The modernization of federal financial management systems has seen significant strides in recent years. From a total of 56 systems needing updates in 2021, the number has now reduced to 47. This progress is attributed to the efforts of the Financial Management Quality Service Management Office (FM QSMO), which has transformed its role from a service provider to a broker. By facilitating access to compliant standards-based solutions and services from trusted providers, FM QSMO aims to address the ongoing need for system upgrades. Despite this reduction, a substantial portion—72%—of these systems will still require modernization by 2035 due to end-of-life issues and compliance with new requirements. Additionally, about 38% of legacy systems remain on-premise, complicating the process of updating and securing them.
The Office of Management and Budget introduced the QSMO concept in 2019 to revolutionize the business model for shared services. The FM QSMO's responsibilities include managing a marketplace for software and services, guiding long-term sustainability, driving standards implementation, and ensuring continuous improvement. Over the past five years, the QSMO has expanded its offerings to include over 100 financial services products from 20 public and private sector providers. In 2024, four agencies awarded contracts totaling $183 million through the marketplace, marking significant milestones in the adoption of modern financial services. The FM QSMO plans to double the number of providers by 2026, aiming for continued growth and diversification in the marketplace.
Transforming Roles and Responsibilities
The evolution of the FM QSMO from a service provider to a broker has been instrumental in advancing financial management modernization. By acting as an intermediary, FM QSMO connects agencies with trusted providers who offer compliant and standards-based solutions. This shift has enabled more efficient and effective access to necessary services. Despite the progress made, there remains a critical need for modernization, particularly due to the impending obsolescence of current systems and the necessity to comply with emerging regulations. Moreover, the challenge of modernizing on-premise hosted systems cannot be overlooked, as it poses significant hurdles in terms of security and efficiency.
The FM QSMO's role extends beyond mere facilitation; it involves comprehensive oversight of the marketplace's offerings. Ensuring that all products and services adhere to government-wide standards is crucial for maintaining consistency and reliability. The office also plays a pivotal role in guiding the long-term sustainability of these solutions, ensuring they remain viable and adaptable to future needs. The FM QSMO drives the implementation of these standards across various agencies, fostering a unified approach to financial management. Continuous improvement is at the heart of their mission, with ongoing efforts to enhance the marketplace platform and user experience. Agencies can now easily search for providers and resources, streamlining the acquisition process and improving overall efficiency.
Growth and Future Prospects
The expansion of the FM QSMO marketplace has opened new avenues for agencies seeking modern financial services. Initially launched with only four providers, the marketplace has grown exponentially, doubling in size year-over-year. Today, it offers access to 20 providers, providing over 100 diverse financial services products. This rapid growth reflects the increasing trust and reliance on the marketplace for essential financial management solutions. The success stories of agencies like the Patent and Trademark Office and the Army's Enterprise Business Systems convergence group highlight the tangible benefits of leveraging the marketplace for modernization initiatives. These examples demonstrate how cloud-based core solutions and support services can significantly enhance operational efficiency and compliance.
Looking ahead, the FM QSMO has set ambitious goals for further growth. By 2026, the office aims to increase the number of providers by 200%, expanding the variety and depth of available services. Engagements with industry stakeholders suggest that this target is within reach, with anticipated growth in specific areas such as core financial solutions. The FM QSMO is also focusing on enhancing the user experience of their platform, making it easier for agencies to find and engage with providers. Continuous improvements will ensure that the marketplace remains a vital resource for federal agencies, supporting their ongoing efforts to modernize and optimize financial management systems. With several agency acquisitions currently in progress, the future looks promising for the continued advancement of financial services in the federal sector.