DOD official defends department against GAO criticisms

The Government Accountability Office earlier this month released the latest in a series of reports taking issue with the Defense Department's ongoing struggles to reform enterprise business systems. But according to a DOD official, GAO is overlooking key factors in the situation, including progress that has been made and legislative curveballs that have made the process harder.

DOD officials have been working for nearly a decade to overhaul the department's more than 2,000 business IT systems and financial management of a portfolio worth more than $7 billion a year. The journey has been dogged by delays and cost overruns, but some say the watchdog reports have masked progress in evolving a fragmented culture into a comprehensive system for managing business and IT.

"I've really watched how the department has evolved in this entire area. Back in the 2005-2006 timeframe, we weren't thinking from a holistic perspective – everything was very local, all decisions were local," said Elizabeth McGrath, DOD deputy chief management officer. "Now we’re aimed at achieving not only an integrated but a simplified business environment, leveraging the technology that's out there today. Back in those days we didn’t talk about shared services, mobile or cloud, or anything like that, so we're trying to leverage computing capabilities...to get to a more simplified environment."

Central to the efforts is the establishment of a DOD-wide investment review board, which involves participation from military leaders across the department, The board examines any business IT investment of more than $1 million. Previously, such acquisition decisions would have been made within the given military branch, but that has changed to provide the Pentagon with portfolio-focused view of DOD's systems and their functionality.

"We're saying, 'Bring that [decision] into the broader conversation and make sure there's a return on investment and a business case that supports the investment,'" McGrath said. "It was a little scary at first because it provided a level of transparency nobody was used to. Now it's instilling much more of a cost culture. [And] it's not just what are the IT systems' costs, but what is the business outcome I'm trying to achieve and how does this IT help me do that? We're really embracing that context in a way we haven't before."

The 2005 National Defense Authorization Act mandated that DOD establish a business enterprise architecture, essentially a blueprint for modernizing business systems and processes, as well as an accompanying transition plan. The latest GAO report faulted DOD in both aspects, including for failing to perform key validations and implement metrics, respectively. But according to McGrath, recent changes to the act's requirement increased the number of systems subject to evaluation by four-fold, complicating and delaying the process.

"With the change in legislation we went from about 200 [systems] to between 1,200 and 1,300 because of the change in criteria," she said. "That's a huge change in a year...to put together a structure by which you could evaluate how does it fit, what is the criteria for supporting the investment, where are they in the reengineering process, are they connected to the architecture? I don't think they appreciate the magnitude of the change the department went through in essentially less than a year's time."

But she added that the legislative changes, while they may have moved the goal posts, still provide important functions.

"Before, we only looked at the development piece," McGrath said. "Now we're looking at all of it...and that really enables us to address the entire business space in a way that puts accountability into the mix, requires justification and a business case, as opposed to just things you want to put [research and development] dollars into."

Oversight measures also target DOD auditability and the department's maligned enterprise resource planning programs, which McGrath acknowledged have historically been troubled. However, the roughly 10 ERPs, while behind schedule and over budget, are putting capabilities into the hands of more than 200,000 users – an increase from 27,000 in 2009, she said.

The critical eye toward DOD business systems and processes, while producing frustration at times, still puts the Pentagon in a better financial management position, according to McGrath. The scrutiny of reform efforts have increased under growing fiscal pressure, but that is not a bad thing, she pointed out.

"The fiscal environment being as constrained as it is right now provides a great catalyst for more forward-leaning thought processes," McGrath said. "I think if you look at when companies change or evolve, many times they have a burning platform. Look at General Motors – how did they go from where they were to where they are now? There was a burning platform that existed, and I think this fiscal environment today is burning platform for sure."