre model. The Kieku system will be used by about 70,000 employees including some 3,000 professionals engaged in financial and HR administration. This new IT system was built taking into consideration requirements. We also had to take into account a further new IT programme being rolled out on the customer side to manage travel expenses.
So, in essence, we focused on implementing solutions that allow us to continue using the systems currently in place to handle payments, financial management services, a travel and cost management programme and payroll services, including payment of salaries and comparable payments. The conversion services used to achieve -compliance ensure that the functionalities introduced into our IT architecture are compatible with other new IT systems rolled out in parallel. Replacing existing systems by new systems would also have proven too costly.
Newsletter: What were the main challenges in the implementation project?
Mikko Grönman: A main challenge was to keep our systems, once -compliant, compatible with the systems of our clients, i.e. the Finnish central government agencies whom we serve. Very careful planning was necessary given that we provide customised service packages tailored to the specific needs of individual agencies. We had to take into account the system specificities of any agency we support. It was therefore extremely important for us to phase our implementation project with a view to ensure seamless processing of transactions with each individual customer. In fact, using conversion services to achieve -compliance also made it easier for our customers to adapt their own systems to . To help our customers manage the transition, we offered consulting and testing services and participated as an expert in their project teams.
Alignment with the migration processes of our customers also required close cooperation regarding implementation of the ISO 20022 message standards. This entailed training for payment and payroll experts. The reports provided to the customer with each payment transaction also had to be adapted to the ISO 20022 message standards. This process was supported by banks and IT providers.
The implementation of new web services and a public key infrastructure (PKI) required thorough preparation before the systems could go live. In a first step, we created two separate testing environments, which allowed us to simulate customer-to-bank communication based on the new technology. In the live production environment, we built altogether six web service channels connecting us with our bank. This transition involved updates of all relevant service agreements between the Centre and its payment service provider and those between the Centre and its customers. The service agreements and usage rights related to more than 400 bank accounts were impacted.
Updating bank account management also involved the change over of all account information to the International Bank Account Number (IBAN) and the Business Identifier Code (BIC).
Last but not least, our progress depended on the progress of our business partners. It was therefore crucial to keep schedules aligned and maintain the same dynamic approach - or to adjust deadlines if circumstances so required.
Newsletter: Is it possible to quantify the investment necessary to implement the payment schemes and standards?
Mikko Grönman: Overall, investments were a bit higher than we expected. It was however very difficult to provide exact estimates at the start of the implementation project due to the fact that so many different service providers operating with different processes were involved.
Newsletter: In your view, what are the main benefits of implementation?
Mikko Grönman: We expect that the benefits of migration will materialise once implementation of the comprehensive Kieku IT information system, the ISO 20022-based account and transaction reporting standard and the ISO creditor reference standard is completed.
Mikko Grönman is Project Manager at the Finnish Government Shared Services Centre for Finance and HR.
The Website features a dedicated page ' Migration - Reports, Case Studies and Indicators'. To view this page click here
Related articles in this issue:
Light at the End of the (Harmonisation) Tunnel. 'Third Progress Report on the State of SEPA Migration' prepared by the European Commission Services: results confirm need for mandatory end dates to pan-European payment instruments
Related articles in previous issues:
The Trailblazer. Kela, the Social Insurance Institution of Finland, completes migration to the SEPA Credit Transfer ( Newsletter, Issue 10, April 2011)
Facing Up to the IT Challenge. Choosing the right IT strategy for SEPA compliance ( Newsletter, Issue 8, October 2010)
Searching for Enlightenment? The new book 'ISO 20022 For Dummies' has all the answers! ( Newsletter, Issue 8, October 2010)
The Global Data Highway. The ISO 20022 catalogue of financial services messages: a progress report ( Newsletter, Issue 8, October 2010)
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