DoD ERP Expert Warning: Functional Silos are Hazardous
By Trish Van Belle
Business Transformation Agency
April 22, 2009
Vienna, Va. – Business Transformation Agency's Deputy Director of Enterprise Integration, Jeetendra Ahuja, summarized the biggest challenge currently facing the Department of Defense (DoD) in the business area: the perils of silos. Drawing on his real world experiences implementing large information technology (IT) systems in DoD, he warned members of industry and government about stovepipes at the first "Enterprise Transformation for Government" conference on March 31.
"We are trying to achieve integration across silos that have been there for a very long time," said Ahuja. This stovepipe problem, he explained, applies not only to IT systems, but to governance bodies who make decisions about business capabilities.
Ahuja spoke on the perils of silos at the Enterprise Transformation for Government Conference
For the last ten years, DoD has been investing heavily in enterprise resource planning (ERP) systems. Its 12 ERPs across military services and agencies account for approximately 50 percent of the business systems annual modernization budget of $2.3 billion. To date, ERP implementation results have been mixed. Few programs are on cost and budget, and the majority do not produce significant returns on investments. Yet there have been successes.
Ahuja asked and answered the underlying question, "So why is the Department investing in ERPs?" Most ERPs replace legacy systems, which have been in place a very long time. Legacy systems tend to optimize stovepipes, not the enterprise, according to Ahuja. "We want to achieve better integration, be auditable, manage costs and be responsive to our customers," he added.
Legacy systems also tend to "break" ERPs when they are interfaced with them, said Ahuja. ERPs are closed, highly integrated systems. Each external interface presents transactional error risk. As the number of interfaces increases, the probability of successful transactions decreases. The government has countless interfaces and spends millions annually to correct reconciliation errors.
BTA is proactively working to address this and other issues. Interfacing ERPs with systems that perform functions beyond the ERPs' inherent capabilities – such as travel, which requires external information from airlines and rental car companies – is necessary, said Ahuja. However, interfacing ERPs with systems performing functions inherent in the ERP – such as procurement – is less efficient and more costly, but is mandatory in some cases. Changes to DoD policies and ERP system functionality are currently being considered, said Ahuja, as ways to address these challenges.
One of the ways to address DoD's biggest challenge – stovepipes – is implementing a new business capability lifecycle (BCL) framework. BCL represents the complete lifecycle framework for business capabilities. It utilizes a single governance structure that incorporates all DoD functional communities, as well as a comprehensive enterprise risk assessment methodology (ERAM) to give decision makers better insight. BCL reengineers major DoD processes to streamline governance and decision support to enable faster delivery of business capabilities.
The Institute for Defense and Government Advancement, which sponsored this launch event, framed the conference around the new administration’s theme for "change." Other U.S. government offices providing speakers included the Government Accountability Office, Agency for International Development, Small Business Administration, Federal Aviation Administration, Environmental Protection Agency and the Departments of State, Interior, Energy and Labor.
The two-day session had a broad transformation agenda. Ahuja’s presentation was the first and only briefing focused specifically on ERPs. He acknowledged there are newer technologies and service-oriented architectures some feel could make ERPs obsolete. He disagrees.
"ERPs are not the problem. We are siloed, and we want to transform at the same time. If ERPs are implemented correctly, they can help us overcome these silos. ERPs are here to stay," said Ahuja. "We have to actively manage the critical success factors to be successful in our transformation journey."