Department of Defense Financial Management modernization."One of my highest priorities," stated Secretary of Defense Donald Rumsfeld," is to have reliable, accurate, and timely financial management information upon which to make the most effective business decisions." One might ask why, during a time when our predominant priority should be that of defending freedom, would the individual most responsible for the freedom fight be concerned about financial management information? "Very often, people mistakenly diminish the importance of financial management because it doesn't seem to be a battlefield activity," remarked Dr. Dov Zakheim, Under Secretary of Defense (Comptroller), during a recent interview published in the Fall 2001 issue of the Armed Forces Comptroller. But one must consider two points: that reliable financial information is necessary to manage the Department's business and to report the results of its operations and that it is a product of virtually every action taken by the Department--especially that of war fighting! Ensuring that the Department can support the man or woman on the ground, in the air, or on the sea is a critical fiscal responsibility of the Department. Strategy for Financial Management Improvements At the request of the Secretary of Defense, the Department contracted with the Institute for Defense Analyses The Institute for Defense Analyses (IDA) runs three federally funded research and development centers (FFRDCs) focusing on defense and scientific issues. Centers The IDA Studies and Analyses FFRDC is co-located with IDA headquarters in Alexandria, Virginia. to conduct a study to recommend a strategy for financial management improvements within the Department. That study, Transforming the Department of Defense Financial Management, A Strategy for Change, was published on April 13, 2001. It is often is referred to as the Friedman Report. The report emphasizes that "current DoD financial, accounting and feeder/operational management systems do not provide information that could be characterized as relevant, reliable and timely. Nor is the 'support of management decision-making' generally an objective of the financially based information currently developed or planned for future development. Front-end investment and much work need to be done to accomplish a necessary transformation. Many positive projects are currently underway in DoD; however, they are narrowly focused, do not have sufficient senior leadership and urgency behind them, and are not part of an integrated DoD-wide strategy." On July 19, 2001, Secretary Rumsfeld established a Department-wide Financial Management Modernization modernization Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family, Program chartered to develop a DoD-wide blueprint-an enterprise architecture-that will prescribe pre·scribe v. To give directions, either orally or in writing, for the preparation and administration of a remedy to be used in the treatment of a disease. how the Department's financial and nonfinancial feeder feeder abbreviation for self-feeders. Used in feeding groups of animals at intervals of several days. Feed has to be dry and comminuted so that it will run down the spouts from the hopper into the troughs. systems and business processes will interact. Additionally, the Secretary directed the creation of a Program Management Office, reporting to the Under Secretary of Defense (Comptroller), to carry out this formidable task. Dr. Zakheim immediately formed a Financial Management Modernization Task Force, under the oversight of Ms. Tina Jonas, Deputy Under Secretary of Defense (Financial Management), to jump-start the program pending the formal establishment of the Program Management Office. The DoD top leadership's vision is that the Department will be managed in an efficient, business-like manner in which relevant, reliable, and timely financial information affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. by clean audit opinions is available on a routine basis to support informed decision-making at all levels throughout the Department. The scope of this initiative encompasses those DoD policies, processes, people, and systems that guide, perform, or support all aspects of financial management within the Department--from the formulation of budget estimates to the preparation of management reports and financial statements. As recommended in the Friedman study, the Department will employ a two-track approach, that is, near-term improvements and long-term solutions. Specific goals include, but are not limited to, the following: * Stabilizing stabilizing, v to hold a limb motionless in order to ground its energy; a standard isometric resistance technique, it releases tension and lengthens muscle fibers. the Department's current financial management systems and initiatives * Improving public confidence in the Department's ability to manage its finances * Reengineering business practices to emulate em·u·late tr.v. em·u·lat·ed, em·u·lat·ing, em·u·lates 1. To strive to equal or excel, especially through imitation: an older pupil whose accomplishments and style I emulated. 2. , as closely as possible, those of commercial organizations * Establishing Defense-wide data and process standards * Developing an overarching o·ver·arch·ing adj. 1. Forming an arch overhead or above: overarching branches. 2. Extending over or throughout: "I am not sure whether the missing ingredient . . . Financial Management Enterprise Architecture To ensure the implementation of an integrated financial management system that complies with applicable requirements, the Office of the Under Secretary of Defense (Comptroller), with the support of an independent contractor A person who contracts to do work for another person according to his or her own processes and methods; the contractor is not subject to another's control except for what is specified in a mutually binding agreement for a specific job. , will develop a financial management enterprise architecture to serve as the Department's blueprint for effective financial management reform. The Department recently issued the enterprise architecture statement of work for private sector consideration and proposals. The Department's goal is for the selected contractor to deliver a suggested enterprise architecture within one year after the date of contract award. The enterprise architecture will include a Department-wide "As Is" financial management systems inventory and environment, a "To Be" environment, and a transition plan with defined milestones and actions for achieving the ultimate desired environment. A high-level Plan of Actions and Milestones (Figure 1) guides and projects the expected program outcomes. The plan marks major milestones in the design phase of the Department's enterprise architecture that are essential to the program's success. Some of the most notable actions are as follows: * Identification of the Departments current systems inventory * Development of Defense standards * Business process reengineering See reengineering. One of the first major efforts initiated by the task force is the identification of all Department-operated financial and business systems and their interfacing relationships. To date, over 600 systems with greater than 1,400 interfacing relationships have been identified and plotted to provide a visual display of the current environment. The system inventory-wiring diagram consumes an entire wall in a frequently visited Pentagon conference room. The "As Is" system inventory eventually will identify all accounting and finance systems and their corresponding interfacing systems, to include direct and indirect feeder systems. Figure 2 illustrates the defined scope of the system inventory effort underway. The identified feeder systems include all nonfinancial business systems that support the acquisition, medical, transportation, property, inventory; supply, and personnel communities, as well as other communities. The feeder systems are represented as either Tier 1, 2, or 3 systems. Tier 1 systems are financial or nonfinancial systems that interface directly with accounting and/or finance systems. Tiers 2 and 3 systems respectively interface indirectly through Tiers 1 and 2 systems. The inventory effort is expected to be completed by the end of January 2002 and should include thousands of systems before it is completed. New Classification System An additional program initiative in progress is the identification of all business lines and products and services provided within the Department. The task force adopted the North American North American named after North America. North American blastomycosis see North American blastomycosis. North American cattle tick see boophilusannulatus. Industry Classification System (NAICS NAICS North American Industry Classification System ) codes as the foundation for this effort. The NAICS (http://www.census.gov/epcd/www/naics.html) is a classification system developed jointly by the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Canada, and Mexico to provide new comparability in statistics about business activity in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . It is based upon the principle that activities using similar processes should be classified together. The business lines and respective products and services will be identified for each DoD field-level activity. This process will help to lead the Department toward implementing "dashboard (1) See Mac Dashboard. (2) A software-based control panel for one or more applications, network devices or industrial machines. Dashboards display simulated gauges and dials that look somewhat like an automobile dashboard. " metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. and performance standards for all DoD business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets (for example, depot maintenance That maintenance performed on materiel requiring major overhaul or a complete rebuild of parts, assemblies, subassemblies, and end-items, including the manufacture of parts, modifications, testing, and reclamation as required. , personnel, and real property). Ideally, all business lines across the DoD Components will be managed in a business-like manner, with the ability to provide "boardroom"-level performance measures for managing the Department's operations. Development of Defense-Wide Data Standards One of the major issues faced by the Department is the lack of data standards, which results in the inability of the systems to communicate with one another. Over the decades, the Department has relied heavily upon crosswalks and data translators This is primarily a list of notable Western translators. Please feel free to add translators from other languages, cultures and areas of specialization. Large sublists have been split off to separate articles. to assemble and consolidate management information for decision makers. This has proven to be unreliable and often inaccurate, forcing the use of manual operations and creative interventions. A significant challenge facing the Financial Management Modernization Program is the development of Defense-wide standards. It is essential that not only data but also business processes, business forms, and financial transaction set standards be developed to support the design of the Defense-wide enterprise architecture. To begin the establishment of Defense standards, the task force so far has identified 415 forms that are used to support the 21 basic financial events defined by the Department of the Treasury (Figure 3). As one would suspect, there are standard forms, Defense forms, and, of course, Component and activity-unique forms. Unfortunately, to compound the problem, only 11 of the identified forms are used extensively by the Department in electronic form. Other Steps to Financial Management Reform The Department established a Financial Management Modernization Executive Committee and a Financial Management Modernization Steering Committee steer·ing committee n. A committee that sets agendas and schedules of business, as for a legislative body or other assemblage. steering committee Noun to provide oversight for the activities related to this modernization effort. These committees compose com·pose v. com·posed, com·pos·ing, com·pos·es v.tr. 1. To make up the constituent parts of; constitute or form: the senior leadership of the Office of the Secretary of Defense The Office of the Secretary of Defense (OSD) is part of the United States Department of Defense and includes the entire staff of the Secretary of Defense. It is the principal staff element of the Secretary of Defense in the exercise of policy development, planning, resource as well as the Military Departments. The committees effectively engage the "owners" of every business operation and system in the oversight of this architecture development. The Under Secretary of Defense (Comptroller) recently published policy directives to ensure that investments in the Department's financial management systems will lead to viable benefits to the Department and that system development initiatives will be consistent with the Department's forthcoming enterprise architecture. In addition, the Under Secretary of Defense (Comptroller), in coordination with the Under Secretary of Defense for Acquisition, Technology and Logistics The Undersecretary of Defense for Acquisition, Technology and Logistics is the title of a high-level civilian official in the United States Department of Defense. The Undersecretary of Defense for Policy is the principal staff assistant and advisor to both the Secretary of Defense and the Department's Chief Information Officer, will sustain vigilance VIGILANCE. Proper attention in proper time. 2. The law requires a man who has a claim to enforce it in proper time, while the adverse party has it in his power to defend himself; and if by his neglect to do so, he cannot afterwards establish such claim, the over the Department's financial management system initiatives. During the ensuing en·sue intr.v. en·sued, en·su·ing, en·sues 1. To follow as a consequence or result. See Synonyms at follow. 2. To take place subsequently. year, as the enterprise architecture design evolves, it will become imperative that the Department's system investments be consistent with the functional and technical tenets of the architecture and that those investments produce short-term quantifiable Quantifiable Can be expressed as a number. The results of quantifiable psychological tests can be translated into numerical values, or scores. Mentioned in: Psychological Tests benefits to the Department. Modernizing the Department's business operations and systems is a Department-wide priority. It will require leadership, active participation, and support at every level within the Department to achieve the Secretary's desired transformation. When you find yourself called upon to provide resources, information, and support of the Financial Management Modernization Program, be assured that financial management reform is necessary if we are to improve efforts to support the servicemen and women who give so much to defend our freedom. |
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