dod financial management strategy & initiatives

Drew Morgan

Director, Business Integration

Office of the Secretary of Defense - Comptroller

March 29, 2014

DoD Financial Management

Strategy & Initiatives

v4

OUSD(C) Strategic

Management Plan

FY 2011-2017

Strategic

Management Goals

DoD Strategic

Management Plan

FY 2014-2015

Business Priorities

Quadrennial Defense Review

Report (QDR)

February 2010

Strategic Goals

2

Sustaining U.S. Global Leadership:

Priorities for 21st Century Defense

January 2012

New Strategic Guidance

DoD Financial Management is Aligned with Higher-Level Strategic Goals

Reduce the cost

of doing

business

Champion a strong and capable

financial management

workforce

Acquire resources necessary

to meet national

defense objectives

Ensure the legal, effective,

and efficient use of

DoD resources

Strengthen

DoD

Financial

Management

Reform Agenda: Increase efficiencies in

HQ and administrative

functions

New QDR

to be Released

Feb 2014

DoD FM Environment

Dramatically Lower FM Business Mission Support

Costs

Improve and Standardize Information

Ensure Auditability

Outcomes

Goals

Maximize Operational

ERPs

DoD Policy Based on

Successful Pilots

Enablers

Strategic Investment Decisions Aligned with FM

Target

Information Driven Standards-Based Reduce Cost

Simplified Affordable Secure Sustainable Auditable

Simplify the Department's FM Environment

Achieve and Sustain an Auditable Environment

Strengthen Interoperability

Achieve Compliance

Improve Decision Making

3

Compelling Need for Rapid Business Integration

Challenges

• Laws, Regulations, Policies

• Culture

• Scarce Expertise

• Transparency

• Audit Deadlines

• Operational Effectiveness

ODO/Component

Department

Federal-wide

Optimum “Enterprise”

Balance

Inherently Government

Federal Shared

Services

Commercial

Outsourcing

Drastic Budget Cuts/Mission

Growth

Installation/

Command

4

Auditability

TARGET - Reduce Interfaces via Standard

Transaction Broker

- Minimize Reconciliations

- Supported Balances

327 Systems

2,000+ Point-to-Point Interfaces

Numerous Manual Reconciliations

Unsupportable Balances

FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22

# Systems,

Interfaces,

Manual

Processes,

Workload

Simplified Environment and

Improved efficiencies

Potential Savings to:

Repurpose to the

Mission

Not

sustainable

at current

budget

levels

Auditability

sustainable at current

& future budget levels

5

~ 327 FM

Systems,

SNaP-IT Budget =

$719M*

Reducing the Number of Systems and Interfaces Through Standards & ERPs

Offers the Most Potential for Simplifying the Environment and

Reduce Total Cost of FM Operations and

Enable Sustained Audit by Reducing FM Systems

IT Budget

Reconciliations, Rework,

Redundant and Manual Processes,

Unsupportable Balances

Auditability, Complexity and

Issues, Point to Point, Data

Calls, Information Uncertainty

Internal Controls,

Material

Weaknesses,

Non-Standards

6

Strategic Priorities

• Simplify the FM environment: processes, standards, technology that drive

fewer systems and interfaces

• Generate reliable and auditable budget and accounting data: support

better management decisions

• Maximize capabilities of operational ERPs: drive more functionality into

ERPs and eliminate legacy systems

• Fix what matters: cost/benefit matters

Business Mission Area Outcomes

• Better financial information for business decisions

• Stronger internal controls impacting financial reporting and auditability

• End-to-end funds traceability and data flow linkage between budget and

expenditures.

• Interoperability among business systems and E2E processes

Business Integration FM Functional Strategy

7

Reducing the Number of Systems and Interfaces Through Standards &

ERPs Offers the Most Potential for &

Achieving Auditability

Annual Campaign

Plans • Applying FM Initiative

& Enablers

• Resulting in Annual

System Retirements

System

System

System

System

System

System

System

System

System

System

System

FM ERP

System

System

System

System

Point-to-Point Interface

Point-to-Point Interface Point-to-Point Interface



System

System

System

System

System

System

System

FM ERP

System

System





System

System

FM ERP

System System

System

System

System

System

System






System


System

FY14

FY18

FY15

FY16

FY17

FM ERP FM ERP

FM ERP

Cross Functional ERP

Cross Functional ERP Cross Functional ERP



Cross Functional ERP FM ERP

FM ERP

System

STANDARD DoD

FM TARGET

ENVIRONMENT

~ 327 Roadmap

Systems ,

Annual Budget =

$719M*

~ 120Target Systems,

Annual Budget = ~$220M

8

FM Roadmap Fiscal Year 2013

LEGEND: Color Code by System Owner – Army, Navy, Air Force, DFAS, other DoD/OSD, Multiple or

Unknown; Italics for Non-FM IRB Systems; (P) Partial Replacement

9

FM Systems - FY 2013 - FY 2018

Component 2013 FM Systems

Baseline FM Migrating/Retiring

Systems – FY13-18 FM Core Systems

FY 18

FM/FM Feeder Target

Systems- FY 18

ARMY 89 47 15 27

NAVY 60* 10 13 36

USMC 1 0 0 1

USAF 41** 9 14 14

Total Services 191 66 42 78

DCMA 2 0 0 1

DCMO 1 0 0 1

DFAS 69 14 38 17

DISA 14 7 1 6

DLA 14 7 0 7

DODDE 1*** 1 0 0

DODEA 1 1 0 0

DTRA 1 1 0 0

JOINT STAFF 1 0 0 1

MDA 3 3 0 0

OSD 3 2 0 1

OSD/DSCA 1 0 0 1

OSDCAPE 1 1 0 0

DHA (TMA) 2 0 0 2

TRANSCOM 3 2 0 1

USD(AT&L) 3 0 0 3

USD(C) 2 2 0 0

WHS 4 3 0 1

Total DoD Agencies 126 44 39 42

Unknown 10 9 0 1

Grand Total 327 119 81 121

As of 6/12/2014 DRAFT

FM Strategic Initiatives to Achieve Target State Updated Campaign Plans

2014

ST

RA

TE

GIC

IN

ITIA

TIV

ES

En

su

rin

g C

om

pli

an

ce

w

/ F

M

Sta

nd

ard

s

2015 2016 2017 2018

Delivers Measurable Outcomes Over the Next Five Years

FIAR * • Achieve SBA audit readiness

• % of DoD FBWT validated

• % mission critical assets

validated for Existence &

Completeness

SFIS / SLOA *, ** • JITC: SFIS/SLOA

Validations begin

• GEX/SCS Crosswalks

completed for Pilots

• GEX/SCS MAPS 1-3 Pilots

• SFIS/SLOA Centralized

Services Proof of Concept

complete

USSGL *, ** • JITC: USSGL Validations of

Chart of Accounts, Posting

Logic, and DDRS Trial

Balances begins

• All USSGL Waiver requests

addressed & validated

Transparency

• Comply FFATA & OMB Jun

12, 2013 memo

• Qtrly .validate Grants awards

(obl.) in Fin. Systems &

USASpending.gov

• # Qualified / Unqualified

SBA/SBR Opinions

• # Assertions and Exams

For Core/Target systems:

• SFIS 10.0 system updates

complete

• System SFIS/SLOA

interface compliance

• JITC SFIS/SLOA

Validations continue

• Improve interoperability

within E2Es

• GEX/SCS Deployed or

additional pilots underway

For Core/Target systems:

• JITC Compliance

validations continue

• Improved posting of

accounting transactions

within the lifecycle of

accounting events

• Review and report

completed FIAR FROs for

Contract and Vendor Pay

• Continue to validate Grant

awards (obligation data)

between Fin. Systems &

USASpending.gov


SBA/SBR Opinions


• Continued SFIS compliance

• Improved Interoperability

within an E2E

• Improved audit readiness

• Improved FBWT Recon

• Improved execution data

• Improved trial balances

• Improved audit readiness

•Continue with Bronze and

Review and report completed

FIAR FROs for Contract and

Vendor Pay

•Continue to validate Grant

awards (obligation data)

between Fin. Systems &

USASpending.gov

• Achieve full audit readiness

for all DoD Financial

Statements



Opinions

• Full Integration & Std. of

Acct. Sys. Contract/Grant

Writing Systems to EDA via

GEX

• Federal Spending

Transparency for Contract

and Grant awards as part

of Wave 4 of the FIAR

Plan

• # Exams


Opinions

* Initiative directly relates to Audit Readiness, Daily FBWT/Cash Balancing Goals

** Initiative heavily enables Auditability & Strengthens Financial Controls or Maximize ERPs as Key Enabler

Top Priority Initiatives titled in

“Red”

DRAFT-For Official Use Only 11

FM Strategic Initiatives to Achieve Target State 2014

ST

RA

TE

GIC

IN

ITIA

TIV

ES

Pro

ce

ss &

Sys

tem

Im

pro

ve

me

nts

2015 2016 2017 2018

Direct Treas. Disbursing *, ** • Pilot Vendor Pay (GFEBS)

Cash Reporting * • Support deployment of Std.

Enterprise Recon Tool &

Processes

Intra-governmental (IGT)/IPP* • Define IPP federal-wide rollout

via Navy with Std Trans Broker

integration

• Rollout to Army

• Publish Std. Data Set

Delinquent Debt Mgmt.

Treasury System Roll-out*

(CARS & GTAS) • GTAS implementation

• Test CARS upgrades

• Integ w/Std Trans Broker

Standard PPBE ** • NGRMS: Incr 1 sys dev

• Work with Prog. Budget –

redefine budget formulation/

planning process (i.e. budget

exhibits)

Fund Distribution (FD) *, ** • Complete requirements phase II

Sub-Allotment Execution *, ** • Develop & coordinate Problem

Statement for DBC approval.

• Conduct AoA to develop DoD-

wide solution

Cost Management • Develop Cost Mgmt. Framework

• Develop/ define enterprise data

elements

• Pilot & Evaluate Contract

Pay, Civilian Pay, Military

Pay, Travel Pay

• Rollout Enterprise Recon

Tool

• Assess pilot results

• Expand transactional

volumes with all

components

• Begin Pilot w/GFEBS

• Complete GTAS DoD rollout

• Complete CARS DoD rollout

• NGRMS: Continue Incr 1

sys dev; implement Q4

• Explore Budget capability in

ERPs

• Implement GF TI-97 in two

steps

• Develop FD Phase III req.

• Re-engineer process to

support auditability and

reduce manual processes

• Issue Policy

• Perform Proof of Concept

pilot

• Measure cost of ops/ lines of

business using Cost

Framework

• Commence full

deployment across DoD

Enterprise

• Integrated Cash

reconciliation, forecasting

and visibility

• Maximize DoD trading

partner volumes

• Expand to non-DoD

Trading partners

• Full use of new business

processes & systems


processes & systems

• NGRMS: Incr 2 sys dev

• Continue integration with

FM ERPs, BA & FD

• Exchange and recon of

budget data in unified

data model

• Visibility and auditability

across all components

• Manual processes

eliminated

• Measure cost of ops/ lines

of business using Cost

Framework

• Complete rollout


processes & systems


processes & systems

• Complete rollout to ODOs


processes & systems

• NGRMS: Implement Incr 2

Q3; start Incr 3 sys dev Q2

• Complete integration with

FM ERPs, BA & FD

• Provide system solution

with string internal controls

to support FY17 audit

readiness

• Further refinement &

metrics tracking

• NGRMS: Implement Incr

3 Q3; start Incr 4 sys dev

Q2 to be implem FY19

Q3

• Visibility of enterprise-

wide PPBE information

• Further refinement &

metrics tracking

Go

vern

men

t-W

ide A

cco

un

tin

g

En

terp

ris

e P

PB

E

6/12/2014

12



FM Strategic Initiatives to Achieve Target State

2014

ST

RA

TE

GIC

IN

ITIA

TIV

ES

2015 2016 2017 2018 L

eve

rag

e T

ec

hn

olo

gy

Delivers Measurable Outcomes Over the Next Five Years

Std Transaction Broker (STB) *

• Establish DISA hosting & DFAS

management of SCS

• Identify Business Rules and

Validation Rules for the

GEX/SCS for SFIS/SLOA

Business Analytics (BA)

• Develop Business Case &

Conduct an AoA to determine

DoD-wide solution

• GEX evolves to Target

STB

• # transaction sets

sending SLOA data

correctly

• # Point-to-point

interfaces reduced for

FM SLOA systems

• Expand Sub-Allotment

solution to Army, Navy,

SOCOM & 4th Estate


sending SLOA data

correctly

• Remaining point-to-

point interfaces

eliminated for FM

SLOA systems

• Near real-time

standards-based

information and

analytics from

authoritative sources


sending SLOA data

correctly

• Continue refinement of

BA tools

• Operational use of BA

tools to inform decision

making


sending SLOA data

correctly

Shared Services

• Define SS as part of

comprehensive SM ConOps

• # SSP evaluations

completed

• # SSP pilots conducted


completed

• # SSP pilots conducted

• # SSP pilots expanded


completed

• # SPP pilots conducted

• # SSP pilots expanded

• All duplicative FM

Target system

capabilities are

consolidated under

Shared Services

6/12/2014 DRAFT-For Official Use Only 13



Stringent Investment Decisions Aligned with Target

Business Intelligence Tool (BI)

Dependencies Exist Among Initiatives The Campaign Plans Ensure Coordination and Effective Use of Enablers

SFIS/ SLOA

USSGL

DoD FM Policy Based on Successful Pilots

S

T

R

O

N

G

E

S

T

E

N

A

B

L

E

R

S

FIAR/ Sustainable Auditability

Cost Management

Evolving

Integration

Interoper-ability

Initiative Key

Compliance & Standards

Process & System

Improvements

Leverage Technology

Sub-Allotments

Funds Distribution

Standard PPBE

Treasury System Roll-out

Delinquent Debt Mgmt

IGT/IPP

Daily Cash Reporting

14

Maximize Leveraging the ERPs

GWA

Initiatives

Direct Treasury Disbursing

Reporting/Cash (DDRS,DCAS)

Business Analytics tools (BA)

(DCD/DCW)

Target FM Business Systems Environment

Core ERPs (DAI , EBAS, Navy

ERP, GFEBS, DEAMS,EBS,

GCSS-A, LMP, MSC-FMS)

Treasury (GTAS, CARS, USAspending)

We Can Achieve This by Executing the FM Functional Strategy

Standard Transaction Broker (STB)

(GEX)

Component Capabilities

Functional Areas

FM Budget

Inventory Acquisition

Payroll/Personnel Travel

Logistics

Vendors

Portal

Enterprise-wide Standard

Data, Processes and

Systems

Disbursing (ADS,DDS)

FAMIS, NGRMS, DTS, IPPS’, DCPS

15

Why do we need a standard

transaction broker?

TODAY TARGET

Point-to-Point “Spaghetti” – Expensive!!! Extremely difficult to Manage or Standardize

Hub and Spoke – Cheaper, Easy to Standardize and Manage, More Scalable,

fewer interface controls for audit

16

Disbursing Systems

Accounting Systems

Connecting the FM Environment

AF DEAMS

DFAS GAFS-R

Army LMP

Army GFEBS

Army CEFMS

DLA EBS

DLA DAI

EBAS/EBAS-D

Navy ERP

DFAS SABRS

DFAS STARS

MOCAS Support Systems

Contracting Systems

DFAS EAS

DCMA MOCAS (Feb-17)

DCMA MOCAS (Feb-17) Treasury PAM/SPS

NOT GEX

Connected

Legend SLOA date unknown

SFIS Configured

SLOA Long-term Plan

SLOA Ready by GWA

Not SLOA Applicable Most Enterprise Systems are already GEX connected

DLA WAWF

Support Systems

DFAS SCRT

DFAS EUD

DFAS BAM

DFAS DCAS (Sep-14)

DLA DDRS (N/A)

Treas Reporting (PIR, CARS)

DLA EFD

DLA EDA (May-15)

DLA SPS (May-15) DLA eProc (Feb-14) Army PADDS AF ConWrite

Treasury IPP/IPAC

Standard Enterprise Lines of Accounting

Partner

System

Partner

System

Partner

System

Partner

System

Partner

System

Partner

System

Partner

System

ERPs and Silos

19

Core Accounting:

General Funds

Core Accounting:

WCFs

Budget Formulation

& Exhibit Generation Timekeeping &

Cost Management Acquisition Inventory &

Logistics

ODO-DAI

ODO-EBAS

Army GFEBS

Army LMP

Army GCSS

Navy ERP

MC-GCSS

AF-DEAMS

Core FM

Other

Functional

Areas…

planned

Further Leveraging Integrated ERP Capabilities Offers the Most Potential

for Reducing the Number of Systems and Interfaces

US Standard General Ledger

(Budgetary and Proprietary)

Budgetary Resource

Management

Payment Management

Financial Reporting

General Ledger Management

Funds Balance with Treasury Management

Receivables Management

Cost Management

FM Functional Strategy

Core Financial System

Functions/Capabilities

Execution-Level Planning

Programming

Budget Planning and Formulation

Exhibit Generation

Funds Distribution & Control

Prior-Year Actuals Feed

Translation to Capabilities Available

Today in the Core FM ERPs

Matching & Payment Warehousing

Disbursing

Billings & Collections

IPACS

Budget Execution/ Funds Mgmt/ Funds Control

(General & Working Capital Funds)

Commitments, Obligations, Expenditures, Reimbursables

Treasury and OMB Reporting (Standard Feeds)

Cost Accounting (GFEBS,DAI Navy ERP)

Cost Accumulation and Allocation

Timekeeping (Navy ERP uses T&A)

Acquisition

Core FM

Inventory

Payroll/ Personnel

Travel

Logistics

ERPs Offer Additional

Capabilities for Other

Functional

Areas

Standard Interfacing / Business Integration

Standard Business Intelligence and Analytics

ERP capabilities maximized today

Initiatives underway to further leverage

Further leveraging needed – Enterprise

PPBE ConOps and Cost Management

Framework / Proof of Concept underway

FM Initiatives are now underway leveraging all of

these ERP capabilities

20

Summary

• Systems, interfaces, and controls are essential to:

– Achieving and sustaining auditability

– Improving DoD Financial Management

• Simplification is the key to long-term sustainability

• 4th Estate owns its financial data … must insist on steps to maintain data integrity

21

Questions/Discussion

6/12/2014 1:52 PM Presentation Title 22

Back-up

6/12/2014 1:52 PM Presentation Title 23

How Does SLOA Support the FM Strategic Initiatives? FM Strategic Initiative Outcomes How SLOA Enables Each Outcome

Financial Improvement and Audit Readiness (FIAR)

SBR Assertion FY 2014 Financial Statement Assertion FY 2017

• Software tracks and records audit trail at each exchange of data, business rule modification, format transformation, etc.

• Enables matching transactions between multiple accounting/feeder systems in 1-to-1 format which can be easily reconciled

• Enables cleaner end-to-end transactional flow and processing

Standard Line of Accounting (SLOA) Improved E2E FM Information Exchange • Enables clean interoperability across the enterprise E2Es

SFIS/USSGL Compliance and Validation

• Proper Posting of Transactions in DoD Financial Systems

• SFIS Compliance Plans as part of Component OEPs

• Workbooks define and reformat subset of SFIS data (SLOA) into standard definitions

• Data compliance with Treasury and OMB standards

Enterprise Funds Distribution/Next Generation Resource Management System (EFD/NGRMS)

Integrated capability to formulate, distribute, track and execute the DoD budget

• Links transactions to the Budget/Funds Distribution data • Transformed, standard data for allocation and distribution of funds

identically across the enterprise

Direct Treasury Disbursing Standard FBWT Daily Recon Process

• Enables automatic matching of disbursement to accounting system (near real-time recon)

• Enables routing ERP data directly to Treasury • Provides necessary data to prepare a Direct Treasury Pay Ready File

Government-wide Accounting (GWA)

Daily Treasury Reporting - GWA compliance by Oct. 14 Standard FBWT Daily Recon Process

• Enables translation of TAS/BETC standard data elements to ADS • Consolidates DSSNs into standard repository for daily reporting

Intragovernmental Transactions (IGT)

• Standardize IGT Process DoD-Wide • Eliminate manual processes and multiple forms • Single Repository for IGT Orders for audit readiness • Reduce IGT Eliminations material weakness

• Enables standardized MIPRs necessary data to perform eliminations • Intakes data formats into single central repository from multiple buyer

systems and transforms it into a standard format, and vice versa • Standard buyer and seller data provides data matching and reconciliation

Delinquent Debt Management Delinquent debt collections to treasury after 90 days, using re-engineered processes

• Enables matching and analysis of invoice data to obligation data in real-time and analyzes discrepancies between the two

• Provides flags against delinquency business rules and provides error report when rules are violated (document LOAs overpaid, etc.)

Maximize ERP Capabilities • E2E Process Improvement • Eliminate redundant capabilities in the E2Es

• Take advantage of imbedded controls within ERPs • Eliminates inefficiencies and reliance on feeder systems • Reduces need to point-to-point interfaces & downstream errors

Standard Transaction Broker Reduce/Minimize Point-to-Point Interfaces • Already connected to the GEX • Minimizes need to reconfigure legacy systems • Enables translation, validation, and routing between key E2E systems

Business Intelligence Tools Near real-time, standards-based information and analytics from authoritative sources

• Software provides detailed reports at each exchange of data, business rule modification, format transformation, etc.

Cost Management Consistent cost data and management across the Department

• Enables use of cost management codes and OCC for cost reporting • Provides the cost management information on every purchasing

transaction which will facilitate Full Cost Accounting 6/12/2014 DRAFT-For Official Use Only 24

1/8/2014 25

Decision Tree to Determine Target FM Systems Total FM Inventory

(327)

Retired/

Unfunded in

2013?

Legacy System?

Can ERP provide

capability prior to

2018?

Componen

t ERP?

No

No

No

No

No

Strategic

IT Enabler

No

Is this a Required

Unique Capability?

Non-Target

(19)

Non-Target

(88)

Non-Target (??)

Target Systems (??)

Target Systems (??)

FM or XFunct

Yes

Yes

Yes

Ye

s FM

XFunc

t

No

Target Systems (??)

Target Systems (??)

Yes

Yes

LEGEND

Target Systems (??)

Non-Target Systems (??)

Total Current FM

Inventory (327)

i.e. Std.

Transaction broker,

Bus. Intelligence

tool

No

Non-Target (??)

dod financial management strategy & initiatives

Documents