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Proven savings through investment management process.


The Investment Management Process (IMP) has been an extremely effective tool in managing the Defense Business System (DBS) IT portfolio. Since it was first created as part of the 2012 National Defense Authorization Act (NDAA), IMP has generated significant savings for the Air Force (AF) and has been an effective tool in the creation of a more honed Organizational Execution Plan (OEP).

NDAA 2012 required the use of

Business Enterprise Architecture (BEA) and Business Process Re-Engineering (BPR) as components to initially build the OEP with updates annually based on changing factors like mission, strategy, or budget constraints.

Three outcomes of IMP show proof of its success. First, over the last three planning and budgeting cycles, the AF has realized savings of $124M, which is a 13% reduction over the first OEP certification submission in FY13 (see graphic). Second, the processes required by IMP have now become institutionalized into AF Business Portfolio Management and OSD has recommended to Congress that DoD no longer require detailed oversight, but a reduced level of review. Finally, the AF Service Development and Delivery Process (SDDP) (AF Manual 33-402) that implements BPR and BEA at the system level is now being utilized across the Department.

The IMP realizes savings by aligning to mission priorities, eliminating duplicative legacy systems, and transforming DoD IT operational environment to applications that will deploy on a common computing infrastructure. BEA and BPR warrant additional discussion due to their importance in the success of the OEP.

Business Enterprise Architecture Role in IMP's Success

Savings realized from the BEA are found in the following functions:

* Re-use of existing system capabilities (highlighted in the BEA);

* Improved business processes (with BEA system-to-process alignment);

* Immediate access to standards review and application (with BEA functional area standards listing); and

* System-to-system interfaces (with the BEA system interface listings).

Re-use of existing system capabilities:

Several critical AF business transformation initiatives have completed steps within SDDP and generated reference models (Performance, Business, Data, Services, etc.) as common frameworks for reference and use. These reference models, developed under guidelines from the Federal Enterprise Architecture (FEA) Framework, DoD Architecture Framework (DoDAF) 2.0, and BEA 10.0, help the Air Force identify capability gaps, as was the case with the following four key systems:

* AF Human Resource Management portfolio's Case Management Tracking;

* Analysis & Reporting System (CMTARS) and future core capability in the AF Logistics and Material Readiness portfolio's Maintenance Repair & Overhaul Initiative (MROI);

* AF Logistics Enterprise Supply Chain Analysis, Planning and Execution (ESCAPE); and

* Government Furnished Material--Accountability (GFM-A).

Since 2013, the AF Deputy Chief Management Officer (DCMO) has required functional business system owners to report IT duplication analysis results, based on systems (OEP and non-OEP) with identical BEA Operational Activities (level 2, 3 and 4), to the Enterprise Senior Working Group (ESWG) annually. These analyses led to decommission of duplicated systems as documented in the AF annual OEP transition plans. The Air Force decommissioned 33 systems in CY14,13 in CY15, and plans to decommission 149 systems by 2021.

Immediate access to standards review and application:

BEA financial benefits include the alignment to DoD finance and accounting requirements, laws, regulations, policies, and relevant standards for the systems that request certification of funds for each fiscal year. The BEA functions listed above directly support the Title 10 USC Section 2222 requirement for "covered defense business systems" (DBS) with expenditures of greater than $1M over the Five Year Defense Plan (FYDP), to include review of the business enterprise architecture. In this capacity, the BEA provides the framework for grouping DBS into portfolios that can be scrutinized for duplication, overlap, and alignment to DoD strategic and functional priorities. This analysis is central to the decision process involved in determining the annual certification approval.

Improved business processes: In August 2014, the Air Force DCMO established the mandate that AF business systems with development and modernization requirements follow the SDDP to detail the procedures by which IT capabilities supporting AF processes are identified, defined, and developed. The SDDP is a disciplined approach that includes six steps (starting with problem identification and BPR) and enables the delivery of effective business systems. The first three SDDP steps result in a detailed statement of user requirements within a testable framework, minimizing the burden in defining user requirements during design and configuration of the solution.

System-to-system interfaces: The BEA provides a system architecture view, which allows insight into system complexity via number of interfaces. When system changes are implemented, the downstream impacts on systems utilizing the data can be determined. In an effort to control the multitude of costly interfaces the AF pursues utilization of "enterprise service buses (ESB)," which allows integration of different applications by putting a communication "bus" between them, enabling each application to talk to the bus.

The above functions of the BEA provide opportunities for savings. The ability to look at existing system capabilities against process alignment, standards, and interfaces is an important step in ensuring optimized processes.

Business Process Re-engineering Role in the IMP Process:

The Principal Certification Authority (PCA), Deputy Linder Secretary of the Air Force, Management (SAF/MG) is responsible for determining whether appropriate BPR has been accomplished prior to the submission of a request for funding certification. The BPR Assessment is completed based on the program's current acquisition lifecycle phase. The required template questions vary with the maturity and fidelity of the program's BPR activities as the program progresses from problem statement development to implemented solution.

A problem statement is the output of analysis conducted after a perceived business problem, capability gap, and/or opportunity is identified. The problem statement is used as the DBS requirements document to inform future analysis and decision making regarding acquisition and IT capital in vestments. The Defense Business Council (DBC), which is the body responsible for funding approval, also uses the problem statement in the defense business system portfolio review process especially regarding system modernization within a portfolio. A problem statement is usually later associated with an investment within the budget and a subsequent certification request. Consequently, a request for certification of funds for DBS modernization must be supported by an approved problem statement.

Within the AF, BPR is a mandatory requirement within the overall SDDP and is the mechanism for creating the AF Problem Statement. For example, the CMTARS SDDP effort established bounded user requirements following an extensive BPR. Further analysis in accordance with SDDP concluded that the resulting documented user requirements could be met by the Defense Logistic Agency's Document Automation and Content Services (DACS) as opposed to developing a new AF business system. The net result is $27M projected cost avoidance over 10 years with a return on investment (ROI) of 1.68. Another illustration of possible savings is the Enterprise Supply Chain Analysis, Planning and Execution (ESCAPE) SDDP's BPR which identified cost benefits from reducing "On Hand Inventory" by 1% that will generate an annual savings within the AF Supply Chain Management of $61.2M with no negative impacts on readiness levels.

Organizational Execution Plan:

The IMP begins with the alignment of Functional Strategies to the Strategic Management Plan (SMP) by the appropriate DoD Functional. DoD Components then use these business strategies to develop their OEPs. The OEPs represent the organization's DBS budget request and demonstrates their alignment of system investments with the SMP to drive value in the DoD's business IT investment portfolio. OEPs represent the AF Integrated Business Plan for resources to achieve the outcomes and goals articulated in the DoD's business plan. OEPs also identify the AF business goals. Prior to granting approval of funds certification, DBC members review data including the example chart below, which provides a breakout for FY16 by functional area for each OEP.

Audit Readiness is a Primary Challenge

As the U.S. Government strives to cut costs, the AF will continue to be challenged to execute its missions with fewer resources. Our primary business challenge is achieving audit readiness. The following risk areas are being closely monitored:

* Enterprise Resource Planning (ERP) Solutions and corrective action plans will not be fully deployed in time to meet Air Force Schedule of Budget Activity (SBA) Audit Readiness goals. AF will need to rely on IT controls for the SBA financial audit where applicable, and ensure compensating business process controls or substantive documentation is available to support audit. The solution is to continue remediation of logistics and financial management IT systems.

* Legacy remediation corrective actions may not be fully deployed in time to meet Existence and Completeness (E&C) Audit Readiness FY15 goals. To remediate this risk, Air Force will rely on IT controls for the E&C financial audit where applicable, and ensure compensating business process controls or substantive documentation is available to support audit. We will continue remediation of logistics and financial management IT systems.

* Air Force lacks a United States Standard General Ledger compliant General Ledger. The solution is the implementation of DEAMS in 2017 and inclusion of its process flows in AF Assessable Units.

* Finally, The AF relies on 4th Estate partners to meet Audit Requirements. Several controls are in place, including: 1) mapping the processes and information exchanges and documenting them in the business enterprise architecture; 2) implementing, complying, and validating data standards and business rules; and 3) leveraging technology to validate and enforce standards and minimize interfaces.

Section 2222 of NDAA 2016, signed by the President on 25 November 2015, contains many changes to the IT certification process. The certification threshold is now $50M across the FYDP and only requires certification for development/modernization efforts reaching that criterion. Sustainment systems and lower level development efforts will be reviewed at the component level. The oversight for the DBS portfolio has led to many best practices to be used across the other mission areas (warfighter, intelligence, and infrastructure) and the success of BEA, BPR, and OEPs played a large role regarding the IT certification process changes included in the law. The AF Business Mission Area (BMA), which manages DBSs, will continue to focus on strategic drivers in future analysis including:

1) Evolving logistics core competencies to fully support Joint Doctrine;

2) Improving acquisition workforce capabilities;

3) Integrating and streamlining personnel and pay operations through BPR and technology modernization;

4) Implementing an Enterprise Learning Environment;

5) Improved financial information; and

6) Stronger internal controls.

Based on the processes defined in NDAA 2012, as well as the AF implementation approach which includes SDDP, the IMP has been an extremely effective tool in managing the Defense Business System IT portfolio. The savings realized within the portfolio would not have been possible without the standardization brought about by BPR and BEA. The AF looks forward to using these institutionalized tools as methods in achieving its mission at reduced cost and is proud that many of the AF techniques have been implemented as best practices across the Department of Defense.


Theresa O'Brien

Theresa O'Brien serves in the office of the Air Force Chief Management Officer, providing leadership within the Business Mission Area which includes a portfolio of500+ systems valued over $1B. She has been working with business IT in various organizations for over 15 years.
AF OEP Trend Analysis

                       FY13   FY14   FY15   FY16

C/S Requested ($M)     $559   $514   $501   $548
D/M Requested ($M)     $282   $461   $361   $303
Total Requested ($M)   $841   $9/5   $862   $851
-DBS Requested         258    221    222    224

Note: Table made from bar graph.

FY16 AF OEP Amount by Function ($K)

AQ     $49,909, 6%
DSE    $2,750, 0%
FM     $231,786, 27%
HRM    $143,304, 17%
I&E    $62,806, 7%
L&MR   $353,994, 42%
SC     $6,455, 1%

Note: Table made from pie chart.
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Author:O'Brien, Theresa
Publication:Armed Forces Comptroller
Date:Jan 1, 2016
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