copyright © 2006 accenture. all rights reserved. defense business transformation “getting it...

Copyright © 2006 Accenture. All rights reserved.

Defense Business Transformation“Getting It Done, Faster, and Making It Stick”

Presented to ASMC 13 September 2006

Eric StangeCEO and President

Accenture National Security Services

2© 2006 Accenture. All Rights Reserved.

DoD has established the right framework…

– DoD Business Enterprise Clarity: The corporate level requirements for business execution at DOD

– Horizontal Business Transformation Focus: Optimizing end-to-

end processes, not policy office stovepipes.

– Business Alignment to Warfighter Needs: Aligning to the mission of the department, and using this alignment to drive urgency.

– Capabilities, not Systems, as Deliverables: Systems follow business requirements – resetting expectations.

– Accountability: Establishment of BTA to unify our efforts (resources, funding, leadership) at DOD level business transformation.


Integrated Business Transformation Story

6 Business Enterprise Priorities

6 Transformational Components

• Personnel Visibility 4• Acquisition Visibility 2• Common Supplier Engagement 23• Materiel Visibility 4• Real Property Accountability 5• Financial Visibility 5

• Army 14• Navy 9• Air Force 19• TRANSCOM 1• DLA 9• DFAS 3

•Narrative Descriptions•Business Value •Schedules•Metrics•Systems Migrations

Integrated Cost Picture ($ Millions)

Key Programs/Initiatives

FY04 &Earlier

FY05 FY06 FY07 Total

2,750.9 575.5 744.4 707.0 4,777.8 9,503.4 3,169.9 3,482.6 3,494.2 19,650.0

12,254.3 3,745.4 4,227.0 4,201.2 24,427.9 Components

Enterprise

TOTAL

DoD is spending the money…


The challenge is then….

…with limited time and money

...how do we move the schedules to the left

…and get value for dollars spent?

Must tie every day, every dollar to capability that delivers quantifiable performance improvements


Success requires this critical link be institutionalized…

Define Quantifiable Performance Metrics – go beyond visibility and standardization - insist on proven best business processes and organizational and IT alignment

Single Process Owner with Budgetary Authority – responsible for setting performance objectives within horizontal domain, and then in coordination with Acquisition Executive, setting up programs and contracts that are aligned with these business priorities

Outcomes > Capabilities > Accountability > Budget

Execute


Acquisition strategy – buying outcomes vs. buying requirements.

The government is the expert on what it wants to be when…

Proven approach often used in private sector

NOW NOW + n YEARS

Traditional scenario –

System integrators bid some combination of schedule, workdays and dollars versus some functional requirements set written by government. This is a shell game unless performance objectives and risk sharing criteria are also on the table.

Ideal world –

Government focus is on defining performance requirements in the ORD and setting governance process in place. SI should propose solution, timeframes to achieve progress towards performance objectives and risk sharing scheme. Arrangements should be flexible to accommodate changing priorities/budget shifts.

…while the integrator is the expert on how to get there..


Today’s Objective

Discuss how DoD can realize better and faster ROI on ERP driven transformation efforts

• Enablers of rapid ERP implementation• DLA BSM

– Acquisition

– Execution

– Results

• Recommendations

Outcomes > Capabilities > Accountability > Budget

Execute


Key Enablers of Rapid ERP Implementations

Commitment to the Business CaseValue proposition is documented, understood, shared, and communicated throughout the enterpriseProgram objectives are aligned to an outcome-based contractBusiness value judgement used in making scope/cost tradeoff decisions

Visible, Committed Executive SponsorshipDecision-making authority is engaged, readily available, and has the necessary span of control,

responsibility, authority, has sole approval for COTS mods and incentive to drive changeDecisions around key issues are dealt with in structured manner, resolved quickly, and are not re-

visitedDeliverables are approved and milestone decisions are made quickly

Identification and Commitment of Subject Matter ExpertsDedicated for extended periods of time, in sufficient numbers, that understand the desired

performance objectives, can represent the enterprise, with compensation based performance incentives

Adopt vs. CustomizeImplement the new business processes through software configuration, not customization

Culture ChangeWillingness to embrace changes is driven by shared recognition of program importance, often

accompanied by performance incentives / bonuses for individuals

Partnership ModelContracting model that creates incentives for both customer and integrator to achieve the business

case


DoD Example – DLA BSMAcquisition Strategy – “Achieve DLA’s Vision”

Joint V ision 2020

D L A Strategic P lan /D L A P erform ance C ontract

D oD L ogistics S trategic P lan

B SM R equired C apabilities

B SM B usiness C ase

O R D /P rocess K P P s/K P Is

Joint V ision 2020






Joint V ision 2020






BSM Contract

F uture L ogistics E nterprise

D L A P erform ance C ontract

Solicitation stated performance objectives and then asked bidders to select solution components…


• Solution includes new data centers and application support outsourcing

• Successful Release 2 cutover completed – 8/1/04

• Implementation will be completed in Sep 06

Suppliers& Vendors

Financial Management

Planning ProcurementOrderFulfillment

Tech QualityBusinessPartners

H`Customers

Warfighters

DemandCollaboration

SupplyCollaboration

Performance Management

Suppliers& VendorsSuppliers& Vendors

Financial Management

PlanningPlanning ProcurementOrderFulfillment

OrderFulfillment

OrderFulfillment

Tech QualityBusinessPartnersBusinessPartners

H`Customers

Warfighters

H`Customers

H`Customers

Warfighters Warfighters Warfighters

DemandCollaboration

SupplyCollaboration

Performance Management

PROGRAMOBJECTIVES

1. Adopt commercial best practices

2. Reengineer supply chain processes and implement new organizational structure

3. Replace 30-year old legacy systems

4. Transform from a manager of supplies to a manager of suppliers

BSM Program Overview

Only CompletedACAT I ERP

Program

DoD example – DLA BSM


Key Success Factors

DLA STRATEGY DRIVERS for BSM

Business Performance Objectives – Definition of Success

Supply chain cost as % of salesSupply availabilitySystem availability

Strategic Partnership Embodied By Performance Based Contract

Payments based on business performance achieved by DLAMotivates both parties towards same business objectivesBest people from both parties – bonus payments tied to outcomes


BSM has resulted in sustained performance improvement that will enable DLA to meet the goals set forth in the Department of

Defense’s Logistics Transformation Strategy.

BSM Results

Achievements

• Performance Management

• IOT&E Certification

• Single IT-Solution

• CFO Compliance

• Retired Systems

Results

• Customer Notification Time reduced to 121 minutes v. 24 hours in legacy system.

• 15% improvement in Logistics Response Time.• Improved demand planning accuracy by 20%

through customer collaboration.• Achieved 99.9% system availability.

• Received OSD IOT&E certification.

• Entire DLA enterprise uses single instance of BSM.

• BSM is certified as CFO compliant.

• Successfully retired legacy DISMS solution in subsistence commodity unit.


Recommendations

•Relentless focus on enablers previously discussed (business case, executive sponsorship, gov’t SME participation, adopt vs. customize, culture change partnership model)

•Focus on defining performance objectives AND understanding and quantifying major cost drivers (including RICE objects, users, locations, training requirements, available government resources, etc.) in developing RFP and at key milestones

•Prior to blueprint, cost variability = +/- 50%

•Prior to design, cost variability = +/- 25%

•Prior to build/test/deploy, cost variability = +/- 10%

•Within each phase a critical task is the validation of major cost drivers and estimate of benefits and costs of subsequent phase(s)

•Performance objectives should guide design and development tradeoffs

•Performance based agreements enable successful outcomes – by aligning all parties with respect to staffing, issue resolution, investments, etc.

copyright © 2006 accenture. all rights reserved. defense business transformation “getting it...

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