The 2000 International Financial Revolution in Military Affairs Conference.

Highlights Global E-Business, Financial Management, and Logistics

The second international Financial Revolution in Military Affairs Conference was held in London in May 2000. The conference followed the highly successful first Financial Revolution in Military Affairs Conference held in Washington, D.C., in November 1998 and again was sponsored by PricewaterhouseCoopers L.L.P., Syracuse University, and the Royal United Services Institute. Thirteen countries, as well as the North Atlantic Treaty Organization (NATO), sent senior financial, e-business, and logistics managers to the gathering. At the request of conference attendees, the agenda was expanded from a financial management focus to include senior management presentations and workshops on e-business and logistics.

Representatives from the U.S. Department of Defense (DoD) played a visible leadership role among their international peers. Mr. Ernest J. Gregory, Deputy Assistant Secretary of the Army for Financial Operations, served as the conference chairman. He set the perfect tone for open, honest discussion and information-sharing among the highly diverse audience.

The keynote address was delivered by Admiral Archie Clemins, United States Navy (Retired), former Commander-in-Chief of the U.S. Pacific Fleet and the foremost proponent of leveraging information technology within the U.S. Navy Ms. Scottie Knott, Director of the DoD's Joint Electronic Commerce Program Office (JECPO), described her experiences in leading e-business implementations throughout the Department. Ms. Mary Lou McHugh, Assistant Deputy Under Secretary of Defense (Transportation Policy), described Dod's efforts to transform the transportation function in an e-business environment.

E-Business--A Changing, Challenging Environment

Admiral Clemins emphasized to the guests during the keynote address, "Your major role is going to be managing change. You will not be an e-commerce expert nor will you be a technical expert. You will only know that you have to start down a road to which the end may not be in sight. It will take courage because most people will not start down a road until they know where it leads. But, in today's world, venturing into the unknown is a necessary step forward!"

He also emphasized the importance of e-commerce as a central theme throughout every functional area in Defense by stating, "The value of e-commerce and its methodology will make us all focus on output management or end-to-end capability and will affect every segment of government and defense--paying income taxes, personnel management, maintenance management, logistics management, and financial management."

Ms. Scortie Knott brought valuable experience and credibility to her discussion of challenges encountered when introducing e-business initiatives into the DoD environment. Why e-business? E-business is a key enabler to the revolution in business affairs. It creates an environment for data-sharing across communities--such as logistics, acquisition, or personnel and readiness. E-business reduces cycle time and operations costs for goods and services provided to warfighter, and leverages the Internet market space. In her discussion "What the Warfighter Will See," Ms. Knott offered powerful examples of benefits derived from getting control of the Logistics pipeline using an integrated data environment, including full supply-chain visibility, ability to monitor shortfalls and alternatives, ability to monitor consumption, and direct access to supply-chain managers.

Ms. Mary Lou McHugh described the highly successful PowerTrack[SM] initiative to reengineer DoD transportation practices in an e-business environment. The driver for PowerTrack, which is a system offered by U.S. Bank, was guidance from the Deputy Secretary of Defense that required DoD components to reduce infrastructure costs for DoD and carriers, to institute a single-payment process, and to strengthen accountability in the transportation and financial processes. The objectives identified by DoD carriers and shippers were to eliminate complicated and unique government procedures and to reduce lengthy (30 to 90 days) payment and reconciliation cycles.

Ms. McHugh described how PowerTrack enables payment to carriers within three days versus 30 to 90 days. It reduces commercial and DoD infrastructure costs at 1060 sites and standardizes processes. She emphasized that there are many more areas where similar approaches can dramatically improve business performance.

Other international speakers included Major General Des Mueller, former head of Support Command in Australia, who spoke on his vision for defense logistics into the 21st century. He advocated increased government partnership with industry. Such partnerships can improve quality and timeliness of outputs, free up capital and reduce costs, increase community involvement, shape industry capabilities, and provide access to economies of scale and best practices.

He emphasized that successful change requires 70 percent leadership and 30 percent management--with an emphasis on execution, not conception.

Mr. Berthold Vanselow, from NATO Headquarters, highlighted the logistics challenges to NATO and offered evidence that the challenges to improving business practices at the individual country level clearly apply at the NATO level.

Defense E-Business a Global Concern

Similar to the 1998 Financial Revolution conference, the 2000 conference highlighted that improving business operations in defense is clearly a global challenge, not an individual country issue. Virtually every government's defense agency is facing resource constraints, human resource challenges in response to changing military objectives, and rapidly changing technical environments. Common barriers to e-business cited by most countries included security issues, personnel skills, and policy or legal constraints. While some countries have made notable progress in specific business areas, none claims to have an ideal business model across all functional areas.

A common denominator from the conference is that visible progress in improving financial management and logistics using e-business approaches is being achieved. Performance measurement programs in New Zealand, commercial off-the-shelf software successes in Canada, commercial accounting programs in the United Kingdom, and transportation redesign in the United States exemplify the dramatic improvements being achieved around the globe. The common architecture and protocol advantages that make the Internet a powerful tool in the United States also provide similar advantages to defense agencies everywhere and encourage the increased leverage of technology capabilities among countries.

The conference attendees voiced a strong desire to continue this international dialog, reinforcing the notion that our challenges are truly common and critical from a global perspective.

Thomas A. Cocozza is a consultant at Price water house Coopers LLP. He has worked on CFO Act implementation, primarily for the Department of Defense, for over six years, Prior to PwC, he worked at the Office Management and Budget in the Office of Federal Financial Management.