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Final Outbrief Academic Year 2013-2014.

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Presentation on theme: "Final Outbrief Academic Year 2013-2014."— Presentation transcript:

1 Final Outbrief Academic Year

2 Industry trends & recommendations
Agenda Program overview Industry trends & recommendations Talent Management Managing Innovation Acquisition Process Improvement Cybersecurity & Leveraging IT Managing through Budget Uncertainties Further discussion / Q&A

3 Program Overview SECDEF concerns for future Service leaders
More open to organizational and operational change Recognizing opportunities possible by emerging technologies Appreciating resulting revolutionary changes Affecting society and business now Affecting culture and operations of DoD in future Businesses outside DoD successful in: Adapting to changing global environment Exploiting information revolution Structural reshaping/reorganizing Developing innovative processes, technologies and projects

4 Program Overview Fellows have access to best executive level business practices Strategic Planning Organization Change Management Human Resources Technology Development (including Information Technology) Supply Chain Outsourcing Builds a cadre of future leaders who Understand more than the profession of arms Understand adaptive and innovative business culture Recognize organizational and operational opportunities Understand skills required to implement change Will motivate innovative changes throughout career

5 Program Overview Reports and Briefings
Monthly Reports and Professional Paper published at end of year Mid and Year-end Briefings to Pentagon Leadership DEPSECDEF, VCJCS, Service Secretaries & Chiefs , 25+ others Business insights relevant to DoD culture/operations Recommended process/organization changes

6 Program Overview All Military Services – Active, Guard, Reserves
O-5/O-6 (post-command or equivalent community milestone) Thoroughly screened; High General/Flag officer potential Senior Service College equivalent Pre-assignment Group Education Current political/military issues; leading edge technologies Meetings with senior DoD officials, business executives, Members of Congress, the Press, former sponsors, alumni Graduate business school Executive Education Ten to Eleven Months at Sponsoring Companies Group visits to each sponsoring company Meeting CEOs, Senior Leadership team, other executives Presentations on sponsor’s business sector and best practices

7 Corporate Sponsors Prior Years Current Year (2013-2014)
3M, ABB Group, Accenture, Agilent Technologies, American Management Systems, Amgen, Andersen Consulting, Apple, Boeing, Booz Allen, CACI, Caterpillar, Cisco, Citigroup, CNN, Deutsche Bank, DirecTV, DuPont, EADS, Enron, ExxonMobil, FedEx, General Dynamics, Georgia Power, Google, Hewlett-Packard, Honeywell, Human Genome Sciences, IBM, Insitu, iRobot, JPMorgan Chase, Johnson & Johnson, Lockheed Martin, Loral, McKinsey, McDonnell Douglas, Merck, Microsoft, Mobil, Netscape, NCR, Northrop Grumman, Oracle, Pfizer, Pratt & Whitney, PricewaterhouseCoopers, Raytheon, SRI/Sarnoff Labs, Sears, Shell, Sikorsky, Southern Company, SpaceX, SRA International, Sun Microsystems, Symbol Technologies, Union Pacific, United Technologies, Vertex Aerospace Current Year ( ) 3M, Amgen, Honeywell, Insitu, iRobot, Johnson & Johnson, McKinsey, Microsoft, Morgan Stanley, Norfolk Southern, Northrop Grumman, Raytheon, Shell, SpaceX, SRI International Next Year ( ) Autodesk, Booz Allen, CACI, Cisco Systems, Dynamic Aviation, FedEx, General Dynamics, Georgia Power, JPMorgan Chase, Lockheed Martin, McAfee, Oracle, Hewlett-Packard, SAP, Sikorsky, Union Pacific

8 Fellows and Corporate Assignments
Col (sel) Josh Olson, USAF M Company, St. Paul, MN Col (sel) David Peeler,  USAF Amgen, Inc., Thousand Oaks, CA COL Michael McTigue, USA Honeywell Aerospace, Phoenix, AZ Col George Schwartz, USAF Insitu, Inc., Bingen, WA LtCol Pete Mahoney, USMC iRobot Corporation, Bedford, MA Col Mary Burrus, ANG Johnson & Johnson, New Brunswick, NJ LTC(P) Larry Dugan, ARNG McKinsey & Company, Washington, DC LtCol Ahmed Williamson, USMC Microsoft Corporation, Reston, VA CDR Clark Childers, USN Morgan Stanley, New York, NY Col (sel) Walt Yates, USMC Norfolk Southern Corporation, Norfolk, VA COL James Kaine, USA Northrup Grumman Elec. Systems, Linthicum, MD CDR Tony Jaramillo, USN Raytheon Space & Airborne Systems, McKinney, TX CDR Shelby Mounts, USN Royal Dutch Shell, New Orleans, LA CAPT Billy Palermo, USN Space-X Corporation, Hawthorne, CA Lt Col Terry L. Thiem, USAFR SRI International, Menlo Park, CA

9 Corporate Sponsor Locations

10 Industry trends & recommendations
Agenda Program overview Industry trends & recommendations Talent Management Managing Innovation Acquisition Process Improvement Cybersecurity & Leveraging IT Managing through Budget Uncertainties Further discussion / Q&A

11 Strategy starts with Megatrends
Innovation Dynamic Global and Geopolitical Environment Big Data / Information Competition for Resources Fiscal and Budgetary Pressures Talent Management Managing DoD Innovation Acquisition Process Improvement Cybersecurity & Leveraging IT Managing through Budget Uncertainties

12 Industry Response during ‘Age of Austerity’
Marketplace Trends DoD as Customer Rapid Internal Restructuring & Portfolio Management Mixed Signals & Expectations Positioning Against Dynamic Global Pressures Reorienting Investment Strategies “Innovation” -- What is the Next Big Disruptive Idea (BDI)?

13 Industry Trends Rapid Internal Restructuring
Targeted and paced force reductions Focus on value proposition for shareholders, customers, employees Examples: iRobot in 2012; SRI International 2013 Aggressive Portfolio Management Pronounced pivot to commercial, international markets Recalibrating business cases; capabilities that are / can be commercialized Heavy risk identification & management for capital deployment strategies Dynamic Global Pressures Commercial companies penetrating national security marketplace Vice defense contractors transitioning to commercial marketplace New entrants leveraging commercial technology & robust private capital Outpacing traditional incumbents Disruptive / Innovative Technologies Will Come From New, Nimble Entrants

14 DoD as Customer: Mixed Signals & Expectations
Increasing use of Lowest Price, Technically Acceptable (LPTA) criteria Instead of Best Value Increasing requirements for upfront prototypes/demos at higher tech readiness Levels are changing the cost equation Most companies OK with open architecture/modular Comes with a premium that must be paid upfront by DoD “identify and pursue clearly defined Grand Challenges” S&T priorities for FY15 budget in 2013 OMB memo 2015 FDYP RDT&E plan asks industry to invest more R&D funds, but “prototype and shelve” potential technologies Spend capital for S&T R&D without identified payoff Not practical without procurement “higher, faster, farther” & low, slow production directly at odds with high-tech commerce & “better, quicker, cheaper” (Defense News, 21 Apr 2014) “ We do not do ‘recreational’ S&T R&D” - Chief Scientist, Major Defense Contractor

15 Industry trends & recommendations
Agenda Program overview Industry trends & recommendations Talent Management Managing Innovation Acquisition Process Improvement Cybersecurity & Leveraging IT Managing through Budget Uncertainties Further discussion / Q&A

16 Talent Management Recruit Develop Retain
Civilian companies struggling w/ recruiting military War for Talent is global “Great Crew Change” of skilled technical workers looming Technical industry competing for experienced talent Need technically skilled to fill their troughs Companies do recognize and like Veterans’ “soft skills” Leadership, teamwork, decision making, risk management Maturity, reliability, dedication Most companies don’t recognize military technical talent Some are figuring it out (Microsoft Software Systems Academy) Civilian compensation incentives impact retention significantly

17 Talent Management Recruit Develop Retain
Effective companies expend great effort developing future leaders Corporate leaders develop annual/long-term/stretch goals upfront Performance evaluated against those goals Leader’s time specifically structured Ensures they’re not “Too busy working to care” about the next generation Intentional social interactions included People valued and handled in a way that recognizes they can walk tomorrow High potentials are important, but so is everyone else DoD training pipes are robust but can be improved Leverage emerging cheap training solutions, e.g., X Box-like gaming console Easily adaptable, highly effective way to deliver broad content spectrum Significant cost reduction alters traditional classroom resource requirements Improve quality/effectiveness over static-motion training Younger personnel need look/feel of high quality graphics, “real world” content

18 Talent Management Recruit Develop Retain
Leverage civilian education, innovation/tech development investments Close Civil-military divide through increased training/refresher in career paths Closer to sources of change, innovation, new technology developments Train in commercial world vs. traditional military schools Increased span of overall personnel education Reduced brick and mortar cost efficiencies Increase perceived value of transitioning military personnel in civilian eyes Narrative battle/same language Unlock opportunities for resource efficiencies in military labs Fill in “Valley of Death” between development silos Make a down payment for future industrial mobilization Historical precedent includes Harvard Business School on a large scale WW II four month long Navy War Adjustment Course

19 Talent Management Recruit Develop Retain
Culture crisis a recipe for losing the Talent War Successful companies have strong culture; people are proud of it Value of military service now more uncertain Unfocused messaging isn’t delivering through the noise End of wars Budget uncertainty/drawdown impacts Leadership endorsing reduced compensation increases Global uncertainty and mixed messages from senior leaders Loss of confidence in the institution Improving economy without a clear call to serve = predictable outcome DoD can't compete with industry on compensation CAN do a much better job selling the value of service today Compensation structures providing loyalty and longevity incentives WORK

20 Industry trends & recommendations
Agenda Program overview Industry trends & recommendations Talent Management Managing Innovation Acquisition Process Improvement Cybersecurity & Leveraging IT Managing through Budget Uncertainties Further discussion / Q&A

21 Key to Success: Standard definition of Innovation
Managing Innovation ‘Innovate’, ‘innovation’, ‘innovative’ found 33 times in 2014 QDR Why is innovation important? Need to reduce acquisition time – get products to warfighter faster Need to reduce cost due to budget cuts, sequestration Need to maintain technology advantage on the battlefield What is innovation? Rapid creation and delivery of a needed capability to the warfighter  On and off the battlefield with sustainable/equitable life cycle costs  For both DoD and defense industrial base. Key to Success: Standard definition of Innovation

22 Managing Innovation Industry’s innovative technology experiences
Development not a short-term proposition A journey requiring a significant time (3 -5 years or more) to implement Requires a change in the overall culture of an organization Requires sustained, long-term commitment from Leadership Requires training and buy-in at all levels of the organization Requires funding and dedicated personnel Can not be an additional duty Better to start programs with experienced contractor personnel Do not try to build internal teams too early Have to accept there will be failures when reaching for stretch goals Innovation is a process that must be managed and requires manpower, time and funding to be successful

23 Industry trends & recommendations
Agenda Program overview Industry trends & recommendations Talent Management Managing Innovation Acquisition Process Improvement Cybersecurity & Leveraging IT Managing through Budget Uncertainties Further discussion / Q&A

24 Acquisition Process Improvement
Large joint/combined requirements programs not delivering promises Consuming resources that could be used to address real needs Expectations vs. Reality Future Combat System, Littoral Combat Ship and Joint Strike Fighter Adverse industrial base impacts Simplify programs and shorten acquisition/development cycles Improve success rate and keep high tech engineers in the game Minimize requirements; define needs at highest acceptable level Provide flexibility in system solutions Focus on effective platform capabilities and open architectures Incorporate follow-on capability upgrades Fail Fast Massive joint/combined requirements programs are not delivering on promises and are consuming resources that could be used to address real needs Expectations vs. Reality: Future Combat System, Littoral Combat Ship and Joint Strike Fighter “DOD has high expectations from this investment: that new weapons will be better yet less expensive than their predecessors and will be developed in half the time.” --GAO Report Adverse industrial base impacts Atrophying contractor design team capabilities Single capable contractor for future systems Simplify acquisition programs High complexity leads to continuous re-scoping of requirements and threatens program survival Small increments of functionality, particularly in software intensive systems, succeeds at a far higher rate than grand designs that deliver all desired capabilities at the end of a long and expensive development program Long, slow acquisition cycles stifle innovation Insitu fly-fix-fly model = half price The level of documentation and multiple layers of review does not *necessarily* equate to better capabilities for the warfighter. Exercising the processes of JCIDS and the DoDI 5000 series sometimes retroactively creates documentation that is of no value. Shorten acquisition/development cycles to improve success rate and keep high tech engineers in the game Retaining personnel with STEM (Science, Technology, Engineering, and Math) is difficult if they are not actively employed and challenged Engineers sitting on the bench waiting for a project to be funded tend to look for work elsewhere that is interesting and useful. They are not hanging around for a paycheck. Northrop Grumman designs and builds a completely new aircraft prototype every year from IR&D just to keep their design team active and developing their skills even when the government is not funding a program. Design skills atrophy Best engineers going to enterprises where their work makes a difference The best people do not remain in a calcified culture of compliance but seek challenges and opportunity. If we do not change what it means to by a government engineer and technical specialists we will not gain access to the best talent. People and culture matter Minimize requirements; define needs at highest acceptable level to provide flexibility in system solutions Opens up greater solution space and provides for increased competition Numerous KPPs and Key System Attributes (KSA) will “over- constrain” the solution and eliminate most or **all** options e.g. many options exist for a tactical vehicle when trading land speed, range, and troop capacity as KPPs but adding speed on water and range on water eliminate most of them. Adding a high threshold of survivability for an underbelly IED detonation probably eliminates ALL potential solutions Focus on effective platform capabilities open architectures that can incorporate follow-on capability upgrades Adhering to open architectures allows for extensibility. Extensibility allows for external interfaces and interoperability you cannot foresee or afford at the initial time of system design Fail Fast Amgen mantra, SpaceX and Microsoft Failing fast sometimes means fielding an interim solution that is not the objective capability. A cheap COTS systems of limited utility and interoperability fielded NOW is better than a fully documented and studied interoperable system fielded three years from now. Realistic expectations are critical to program success

25 Acquisition Process Improvement
Traditional requirements based acquisition ineffective/inefficient Locks in requirements before understanding what is achievable Long system development timelines lead to excessive costs Capability delivered to the warfighter much later than needed Embrace capabilities based acquisition Approach to be use when looking for revolutionary change Capitalize on innovations ready now Off-the-shelf solutions often provide 80-90% of desired capability Remain agile to prevent technical surprise Traditional requirements based acquisition is ineffective and inefficient Inevitably locks in wrong requirements up front, before we understand what is achievable Too many, disparate requirements leads to unnecessary compromises and reduced overall system capabilities Requirements allocation to too low of a level based on paper analysis Build, integration and test incorporated too late in the process (no feedback loop from reality) Long system development timelines lead to excessive costs and deliver capability to the warfighter much later than need Often leads to program cancellation or restructuring (longer timelines) Component and sometimes system obsolescence by the time system is fielded Too slow and too costly to effect revolutionary change Sacrifices the forest for the trees Embrace capabilities based acquisition approach when looking for revolutionary change Allow the state of the art and what is technically achievable to drive solutions Capitalize on innovations ready now; Off-the-shelf solutions often provide 80-90% of desired capability Much greater bang for the buck COTS solutions do not include all of the functionality that the government would have designed into a system but they can be the right solution at the right time for a short service life capability that will be replaced by a more rigorously designed objective capability later Remain agile to prevent technical surprise Commitment to investments in innovation encourages contractor IR&D Capabilities based acquisition can save cost and deliver greater capability to the warfighter sooner

26 Acquisition Process Improvement
Program offices are incapable and/or not empowered to develop and execute streamlined, innovative acquisition approaches Develop and empower Program Managers to be innovative Open to planning and executing non-standard acquisition strategies Overcome institutional adversity to change Restructure program offices with right expertise and technical support Use full flexibility that Federal/Defense Acquisition Regulations allow Tailored acquisition approaches should be the norm Shepherd strategies through approval process Program Executive Offices and Acquisition Executives Validate engineering and cost models Ensure effective Human System Integration issues understood/addressed early Program offices are incapable and/or not empowered to develop and execute streamlined, innovative acquisition approaches Program office and supporting cast (contracting officers, SETA/FFRDC, oversight chain of command, etc.) often do not operate as one team with a common goal. This becomes especially challenging when attempting to execute a strategy outside the norm or working with Congressional staffs to keep a program sold. Develop and empower Program Managers capable of planning and executing non-standard acquisition strategies Grow PMs through the system with experience across the full acquisition timeline PM tenure should ensure that they will be in place to execute based on their acquisition decisions for increased responsibility and accountability Operational experience required to understand true warfighter needs Consider increased joint acquisition billets for broader exposure Overcome institutional adversity to change; restructure program offices with the right expertise and technical support Be bold; do the hard things and get on with it – Northrop, Morgan Stanley, and other CEO’s speaking about implementing needed change Certain jobs and functions need to be redefined or removed; More is not always better Culture change is hard but required! Broader expertise needed to execute streamlined approaches Must be capable of more than just evaluation and enforcement of technical requirements Need to fulfill the oversight requirements without stifling innovation Use the full flexibility that Federal/Defense Acquisition Regulations allow; tailored acquisition approaches should be the norm Not just for urgent operational needs Strategies should be aligned with larger acquisition goals i.e.. Better Buying Power initiatives Contracting Officers must be able to operate differently and utilize their full authorities Many contracting officers are loathe to use the latitude granted to them in the FAR & DFAR. A “safe & conservative” contract makes life easier for the contracting officer but can eliminate creative and useful procurement and support options that meet the needs of the warfighters Ensure that Program Executive Offices and Acquisition Executives shepherd strategies through approval process Simplify and shorten the approval process Need early buy-in from OSD CAPE (Cost Assessment & Program Evaluation) and congressional oversight committees Provide stability to the contractors Invest in validating engineering and cost models Validated cost and performance models reduce risk Correctly employed Modeling &Simulation tools Provide similar insight to live Development /Operational Test Far less cost Ensure that effective Human System Integration issues are understood and addressed early Demand contractor use of "interactive designers" to reinforce user-centered (vice system engineer-centered) design Capable and empowered program offices are critical to application of larger acquisition goals i.e.. Better Buying Power initiatives

27 Acquisition Process Improvement
Strict FAR part 15 application drives cost Barrier to new market entrants and reduces competition Expand usage of FAR part Commercial Item Acquisition Many high-tech domains no longer belong solely to Govt/DoD Affordable form, fit, function trumps need for excessive documentation Cost Plus contracting incentives not aligned with cost saving Use fixed price contracts where practical Negotiate mutually beneficial milestone payments Strict FAR part 15 application drives cost, is a barrier to new market entrants and reduces competition Should be more deliberate and fiscally responsible in application choices Expand usage of FAR part 12 Commercial Item Acquisition Substantial cost savings potential Leverages commercial market forces 90% ready solutions for fraction of the cost Nontraditional DOD contractors, especially start- ups and small businesses, do not have the do not have the capabilities and expertise to compete Commercial markets don’t require the rigor, documentation Commercial markets do require innovation Acknowledge the fact that many high-tech domains no longer belong solely to government/DoD Space launch, UAV’s, robotics, etc. Affordable form, fit and function trumps need for voluminous documentation Cost Plus contracting incentives not aligned with cost saving goals Endless churn in requirements space still rewarded with full payment No financial incentive for the contractor to push back on costly or unnecessary requirements Does not allow contractor to spend more on one program to save much greater costs across his portfolio Earned Value Management focuses on development and procurement costs, not the full life cycle Use fixed price contracts where practical Provides simplicity in contract execution and allows for streamlined program offices Encourages cost savings innovations at the contractor Negotiate mutually beneficial milestone payments Provides government with stable budget execution performance Enables the contractor the flexibility to plan work Commercial procurement practices better posture DoD to capitalize on commercial capabilities and innovation

28 Acquisition Process Improvement
Compliance with government Cost Accounting Standards (CAS) Drives substantial overhead Only slightly more accurate than commercial data Evaluate the actual value to the customer Force compliance only when absolutely necessary Leverage Generally Accepted Accounting Principles (GAAP) data Rely on far less expensive independent accounting audits Recognized industry experts (Deloitte, KPMG, Ernst & Young, PWC) Cost Data Reporting requirements add additional cost burden Do not levy requirement on fixed price contracts Replace collection of rearward looking data Use market research to predict commercially derived systems future costs Compliance with government Cost Accounting Standards (CAS) drives substantial overhead and is only slightly more accurate than commercial data Does not provide actual system cost – reflects how costs were “allocated” Forces contractors to change their business model to be less efficient than their commercial peer Costs are passed on to all customers and may risk their commercial competitiveness CAS documentation is rearward looking and does not improve the probability of program success over commercial accounting GAAP is more affordable and perhaps more useful than CAS Evaluate the actual value to the customer and force compliance only when absolutely necessary Leverage Generally Accepted Accounting Principles (GAAP) data Rely on far less expensive independent accounting audits from recognized industry experts (Deloitte, KPMG, Ernst & Young, PWC) Cost Data Reporting requirements add additional cost burden Do not levy this requirement on fixed price contracts Replace collection of rearward looking data with market research to predict future costs on commercially derived systems Elon Musk’s rhetorical question: If you are paying a fixed price for a ride into orbit, why worry about the cost of the rocket that gets you there? GAAP is more affordable and perhaps more useful than CAS

29 Acquisition Process Improvement
Excessive operations and support costs Not adequately addressed Lack of focus on systems sustainment Combine life cycle support for platforms with common components Increase Common Automatic Test Systems for common components Use Original Equipment Manufacturer (OEM) Special Test Equipment (STE) Place Field Service Repair  (OEM STE) closer to the flight line Increase Centers of Excellence Eliminate redundancy by combining facilities that have like work Excessive operations and support costs are not being adequately addressed; lack of focus on systems sustainment Combine life cycle support for platforms with common components Aviation Platforms across the services use common systems with separate Life Cycle support     Increase Common Automatic Test Systems for common components throughout the services Use Original Equipment Manufacturer (OEM) Special Test Equipment (STE) Place Field Service Repair  (OEM STE) closer to the flight line Increase Centers of Excellence; Eliminate redundancy by combining facilities with like work Joint Aviation Engine Maintenance Repair and Overhaul Joint Communication System Repair sites Joint Radar System Repair site Acronyms: ATS – Automatic Test Systems CASS – Consolidated Automated Support Systems IFTE – Integrated Family of Test Equipment MRO – Maintenance Repair and Overhaul O&M – Operation and Maintenance OEM – Original Equipment Manufacturer STE – Special Test Equipment VDATS – Versatile Depot Automatic Test Systems WCF – Working Capital Funds WRA – Weapon Replacement Assembly Capitalize on efficiencies in life cycle support

30 Industry trends & recommendations
Agenda Program overview Industry trends & recommendations Talent Management Managing Innovation Acquisition Process Improvement Cybersecurity & Leveraging IT Managing through Budget Uncertainties Further discussion / Q&A

31 Cybersecurity & Leveraging IT
People Process Technology People – Get the right people on the bus Recognize, understand, build capable cyber force Operates within cyberspace as an operational domain Prepare trained and ready Cyber Forces Identify cadre of IT Acquisition Professionals Identify distinct skills and training for offensive AND defensive cyber People It starts at the top – leaders must be committed to recognizing cyberspace as a critical domain, understanding the implications of succeeding (or failing) within it and building a capable cyber force Trained and Ready Workforce: - Services produce operators “certified” to operate in the Joint arena; Creation of Cyber MOS/Designators or development of Cofield roadmaps Cyber skills & training: ID the skills necessary to be effective (offensively, defensively, intelligence/analysis) within cyberspace. DoD Directive M is a disaster. It governs the training and qualification standards of the IA workforce which is primarily our defensive cyber engineering community. The IA Workforce includes both the system designers and builders and the watch standers who man the systems once they are deployed. The expensive and time consuming commercial certification standards prescribed by the M do little to enhance our security. DoD could have better trained and prepared personnel and systems if we did not have multiple layers of design review heaped on top of the one-deep workforce that actually performs cyber engineering. The money spent on the expensive PDs that have these certifications could be better spent actually training cyber engineering workforce and using the balance of the conserved resources on the offensive cyber capabilities. The portion of the workforce that performs cyber engineering and the portion of the workforce that evaluates the cyber engineering designs and implementation are not on the same team, i.e. the evaluators have “no skin in the game” with respect to the performance, cost, and schedule of an acquisition program. They are not incentivized in their performance evaluations to assist in getting systems certified and accredited rapidly. Remain committed to Cyberspace domain: Organize, Train and Equip a relevant force.

32 Cybersecurity & Leveraging IT
People Process Technology Process - Take acceptable risks & avoid analysis paralysis Clearly articulate product / solution requirements to industry Ensure funding availability is programmed into solution delivery Resist “requirements creep” that increases cost and time-to-target Avoid imposing unnecessarily expensive security controls Don’t buy an insurance policy which costs more than what is being insured Processes Revisit and streamline certification processes: The current set of regulations is tedious, redundant, confusing, and costly in terms of time and relevance of the technology that you actually receive once authorized: Federal Risk and Authorization Management Program (FedRAMP); Federal Information Security Management Act (FISMA); Federal Information Processing Standards (FIPS); DoD Information Assurance Certification and Accreditation Process (DIACAP); Joint Interoperability Test Command (JITC) certification; Military Departmental (MilDep) certifications It costs industry more $$ to meet Federal/DoD standards for many offerings, especially those originally intended for consumer use; those costs are transferred to the customer. Many of these solutions are already employed by other industries that manage critical information (i.e., Financial, Medical, Pharm). The additional “rigor” required by DoD will not only cost more upfront, but will also cost in time – by the time the solution is authorized, the technology is already outdated. The new DODI Risk Management Framework is a step in the right direction. It offers the latitude if not the encouragement to the service component CIOs to delegate the authority to assume risk in the realm of IT/Cyber to the appropriate echelon instead of having a centralized approval authority (a.k.a. a bottleneck at the top) where the whole enterprise gets stuck. High priority programs eventually power-through the logjam to get approval but many smaller programs with lower levels of mission criticality get stuck for years trying to get approval of their IA controls. There are often more people touching a package to review it than there are in the program office to build it. The new DODI Risk Management Framework is that revamp and I believe it's a pretty good one. The services still have the chance to misinterpret it in the worst way possible and maintain the status quo but hopefully they won't. Develop IT/Cyber Ecosystem commensurate w/ Industry...Industry standard meets/exceeds DoD’s (e.g., Financial & Tech markets).

33 Cybersecurity & Leveraging IT
People Process Technology Technology – Use the right weapon for the target Dramatically improve IT Portfolio Management More efficiently leverage commonly used IT tools Increase operational reach and business efficiencies Develop, articulate, execute unified departmental enterprise strategy Implement Joint Information Environment (JIE) aggressively Reform IT Acquisition Process More Cyber engineers Reduce layers of unnecessary administrative review More driving instructors and fewer traffic cops Tools Gain full asset visibility: Improve stewardship of licenses and services; Deploy and employ what we already own…optimally; Will facilitate better IT Portfolio Management & tech refresh solutions; Leverage IT tools commonly used to increase operational reach and business efficiencies in private sector (i.e., Unified Communications [LYNC and telepresence], collaborative systems [SharePoint, IntelLink], storage/back-up/recovery [Cloud], Data Analytics tools [Big Data]). JIE: Develop & articulate a clear Departmental Enterprise Strategy (will reduce the “surface area” of our operational networks; What is the current strategy and how are we seeking to execute it (i.e., Cloud?)? Which office(s) in DoD have the authority to ensure its successes (e.g., OSD, JS, DISA, or Service-driven)? Reform IT Acquisitions Process – Integration and Interoperability (I&I) should be explicitly required in the JCIDS documentation. It should NOT be presumed that every piece of information technology must be interoperable and integrated into a larger architecture that shares data. Not everything needs to share data but adding the external interfaces and going through JITC certification can add large sums of cost to systems without adding anything to their value to the warfighter or taxpayer. Synergize current joint capabilities thru IT awareness…leverage Industrial innovation.

34 Industry trends & recommendations
Agenda Program overview Industry trends & recommendations Talent Management Managing Innovation Acquisition Process Improvement Cybersecurity & Leveraging IT Managing through Budget Uncertainties Further discussion / Q&A

35 Corporate Management through Budget Uncertainty
Fully Centralized Cost Management Organizations CEO level sponsorship and mandate Organized adjacent to Company Sourcing Operations Business units partnerships; not just mandated changes Benefit reductions forced to business units via CEO / COO Compensation reductions Targeted outsourcing, location strategy, salary/bonus deferrals, manpower reductions Non-Compensation reductions Sourcing contract renegotiations, targeted expense reductions & furloughs Non-operational business units Included in efficiency programs Company-wide sourcing Silo’d organizations forced to utilize firm-wide sourcing synergies Exceptions tracked and monitored by a central authority Incentives: If you don’t reduce costs – you will be fired…that is the bottom line. Success no longer tied just to revenue generation – success tied to both revenue generation AND expense reductions You WILL do more with less (and it is up to you to figure out how) and you WILL reduce discretionary expenses If you don’t find a solution – you won’t be the one left when the music stops. There will be someone who does get on the bus – and they will have a job… Real Estate reductions – location strategies that consider cost of real estate and personnel at various locations (NYC for example) Non performing unit closures – if a business is not profitable – it is discontinued. If it is a required business and costs too much, it will be outsourced if it is not core and it can be done cheaper. Salary Deferrals – long term cost avoidance through cultural changed in compensation schemes (and benefits packages) Difference with DoD is that they can over-swing and it won’t kill the business – they can simply readjust

36 Managing through Budget Uncertainties Recommendations for DoD
Fully Centralized Cost Reduction Effort across ALL businesses Exceptions destroy cost reduction efforts Incentives for behavioral change must have teeth Highest level sponsorship and backstop Industry partnerships with Business units Not simply mandating reductions Strategic Sourcing mandated Incentivize away from exceptions (negative or positive) Organizational effectiveness programs for overhead/operational functions Cultural shift from wartime spending mindset for all Services and components Reduce individual and institutional complexity Achieve increased Operational efficiencies Business units that are exceptional revenue producers (SOF) are non exempt from the operational efficiency requirements – the idea that one set is exempt (investment banking for example) destroys the cultural change required to make this successful

37 Industry trends & recommendations
Agenda Program overview Industry trends & recommendations Talent Management Managing DoD Innovation Acquisition Process Improvement Cybersecurity & Leveraging IT Managing through Budget Uncertainties Further discussion / Q&A


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