Whether renovating a 100 year old house or working to modernize a 245 year old organization, sometimes it takes digging down to a solid foundation to build bigger, better and stronger.
Such a foundation was laid for the first time as the U.S. Army Financial Management Command just completed a three-year mission of documenting and standardizing all of the Army’s business processes impacting financial statements, and the results have already paid dividends.
“We started standardization because Congress mandated the Department of Defense go through a full financial statement audit, and we quickly realized the only way to achieve a clean audit opinion was to get a baseline,” said Chris Reynolds, USAFMCOM Business Process Management director. “And, the only way to get a baseline was to standardize our processes and practices across the entire Army enterprise.”
“I think this is an initiative the whole department needs to undertake, and I’d imagine with some of the audit efforts they are doing that, but the difference with the Army’s business process standardization was it really focused on operations and improving them across the Army,” said Greg Schmalfeldt, Defense Finance and Accounting Service Indianapolis director and Army client executive. “You get the benefit for the audit, but you’re not doing it for the audit.”
Reynolds went on to define auditability as “doing things right” and having the evidence to document how money was spent, which directly impacts readiness and lethality.
“Money is a weapon system – every uniform, piece of equipment and weapon we equip Soldiers with starts with dollars,” Reynolds explained. “So every dollar we are inefficient with reduces our readiness because we aren’t able to move the Army forward and modernize.”
That is a reality the U.S. Army Forces Command, the Army’s command responsible for training and preparing a combat ready and globally responsive force, deals with every day.
“Our primary mission is readiness – readiness to provide ready trained forces for the combatant commanders and readiness in support of national disasters,” said Tommy Byrd, FORSCOM chief resource management officer. “The standardization helps us predict and determine cost requirements, and having available funding at the right time so that the warfighters can have the right equipment they need to be trained and ready.”
A prime example of readiness through reform is found in the Army’s capstone stewardship forum, the Command Accountability and Execution Review (CAER), which was directly supported by the business process standardization initiative.
Through CAER, the Army and DFAS were able to identify and correct issues causing approximately $700 million in Army funds to be de-obligated each year, said Schmalfeldt.
Congress appropriates funds to the Army with specific periods of availability. When funds, obligated in the Army’s annual budget, are de-obligated after that period, there are very limited instances where they are allowed to be re-spent. Consequently, the Army loses the purchasing power to procure things like weapons systems and ammunition.
Reynolds said the BPS team was already in the process of standardizing the Army’s transportation business processes when Lt. Gen. Thomas Horlander, military deputy to the Assistant Secretary of the Army for Finance and Comptroller and creator of the CAER forum, reached out to USAFMCOM and Schmalfeldt to help reduce the amount of de-obligated funds.
“We were able to standardize how [transportation accountability] codes would get funded and utilized and we were able to update the systems and…establish a pre-validation process, which ensured the funding was available for the billings once it was posted,” said Byrd. “That would not have come together as smoothly if there wasn’t a time where we started to sit down and look at and standardize the process for the transportation of things.”
“CAER changed our transportation billing processes, and the Army needed a way to get those changes out to the field,” said Reynolds. “Our role was listening, documenting and making sure the end user understood the changes.”
On top of the benefits to the warfighter, Reynolds said standardization is also fulfilling an obligation and responsibility to the American people beyond providing for a strong national defense.
“All of the funds we spend are taxpayer dollars, so we owe it to the taxpayers, the individuals who are working hard, to show we are using their dollars in a very efficient and effective manner,” he explained.
“The general public is now becoming more confident we are paying our bills on time and utilizing the funding for what it’s meant for,” added Byrd.
When the BPM team began its mission in 2016, Reynolds said that across all three components they found the Army had only documented a total of five sub-processes, which were nothing more than basic flow charts.
“What we found were there were several individuals and organizations that were doing things their own way,” he recalled. “So, when auditors would come in, they would find different business practices across the Army, and we would get audit findings saying the Army doesn’t have a documented and standardized process.”
Today, with the standardization of military pay, the team wrapped up the last of all seven major end-to-end business processes, encompassing 415 sub-processes, which are all housed in an innovative, one-stop collaboration tool called the Army Process Portal.
The APP provides both auditors and end users with interactive process maps with increasing granularity. On top of that, the maps link applicable laws, policies, regulations, forms, job and training aids, and audit checklists and sample packets.
“If I were to identify our biggest accomplishment, I don’t think it would be tied to a process itself – it’s the APP,” said Brig. Gen. Mark S. Bennett, USAFMCOM commanding general. “We took multiple domains and brought them all into one tool with all the resources our Soldiers, civilian employees, contractors and auditors all need to do business in a standardized way, just one click away.”
Denise Gallion, USAFMCOM Audit Response Center director, said she felt the APP is a great resource for both auditors and the Army.
“We have a lot of information where the auditors can go…but I think it’s more important that we have that resource out there for the field so that they can understand the end-to-end processes,” Gallion explained. “So, I think having a lot of that information out there along with these processes should help us, as Army, be able to tell our story no matter where the auditor chooses to go [in their audit].”
“The APP allows a central repository, allows a place for the field to go and find available checklists to help them prepare for audits,” added FORSCOM’s Byrd.
While building the APP was daunting enough, documenting all business processes across the Army worldwide was no easy task.
“The biggest challenge was getting nearly 2 million people across the Army at hundreds of installations and in thousands of commands to all do business the same way,” said Reynolds. “Four of the seven E2E processes are outside the financial management domain, but they’re all processes that trigger financial transactions, so we needed to engage everyone from senior leaders to technicians across a broad spectrum of domains including logistics, human resources, real property, transportation and more.”
Reynolds said he started with the senior leaders to get their buy-in first.
“I beat the halls of the Pentagon for months, getting those individual champions to buy in and get them to understand that if they could be more efficient with their business processes, they can do more for their organization,” he recalled. “It also helped when we explained we were going to do all the work; we were just asking them to open the doors to their people.”
There was also some additional education needed when it came to the necessity and the scope of the project.
“Some leaders thought our Enterprise Resource Planning systems were the only way to standardize, but there are so many things happening outside of those systems that are a part of the processes,” said Reynolds. “We needed to show them we needed to standardize our day-to-day activities, not just our ERPs.”
“The Army is very complex, very large,” explained Schmalfeldt. “I look at your very diverse organization like General Electric, and you need an initiative like business process standardization to reinforce how people are supposed to operate within the systems in this complex environment.”
The DoD and Army use a business process architecture with five levels, zero to four, which represents how an organization performs business activities in a given business system environment.
“All processes go to level four, which includes job and training aids the end users need to do specific tasks,” explained Reynolds. “We had those documents, but the Army processes were only documented to level two, so there was a gap.
“This is the first time in our Army history anyone has ever closed the gap and documented the level three business processes,” he added.
For those in the field, they can now use that information to make better end-user products.
“I’m able to start building process maps below process level three,” said Byrd. “I can then lay out what we do in preparing for audit and how to maintain documentation.
“That is useful for us as we are reestablishing FORSCOM’s V Corps here at Fort Knox and in that reestablishment we wanted to use those tools to help them establish their business processes,” he added. “We are trying to lean on these resources to get them started.”
The BPM team didn’t just stop with getting senior leader input and buy-in. Once the doors were opened, they used the opportunity to engage directly with the end users.
“We needed to make sure they had a voice because the Army had a bad habit in the past of developing policies at the five-sided building in Washington, D.C., and they’d find several of the commands couldn’t comply with them either because of their structure or their environment,” Reynolds explained.
To capture that input, BPM deployed around the globe to sit side-by-side with people across the Army doing the day-to-day work. They also hosted workshops, bringing the stakeholders together, and created a change-control section of the APP where users could submit feedback to processes undergoing standardization.
“They didn’t jam it down people’s throats,” said Schmalfeldt “They listened to them, and they gave them an opportunity to buy into this and to get their business processes included into the standardization.”
“Forces Command is a very geographically dispersed organization with four cores, operating independently and focusing on their missions,” said Byrd. “Bringing them together allowed us to identify some of the similarities and differences happening in the command and agree on the most efficient manner to support the warfighter within the guidance of the DoD [Financial Management Regulation] and the other DFAS and Army regulations.”
Now that standardization is complete, the philosophy of prioritizing end-user feedback continues into BPM’s sustainment role with a collaboration space on the APP for users to engage in conversations related to process updates and the ability to compare new and old processes directly in the portal.
BPM leadership said the team is committed to keeping the process standards up-to-date, republishing them annually and making critical changes on an as-needed basis. They also said the APP was critical to keeping those users and stakeholders informed on changes as they will be notified through the portal, and the ARC team agreed.
“Ideally in next few years we’d want to see rapid changes year-to-year as we call out findings and issues, and we want to see them addressed and overcome every year,” concurred Gallion. “It will be important as a lot of those will involve new controls that we can communicate what those controls are so the field can start performing them.”
“Because of all the value-added content that helps people across the Army, not just in the financial management domain, do their business, we continue to see record increases in the number of users,” said Reynolds. “We are focused more on the end user than the audit now, because if we do things the right way, the audit will take care of itself.”
While audit has shifted from being the primary focus, it still remained a top priority.
“The APP was created for the end user, but we took the process maps and wrote a book on the process standards for the auditors, which we send to them before they come in so they know what organizations are performing which tasks, where to go and who’s actually doing the business they want to test,” Reynolds explained.
The BPM team said they believe this builds confidence in the Army with the independent auditors as they know the Army has documented their processes and risks, aligned controls with those risks, and worked hard to standardize everything.
“The auditors said that it’s really helpful, especially for new auditors coming into the process,” said Charley R. Lopez III, USAFMCOM ARC supervisory accountant. “The auditors see it as an authoritative single source of truth for what the Army’s E2E understanding of itself, to include its service providers.”
Audit packages are now built for auditors that identify process maps and all the documentation to go with them, said Schmalfeldt, who added that having internal controls improves the operational areas of risk and engagements with auditors are now much improved.
“It becomes overwhelming when they have to learn from the field, and we didn’t build confidence in the auditors when there wasn’t a consistent message from the commands because the commands are so uniquely different,” agreed Byrd. “The process standards lay out the footprint on what they should see, maybe not in the same systems, but [showing] the same outputs should come out of the process.”
Through standardization, the Army increased its control catalog by more than 400 percent.
“Now they don’t need to ask how we do our business, they can just test us to make sure we’re doing our business right,” said Reynolds.
Another benefit of the APP is the time savings it provides end users during an audit.
“Documentation has been a challenge since the beginning in making sure people understand what documents to save and how to save them, so that multiple parties can access them,” said Gallion. “That’s been one of the big problems from the front because our sample sizes are so big right now that it can be overwhelming…and if we’re not comfortable and confident with [our responses], the auditors are going to have plenty of questions for us.”
“In the past, [end users] didn’t get their audit-sample checklist until they were about to get audited, so they were scrambling to gather the documentation to support the transactions,” said Reynolds. “Now, with the APP providing the checklists attached to the process map, they know what’s required of them and how to save and store the required documents.”
Standardization also speeds up the processes for the independent auditors, who are often used to conducting audits in the private sector but are sometimes unfamiliar with how the DoD conducts business, explained Byrd.
“The auditors can go in and educate themselves before they go into the field and are faced with all the multiple activities that we have operating within a command,” he continued, adding that understanding helps them go exactly where they need to go and find the information they need efficiently.
“When you’re saving minutes on thousands of samples, you’re saving a lot of time and money,” Reynolds added. “Auditors also don’t need to pull as many samples when they see we have our stuff together, so it drives the cost of the audit down.”
Looking ahead, the BPM team said their work has built a platform on which the Army can continue its modernization efforts.
“These standards are the baselines to build new systems,” said Reynolds. “The first step of business process re-engineering is documenting your current process, which we’ve done.
“Now, we are way far ahead when it comes to moving our Army forward,” he concluded. “We can take these products and make our Army even better.”
To access the business process standards, visit the APP at https://army.deps.mil/Army/cmds/USAFMCOM/bps/SitePages/Campaign/Campaign.aspx?cid=98.
(Editor’s note: Heather Hall-Koenig and Abby Herriman, USAFMCOM BPM, contributed to this article.)