Implementing standards in DoD business systems for improved financial visibility.

The problem: an inability to access a broad set of information that processes quickly, accurately, and efficiently the solution: the Standard Financial Information Structure.

Perhaps you can relate to this scenario: Your team is responsible for one of the Department of Defense's (DoD's) many legacy business systems. After months or even years of effort, you've received the go-ahead (and the budget) to proceed with upgrading the system to incorporate new departmental requirements and financial standards. What now? Initiatives like the Standard Financial Information Structure (SFIS, commonly pronounced "ess-fis") and the United States Government Standard General Ledger (USSGL) sound great in theory, but how in the world do you begin integrating them into such an already complex environment? And, just as important, what are the benefits of doing so?

The 50,000-Foot Perspective

Addressing these questions requires a look at the bigger picture of DoD financial management (FM) transformation. Since July 2001, the Department's Business Management Modernization Program (BMMP) has focused on better enabling DoD to support its warfighting objectives, while continually improving the FM information provided to the Congress, which acts as the steward of United States government investments. A key hindrance to achieving these goals--and to effective decision making in many large, complex organizations--has been the inability to access a broad set of information that can be consolidated, analyzed, and evaluated in a timely, accurate, and meaningful way.

A lack of uniform departmental data standards, combined with disparate business and financial processes and systems, underlies this challenge. As such, the BMMP staff identified Financial Visibility as one of the six core DoD business enterprise priorities (Figure 1). Financial Visibility is defined by BMMP's Financial Management Transformation Team as having immediate access to accurate and reliable financial information (planning, programming, budgeting, accounting, and cost information) in support of financial accountability and efficient and effective decision making throughout the Department in support of the missions of the warfighter. (For more information about DoD business enterprise priorities, see http://www.dod.mil/comptroller/bmmp/pages/about_priorities.html.)

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Drilling down further, the DoD financial management community has defined six FM core business capabilities that support the Financial Visibility priority. These capabilities are the essential building blocks for achievement of the Department's financial management mission and are developed through enablers including people, processes, controls, tools, systems, and information. The sidebar lists and briefly summarizes the six core business capabilities.

SFIS in Review

Armed with this executive-level perspective, it's much easier to understand the role of SFIS and other standards in DoD business transformation. As discussed in "We're Talking SFIS: Introducing the Common Business Language of DoD" (Armed Forces Comptroller, Spring 2005), SFIS is a comprehensive data structure that supports requirements for budgeting, financial accounting, cost/performance management, and external reporting across the DoD enterprise. SFIS provides an enterprise-wide standard for categorizing financial information along several dimensions to support financial management and reporting functions. Implementation of the SFIS will impact each of the six FM core business capabilities and will place SFIS into every business process in which financial transactions occur.

Among other benefits, SFIS:

* Standardizes financial reporting data across DoD.

* Enables decision makers to efficiently compare similar programs and activities across DoD.

* Provides decision makers the level of detail they require for meaningful information retrieval and auditability.

* Improves the efficiency of maintaining business systems, thereby reducing costly maintenance and translation of nonstandard data.

* Links program execution to performance, budgetary resources, and actual financial information.

Deploying SFIS

Comprising functional subject matter experts from across each of the Core Business Missions, the SFIS team has been working collaboratively to define the elements, to assist the DoD components on a phased deployment, and to develop processes for the continuing evolution of SFIS. Phase I definitions were completed in May 2005, and ongoing deployment of the 59 data elements will begin providing a common language across the Department to facilitate data interoperability. The data elements in Phase I are focused primarily on supporting the production of DoD financial statements. As SFIS deployment begins, each system (based on its particular environment) will be placed into one of three categories featuring tailored implementation approaches.

Category A consists of deployed environments that merit investment to update systems in order to support SFIS. In these cases, interim or target systems can align software changes with SFIS in order to enable a common roll-up to financial statements. Although not yet solidified, this category will likely include a number of core business systems that are expected to be operational for several years.

Category B comprises legacy environments in which direct investment is not warranted. For these systems, an interim approach including mapping and crosswalks will be employed to enable a common roll-up to financial statements.

Category C encompasses emerging environments, including new enterprise resource planning (ERP) systems such as the Defense Enterprise Accounting and Management System, the Defense Integrated Military Human Resources System, the General Fund Enterprise Business System, and the Navy ERE Detailed guidance will be provided to these system owners to ensure support for the deployment of SFIS elements and development of a future data set that enables a common roll-up to financial statements.

The SFIS team is providing leadership for each system category to prioritize deployment and to assist the DoD components in adopting the new standards.

As Phase I of SFIS is deployed, the team is beginning work on Phase II definitions. Phase II and subsequent phases will focus on establishing common terms and uses for planning, tracking, and evaluating performance in terms of time, resources, cost constraints, and targets. The Phase II goal is to define the SFIS data elements needed to meet terms and conditions of the Government Performance and Results Act of 1993. The development of common cost/performance terms is aimed at establishing uniform, performance-based management business practices and processes on an enterprise-wide basis. These practices will be represented in the Department's planning, programming, budgeting, accounting, reporting, and--foremost--its performance.

Implementation Challenges and Approach

The DoD systems environment features an almost mind-boggling mix of component ERPs, legacy financial systems, and an array of corporate systems that provide a specific capability (such as contract writing, entitlements, or financial reporting). As a result, each DoD core business system requires a tailored SFIS implementation consistent with its functional scope, degree of integration with other core business systems, and proposed technical solution. For example, implementing SFIS in a Navy ERP system that uses a platform supplied by the firm SAP will differ from implementing SFIS in a custom-developed financial reporting system.

SFIS will be embedded in the Business Enterprise Architecture (BEA) 3.0. In fact, compliance with the BEA is a requirement for all system funding approvals based on the new Investment Review Board requirements. Furthermore, SFIS compliance is required for all impacted systems across the Department. Each system's program management office will work with the SFIS team to develop an SFIS implementation approach. The result is a tailored implementation approach that is BEA-compliant with SFIS standards.

SFIS Deployment Timeline

The SFIS team has outlined deliverables for both the 6-month and the 12-month time frames. By December 2005, SFIS Phase I will be fully integrated into the BEA, and the team will have accomplished specific objectives within each system category, including the following:

* Detailed change proposals will have been developed for impacted systems, including levels of effort, resources, and funding.

* Category B systems will have been migrated from Standard Fiscal Code (SFC) to SFIS for USSGL-required elements in the Business Enterprise Information Services (BEIS). BEIS focuses on leveraging existing infrastructure to interface, standardize, and share data among DoD business systems for enterprise-wide financial reporting and information analysis.

* Category C systems will have received assistance from the SFIS team with their ERP implementation blueprinting and integration planning processes.

Upcoming stages of development call for the BEA to be fully updated to reflect Phase II SFIS elements:

* The SFIS team will assist Category A system owners within the DoD components (as appropriate), implementing system and process changes for Phase I elements.

* For Category B systems, migration will be completed from SFC to SFIS for the remaining Phase I elements in BEIS.

* For Category C system owners, the SFIS team will continue to assist in ERP implementation blueprinting and integration planning. Phase II definitions will be incorporated into guidance.

SFIS Resources

Although implementing a DoD-wide data structure like SFIS is a challenge, the SFIS team is encouraged by the zeal with which the components are tackling that challenge. Presentations and discussions hosted by the SFIS team in late spring of 2005 were attended by representatives from DoD components and the core business missions. These full-day, interactive sessions enabled stakeholders to learn about the long-term strategy for SFIS and other standards, to ask questions, and to hear how colleagues throughout the Department are addressing (or plan to address) various integration issues. The SFIS team will hold similar presentations during each phase of SFIS development to ensure that the information is shared with all stakeholders.

The Financial Management Transformation Team has also expanded its area of the BMMP Web site to include a section devoted to SFIS, complete with briefings, documents, frequently asked questions, links to authoritative resources, event information, and more. For the latest information on SFIS, visit http://www.dod.mil/comptroller/bmmp/pages/fminitsfis.btml.

FINANCIAL MANAGEMENT CORE BUSINESS CAPABILITIES

Forecast, Plan, Program, and Budget. The ability to develop, review, evaluate and support financial forecasts, plans, programs, and budgets and to integrate them with appropriate performance indicators to achieve effective business operations and program goals

Manage Financial Assets and Liabilities. The ability to identify, classify, value, and manage financial (fiscal) assets to include accounts receivable and liabilities to include accounts payable from acquisition or inception to disposal or liquidation

Managerial Accounting. The ability to accumulate, classify, measure, analyze, interpret, and report cost and other financial information useful to internal and external decision makers reviewing the execution of an organization's program or project resources to ensure that they are effectively being used to meet objectives

Funds Allocation, Collection, Control, and Disbursement. The ability to control and distribute funds based on appropriation and authorization laws; to monitor such funds against available balances for purpose, time, and amount; to collect funds; to issue and track disbursements; and to monitor cash position

Manage General Ledger. The ability to record proprietary and budgetary general ledger (GL) transactions in accordance with Federal Accounting Standards Advisory Board standards, Generally Accepted Accounting Principles, and regulatory requirements; to define the use of and rules to control GL accounts; and to conduct GL analyses and reconciliations

Financial Reporting. The ability to provide relevant financial visibility and real-time information dashboards for DoD decision makers and to summarize financial information for the purpose of producing mandatory reports in compliance with regulatory requirements and discretionary reports in support of other requirements

Christine Wenrich is the Joint Requirements and Accounting Policy division chief within the Financial Management Transformation Team of the Business Management Modernization Program. She is a member of the ASMC's Yankee Chapter.