GFEBS: the foundation for army financial management transformation: how the United States Army plans to reform its business and financial management functions in its goal to achieve financial accountability.

The President of the United States, the Secretary of Defense, Army leaders, and the Congress have all made it clear that financial management transformation at the Department of Defense (DoD) is not an option--it is an imperative. In concert with DoD's Business Management Modernization Program (BMMP), the Army is in the process of reforming its business and financial management functions, including eliminating redundant or noncompatible systems, standardizing business processes, and evaluating how to better manage resources. All of this is being done to provide senior Army and DoD leadership with timely and accurate information that enables them to make sound business decisions in support of warfighting operations.

Since 1995, the Government Accountability Office (GAO) has designated DoD financial management as a "high-risk area." Specific to the Army, the GAO has stated that the service has "pervasive weaknesses in internal control, processes, and fundamentally flawed business systems," (1) resulting in a lack for "billions of dollars of resources." (2) To address this issue, DoD has developed an enterprise architecture and is working to rein in the myriad disparate financial systems to operate cohesively (even seamlessly) within that architecture. Doing so will give administration and congressional overseers the level of financial accountability they need from the Department.

The Army is in step with the Navy and the Air Force in bringing this financial accountability goal within reach. By this time next year, the Army's General Fund Enterprise Business System (GFEBS), which is one of more than 40 programs the U.S. Army Program Executive Office Enterprise Information Systems oversees, will have completed its initial technology demonstration and will be up and running in at least one site, with full deployment scheduled in 2009.

The Assistant Secretary of the Army (Financial Management and Comptroller) (ASA(FM&C)), the Honorable Valerie Lynn Baldwin, put the ambitious GFEBS schedule in perspective during her testimony before Congress in November 2004, when she compared the GFEBS undertaking to Oracle Corporation:

"Oracle has nearly 40,000 employees in 140 countries, a narrow business focus, and revenues of just $10.1 billion in 2004. They began their integration effort in 1999. Today, five years later, Oracle is in the final stages of its transition.

"In contrast, the Army employs nearly 1.3 million active, Guard, Reserve, and civilian personnel who are stationed in 120 countries. Our fiscal year 2004 revenue stream was nearly $224 billion. Unlike Oracle, the Army has multiple businesses, which include buying and selling parts and developing and procuring weapon systems. On our fiscal year 2004 balance sheet, we reported $246.7 billion in total assets and $64.3 billion in total liabilities. To say that implementing GFEBS by 2009 is aggressive is an understatement of the highest magnitude."

Conversely, it would be hard to overstate the importance of the GFEBS--driven transformation to the Army. That's because the long-term impact of the system, which will be outfitted with commercial off-the-shelf SAP software, will be nothing less than staggering. As GFEBS replaces a host of outdated stovepiped accounting and financial management systems, it eventually will manage $100 billion in spending by the active Army, the Army National Guard, and the Army Reserve. And with more than 79,000 end-users at more than 200 Army installations around the world, it will be one of the world's largest enterprise financial systems.

It won't happen overnight, of course. The Army plans to implement GFEBS in several phases between fiscal years 2005 and 2009.

The first phase--a technical demonstration of the GFEBS end-to-end, core financial capability--will take place at Fort Jackson, South Carolina. Before launching into a discussion about the technical demonstration, a bit of history will help lay the groundwork associated with the Army's financial system reforms.

Responding to the Call for Fiscal Accountability

As mentioned earlier, the GAO has been, rightly so, on the financial accountability bandwagon for more than a decade. Not only is the lack of financial accountability a concern from a taxpayer perspective, it undeniably affects the real-time, day-to-day support that the Army provides to its personnel fighting on the front lines.

Consequently, the Office of the Secretary of Defense (OSD) directed the military services--which had, over a span of 30 years, independently created a tangle of financial systems--to get their financial houses in order. More specifically, the components were directed to put in place and maintain financial management systems to comply with the Department's Business Enterprise Architecture and other established standards. In response, Army planners prepared the groundwork for a state-of-the-art financial management system; and in short order, the broad outlines of the system--GFEBS--began to emerge.

The Army leadership established the GFEBS Executive Steering Committee (ESC) to govern the developmental effort. Members of the committee included major command resource managers, as well as representatives of the Army Audit Agency, select Department of the Army staff agencies, OSD, the Air Force, and the Navy. The Principal Deputy ASA (FM&C) is the executive sponsor, and the Deputy ASA (Financial Operations) is the ESC chair.

A few months later, when GFEBS reached the contracting stage, four highly qualified enterprise resource planning (ERP) software integrators entered the competition. After a thorough review of the proposals, Accenture was awarded a $437 million, 10-year contract.

The initial fielding of GFEBS will be to the Army's Installation Management Agency, specifically to Fort Jackson, home to the Army's Finance School. There, GFEBS initially will focus on a real property inventory. It may be hard for most people to fathom that the Army does not have a firm grasp on its real property; but, over time, as each command established its own method and automated system to account for its inventory, the Army--as a service--did not have an automated system to compile the commands' inventories into an accurate database capable of multiple query sources and angles. GFEBS tackles this issue head-on and will eliminate confusion about (and value associated with) real property inventory across the Army.

After GFEBS demonstrates successful real property accountability at Fort Jackson, the Army will expand the system's operations, on a phased basis, to other areas affecting the balance sheet. This will enable GFEBS to provide a single financial management system, supported by best business practices, for all Army general funds. Once GFEBS has proven its mettle at Fort Jackson, the Army will begin deployment service-wide.

Current Undertakings

Today, predeployment preparations are underway. At the Defense Finance and Accounting Service Indianapolis, subject matter experts (SMEs)--specialists who are drawn from a number of Army commands--are mastering the ins and outs of SAP and participating in process-design workshops. To build their know-how into the system, the SMEs will be involved in planning, designing, analyzing, and testing business processes connected with the Fort Jackson demonstration.

From the start, GFEBS leaders have also been consulting with other services about their financial transformation experiences. Of particular help has been the U.S. Navy, which has conducted demonstrations of its new ERP financial management system and has shared valuable lessons learned with the Army. These consultations have helped the Army set the course for GFEBS--from acquisition strategy to requirements planning and testing controls.

Not only does GFEBS build on best practices from the other services, but it also meets a host of requirements set forth from the Congress and the Department, such as:

* Following standards set in the Chief Financial Officers Act of 1990 and in the Federal Financial Management Improvement Act of 1996.

* Conforming to the federal financial management systems requirements identified by the Joint Financial Management Improvement Program.

* Measuring up to all applicable accounting standards, including requirements to employ the U.S. Government Standard General Ledger at the transaction level (as mandated by Office of Management and Budget Circular A-127).

* Conforming to the Department's Business Enterprise Architecture to be in sync with the processes and systems of all DoD core business mission areas.

The Challenging Road Ahead

GFEBS has a lot going for it--that's clear. But the Army also is facing some serious obstacles, including users' natural resistance to change and a time crunch that's formidable, to say the least. Project leaders are embarking on a change management strategy to address the first issue; the aggressive development and testing schedule will address the latter.

That's not to say the road ahead will be clear of obstacles; in fact, the Army expects more than its fair share of challenges. Regardless, the Army intends to deploy GFEBS with the same forthright, honest, and inclusive strategy with which it has undertaken development and testing. It's the only way GFEBS will win user confidence and meet the Army's goals of sound financial management. In addition to creating reliable financial statements, when integrated with non financial business systems, GFEBS will provide Army and DoD senior leaders and decision makers with accurate, up-to-date information upon which they can base sound business and strategic decisions.

Author's Note

I encourage you to continue watching GFEBS as the system makes history and evolves into one of the world's largest enterprise financial systems. We're open to receiving--and I'm encouraging--your comments and suggestions. The e-mail address is [e-mail].

Army GFEBS At a Glance

General Fund Enterprise Business System

Replace outdated accounting and Financial management systems

Powered by commercial. Off-the-shelf software

79,000 users by 2009

Managed by Program Executive Office Enterprise Information Systems

End Notes

(1) GAO-04-910R DOD Fiscal Year 2007 Audit Opinion

(2) GAO/AIMD-94-12 Strong Leadership Needed to Improve Army's Financial Accountability

Cherie Smith is the Army's project officer For GFEBS, under the U.S. Army's Program Executive Office for Enterprise Information Systems.