Priming the Pipeline
The New Reality for Customer Engagement
Priming the Pipeline
CIO Stenbit's strategy is both huge and simple: Deploy an IT modernization plan for the Pentagon that reflects the struggles many companies in private industry facethe need to centralize financial controls and communications while keeping some decision-making decentralized. For starters, Stenbit wants to maximize the benefits of existing IT projects, minimize project delays and speed up IT acquisitions. He's created a Rapid Improvement Team to oversee a dozen pilot projects aimed at finding ways to cut, from years down to 18 months, the time it takes to get technology approved and put into the hands of the soldiers, sailors, airmen and technology workers who need it. Says Air Force CIO John Gilligan: "In wartime, we can cut through the bureaucracy without sacrificing quality and still provide rigorous oversight. But if something's not quite on that wartime priority list, it can take years to process the requirement, get the funding, do the contracting action and get a system installed."
Gilligan says the panel has already been making changes, such as giving the branches more autonomy to make decisions, streamlining the review processes, and posting periodic reviews of IT purchases and installations of intranets, instead of printing out scores of paper copies for individuals with oversight responsibility to circulate for weeks, if not months or years, at a time.
Also since Sept. 11, at the behest of Stenbit, each of the DoD's three armed service departmentsthe Army, the Air Force, and the Navy-Marine Corpshave been working to overhaul their IT systems, in some cases for the first time in more than a decade. Changes have been as simple as giving recruits an e-mail address before they get their first buzz cut, and as complex as making plans to digitize supply, weapons procurement and order systems. The Pentagon is also creating mammoth intranets, serving more personnel1.4 million active duty men and women in uniform, another million in the National Guard and Reserves, and some 659,000 civilian employeesthan any private enterprise in the U.S.
And to better manage supply chains, there are at least seven different enterprise resource planning systems being deployed to update technology that, in some cases, dates to the 1950s and, in at least one case, is based on 80-column punch cards. "Because of the pace of technology," Stenbit says, "I'm not a big believer in centralized planning of IT. I am much more of an impressionistic, van Goghlike person believing that we need to let technology lead us, continually, into areas unique to the targets at hand."
Case in point: The Navy has four pilot projects under way. The Naval Sea Systems Command has awarded a $36 million contract to IBM Corp. to set up a regional maintenance system as part of a $347 pilot program. The Space and Naval Warfare Systems Command went live with its SAP system to track business operations last July under a $58 million program that will replace 35 legacy systems. The Naval Air Systems Command had a one-year, $9 million pilot with KPMG Consulting Inc. to manage its E-2C Hawkeye program, part of a $192 million ERP pilot program. The Army awarded a 10-year, $680 million contract to Computer Sciences Corp. to convert two legacy systems in the supply chain to ERP systems.
But Stenbit's approach hasn't come without criticism. Last November, the DoD's Inspector General criticized the plethora of ERP programs under development and raised concerns that the military services are developing at least $2 billion worth of financial management systems in a hodgepodge fashion before they know for certain that these systems will be compatible with the DoD's other standard finance systems. Stenbit's solution, for now: Regularly convene the various ERP program managers to make sure their systems can talk with each other. Meanwhile, efforts to gun down cultural silos are also under way. Says the GAO's Hite: "Without a department-wide plan, people try to do things to control just their little part of the world. [The DoD] needs to put in place a blueprint for the department as a whole."
Another big-ticket item on Stenbit's fix-it list is purchasing. Before the DoD can transform the armed forces, he says, it will have to change the way it buys weapons and supplies. The current system was developed to cope with the relative certainties of the Cold War, but it isn't flexible enough to meet the fast-changing demands of the more volatile new war on terrorism. Now, for example, when the supply officer aboard a U.S. Navy aircraft carrier at sea needs to order new parts for a plane, he or she must contact the mother ship in the fleet, which then communicates back to its shore-based command, which in turn must notify the Navy Supply Systems Command, the $6 billion-a-year organization that moves supplies and spare parts to keep the Navy's ships stocked. Each of these steps involves different, disparate technology systemssome involving COBOL systems.
To combat this, NAVSUP is testing a state-of-the-art SAP system that may one day manage all Navy supplies of ammunition, food and parts worldwide. Navy Commander Tom Gerstner, director of change management and training for NAVSUP, estimates there could be up to $4.5 billion in purchasing savings by 2007, simply by getting rid of some mainframes, reducing the time needed to reconcile disparate databases and cutting the cost of inventory.
Speed gains are also expected. During a recent test, Navy officials followed a spare part through the current system, tracking it through 35 separate physical moves and 29 different systems of paper logbooks before it was delivered. "In the new environment, we will have one computer system, and instead of taking 30 days to deliver a part, it should only take 15," Gerstner says.
By far, the DoD's biggest ERP project to reform purchasing is in the Defense Logistics Agency, the arm of the DoD that supplies everything from jeep tires to uniforms to helicopter spare parts. With more than $15 billion in sales annually, the DLA would rank around 125 on the Fortune 500between Sun Microsystems Inc. and The Coca-Cola Co. David Falvey, the DLA's program executive officer, says DoD officials looked at a host of private companies, from Hewlett-Packard Co. to Dell Computer Corp. to Florida Power & Light, before deciding that ERP would be the cornerstone of an estimated $750 million business systems modernization program through 2005. "We need to have more material shipped directly from the supplier to the troops, to cut out the middle step and all the costs related to holding that inventory," Falvey said of the program, which went online in July.
Stenbit is also a big advocate of outsourcingin sharp contrast to military tradition, where proprietary code and systems unique to the DoD were developed, partly for security reasons. Stenbit hopes one day to replace much of this with commercially developed systems and software. Not only would that save money, Stenbit says, but it would let the DoD keep better pace with new technologies. "The idea of the military industrial complex that Eisenhower talked about was government telling defense companies what to make," says Stephen Gale, director of the Organizational Dynamics program at the University of Pennsylvania. Now, says Gale, new technology available on the open marketsfrom smartcard technology to intranetsdrive what the Pentagon does.
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