Business transformation is turning heads

Editor’s Note: This story was updated at 11:30 a.m. March 27, 2006, to reflect that Brandy Johnson is a colonel, not a lieutenant colonel, and program manager for the Defense Travel System, not Defense Travel Service.

In 1991, when the Army started experimenting with digital forces, it set up a facility to test computerized command systems before they were used on the battlefield. Soon the Central Technical Support Facility (CTSF) at Fort Hood, Texas, had become the hub of systems engineering and interoperability testing for digital combat systems that would transform warfighting.

Last November, the Army secretary assigned the Fort Hood facility to the office of the Army chief information officer, with the key proviso that CTSF was to test the interoperability of all Army information systems, including — for the first time — Army business systems. For some, it was a quiet but clear sign that top Army managers now value business systems as an essential piece of their warfighting equipment.

The transfer coincided with a series of moves by the Pentagon last year to tackle business transformation, an attempt to sort through its 4,000-plus far-flung business systems and put together a machine that could provide payroll, finance and travel services across all military services and organizations. “We’ve brought together the most transformationally oriented career civil servants we have within DOD to have accountability for the corporate requirements of the Department of Defense,” said Paul Brinkley, deputy undersecretary of Defense for business transformation. “And when we say we’re going to do something as a collective, there’s somebody at the top that’s actually accountable to do it.”

So the Government Accountability Office turned heads in October when it concluded that despite a few caveats, the Pentagon had made important progress in transforming its business systems. That included writing a new defensewide enterprise architecture and transition plan, setting up rules to vet business system investments and building a management organization capable of leading the project successfully.

“Six months earlier, I would have said the glass was empty,” said Randy Hite, director of information technology and architecture at GAO and co-author of the report. “And now I would say the glass is half full. In the last six months, they have made more progress than they had made in the past four years combined.”

Many defense watchers believe the review signifies a turning point in the way DOD approaches the problem of business transformation. Among other changes, they have observed a politically powerful management team to lead the project, a succinct mission to align business and warfighting systems, and a willingness to let the services manage their own implementations in exchange for cooperation on standards.

“I think that what they’ve done is not only lay out a concept but they have set up what looks like a viable governance model,” said former DOD controller Dov Zakheim, now a Booz Allen Hamilton executive. “That’s terribly important because at this stage, you’re into the sixth year of the administration, and so the question is, ‘How do you give this thing legs? How do you make it sustainable regardless of who of the secretary is?’”

The business transformation initiative currently has a management structure with a direct line to the top levels of the department. Gordon England, DOD’s deputy secretary and chairman of the Defense Business Systems Modernization Committee, has been essential to its progress. Army Maj. Gen. Carlos “Butch” Pair, defense business systems acquisition executive, has been another significant contributor.

To spearhead the initiative, the Pentagon also formed the Defense Business Transformation Agency (BTA), led by Brinkley and Tom Modly, deputy undersecretary of Defense for financial management. The agency is in charge of 18 major systems, including the Defense Travel System and the Defense Integrated Military Human Resources System (DIMHRS).

Starting out
Although BTA has made a good initial showing, it starts out in a deep hole. Last year, the department spent $15.5 billion to operate a hodgepodge of systems. And some observers believe a lack of enthusiasm for business transformation in some Pentagon offices has already hampered the department’s warfighting transformation.

“You need to have a clear picture of all your business activities, from spending money on contracts to moving material, ordering supplies and keeping track of people,” said Ray Bjorklund, senior vice president and chief knowledge officer at research firm Federal Sources Inc. “If you don’t have that, it’s almost Pollyannaish to think you can make the really informed decisions that enable you to make operational decisions quickly.”

Hite agreed that although DOD has made strides, it has a long way to go. “Success on this modernization is not about just putting in place these institutional controls; those are enablers,” he said. “The hard part of is making sure that they are reflected in each and every investment. Ultimately, you want to get to the point where you are delivering modernized capabilities to replace old legacy systems. That is the long pole in the tent.”

But defense business planners argue they are beginning to see both — certified business components going into systems that are already hitting the field. As of last month, the Office of the Secretary of Defense had certified that more than 215 business systems investments aligned with the new architecture.

The services themselves screened out more than 200 additional investments.

BTA also recently posted on its Web site its first round of deliverables, Brinkley said. These include the Acquisition Spend Analysis Service — designed to provide a single view of acquisition data from multiple services — the Defense Civilian Personnel Data System, and a digital version of Standard Form 44, which “extends our acquisition visibility all the way to the point of the spear.”

Service resistance
The defense bureaucracy is rarely kind to centralization, and BTA has had to gauge how much force to exert on the military services to adopt its plans. Earlier this year, it withdrew a plan to create a departmentwide integrated human resources and payroll system — DIMHRS — after the services balked at a top-down implementation.

BTA then sent a team of negotiators, led by BTA transformation planning leader David Fisher, to evaluate the standoff. The team found that the agency needed to improve communications and make sure the services were more directly involved in defining requirements and planning programs rather than working through a coordinating office.

To some people, the experience was typical of most enterprise resource program launches. “The government, DOD and industry have significant challenges in implementing ERPs,” said Vernon Bettencourt, the Army’s deputy CIO. “I think what you are seeing with DIMHRS is some of those growing pains as you try to implement ERP and, in this case, not just within a service but across all of DOD.”

The new plan calls for DIMHRS to absorb 79 systems, and the system will act as a departmentwide traffic cop for sharing human resources, pay and benefits information via some 500 older systems for all active-duty employees and National Guard, Reserve and retired personnel.

On an operational level, defense program managers say BTA has cleared the way for department offices to resolve common problems.

“In the past couple of months, for the first time, the business PMs have a unified place to sit down and talk about systems that we’re connecting with and that [we] will connect with in the future,” said Col. Brandy Johnson, program manager for the Defense Travel System, which handles travel logistics for 824,000 military employees at 6,760 sites worldwide.

Defense management strategists believe that simply altering perceptions about business transformation will be critical to its success. For decades, business transformation has been equated with financial accountability, which is one of the first casualties of war.

But as the services transform into a more modular warfighting force, they will need better connectivity among units and back to noncombat resources. “When you go to Iraq or Afghanistan or Kuwait or Korea, it’s a joint fight out there and we want to be as joint as possible and as efficient as possible,” Bettencourt said. “We start from a premise that we have to operate from within a DOD-wide enterprise and business process perspective.”

So will business transformation succeed, given its promise and its problems? The answer seems to be that it will. “Not only am I optimistic about it, but the fact of the matter is that it has to work,” Zakheim said. “There has to be a viable management information system. There’s no other way around it.”

McCloskey is a freelance editor based in Chicago.