DOD effort to consolidate its financial IT draws fire

Defense comptroller Dov S. Zakheim says, 'DOD has ... made important progress.'

Scott Davis

The Defense Department has invested two years and $100 million in modernizing its financial systems, but many experts are questioning the results.

Critics ranging from federal auditors and former Defense officials to enterprise architecture experts have identified problems with the project, which began in July 2001, when Defense Secretary Donald H. Rumsfeld established the Financial Management Modernization Program. This summer, DOD renamed the project the Business Management Modernization Program.

Some say Defense has taken too long, spent too much money, committed too much manpower and has too little to show for its first step in turning around longstanding financial systems woes'the development of a business enterprise architecture.

The effort has called to mind Winston Churchill's famous reference to 'a riddle wrapped in a mystery inside an enigma,' said Paul Brubaker, a principal at IGC Government in Reston, Va., and a former deputy CIO at Defense.

In April of last year, DOD hired IBM Corp. under a $100 million blanket purchasing agreement to identify which of more than 2,300 business systems would be phased out and which would become part of the new business architecture.

About three months ago, IBM and a team of subcontractors unveiled the architecture.

It 'depicts more than 740 activities, 2,589 information exchanges, 9,946 definitions, 76 data stores, 1,081 business rules and 4,020 business and financial requirements,' said Bill Williams, leader of the Defense team for IBM's business consulting services.

The transition plan the company included with the architecture breaks it into 103 implementation segments. Between now and next April, IBM plans to work with DOD to amplify plans for each segment, Williams said.

Defense comptroller Dov S. Zakheim said, 'DOD has expended tremendous effort and made important progress, and DOD's initial version of the business enterprise architecture provides a foundation from which to build and ultimately produce a well-defined business enterprise architecture.'

The next phase will be moving from the as-is environment to the consolidated IT environment, Zakheim said.

DOD has assigned 300 people to the modernization office to work on the business architecture. More workers are providing support to seven key business areas that are also being overhauled in the process.

But the business architecture has been both celebrated for its scope and ambition and criticized for its complexity.

Much of the criticism involves the time DOD has spent defining its as-is environment as well as what is missing from that environment.

'It's a convoluted exercise in chart-making,' Brubaker said. 'If you're really serious about transformation, you don't spend a long time understanding the design of the horse and buggy.'

In a report issued last week, the Defense inspector general's office said DOD has not defined what a business management IT system is or established a systems inventory for the modernization effort.

'DOD does not have a single-source repository to collect its business information, reduce the burden of multiple and costly data calls and inform its transforming initiatives,' said the report, Systems Inventory to Support the Business Enterprise Architecture.

Without such a repository, the department cannot meet the business monitoring and reporting requirements mandated by the Office of Management and Budget, said the report signed by David K. Steensma, deputy assistant IG for auditing.

Steensma has asked Zakheim and Defense CIO John Stenbit to respond to the IG report by Aug. 11.

Back to the shop

The IG report came close on the heels of a critical audit from the General Accounting Office earlier this month.

GAO described the architecture as difficult to navigate and missing key elements. In its report, GAO said the as-is environment lacked five things:
  • Descriptions of current business operations, the functions people perform and location details

  • Details about current data

  • Technology standards

  • Security standards and tools

  • Performance metrics.

'As a result, DOD does not have a sufficiently described picture of its as-is environment to permit development of a meaningful and useful transition plan' to a new architecture, said the report, Business Systems Modernization: Summary of GAO's Assessment of the Defense Department's Initial Business Enterprise Architecture.

GAO also said DOD has underestimated the cost to run its financial systems. The audit agency said DOD would spend $18 billion this year to operate, maintain and modernize its accounting, acquisition, logistics and personnel systems.

DOD has pegged the figure at $5 billion.

Despite the criticism, Defense officials defended the progress. The bulk of the difficulty has not been in developing the architecture but in re-engineering processes to implement that architecture, said Lydia Moschkin, deputy director of the modernization program.

'Re-engineering business processes requires changes in the ways DOD's employees are conducting business. A major cultural change is part of business process re-engineering,' Moschkin said. 'The technical aspect of creating the architecture pales in significance to that of the cultural challenge faced in getting it implemented.'

Another important step will be meshing DOD's architecture with OMB's efforts to establish the Federal Enterprise Architecture.

Norm Lorentz, chief technology officer of OMB, said DOD's functions are not represented in OMB's Business Reference Model, but 'we are working with them to do that.'

To read the IG's report, go to and enter 138 in the box. For the GAO report, enter 139.


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