For years, the Department of Defense (DoD)'s business systems have faced intense scrutiny from the Government Accountability Office (GAO). After all, each year, the DoD spends billions of dollars designing, building, operating and maintaining business systems for U.S. troops. And for decades there was no requirement to adhere to a DoD-wide architecture or set of common standards regarding business processes.

So over the years, DoD business management systems have been unable to interact satisfactorily with one another and facilitate the synthesis of management processes; provide DoD decision makers with timely, accurate and reliable information; fulfill all financial management laws, standards and requirements; and produce auditable financial statements.

Business systems needed to be modernized. According to the department's Web site, the DoD manages more than twice the dollar volume of the world's largest corporation, employs more people than the population of some countries and carries 500 times the number of inventory items as the world's largest commercial retail operation. Indeed, business systems needed to be modernized.

Then last October the GAO turned heads when it concluded that despite a few caveats, the Pentagon had made notable progress in transforming its business systems. This is due in significant part to the Business Management Modernization Program (BMMP), the Department of Defense's business transformation initiative.

The four key objectives of the DoD's business transformation efforts are as follows:

• Provide support for the joint warfighting capability;
• Enable rapid access to information for strategic decisions;
• Reduce the cost of DoD business operations; and
• Improve financial stewardship to the American people.

The GAO's report noted such progress as the DoD having accomplished the following: written a new defense-wide enterprise architecture and transition plan; set up rules to vet business system investments; and built a management organization capable of leading the project successfully. The review is considered by many defense watchers as the turning point in the way the DoD approaches the business transformation problem.

To spearhead the initiative, the Pentagon recently created an agency devoted to business change — the Business Transformation Agency (BTA) — formed to move dozens of the Pentagon's most extensive business modernization programs under one roof and centralize oversight of 18 department-wide programs/projects, including the Defense Travel System, the Defense Cash Accountability System, the Standard Procurement System, the Pentagon's e-mail system and the Defense Acquisition Management Information Retrieval program.

In March, the DoD published its 2006 Congressional Report and noted the progress it has made in its business transformation efforts since delivering its last report in March 2005. In the year between, the department instituted a strong governance structure to guide and manage its business transformation efforts. This governance structure includes the establishment of the BTA, which, as stated above, serves as the catalyst for business transformation by coordinating, consolidating and integrating activities at the DoD Enterprise level. The business transformation initiative currently has a management structure with a direct line to the top levels of the department.

As well, an investment review process was implemented to better evaluate and control the DoD's significant business systems investments.

And the department both developed and is utilizing integrated management tools, namely the Business Enterprise Architecture (BEA) and Enterprise Transition Plan (ETP). The BEA provides the architectural framework for an information infrastructure for the DoD, and the ETP provides the roadmap with measurable plans, schedules and budgets for transforming the department's business operations. The BEA and ETP currently are focused on the business capabilities for identified business enterprise priorities, and the systems and initiatives that will enable those capabilities.

The DoD is spending about $4.2 billion a year to maintain its business systems.

Despite the significant strides forward, however, the department has a ways to go on all objectives.

Although the BTA has made a good initial showing, "it starts out in a deep hole," said an article last month at government, business and tech news site FCW.com.

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.

Although the BTA received a pat on the back from the GAO, the two organizations remain at odds over some of the subtleties of business transformation. Defense management strategists believe that simply altering perceptions about business transformation will be critical to its success.

Aptly noted FCW: "For decades, business transformation has been equated with financial accountability, which is one of the first casualties of war."

Resources

Defense Fact Sheet: Business Transformation Overview
Dept. of Defense, Defense Business Transformation

Business transformation is turning heads
by Paul McCloskey
FCW.com, March 27, 2006

Defense's business transformation chugs forward
by Dawn S. Onley
Government Computer News (GCN), March 20, 2006