DOD Business System Modernization Ambles Along

The Department of Defense (DOD) efforts to update its business systems have been designated as “High Risk” by government oversight organizations for decades. The complex business environment includes over 2,000 business systems and reportedly costs the department around $10 billion in fiscal 2015. This complexity and high combined costs renders the investments vulnerable to fraud, waste, abuse, and mismanagement. Since June 2011, 31% of the recommendations to address provisions for improving business system management have been implemented.

According to the DOD, their business system environment includes 2,179 business system investments, estimating $10 billion in costs for fiscal year (FY) 2015. Of these systems, DOD reportedly approved certification requests for 64% business systems in FY 2015 as part of the FY 2005 National Defense Authorization Act’s certification and approval requirements. Focusing on the certified systems reported for FY 2015, the functional areas with greatest density include: 37% of the certified systems fall into the human resources management functional area (20% of the total), followed by 29% for logistics and material readiness (16% of the total), and 15% for financial management (8% of the total).

The challenges related to these business systems are significant not only because of the potential vulnerabilities but because, as they stand, they represent missed opportunities to achieve greater efficiencies. Over the years, the Government Accountability Office (GAO) has issued recommendations to highlight areas for improvement. These recommendation address a range of overarching provisions to enhance business systems management.

Since 2011, DOD efforts have implemented 5 of the 16 recommendations made by GAO. For example, the Defense Department has improved its reporting of business system data in its annual budget request. Specifically, the common elements have been established for tracking information about business systems, enabling information about individual business systems to be matched across systems. Also, the DOD CIO confirmed that it conducts periodic data quality assessments. These steps combine to better position the department to report reliable information in its annual budget request and maintain greater accuracy about business systems to support its management efforts. The department has also set a deadline for integrating and validating the repositories, completing the implementation of recommendations related to Mandated Budgetary Reporting.

 

Even so, there are a remaining 9 recommendations that have yet to be completely implemented. These outstanding adjustments include updating congressional compliance reporting with staffing shortfalls and impact data, developing strategic approach to close gaps in workforce skillset as part of human capital planning for the Office of the Deputy Chief Management Officer, as well as devising a timeline and strategy for key elements of the enterprise transition plan such as milestones, performance measures, and funding plans.

Although the enhancement efforts aim to increase efficiencies and cost savings, the programs related to the DOD’s business systems modernization have continued to command significant investment levels. As the timeline for these developments extends, these modernization initiatives are likely to present additional opportunities for vendors as the DOD contends with business, technology, and regulatory requirements. For example, compressed timelines (e.g. to meet auditability deadlines) could increase pressure to implement quick fixes that could delay progress toward sustainable, long-term financial management reform across DOD. Also, while automated business systems are essential for effective financial management and reporting department-wide, the DOD’s major systems acquisition and development efforts have continued to experience impediments to deploying such systems on schedule and with the intended capabilities.

Additional insight, program status details, and analysis on the state of business system modernization within the Defense Department and civilian agencies is can be found in the GovWin Federal Industry Analysis report Federal Enterprise Business Systems, 2015.