The Office of Business Transformation (OBT) has a critical mission. The office identifies and champions the adoption of best business practices across the Army in order to provide readiness at best value to the Nation.
Is the Army a business? Undoubtedly not. When the Army men and women to put their lives on the line in defense of the Nation cannot compare to what is asked of employees in the business world. But does that mean the Army should not be "business-like" in many of our practices? Absolutely not. We are a Fortune Top 20-sized organization with manpower and assets rivalling the largest U.S. companies. If the Army is inefficient, it runs the risk of wasting millions, perhaps billions of taxpayers' dollars.
The OBT works directly for the Under Secretary of the Army, Honorable Patrick Murphy. He is a supportive advocate of business efficiency, having come from the private sector and Congress, and we support him in his role as the Army's Chief Management Officer by developing strategies and policies that facilitate better readiness outcomes by the application of resources freed-up from inefficient processes and systems. To give you an appreciation of the Army's business transformation efforts, some of the projects being worked by the OBT with the great leaders in the Army are highlighted.
SIZE OF ARMY HEADQUARTERS
Faced with the task from Secretary Hagel in 2012 to reduce by 20%, the Army set a higher goal of 25%, and will achieve it over time between now and FY18 in all headquarters led by two-star officers and above. The Army made a total of 13,400 reductions, both military and civilian in those headquarters and re-applied resources to our operational forces. In the Department Headquarters, we went even further. The Army was the first in DoD to employ a technique known as delayering. The Army Headquarters had become top-heavy with the median span of control for supervisors at four, with 10 distinct echelons from the Secretary of the Army to the most junior action officer, and 50 percent of Colonels & General Schedule-15 employees reported to a supervisor of the same grade. This top heavy headquarters design contributed to excessive times for information to be either passed to the bottom or the top of the pyramid. To address this, an intensive review was conducted in collaboration with a top tier management consulting firm and our Principal Officials to re-design their organizations. This review resulted in an increase to median span of control to eight, the removal of two echelons, and a 70 percent decrease in same grade reporting. In recognizing the success of this undertaking, others within the Department of Defense have begun to conduct similar reviews.
BUSINESS SOFTWARE
The Army is nearly finished with the implementation of the most comprehensive business software solution ever attempted in the Federal Government, integrating our four major Enterprise Resource Planning (ERP) systems, which support financial management, logistics, personnel and pay, as well as the industrial sector of the Army. In addition to being the most ambitious effort of its kind, this integration is already responsible for significant savings. As these systems come on-line, old legacy systems, which are inefficient and vulnerable to cyber-attack, are being retired. Forty-five of these legacy systems were retired in Fiscal Year 2014 and ninety-two in Fiscal Year 2015. Along with reduction in cost, improved security and efficiency, this will greatly aid in our effort to become fully auditable as well. While OBT is the primary central advocate for this suite of capabilities, many others directly contribute to its success, primary among them the Army Materiel Command, Army G-1, Army G-4, and the Assistant Secretaries of the Army for Acquisition, Logistics and Technology and Financial Management and Comptrollership.
BUSINESS EDUCATION
In the course of 15 years of war, the Army necessarily focused its attention on warfighting success with our education programs targeted at developing leaderships to accomplish this. As a result, other competencies such as the management of large and complex organizations were de-emphasized. Even our talented civilian workforce has identified that one of its greatest needs is to increase its level of business acumen. OBT is at the forefront of re-introducing related topics into the curricula of Professional Education for both the military and the civilian cohorts. For example, the OBT taught a new elective in the Spring of 2016 at Command and General Staff College and are working with the Army Management Staff College, Army War College, and with the head of the General Officer education program to provide the same for uniformed personnel and civilians at every level of the Army.
CONTINUOUS PROCESS IMPROVEMENT AND REENGINEERING
The Army is an organization with tens of thousands of processes that support everything from ordering ammunition to promoting a Soldier. OBT is responsible for the Army Business Enterprise Architecture that supports these processes and as such, we have made significant progress over the past several years in mapping and understanding exactly how these processes work and interface with one another. This paves the way for dedicated efforts to drive efficiencies into process execution. Augmenting this responsibility, OBT is the proponent for the Army's Lean Six Sigma (LSS) program that provides a structured and systematic approach for improving the effectiveness and efficiency of organization processes which can result in significant cost savings and avoidance. To date, the Army has trained 14,000 LSS practitioners, including 1,100 in the last year and the program is responsible for a validated cost savings and avoidance of greater than $800M in Fiscal year 2015 alone. OBT is also the proponent for Business Process Re-Engineering (BPR) in the Army. Also responsible for the realization of savings and efficiency, a recent BPR effort associated with the Army's Integrated Pay and Personnel System took over 140 existing legacy processes, re-engineered them to fit the capabilities of ERP software, to move forward with 30 fully integrated processes.
EVERY DOLLAR COUNTS CAMPAIGN
Too often commanders either execute activities absent the full understanding of the costs behind their core processes or spend resources out of fear of "under executing" or the decrementing of future funds. Unchecked, this leads to an Army that does not value or practice good financial management and inhibits stewardship and innovation. The "Every Dollar Counts" initiative is a recognition that in addition to being the best warfighters in the world, the Army must have leaders that understand and practice good management behaviors by skillfully applying the given resources to maximizing their warfighting capability and capacity. On 15 April of this year, the Honorable Patrick Murphy, as the then Acting Secretary of the Army, signed Army Directive 2016-16 Changing Management Behavior: Every Dollar Counts, as the bold foundation to the Every Dollar Counts Campaign. The goal of the campaign is to change incrementally the Army culture to one that highly values good stewardship of taxpayer dollars by ensuring every dollar counts towards a trained and ready force to fight and win the Nation's Wars. It directs five specific requirements to occur beginning 1 July 16:
All Two-Star/Tier 2 Senior Executive Services headquarters and above will establish and track a select number of annual performance measures that nest under the appropriate higher headquarters goals and objectives.
-- While there are no specified number of measures, they should be few and only those critical to the Commander.
-- How many units are needed in a high state of readiness; how many Soldiers are needed trained or recruited; what is an acceptable condition for the roads and buildings? These are examples of key areas to be monitored.
Commanders will avoid using budget execution data and obligation rates as the sole measure of efficiency or effectiveness.
-- The key is "sole measure." The goal for "Every Dollar Counts" is to maximize output with the least amount of resources possible. Commanders, and subsequently their resourcing teams, must use measures of efficiency in relation to achieving their outcomes.
-- Link outcomes to money. Instead of reporting we are "85 percent obligated," how about "we are 85 percent obligated and have accomplished 90 percent of our objectives." Now we are having a meaningful conversation.
Commanders will understand and systemically manage the total costs to operate the critical processes they have primary responsibility.
-- Account for the fully-burdened cost of an activity, to include military, civilian, and contract labor, maintenance, and long-term costs which might not be immediately apparent.
-- Seek to think in terms of "cost to the government" or "cost to the taxpayer" rather than specific colors of money or "cost to the organization." Avoid selecting a course of action with a greater total cost simply because the funding sources involved are more easily accessible or have less oversight. Or a course of action less costly to the organization but more costly overall to the Army over time.
Eliminate the "use or lose" funding mentality.
-- The National Bureau of Economic Research reports that Federal agencies on average spend "4.9 times more in the last week of their fiscal year than in a typical week during the rest of the year." This leads to significant wasteful end-of-the-year spending.
-- Relentlessly root out and put a stop to the traditional end-of-fiscal-year spending simply to obligate budgeted funds. If it is not something you would spend money on 1 October, do not spend the money on 30 September.
-- Look for trends in de-obligation of funds and ask why. This could indicate either an organization which has found efficiencies or no longer needs the funds or it could indicate habitual "budget padding." One is good and the other is bad.
Encourage and reward subordinate leaders and commands demonstrating extraordinary stewardship of resources and innovate ideas to improve processes.
-- Begin to make efficient use of resources as a distinguishing factor to rate and reward subordinates. For example, if two brigade commanders achieve the same readiness outcome but one was able to do it with a significant less amount of resource expenditures, this should be a distinguishing factor for promotion potential.
-- Reward commanders with the savings they generate. Allow them to reinvest it into their organizations readiness. Provide them more gunnery time or allow them to do special training events like staff rides.
-- Develop methods for commanders to share savings ideas and ways they reinvested their savings.
-- Develop transparency when utilizing savings for higher priority missions. Let your command know that certain high priority missions were able to take place because specific commanders generated savings.
-- Fund each year based off mission requirements, not previous year's budget expenditures.
Like all other elements of the Army, the Office of Business Transformation serves a unique and important role that compliments and supports the primary mission of the Army -- to provide trained and ready Soldiers. The above examples highlight only a few of the many areas where real and profound improvement has been made enabling the Army to function more efficiently. But like the world we live in, and the ever changing threats, this challenge will continue to evolve and require new, innovative thought for solutions to keep your Army Strong.
As our Army leadership has changed, the commitment to continuing meaningful transformation of the business of the Army remains strong. With your support we cannot fail, the stakes are too high.
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