Is the Army a business?
May 28, 2014
By J.D. Leipold
- More U.S. Army News
- 2013 Army Annual Business Transformation Report
- Army Office of Business Transformation
- Functional Area 50
- Functional Area 50 on Facebook
- STAND-TO!: Functional Area 50
- Problem solvers tackle Army complexity
- Lt. Gen. Spoehr's remarks delivered during the AUSA ILW Breakfast (28 May 2014)
WASHINGTON (Army News Service, May 28, 2014) -- The director of the Army Office of Business Transformation asked members of the Association of the U.S. Army at its 270th Institute of Land Warfare breakfast today, whether they thought the Army was a business.
"We certainly have many of the characteristics of a business. We have capital assets,[and] a multitude of functions. We've got a diverse workforce. We've got upstream and downstream supply chains, and now it looks like we're going to be audited on an annual basis," said Lt. Gen. Thomas W. Spoehr, who took over the Office of Business Transformation in July.
Providing background as to the mission behind the Office of Business Transformation, Spoehr said his office includes about 60 well-qualified operations research analysts, information technology professionals, strategic planners and operationally qualified officers. They support senior Army leaders, principally, the new Undersecretary of the Army Brad R. Carson, who by the direction of Congress serves as the chief management officer for the Army.
Spoehr said the Army manages an education enterprise with more students than the top five U.S. university systems combined, 108,000 family housing units, 13.5 million acres of land -- a little bit less than the state of West Virginia, 144,000 buildings, and 2,252 miles of railroad.
The amount of energy the Army produces equals that of the city of Tampa, Fla., and the number of vehicles in the Army fleet is larger than UPS and FedEx combined, he said.
"But, are we a business?" Spoehr went on. "I think after due consideration, in the end the answer to that question must be no. The Army's sacred role is to protect the nation's interests. The unique nature of the profession of arms transcends what we would consider typical for business."
While the Army is not a business, Spoehr said if it is to be successful, it must exhibit "world-class" business practices.
"If we tolerate inefficient business practices, we risk sending America's sons and daughters into combat ill-prepared, and I think you all agree that's unacceptable," he said.
Spoehr said as the service seeks to improve on business practices, the Army also has some inherent advantages -- a proven reputation for getting the mission done no matter what the difficulty, a great leader education program and a strong set of ethics and values.
Even so, the Army also has some inherent disadvantages, he said, among them a budget which offers little flexibility and is divided into multiple appropriations which can't be interchanged.
"First and foremost, we are engaged in responsibly sizing our forces to meet the nation's needs," Spoehr said. "You've heard the secretary and the chief testify that under full sequestration, the total force military end strength has to drop to 920,000 Soldiers."
Spoer said if sequestration is not necessary, he thinks the Army should be able to keep 980,000 Soldiers (450,000 active-duty, 335,000 National Guard and 195,000 Reserve) and the entire headquarters has been engaged in identifying the best force within those constraints.
He added that Army Chief of Staff Gen. Ray Odierno has said he feels a moral responsibility to reduce non-warfighting functions and capabilities to the greatest degree possible before he reduces another infantry squad, armored platoon or truck company.
"We anticipate these headquarters reductions alone will save approximately 13,000 spaces, which can either be reallocated or eliminated and those savings can be plowed back into readiness," he said.
Spoehr also highlighted other areas where the Army was making progress in becoming more business-like, such as its IT portfolios and systems. For business systems alone, cost has been running around $2 billion annually for more than 700 systems.
But with the fielding of the general fund enterprise business systems, or GFEBS, and the logistics modernization program, LMP, and two major enterprise resource planning systems or ERPs -- the global combat support system-Army, known as GCSS-A, and the integrative personnel and pay system-Army, known as IPPS-A -- are both on track and ahead of their milestones, he said.
"By fiscal year (20)19, by retiring outdated legacy systems and folding these capabilities into our new ERPs, we anticipate driving down annual IT costs by $600 million a year, down to $1.4 billion and that will also shed 180 systems, bringing us down to 520 -- and we're still working to identify other systems we can eliminate," Spoehr said.
The general highlighted a few other efficiencies which have reaped significant savings, but haven't lessened quality:
• CIO G-6 achieved great savings and achieved economy of scale in enterprise email, software licenses and cloud hosting which is saving the service more than $100 million annually.
• The Army surgeon general has developed several new systems which track medical care and its costs, resulting in Army medicine leading the Defense Department in efficiency while still providing world-class health care.
• The Recruiting and Retention School moved from Fort Jackson, S.C., to Fort Knox, Ky., which resulted in the command saving $10 million annually because there was extra housing capacity at Knox which wasn't available at Jackson.
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