The Military Departments’ Business Enterprises tailor system investments and processes to their special or unique needs. Table 3-1 identifies each Military Department’s Strategic Goals for improving its business processes and operations.

Table 3-1: Military Departments’ Business Enterprises

Table 3-2: System Modernizations and Initiatives by Military Department*

Department of the Army

• The Department of the Army has four strategic goals for improving the Army Business Enterprise:
• Increase situational awareness by establishing an enterprise-wide operating picture and data framework for optimal decision making
• Improve asset accountability by creating an integrated financial environment and deployable financial management system
• Enhance and leverage Army enterprise-wide synchronization by coordinating Department of Defense (DoD), Joint and Army initiatives to align people, processes and technologies
• Improve information technology (IT) investment strategy through rigorous investment certification processes and IT Portfolio Management (IT PfM
• Six supporting performance priorities define the capabilities the Army must acquire or improve to achieve these goals:
• Support the warfighter by accelerating business systems modernization and the transition to net-centric data environment
• Provide access to more reliable and accurate personnel information for Warfighting mission plannin
• Improve the accuracy and timeliness of information provided to Army decision makers
• Provide Enterprise Resource Planning (ERP) systems for asset accountability, budget execution and accounting
• Improve business practices through continuous process improvement to decrease operational cost and cycle times, and reduce unnecessary work and rework
• Strengthen Army IT governance and IT portfolio management, including enterprise-wide, cross-Domain synchronization

Section 6 summarizes the status of key milestones for Army systems and initiatives against the targets set in the September 2007 Enterprise Transition Plan (ETP). This section provides examples of the progress during FY08 made by the Department of the Army in achieving its performance priorities for improving the Army Defense Enterprise

Access to Reliable and Accurate Personnel Information

The Army’s readiness to succeed at its assigned missions depends on its ability to employ properly trained personnel. The Army uses information technology to streamline training processes, automate training management functions and deliver training to Soldiers and Department of the Army civilians, at or near their home stations or when deployed, using multiple Distributed Learning (dL) methods. The Army maintains 226 Digital Training Facilities (DTFs) worldwide, serving 379,000 training participants.

The Army Learning Management System (ALMS) supported 181,000 participants taking web-enabled training in military technical and tactical proficiencies, military occupational specialty skills and leader development. Army e-Learning provided web-enabled commercial business, technical and foreign language training to 124,000 participants worldwide.

The development and sustainment of dL capability has enabled a reduction in training backlogs, supported migration of legacy courses to ALMS and expanded course catalogs. This automated training management is providing access to more reliable and accurate personnel information for Warfighting mission planning, and improves business practices to decrease operational cost and reduce unnecessary work. The measure of dL effectiveness is determined by amount of training throughput—that is, the number of training participants who use the core Army dL infrastructure to access training. Figure 3-1 shows how reliance on dL training continues to grow. The growth is due to value gained from cost avoidance and cost savings in travel, improvements in readiness and morale by keeping Soldiers at home and embedded within their units and in place with their families while training rather than having to travel to an Army school to attend resident training.

Army dL provides information that is visible, accessible, institutionalized, understandable, trusted, interoperable and responsive to user needs. U.S. Army Training and Doctrine Command records show that Army schools used dL to provide over 278,700 days of individual training, primarily in military occupational skills. In addition, the Army continued development of the Deployed Digital Training Campus (DDTC), which provides deployed Soldiers access to this training resource.

Individual and Unit Readiness are improved as Soldiers remain at their home station to complete their training for increased warfighting skills. Army program managers and Program Executive Officers used the dL infrastructure for training of personnel in the use of new military equipment and information technology systems. Soldiers and Department of the Army civilians used the dL infrastructure for self-development training in business, technical and foreign language skills, improving their ability to perform their duties.

In 2008, the Army began migrating dL courseware from legacy learning management systems to the Army Learning Management System (ALMS). Through December 2008, 382 legacy correspondence and dL courses migrated to the ALMS. This effort complements on-going work to populate the ALMS with newly developed dL courseware or courseware recently converted from legacy formats. For the next reporting period, the Army plans to increase the utilization of its dL infrastructure by migrating additional legacy courseware to ALMS, populating the ALMS with additional new courseware, enhancing ALMS functionality and completing development of the Deployed Digital Training Campus (DDTC).

The Army has set a goal to migrate all Army dL courseware from legacy learning management systems to the ALMS by second quarter of FY11. The Army also plans to field 50 DDTCs beginning in FY10, which, at Full Operational Capability, will provide training for up to 860 deployed Soldiers per hour.

Improve Business Practices

Many of the Army’s end-to-end (E2E) business processes are susceptible to the techniques of continuous process improvement (CPI). In recent years and largely under the pressure of meeting the requirements of the Combatant Commanders, Army managers have adapted CPI techniques to make significant business improvements. One example of successful CPI is the Improved Logistics Management Strategy that transformed the processes for tracking and repairing damaged parts, and for ensuring timely delivery of spare parts to Brigade Combat Teams (BCT). In another significant improvement, the time required for sealift of a unit's redeployed equipment from Operation Iraqi Freedom to the unit's home location was reduced from 58 days to 50 days or less, thus enabling faster repair, replacement and modernization, or RESET, and improvement in unit dwell time, unit readiness, and increased unit ability to assume full-spectrum operations.

Sealift Transit Time

Historically, redeployments were considered “administrative movements” with no emphasis on aggregating or expeditiously returning unit cargo. Therefore, units often had their equipment returned on multiple ships (20 or more) and received their equipment 120 to 150 days after returning to home station. Due to dwell times averaging 12 months or less between consecutive Operation Iraqi Freedom (OIF) rotations, the Army had to shorten unit redeployment timelines. In order to meet the Chief of Staff of the Army’s objective of 15-months dwell time (between consecutive deployments) and full-spectrum trained units, equipment must be received at home station for RESET, inventory and individual training no later than 50 days after troop redeployment and arrival. In 2007, the Army worked with U.S. Central Command (USCENTCOM) and the U.S. Transportation Command (USTRANSCOM) to conduct redeployments as operational movements and reduce sealift timelines to 58 days for active duty BCT.

After conducting numerous consistent redeployments in less than 58 days, the Army Staff then worked closely with CENTCOM and USTRANSCOM to determine how to increase reductions in the sealift redeployment timeline. Analysis concluded that a 50-day redeployment would be feasible by maintaining a vessel speed of 18 knots (versus the former planning factor of 15 knots) and decreasing port clearance to delivery time from 14 to 11 days as shown in Figure 3-2.

Figure 3-2 illustrates how vessel speed and port clearance are used as measurements, and why both are important parameters in making this improvement possible. Specifically, increasing vessel speed by three knots reduces ocean transit by as many as five days. Similarly, port clearance time is reduced three days by coordinating “port to final destination” rail and truck transportation prior to the ship’s arrival at the port of debarkation. These two measurements combine to save eight full days of transit time.

Reducing OIF sealift redeployment to 50 days or less facilitates delivery of vehicles and equipment to units at the same time Soldiers return from post-redeployment block leave. This allows the units to immediately inventory their equipment, repair deficiencies and begin individual and collective unit training. The reduction will permit units at least eight more days with their equipment between consecutive rotations. Those eight days are critical, considering dwell times between consecutive BCT deployments is typically less than 13 months. Eight extra days equates to four weekends that Soldiers do not have to work in order to prepare for their next deployment and significantly improves the quality of their dwell time.

Figure 3-2: Improve OIF Sealift Timeline from 58 to 50 Days

Logistics Management Strategy

To achieve a 21st century logistics support environment both fluid and responsive to combat unit needs, the Army needs access to accurate and timely information. This permits Commanders and staff to manage the logistics environment in a proactive vice reactive manner.

Existing decision support capabilities and logistics management techniques have been reactive for more than 20 years due to the latent nature or frequency of information provided by current systems. The availability of real or near real-time information--coupled with an integrated environment—is allowing the Army to develop interactive decision support capabilities to address long-standing resource intensive logistics management challenges.

An FY08 operational assessment, conducted at an Army unit’s tactical supply support activity, validated the functionality of an ERP system for the repair parts process. Army regulations provided the performance standards; these standards were programmed into the reengineered solution. The unit demonstrated performance improvements ranging from gradual to dramatic—but always exceeding both the Army standards and baseline performance. Improvements were assessed by measuring dollar values for Overage Reparables, Overdue Deliveries and Demand Satisfaction.

Overage Reparables are repair parts ordered without turning in corresponding unserviceable like items for repair and return to stock. Modern weapons systems consist of approximately 2,500 individual parts of which 15-20% are the most expensive but can be repaired at a fraction of the cost of a new item. At any point in time, there are approximately $600M of unserviceable reparables across the Army yet to be turned in for repair. The efficient channeling of unserviceable reparable parts into maintenance for repair and return to stock forms the core of the reparables management program. On November 1, 2007 and prior to the implementation of improved business processes at the same Army unit’s tactical supply support activity, the Overage Reparables dollar value stood at over $39M. On February 1, 2008, after implementing the improvements, the value dropped 90% to $3.8M. This drop occurred steadily during the evaluation period and as of December 1, 2008 it stood at $204,349—a drop of 99.48%, as shown in Figure 3-3. The projected benefit had been a conservative 50%. This dramatic improvement clearly illustrates the benefit of an enterprise approach to logistics management.

When Overage Reparables dollar value is low, it indicates that unserviceable repair parts are being turned in for repair and return to stock, minimizing the need to order stocks from the national level only to turn them in as excess once the unserviceable part has been turned in and repaired.

Overdue Deliveries are repair parts orders that have exceeded the average length of time it takes to arrive. Customer Wait Time is probably the most critical measure of how well weapons systems are being supported. The longer a mechanic has to wait for a repair part, the longer a piece of equipment remains inoperable, thus affecting a Commander’s ability to maintain high readiness. The efficient tracking and timely resolution of Overdue Deliveries has the net effect of significantly reducing Customer Wait Time. As shown in Figure 3-4, the Overdue Deliveries measure had no baseline as the legacy solution lacked the necessary sophistication to generate a baseline figure. The original baseline measures were 4% and 2%; both improved significantly to 2.16% and 1.17% respectively. When Overdue Deliveries are low, needed repair parts are arriving on time. When Zero Balance is low, parts needed to repair inoperable equipment are in stock and available for issue. When Zero Balance with Dues Out is low, then very few parts are backordered. This important tool leverages the configurable nature of the ERP solution to improve significantly the management of late shipments and addresses a 20-year old problem.

Demand Satisfaction for repair parts includes the ability to provide requested repair parts immediately upon demand. The ability to provide repair parts immediately upon demand is a key measure of how well a Brigade Combat Team (BCT) is supported. In the commercial sector, when a vendor does not have an item in stock, the consumer simply goes to another store. In a tactical environment, options are few. The implications are severe when a BCT cannot maintain its weapons systems in a ready state.

Demand Satisfaction captured on December 1, 2007 was 85%. When it was high, the customer was receiving required repair parts immediately upon demand. On December 1, 2008, it stood at 92.10% - an 8.4% improvement. During the 12 months under evaluation, it steadily improved and generally remained above 90%, peaking at 96.8% in November 2008, as shown in Figure 3-7. This critical measure addresses the consistent repair parts availability to the BCT. Timely parts availability directly translates into equipment readiness and, as a result, unit readiness. The effective packaging of complementary decision support resources ultimately led to the improvement of this core measurement.

Reengineered decision support capabilities are allowing the Army to transform dated business processes and practices, streamline resource intensive process steps, and become efficient stewards of available funds. In addition, the improved processes can be effectively performed within the manpower constraints of the modular Army in both peacetime and wartime footings. The benefits realized increase as business processes are improved throughout the Army Logistics Domain, with the addition of Property Management, Maintenance Management, Ammunition and Financial Management for tactical logistics. The end-state will be a business information environment that effectively complements the modular Army as an integrated part of the joint community in a net-centric environment across the Department of Defense. These improvements are critical in meeting the Army Chief of Staff’s RESET imperatives of: 15 months dwell time (between consecutive deployments); equipment readiness ratings greater than 70%; equipment on hand ratings greater than 80%; and Army units adequately trained to assume full-spectrum operations. The Army staff will continue to improve redeployment doctrine and policy, and institutionalize the ethos that redeployment operations are as critical as deployment.

Strengthen IT Management and Governance

The Army’s Business Mission Area is composed of functional domains with architectures in various states of development. The Army has sought to federate the Domains’ architectures using the Business Enterprise Architecture (BEA) as the ontology. The Army completed federation of the Logistics and Financial Domain architectures and is federating the architecture of the Acquisition Domain.

In FY08, Army leadership put the Army’s ERPs on a path from convergence to federation, moving toward integration. The Army’s three ERPs – General Fund Enterprise Business Systems (GFEBS), Global Combat Support System-Army (GCSS-A) and the Logistics Modernization Plan (LMP) moved from disparate program development into centralized, coordinated management of the Army’s ERP strategy.

The Army has leveraged lessons learned from multiple phases of analysis of the ERP architecture and from the ongoing federation of the BEA to evolve a strategy for its business systems architecture that centers around end-to-end business processes. In cooperation with other Army and Department of Defense architects, the Army is progressing from fragmented, legacy information technology systems to business process systems integrated across functional lines. Figure 3-8 shows an effective indicator of improvement— capability gaps in the Army Enterprise Architecture as measured quarterly using the Architecture Compliance and Requirements Traceability (ACART) tool, a BEA compliance database.

Figure 3-8: Closing Army Enterprise Architecture Gaps

In this way, the Army is on an incremental path to an integrated architecture and interoperable systems for its general ledger accounting system (GFEBS) and its national and tactical logistics systems (LMP and GCSS-A), thus giving the Army improved visibility of its financial and logistics assets. These are long-standing priorities for Congress, DoD and the Army.

The goal of the Army Business Mission Area and Domain architecture is to eliminate gaps in the Army’s Enterprise Architecture by FY10. Progress is tracked quarterly using ACART. The Army has incorporated the first six of 15 end-to-end business processes into the ACART tool. The consistent use of the ACART tool across all Domains is a key strategy and source of consistent data for exposure of capability and resource gaps. It overcomes challenges posed by the different levels of maturity of Domain architectures and the use of different architecture tools; it also incorporates the periodic updates of BEA. The use of ACART to identify capability gaps enables development of mitigation plans and action plans. Going forward, the remaining end-to-end processes will be incorporated. The work being done to integrate the major ERPs will more and more become a primary focus of Army business process architecture.

Department of the Navy

The Department of the Navy’s (DON) strategic goals for realizing meaningful and sustainable structural changes in Navy-Marine Corps business management are to:

• Improve the ability to forecast and control program total cost of ownership
• Increase resource allocation effectiveness
• Streamline/improve effectiveness of the department’s business operations

The key supporting tasks that will enable the department to achieve these goals are:

• Increase visibility into comprehensive program lifecycle costs via deployment of enterprise wide standardized processes and software and through more systematic implementation of existing acquisition governance guidance
• Strengthen linkage between resource allocation (planning, programming and budgeting) and strategic guidance (DoD guidance, Cooperative Strategy for 21st Century Seapower and USMC Vision and Strategy 2025)
• Align and integrate improvements across all business operations mission areas by utilizing Continuous Process Improvement (CPI) methodologies and exploiting emerging technology
• Modernize and integrate legacy systems’ data and applications to improve data accessibility
• Establish and manage a secure, interoperable net-centric naval Information Management (IM) and Information Technology (IT) infrastructure
• Verify proper design and effectiveness of Navy and Marine Corps internal financial management controls
• Extend Chief Management Officer (CMO) implementation

Section 6 summarizes the status of key milestones for naval systems and initiatives against the targets set in the September 2007 ETP. This section provides examples of the progress during FY08 made by the Department of the Navy in achieving its performance priorities for improving its Defense Enterprise.

Program Lifecycle Cost

Driven by mandates from the Vice Chief of Naval Operations and the Assistant Secretary of the Navy for Research, Development and Acquisition, the Total Ownership Cost (TOC) effort is focused on controlling the total cost of ownership (lifecycle cost) across all programs to ensure the department delivers sufficient capability to fulfill the strategic imperatives articulated in the Cooperative Strategy for 21st Century Seapower and USMC Vision and Strategy 2025 at an affordable cost. Desired effects include achieving near and long term savings by changing the practices, policies and investment strategies that may affect the cost of development, procurement, operation and disposal. The groundwork for this effort was achieved by bringing together leadership across the Navy to discuss methods to reduce TOC for the current and future force. Because of these forums, specific initiatives have been launched to better understand and reduce TOC. As this effort moves forward, these specific tasks will result in changes to the way the department procures and sustains its force structure.

The immediate goals of the TOC effort are to:

• Develop recommended changes to DoD and DON policies, processes, roles, responsibilities and incentives to support a sustained focus on TOC reduction
• Develop an aggregated fleet TOC baseline projection
• Develop a TOC investment strategy
• Continue to conduct regular visits and reviews at echelon commands to communicate the strategic importance of the TOC focus

DON Planning, Programming and Budgeting

The DON planning, programming and budgeting improvement effort focused on providing a more integrated view of the department’s investment program and a clearer strategy-based perspective on the capabilities the program delivers. The effort is expected to:

• More deeply embed strategic guidance into resource allocation decision-making
• Strengthen the capability framework for program build
• Improve program build process alignment and synchronization
• Align enterprise business rules for generating Total Force, Procurement and Readiness program proposals during the planning and programming phases

Process improvements have been piloted in the FY11 Program Review and will continue maturing in the FY12 Program Objective Memorandum.

Business Mission Areas

Optimizing the department’s business processes requires identification and prioritization of improvement projects and application of process improvement tools to reduce waste, and improve operational performance and affordability. The Secretary of the Navy has led the initial push within the department to institutionalize CPI/Lean Six Sigma (LSS) as one of the primary approaches to assessing and improving the efficiency and effectiveness of DON processes. These optimization efforts aim to:

• Reduce cycle times to speed decisions, transactions and paperwork
• Increase quality of work life
• Provide optimum process reliability
• Ensure affordability
• Improve the safety of Sailors and Marines

This DON CPI program strategy is aligned with the DoD CPI program and will continue to build on industry-recognized practices and business improvement tools.One example is the DoD Enterprise Software Initiative (ESI), co-chaired by the Department of the Navy, a joint project to reduce the cost of Commercial Off-the-Shelf information technology and implement an enterprise process for software management. This methodology continues to create opportunities to leverage buying power and reduce per unit software licensing and maintenance fees. In the past year, ESI added four new software publishers to the program. Agreements were established with Sun for its Java Enterprise System and Star Office software and with Apple, Minitab and PowerSteering for desktop and server software, maintenance and support. Agreements to add additional products from existing ESI participants Oracle and SAP brought to 10 the total of new ESI agreements achieved in 2008 and to over 75 the total for the initiative. Since its inception in 1998, ESI has been credited with enabling over $3B in cost avoidance for DoD Components and Agencies, and has won numerous government and industry awards.

In 2008, ESI’s Data-at-Rest Tiger Team was honored by DoD for Excellence in Information Assurance and received an Intergovernmental Solutions Award from the American Council for Technology for its work in negotiating enterprise licenses for urgently needed data-at-rest encryption technology.

The core business missions that support the development, deployment and sustainment of critical warfighting capabilities across the DON are shown in Figure 3-9. The High Impact Core Value Streams (HICVS) to the left are owned by the Assistant Secretaries of the Navy and represent key business processes.

Figure 3-9: DON Business Processes-Enterprise View

Legacy Systems

To gain visibility into the costs of operating the maritime fleet, and to standardize the business processes across the Department of the Navy, the department must modernize the business systems and retire legacy systems, which are often redundant and difficult to integrate.

Eliminating networks without losing or interrupting capability is a complex and challenging undertaking, but the Navy established a goal to terminate 25 legacy networks in 2008. As shown in Figure 3-10, the Navy has eliminated 146 legacy networks since 2006 through the efforts of the Cyber Asset Reduction and Security (CARS) initiative, as well as by other organizations throughout the Navy.

Figure 3-10: Navy Legacy Network Reduction

IM and IT Infrastructure Management

The Sea Services maintain a persistent global presence using distributed forces extended beyond traditional deployment areas and performing missions ranging from humanitarian operations to counterterrorism and irregular warfare. Maritime forces are tailored to the unique and evolving requirements particular to each geographic region, often in conjunction with joint, allied and interagency partners. The Department of the Navy works to develop, implement, operate and sustain a global information infrastructure that provides secure, interoperable, end-to-end connectivity to all its Sailors, Marines and Civilians. Common architecture and technical standards ensure that the naval component of DoD’s Global Information Grid (GIG) maintains interoperability with joint forces, allied coalitions and interagency partners. With more than 700,000 users, the Navy-Marine Corps Intranet (NMCI) is the world’s largest intranet, providing access to voice, video and data services to Sailors, Marines, Civilians and contractor support personnel at more than 300 locations in the Continental United States, Hawaii, Japan, Guam, Puerto Rico and Cuba. NMCI plays a vital role in information sharing, transmitting 3.4 terabytes of data each day and over 100 million email messages each month. NMCI maintains robust network security.

During an average month, NMCI thwarts 1,200 unclassified intrusion attempts, blocks nine million spam messages and disinfects tens of thousands of viruses. Additionally, NMCI’s flexibility and ability to reconstitute operations rapidly has helped the Navy and Marine Corps maintain mission capability in the face of challenges, such as, the attack on the Pentagon, Hurricanes Isabel, Katrina and Rita and the California wild fires. By law, the NMCI contract will expire September 30, 2010. The Department of the Navy is actively preparing for the Next Generation Enterprise Network (NGEN), the follow-on to NMCI and a step closer to the department’s future vision of a fully-integrated enterprise environment in which data and services will be ubiquitously available to DON users, the Naval Network Environment (NNE). The Secretary of the Navy, the Chief of Naval Operations and the Commandant of the Marine Corps are guiding the NGEN initiative. Their emphasis is upon effecting a seamless transition to the new network, while employing lessons learned from NMCI and other government and industry organizations to further improve reliability, adaptability, governance and support to operating forces.

Financial Management Processes

In FY08, the Department of the Navy asserted audit readiness for Contingent Liabilities for Existing and Pending Litigation (an estimate that represents approximately 9.5% of the Department of the Navy’s total liability) and qualified audit readiness for a working capital organization, the Naval Research Laboratories. The Laboratories performed risk analyses, assessments and tests on key internal controls, and documented that all of their core business processes were operating effectively. Working with the Defense Finance and Accounting Service, the Department of the Navy completed risk analysis and internal controls testing associated with its collections and disbursements processes, providing better visibility into receipts and payments. The Department of the Navy also documented and began internal controls testing on three more key General Fund business processes: funds receipt and distribution, civilian labor payroll, and reimbursable work orders (performer). This testing will assure Navy and Marine Corps leaders that internal controls are properly designed and effective. Finally, the Navy Enterprise Resource Planning (ERP) software, a key steppingstone to naval operations in a transformed business environment, was deployed at two of the Navy’s four major acquisition commands (the Naval Air Systems Command and the Naval Supply Center). The major acquisition commands are the largest business concerns in the Navy. When fully implemented across the systems commands, Navy ERP will be the sole financial system managing more than half of the Navy’s total obligations

Chief Management Officer Implementation

The FY08 National Defense Authorization Act (NDAA) established the position of a Chief Management Officer both in the Office of the Secretary of Defense and in each of the Military Departments, with responsibility for drafting and implementing business enterprise architecture and associated process improvements. The Chief Management Officer of the Department of the Navy is the Under Secretary of the Navy.

The FY09 NDAA required each Military Department also to establish an Office of Business Transformation. In order to effectively execute the required functions of the office, the Secretary of the Navy established the position of the Deputy Chief Management Officer (DCMO), who serves as the Director, Office of Business Transformation.

The DON DCMO serves as principal advisor to, and day-to-day lead executive for, execution of the responsibilities of the DON CMO. The DCMO coordinates with the Office of the Secretary of Defense (OSD) DCMO and will assist the Under Secretary in his or her responsibilities as Chair of the DON Business Transformation Council (BTC).

The Secretary of the Navy appointed a DCMO in November 2008. The following responsibilities and near term tasks were assigned to the DCMO:

• Development of a well-defined enterprise-wide business systems architecture and business transformation plan for submission to Congress by July 2009
• Establishing and staffing the Office of Business Transformation within the Office of the Under Secretary of the Navy, to ensure that the business transformation plan, architecture and transition plan, once developed, are aggressively implemented and accurately measured
• Providing necessary information to the DoD DCMO, including updates to the DoD Strategic Management Plan
• Developing recommendations for the DON CMO with the goal of aggressively pursuing improvements and innovations to streamline and enhance DON business operations
• Providing oversight of the use of LSS tools and CPI within the DON via creation and implementation of policies and collaborative efforts to incentivize process improvement
• Supporting the development of an aggressive department-wide plan to speed the implementation of ERP software across the Department of the Navy. In particular, identifying methods to tie the ERP efforts to improvements in key DON Business Processes such as reducing the Total Ownership Cost of DON assets

In the near term, the DON DCMO focused on three initiatives to accelerate the standup of the Office of Business Transformation:

1. Integrating civilian and military business transformation efforts by aligning the efforts of the DCMO and Navy Enterprise Integration and Analysis Office (OPNAV N09X). OPNAV N09X is the Chief of Naval Operations’ staff element focused on business operations improvement.
2. Coordinating Navy and Marine Corps business transformation efforts. DON is unique in that it is a single military department with two Services. Consequently, achieving alignment among the business operations frameworks for Navy, Marine Corps and DoD is key. These efforts are reflected in the draft DON CMO Charter, the draft SMP and a portfolio of business transformation initiatives, which will be managed by the Office of Business Transformation.
3. Integrating the oversight of CPI/LSS implementation throughout the DON into the Office of Business Transformation. This will allow for standardized assessment metrics, incentive policies and project tracking across the enterprise. Further, the Office of Business Transformation will ensure that successful projects are replicated across the DON, and training resources are reallocated as individual sites become more proficient in using process improvement methodologies.

The Department of the Navy has made good strides in the past year to:

• Standardize business processes, particularly in the area of financial management
• Focus awareness on the need to define total ownership costs early in the planning and programming cycle
• Gain greater visibility into its lifecycle costs

The upcoming report in July 2009 on the department’s strategic management plan and implementation of business enterprise architecture will demonstrate the continued, accelerated progress this foundation permits.

Department of the Air Force

• The Department of the Air Force has five strategic goals for improving its Business Enterprise:
• Focus operational support on improving joint warfighter effectiveness by integrating high value operational threads across domains and across combat and combat support functions
• Set common goals and priorities across the operational support of the Air Force Enterprise
• Reengineer critical processes, identify and prioritize processes for improvement and redesign them whenever they fall short of the immediate or long-term expectations
• Move systems into a modern information framework. Leverage existing initiatives of the Air Force and the Office of the Secretary of Defense (OSD), while synchronizing and accelerating them to achieve transformation
• Harvest resources to complete operational support transformation and support modernization of Air Force and joint capabilities
• Eight supporting performance priorities define the capabilities the Air Force must acquire or improve to achieve these goals:
• Synchronize the Supply Chain and Installation Management with Operations – Globally

Section 6 summarizes the status of key milestones for Air Force systems and initiatives against the targets set in the September 2007 ETP. This section provides examples of the progress during FY08 made by the Department of the Air Force in achieving its performance priorities for improving its enterprise.

Synchronize Supply Chain and Operations Management

The Air Force is recasting its supply chain to deliver more effective support to mobile expeditionary forces by implementing asset identification and tracking throughout the Air Force logistics system, thus providing full lifecycle asset management. Notably, FY08 efforts have targeted assets with designated properties as identified by DoD Item Unique Identification (IUID) guidelines. Marking each required item using these standard guidelines provides the Air Force with improvements in accurate and timely information on location, condition, status and identity of assets (aircraft, munitions, equipment, supplies, etc). The IUID standard is driving improvements in acquisition, repair and deployment.

Implementation of IUID guidelines will provide the Air Force with long-term improvements to Air Force asset management in a number of areas. A multi-phase process is delineated in the Department’s September 2007 ETP. Figure 3-11 shows that the Phase I goal for the implementation of IUID was not met during FY08—however, significant progress was made in that Unique Item Identifiers (UIIs) were assigned to 9,448 aircraft and all UII-marked items were listed in the IUID Registry through automated links between parts-marking devices and the registry to minimize duplicate entries.

Two initial projects, called Pathfinders, were conducted to validate anticipated efficiencies in the use of IUID technologies. The IUID Reliability Pathfinder demonstrated a repeatable, scalable serialized asset tracking process within an asset population. It identified by serial number those parts that fail most often. This enabled improvement of Pitch Electronic Control Unit mean-time-between-demand by 35%. The Warranty Tracking Pathfinder created a warranty tracking process using IUID. The Pathfinder delivered a repeatable, scalable process to alert technicians at the “point of maintenance” and forward supply points regarding parts warranty status. The result was reduced repair costs and increased utilization of warranties.

Asset identification technology consists of active and passive Radio Frequency Identification (RFID) tags that transmit asset data to logistics information systems. This technology facilitates analysis and decision making in the management of the total Air Force supply chain. This effort is two-pronged. The first objective is to ensure that Air Force assets are tagged as they enter the supply chain and are employed. The second objective is RFID read/write availability.

Munitions experts attached active RFID tags to 323 Precision Guided Munitions and Air-to-Ground Missile containers stored in seven ammunition igloos. The RFID tags record temperature and relative humidity, thus increasing asset visibility without human intervention and reducing work-hours for condition checking and inventory.

The Air Force Central Command (CENTAF) Southwest Asia Asset Accountability Pilot at Al Dhafra Air Base leveraged existing active RFID infrastructure and RFID tags, successfully tracking fully 99.6% of vehicles and equipment. It also reduced the effort-hours for asset location and provided enhanced capability to find lost assets – a successful test in real world conditions.The second branch of the RFID effort is to assure active RFID read/write capability is available across the Air Force enterprise. To date, 445 stations at 224 sites are writing tags for cargo entering the Defense Transportation System. The Air Force has integrated RFID capability into the Cargo Movement Operations System (CMOS) used by the Air Force, the U.S. Transportation Commandand the Army.

The Air Force also has initiated process improvement activities across the full spectrum of the logistics activities, significantly improving supply chain management. Asset management capabilities were centralized, resulting in increased efficiencies.

The Air Force activated its Global Logistics Support Center (AFGLSC) at Scott AFB, providing centralized Supply Chain Management (SCM) planning and execution, integrated SCM processes, real-time collaboration with customers and suppliers, and global command and control based on Air Expeditionary Force lessons learned. The Centralized Asset Management (CAM) Program streamlined management processes for weapon system sustainment accounts. In FY08, total budgeted funding was $13.8B (including supplemental), which represents approximately one-third of Air Force Operation and Maintenance (O&M) accounts. Central management of funds provided the best mix of support to meet warfighter requirements. Purchasing and Supply Chain Management Commodity Councils developed enterprise procurement strategies, linked customers with suppliers, drove standardization and leveraged volume purchases to improve customer support, unit prices, quality of goods & services and delivery responsiveness. Commodity Councils realized a cost savings/avoidance of over $5.5M and a 125-day reduction in overall administrative lead-time through FY08.

Information system improvements provide Air Force decision makers, logisticians and maintainers with access to data and analysis critical to asset management and to ensure that relevant and accurate data is available when and where it is needed.

The Air Force implemented Military Standard (MILS)-to-Defense Logistics Management System (DLMS) data conversion that resulted in a 61% reduction in the number of data transactions – reducing bandwidth, storage and processing time required. Electronic Technical Orders (T.O.) eliminated the need for pallets of paper T.O.s to accompany weapon systems and reduced distribution time by 23 days. Available via the internet, they currently support approximately 30,000 Air Force users worldwide. This reduced T.O. library maintenance time from five days per library account per month to one day per account per month, returning approximately 6,000 workdays per month back to aircraft maintenance. Local printing capability reduces shipping costs by as much as 75% and reduced shipping times for paper T.O.s from weeks to days.

Supply chain transformation has streamlined and modernized the fundamental logistics processes, improving on operational capabilities while reducing the cost to deliver them. This comprehensive process of reengineering is leveraging new technologies, and modernizing or developing systems at the foundation of combat support. The benefits of these transformative initiatives include increased asset visibility without human intervention, thereby reducing work-hours for condition checking and inventory; reduced repair costs; improved warranty utilization; and reduction of bandwidth, storage and processing time requirements. Building more robust IUID/RFID and Standard Financial Information System capabilities prepared Air Force logistics data for exploitation by enabling the Standard Base Supply System to use the new DoD standard data formats of the DLMS.

Support People

The Air Force is building a new service-delivery model for managing personnel and pay, as well as quality of life and morale, welfare and recreation. It is improving the efficiency and quality of transactional, customer service, advisory and program oversight services through reengineering, consolidation and automation.

In this new service-delivery model, the majority of manpower, personnel and services transactional and customer service work, as well as the program management/oversight of those functions are centrally consolidated. This enhances access to personnel services and information through leveraging web-based applications and next-generation contact center technology that puts real-time personnel and pay tools and information in the hands of customers.

The Air Force implements this priority through workplace and family programs, training and education of military and civilian leaders, change management strategies and changes to business processes, personnel accountability and contracting. Significant improvements are described in the next section. The Air Force measures the achievement of these objectives through the number of personnel processes for which members have real-time self-help and 100% transformation to Total Force processes and capabilities.

Automation and Self-Service

The Air Force Financial Services Center (AFFSC) has been a great success story for the Air Force. It has transformed business operations to utilize information technology and continue to support the mission as services are moved to a central processing center – thus downsizing the back-office footprint. The AFFSC now performs 35% of base-level processes at a centralized location, removing the need to have Airmen directly providing support at each base. This effort has saved $200M and nearly 600 manpower authorizations, which were then recapitalized within the Air Force.The number of personnel processes for which members have real-time self-help gauges how well the Air Force is transforming processes historically performed by face-to-face interaction with customer self-service. Customers no longer has to stand in line and wait for service. They can access their information and make changes at anytime from anywhere. Transformation efforts in FY08 are on track toward the performance target of providing customer self-service access to 120 identified processes.

Deploy Tools, Organizations, and Training

The Air Force expanded training and improved staff performance for all non-appropriated fund employees by documenting training in the employee’s personnel records.

The Air Force centralized funding and management of the Air Force lodging program, including development of corporate standards for facilities and operations. Quality and efficiency improved, ensuring that Air Force lodging supports the mission by providing overnight accommodations comparable to any highly regarded private sector limited-service hotel.

Standardize Services and Platforms

The Air Force is streamlining capabilities across the Total Force in an effort to standardize the way it does business and provide consistency to the customer experience. FY08 results are on track toward the goal of transforming Total Force personnel processes and capabilities, with the exception of the Defense Integrated Military Human Resources System (DIMHRS) processes.

Significant improvements were realized in FY08 through increased efficiencies via the centralization of personnel services and integration of Total Force personnel into standardized service platforms. During FY09, the Air Force anticipates conducting intensive process analysis activities, which will enable accelerated improvement in the Air Force measures of effectiveness.

Provide Accurate, Reliable, Timely Financial Information

The Air Force is committed to improving the accuracy, reliability and timeliness of financial information for decision makers and achieving audit readiness on the financial statements. To achieve this priority, the Air Force is breaking down business processes into manageable increments aligned to the BEA and the Chief Financial Officer (CFO) and the Federal Financial Management Improvement Act (FFMIA) compliance requirements. The Air Force is using the Air Force Financial Improvement Plan (FIP) to prioritize efforts, in accordance with Office of the Secretary of Defense (Comptroller) strategy, and ensuring the efficient use of resources to standardize and integrate processes with other Component initiatives. This supports consistency and continuity not only across the AF Enterprise, but the DoD Enterprise.

The Air Force is moving away from the old transaction-based business model to a new paradigm incorporating financial transparency to achieve a clean audit through the modernization of financial systems, documenting processes, implementing the Standard Financial Information Structure (SFIS) initiative and the identification of authoritative data. These efforts directly impact the Air Force’s ability to audit the business practices, finance the fight and support the Air Force mission.

Additionally, the Air Force has worked to reduce transactional activities, establish transparent processes and consolidate functions while providing increased capabilities to the warfighter. This is being achieved through the utilization of Enterprise Resource Planning (ERP) systems, such as the Defense Enterprise Accounting and Management System (DEAMS) and Expeditionary Combat Support System (ECSS).

The Air Force is leading the Department towards meeting their Common Supplier Engagement (CSE) goal. In FY08, the Air Force became the first Component to meet and surpass the enterprise goal of processing 75% of the financial transactions electronically, as shown in Figure 3-12. The Air Force goal is to process 80% of the financial transactions electronically, measured by the percentage of different types of financial transactions at all levels within the Air Force, using Wide Area Workflow (WAWF). The Air Force uses this information to identify improvement areas and evaluate the status of previous improvements/changes.

Figure 3-12: Percent Financial Transactions Processed Electronically

Data management is a key component to achieving accurate, reliable and timely financial information. The Air Force collaborated with the Defense Finance and Accounting Service (DFAS) on a moratorium study of Air Force Financial Management (FM) data elements that concluded that FM data needed standardization among enterprise legacy systems. This effort laid the initial framework for the creation of a data quality service utilizing the DISA service-oriented architecture environment. This should support enforcement of data standardization and reduce the amount of reconciliation, rekeying and rework to input data.

The Air Force, in collaboration with the DoD Chief Financial Officer, has developed a prototype methodology to merge implementation of Office of Management and Budget (OMB) Circular A-123 (Appendix A) with the Financial Improvement and Audit Readiness (FIAR) Plan, providing enhanced audit readiness strategy for all Components. The Air Force formed an integration team that reviewed the business processes identified in the BEA, modified guidance to assure internal control review, released revised templates and restructured process narratives and flowcharts. This effort realigned the General Fund and Working Capital Fund areas to the new end-to-end segment approach. On May 1, 2008, Air Force completed risk analysis, developed detailed test plans, completed control assessment and performed testing when appropriate. Air Force provided the DoD Comptroller with Air Force implementation guidance, formats, and lessons learned to assist in developing Defense-wide guidance for all Components in FY09. This prototype successfully met the requirements of Appendix A, implementing a common methodology and sustaining the program. Integration of the FIAR, ETP and OMB Circular A-123 is essential to meeting the mission and providing accurate, reliable and timely information.

Department of the Air Force—Chief Management Officer

The Secretary of the Air Force designated an Air Force Chief Management Officer (CMO) on August 6, 2008, and then subsequently created the position of Deputy Chief Management Officer (DCMO) to provide cross-administration continuity.

As shown in Figure 3-13, the CMO serves as the Air Force Enterprise Process Champion, facilitates integration across the Air Force Strategic Plan and bolsters the alignment and effectiveness of Air Force-wide processes in support of the priorities, goals and objectives in the 2008 Air Force Strategic Plan. CMO activities are coordinated through and with the Air Force Council (provision of resources) and Process Council (process modernization).

The Air Force has fully documented its existing governance processes, benchmarked with the private sector and formed a cross-functional integrated process team, comprised of senior leaders, to define the roles and responsibilities of the CMO within the Air Force. The Air Force is confident that as it continues to implement Section 904, its current, robust governance processes support the intent of the law.

Customer Wait Time is the elapsed time between the date the order is submitted and the date the order is delivered (computed at the stock number level.)