stars cfo act system changes

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Department of the Navy Office of the Assistant
Secretary of the Navy (Financial Management and
Comptroller)
Financial Management Systems Vision Transition
Plan ERP Update
Mr. Ed Johnson, Office of Financial Operations,
ASN(FMC)
Financial Management Conference, San Diego 1-3
February 2005
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Objective

• To outline the DON Financial Management Systems
  Vision
• To be used as a frame of reference for improved
  decision making
• To develop a basis for a meaningful transition
  plan
• To gauge need for new or improvements to systems
• To make funding decisions
• To provide a Converged Enterprise Resource
  Planning Update

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ASN(FMC) Financial Management Vision

• Provide accurate, timely, and reliable financial
  information to decision makers
• Provide an automated environment to support the
  efficient production of auditable financial
  statements
• Support business process standardization
• Support the use of a common language (USSGL)
• Reduce disparate IT systems
• Enhance Enterprise integration
• Reduce long-term IT costs

Aligns the Department of the Navy with the goals
and direction of the DoD Enterprise Architecture
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Overarching Guidance

• Chief Financial Officers Act
• Requires that financial statements be prepared
  and audited
• Requires implementing OFFM (JFMIP) certified COTS
  systems when replacing existing FM systems
• Federal Managers Financial Integrity Act
• Requires improving the accountability and
  effectiveness of federal programs and operations
  by establishing and reporting on management
  controls
• Revolution in Business Affairs
• Established COTS ERP as the cornerstone for DON
  enterprise management
• DON Functional Area Managers
• Rationalization of redundant/obsolete systems
• BMMP Enterprise Architecture

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Assumptions

• The FAM rationalization process, the BMMP
  architecture, and the Navy ERP implementation
  plan will all help drive the Financial Management
  Vision
• The Vision is not an implementation plan it is
  a tool to be used when making decisions a
  roadmap of where FM is headed.
• Outcome must be consistent with the goals of
  achieving a clean financial opinion
• Any new system implementation should be a OFFM
  (JFMIP) certified system
• A well integrated business solution tied together
  with the USSGL should support an acceptable
  financial solution
• Any savings generated by the retirement of legacy
  systems may be redirected to implement and
  support COTS products
• DFAS will manage a data repository to which DON
  FM data is sent for all levels of reporting and
  management

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FM Vision for Business Transformation

• DoD Business Enterprise Architecture Framework
• Standardize business processes provide data
  standards
• Requires systems portfolio management
• Converged ERP Cornerstone
• Implement a modern, integrated COTS software
  product
• Reengineer business processes
• Functional Area Manager Process Transition Tool
• Rationalize FM systems portfolio management
• Standardize business processes
• DoD Financial Improvement Initiative Integrating
  Plan
• Basis for DON Financial Improvement Plan
• Provide clean financial statements/unqualified
  audit opinions
• Guide system improvements

Successful business transformation will produce
clean statements audit opinion
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Financial ManagementTransition Plan
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Systems View Current
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Todays Systems Environment

• Too many systems
• Redundant, stove-piped
• Poor integration, interoperability
• No standard data structures
• Limited visibility in budget
• Discrete elements of spending lacking
• Difficult to support technologically
• Difficult to audit

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What has been Happening?

• DON Systems Efforts
• Migrating to Converged ERP and other standard
  systems
• FAMs rationalizing systems portfolio management
• Echelon IIs working toward 50 system reduction
• DON Comptrollers implementing FIP-related system
  changes

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What has been Happening?

• OSD Systems Efforts
• Enterprise Architecture and Transition Plan
• OSD Domains are developing system transition
  plans
• Domains conducting systems reviews and approvals
• Domains and PAE are making budgetary decisions
  to reflect these plans (POM 06 Issue Papers)
• DoD Financial Improvement Initiative unfolding

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Initial Transition Plan!
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Transition Plan Strategy

• Show ERP as the cornerstone/end-state
• Notional time-phased transition to Navy ERP
• Use ERP deployment schedule as baseline
• Notional time-phased transition of supporting FM
  legacy systems
• Look at two approaches
• Systems view
• Command view

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Navy Systems Transition Summary
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STARS HCM
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STARS HCM
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STARS HCM

• Annual system cost XXXXXX
• Number of sites
• Number of users

• Feeder systems
• Feeder systems eliminated
• Savings XXXXX

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STARS FL
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STARS FL

• Annual system cost XXXXXX
• Number of sites
• Number of users

• Feeder systems
• Feeder systems eliminated
• Savings XXXXX

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Next Steps

• Identify all FM systems used, by activity
• Identify all feeder systems to FM systems
• Identify any current migration strategies
• Identify budgets for each system
• Plot these systems
• Analyze and share results
• Incorporate in FM Transition Plan

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Keys to Success

• Command participation
• A FM systems transition plan that goes beyond
  notional
• NDAA and BMMP restructure requires a Component
  transition plan
• Can incorporate in DON Financial Improvement Plan
• Keep DON FM Management informed
• Keep ERP Program Office informed

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Conclusion

• The DON IT footprint is enormous
• Development of Transition Plan is doable
• It is hard work and ever evolving
• It must result in reduce costs and improve FM
• There will be obstacles
• To getting consensus
• To determining financing mechanisms
• System decisions must not adversely affect an
  activitys ability to perform its mission,
  however
• IT economies and efficiencies are expected
• System migrations will be necessary

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Converged Enterprise Resource PlanningUpdate
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Production Systems - Demonstrated Benefits

• Financial Management (SPAWAR Cabrillo)
• 50 reduction in annual cost of Business Systems
  support
• Cut simplified acquisition requisition-to-order
  process time from 44 days to 44 minutes
• Regional Maintenance (NAVSEA/FFC NEMAIS)
• Reduced average Total Repair Time by 16 from 96
  to 81 days
• Elimination of job rejection notification delay
  from 20 days to immediate
• Program Management (NAVAIR Sigma)
• 66 improvement in financial statement processing
  time
• Aviation Supply (NAVSUP/NAVAIR SMART)
• One million inventory transactions with lt ½
  error rate
• Reduced warehouse refusal rate from 3.5 to 0.5

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Transition from Pilots to Navy ERP Program
Pilot Interoperability Phase
Navy ERP (Converged) Program
Pilot
MS A/B
Sigma (NAVAIR BearingPoint)
Cabrillo (SPAWAR IBM)
SMART (NAVSUP EDS)
NEMAIS (NAVSEA / CFFC IBM)
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One Program With One Mission

• Navy ERP Mission
• To reinvent and standardize Navy business
  processes for acquisition, financial and
  logistics operations
• Programs Key Objectives
• Build an integrated financial system that
  complies with Business Enterprise Architecture
  (BEA) requirements for all Navy commands
• Optimize end-to-end value chains across
  functional and organizational boundaries
• Collapse the pilot programs to produce a single
  product for the Navy
• Maximize ROI through effective deployments and
  sequencing of functionality

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Business Reengineering Activities

• Use SAP as entitlement system for Navy
• Use DLA model but improve it
• DFAS involved in design effort
• Use SAP for Receipt / Acceptance process
• WAWF / WINS / EDI
• Standard USSGL throughout Navy
• Standardize definition and applicability of WIP
• Standard Rates for GF cost and billing
• Re-engineered P-card process

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Business Reengineering Activities

• Use Investment Management program structures to
  represent major weapon systems (aircraft, ships,
  etc.)
• Simplifies project structures, reduces volume,
  provides program management view
• Use Resource-Related Billing with Characteristics
  and FM funds availability control
• Allows for multiple funding sources to be
  assigned to a single WBS billing element
• Optimizes WBS for project mgt instead of
  funding/billing
• Standardized order fulfillment
• Incorporated serial number tracking in processes
• Common plant supply solution for maritime and
  aviation I-level repair activities

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NAVSUP Business Process Reengineering Study

• SIs / SAP validate (measure) relative grading of
  effort (process) in 22 level II Supply-related
  business areas
• Drafts presented, edited, and final product
  received November 04
• Overall score 5-6 (Clearly indicated
  reengineering well beyond Legacy replacement)

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Navy ERP Program Schedule (POM 06)
Rev 20041115 1100
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Whats Next

• System configuration
• Documenting technical steps to configuration
• Business Process Procedures (BPPs) being
  developed
• End-user desk top guides and training
• Technical functional scripts being developed
• For approved RICE (Reports, Interfaces,
  Conversions, Enhancement) objects
• Testing scenarios being developed
• To demonstrate end-to-end functional capability
• Tie back to ORD and BEA
• Deployment activities have started at first site
• Kick-off meetings, begin planning

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BACKUP

• BACKUP

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Evolution of Navy ERP
Efforts That Established Mission Need
One Navy Solution
Pilots
Mandate

• ASN (RDA) directed convergence of Navy ERP Pilots
  
• CNO SECNAV declared support for Convergence to
  proceed
• Navy ERP PMO Established
• Requirements letter signed by ASN (RDA) and N4
• Operational Requirements Document Development
  Initiated
• ERP included in DON Objectives for 2004

• Revolution In Business Affairs JV 2020 Vision
• Commercial Best Practices (CBP) ESG established
• Give priority to investments that will cut our
  operating or business costs, such as Enterprise
  Resource Planning (ERP) and Navy-Marine Corps
  Intranet (NMCI)

• Pilots established 1998
• Directed use of commercial approach
• Goals
• Standardize DoN processes
• Provide an Integrated Enterprise solution that
  seamlessly supports end-to-end capability
• Demonstrate ability to provide accurate,
  consistent, timely financial information from a
  single source
• Manage and track cost drivers

ERP Enables The Navy To Realize Leadership Vision
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Scope Of Navy ERP Systems
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What The Pilots Proved

• ERP can be used to
• Operate and manage a major Echelon 2 acquisition
  command and Echelon 3 subordinate commands (PM,
  Workforce Management, FM, Procurement)
• Integrate Maintenance and Supply in performance
  of aviation and ship maintenance, provide
  visibility of resources across activities and
  optimize supply chain management
• Validate compliance with the CFO Act and provide
  significant reductions in legacy IT and data base
  systems with resultant cost reductions and data
  quality / timeliness benefits

No Longer A Question Of Can We?
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Navy ERP Functional Scope
Release 1.X

• Financial Management
• Financial Accounting
• Revenue and Cost Controlling
• Asset Accounting
• Public Sector Management

• Materials Management
• Procurement
• Sales and Distribution
• Inventory Management, Warehouse Management
• Environment, Health, and Safety
• Material Requirements Planning (Regional Level)

• Plant Maintenance
• Plant Maintenance
• Quality Management
• Environment, Health, and Safety

• Program Management
• Project Management

• Workforce Management
• Time Management
• Certification Assignment Control
• Training and Event Management

• Wholesale Supply/APS
• Production Planning and Procurement Planning
• Advanced Planning System (APS) Processing
• Business-to-Business Procurement

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Deployment Locations

• Weapon Systems Acquisition, Maintenance
  Supply Support Commands

• Echelon 1 and 2 Financials
• CNO (FMB/N8)
• Echelon 2 Financial Offices
• Aviation Value Chain
• NAVAIR
• HQ
• NAPRA/NAMRA
• TSD Orlando
• NATEC
• Naval Air Warfare Centers
• Fleet
• Fleet Forces Command HQ
• Aviation Intermediate Maintenance Depots
• Regional Maintenance Centers
• Measure Operational Control Centers
• Remote Calibration Labs

• Maritime Value Chain
• NAVSEA HQ
• NAVSEA Logistics Centers
• NAVSEA Warfare Centers
• Naval Submarine Support Facility New London
• SUBMEPP Portsmouth
• Supply Value Chain
• NAVSUP HQ
• Naval Inventory Control Point
• Fleet Industrial Support Centers
• Fleet Supply Activities
• C4I Value Chain
• SPAWAR HQ
• SPAWAR System Centers

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System Requirements Review (SRR)System
Functional Review (SFR)Operational Requirements
Document (ORD)Review
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SRR/SFR Effort Parts 1, 2 3
December 1
November 8 9, 30
October 25 - 28
Part 1
Part 2
Part 3
Navy ERP Pilot Reconciliation
SRR/SFR Conclusion
ORD Traceability Review
Gaps, Issues, Concerns
Results
SRR/SFR Report
Mitigation Plan
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The SRR/SFR will

• Establish a system functional baseline for
  Template 1, Release 1.0
• Demonstrate how Release 1.0 functionality will be
  sufficient to replace the Pilots
• Demonstrate how Release 1.0 is traceable to the
  ORD Requirements
• Demonstrate the system functional design provides
  sufficient detail to enable system technical
  design

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Big Rock Items

• Labor Processing
• FMO, DFAS, WFM, PM, Maritime VCM, Aviation VCM
• 16 issues, e.g., certification to DCPS, standard
  versus actual cost, cost transfers, cost
  approval, end-to-end review, and year-end
  processing
• Inventory Valuation compliance with
  accounting standards
• GAO, FI, FMO, MM, SD, ARMY, DLA, SAP, OSD (C)
• 3 issues, calculation of moving average cost,
  capitalizing or expensing cost to repair a broken
  item, valuation of broken items software
  customization issues

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Action Plan

• Each SFR/SRR gap is being reviewed by the ERP
  team in concert with pilots and value chain
  managers
• Tiger Teams established to address Big Rocks
• Mitigation plan for each item must be approved
• By VCMs/Senior Leadership/ERP PM
• And through the Configuration Management Board