The political context of the Ministry of Finance’s efforts to update the existing federal accounting and budgeting system and to improve overall these processes for the government was complex. Given the historic and institutional context described above, the Ministry of Finance was faced with ministries and other spending units that did not want to give up their existing solutions and/or proposed IT investments for a Ministry of Finance chosen one based on a single technology and standardized workflow. Without the authority to mandate that the other ministries modify their internal processes, the Ministry of Finance had to depend on the voluntary willingness of the other ministries to cooperate, and this willingness was not generally forthcoming.

The reform of the federal accounting and budgeting system was part of a much larger governmentwide reform effort. Because of this reform effort, As part of this effort, the Ministry of Finance was able to secure the needed high level political support to move forward with the necessary legislative changes, obtain the needed funding, and secure the necessary level of cooperation from the individual ministries. The political climate was influenced by several recent milestones for the Austrian government. These three milestones contributed to focusing the energy of the Austrian government on reform.

Austria’s decision to join the European Union on January 1, 1995, had a significant influence on the political and economic context – placing considerable pressure on the government to initiate several budget consolidation programs and structural adjustments.¹ Government reform in Austria reached a new level after a political change in government in 2000. The new government put a strong emphasis on a comprehensive reform of administration and on budgetary consolidation to meet the EU’s criteria for participating in the single monetary policy.² The ‘administrative reform law’ that passed Parliament in November of 2001 outlined a broad range of reform projects to include personnel reductions, an improved cost accounting system, and budgetary improvements. In 2003, due to deteriorating economic conditions, the Austrian government officially dropped its goal of maintaining a zero budget deficit, but considered austerity and savings a high priority – and still does to this day.³ Through its Administrative Innovation Program (VIP), the government targeted a total reduction of public spending by €1.3 billion by 2006. In addition, the government targeted reduction of the Federal Administration by an equivalent of 10,000 full time employees between 2003 and 2006.⁴ In March, 2004, the Austrian E-Government Act set the requirement that all public bodies be capable of full electronic transactional service delivery by 2008.⁵ These three events raised the Ministry of Finance’s plans for a new accounting and budgeting system to a high priority. The system would support the goals of both internal government reform and delivery of improved services to citizens through its e-government strategy.

In the same period, another policy trend further supported the Ministry of Finance’s efforts to implement the new federal accounting and budgeting system: consolidating government organizations into single corporate entities. In the 1990s, 24 government organizations were transformed into corporations with their own legal identity. The underlying administrative principle of reorganization or “corporatization” is that the government should not do anything that can be done as well or better by the private sector or by independent organizations operating on free-market principles at arm’s length from central government.⁶ A major motivating force for this corporatization was dissatisfaction throughout the government with limited flexibility in financial and administrative routines, personnel actions, and wage policies. This dissatisfaction often focused on the two organizations that played a critical role in implementing the new budgeting and accounting system, the Federal Computing Center and the Federal Bookkeeping Agency.⁷