3Program Overview SECDEF concerns for future Service leaders More open to organizational and operational changeRecognizing opportunities possible by emerging technologiesAppreciating resulting revolutionary changesAffecting society and business nowAffecting culture and operations of DoD in futureBusinesses outside DoD successful in:Adapting to changing global environmentExploiting information revolutionStructural reshaping/reorganizingDeveloping innovative processes, technologies and projects
4Program OverviewFellows have access to best executive level business practicesStrategic PlanningOrganizationChange ManagementHuman ResourcesTechnology Development (including Information Technology)Supply ChainOutsourcingBuilds a cadre of future leaders whoUnderstand more than the profession of armsUnderstand adaptive and innovative business cultureRecognize organizational and operational opportunitiesUnderstand skills required to implement changeWill motivate innovative changes throughout career
5Program Overview Reports and Briefings Monthly Reports and Professional Paper published at end of yearMid and Year-end Briefings to Pentagon LeadershipDEPSECDEF, VCJCS, Service Secretaries & Chiefs , 25+ othersBusiness insights relevant to DoD culture/operationsRecommended process/organization changes
6Program Overview All Military Services – Active, Guard, Reserves O-5/O-6 (post-command or equivalent community milestone)Thoroughly screened; High General/Flag officer potentialSenior Service College equivalentPre-assignment Group EducationCurrent political/military issues; leading edge technologiesMeetings with senior DoD officials, business executives,Members of Congress, the Press, former sponsors, alumniGraduate business school Executive EducationTen to Eleven Months at Sponsoring CompaniesGroup visits to each sponsoring companyMeeting CEOs, Senior Leadership team, other executivesPresentations on sponsor’s business sector and best practices
7Corporate 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 AerospaceCurrent Year ( )3M, Amgen, Honeywell, Insitu, iRobot, Johnson & Johnson, McKinsey, Microsoft, Morgan Stanley, Norfolk Southern, Northrop Grumman, Raytheon, Shell, SpaceX, SRI InternationalNext 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
8Fellows and Corporate Assignments Col (sel) Josh Olson, USAF M Company, St. Paul, MNCol (sel) David Peeler, USAF Amgen, Inc., Thousand Oaks, CACOL Michael McTigue, USA Honeywell Aerospace, Phoenix, AZCol George Schwartz, USAF Insitu, Inc., Bingen, WALtCol Pete Mahoney, USMC iRobot Corporation, Bedford, MACol Mary Burrus, ANG Johnson & Johnson, New Brunswick, NJLTC(P) Larry Dugan, ARNG McKinsey & Company, Washington, DCLtCol Ahmed Williamson, USMC Microsoft Corporation, Reston, VACDR Clark Childers, USN Morgan Stanley, New York, NYCol (sel) Walt Yates, USMC Norfolk Southern Corporation, Norfolk, VACOL James Kaine, USA Northrup Grumman Elec. Systems, Linthicum, MDCDR Tony Jaramillo, USN Raytheon Space & Airborne Systems, McKinney, TXCDR Shelby Mounts, USN Royal Dutch Shell, New Orleans, LACAPT Billy Palermo, USN Space-X Corporation, Hawthorne, CALt Col Terry L. Thiem, USAFR SRI International, Menlo Park, CA
11Strategy starts with Megatrends InnovationDynamic Global and Geopolitical EnvironmentBig Data / InformationCompetition for ResourcesFiscal and Budgetary PressuresTalent ManagementManaging DoD InnovationAcquisition ProcessImprovementCybersecurity & Leveraging ITManaging through Budget Uncertainties
12Industry Response during ‘Age of Austerity’ Marketplace TrendsDoD as CustomerRapid Internal Restructuring & Portfolio ManagementMixed Signals & ExpectationsPositioning AgainstDynamic Global PressuresReorienting Investment Strategies“Innovation” -- What is the Next Big Disruptive Idea (BDI)?
13Industry Trends Rapid Internal Restructuring Targeted and paced force reductionsFocus on value proposition for shareholders, customers, employeesExamples: iRobot in 2012; SRI International 2013Aggressive Portfolio ManagementPronounced pivot to commercial, international marketsRecalibrating business cases; capabilities that are / can be commercializedHeavy risk identification & management for capital deployment strategiesDynamic Global PressuresCommercial companies penetrating national security marketplaceVice defense contractors transitioning to commercial marketplaceNew entrants leveraging commercial technology & robust private capitalOutpacing traditional incumbentsDisruptive / Innovative Technologies Will Come From New, Nimble Entrants
14DoD as Customer: Mixed Signals & Expectations Increasing use of Lowest Price, Technically Acceptable (LPTA) criteriaInstead of Best ValueIncreasing requirements for upfront prototypes/demos at higher tech readinessLevels are changing the cost equationMost companies OK with open architecture/modularComes 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 memo2015 FDYP RDT&E plan asks industry to invest more R&D funds, but“prototype and shelve” potential technologiesSpend capital for S&T R&D without identified payoffNot 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
16Talent Management Recruit Develop Retain Civilian companies struggling w/ recruiting militaryWar for Talent is global“Great Crew Change” of skilled technical workers loomingTechnical industry competing for experienced talentNeed technically skilled to fill their troughsCompanies do recognize and like Veterans’ “soft skills”Leadership, teamwork, decision making, risk managementMaturity, reliability, dedicationMost companies don’t recognize military technical talentSome are figuring it out (Microsoft Software Systems Academy)Civilian compensation incentives impact retention significantly
17Talent Management Recruit Develop Retain Effective companies expend great effort developing future leadersCorporate leaders develop annual/long-term/stretch goals upfrontPerformance evaluated against those goalsLeader’s time specifically structuredEnsures they’re not “Too busy working to care” about the next generationIntentional social interactions includedPeople valued and handled in a way that recognizes they can walk tomorrowHigh potentials are important, but so is everyone elseDoD training pipes are robust but can be improvedLeverage emerging cheap training solutions, e.g., X Box-like gaming consoleEasily adaptable, highly effective way to deliver broad content spectrumSignificant cost reduction alters traditional classroom resource requirementsImprove quality/effectiveness over static-motion trainingYounger personnel need look/feel of high quality graphics, “real world” content
18Talent Management Recruit Develop Retain Leverage civilian education, innovation/tech development investmentsClose Civil-military divide through increased training/refresher in career pathsCloser to sources of change, innovation, new technology developmentsTrain in commercial world vs. traditional military schoolsIncreased span of overall personnel educationReduced brick and mortar cost efficienciesIncrease perceived value of transitioning military personnel in civilian eyesNarrative battle/same languageUnlock opportunities for resource efficiencies in military labsFill in “Valley of Death” between development silosMake a down payment for future industrial mobilizationHistorical precedent includes Harvard Business School on a large scaleWW II four month long Navy War Adjustment Course
19Talent Management Recruit Develop Retain Culture crisis a recipe for losing the Talent WarSuccessful companies have strong culture; people are proud of itValue of military service now more uncertainUnfocused messaging isn’t delivering through the noiseEnd of warsBudget uncertainty/drawdown impactsLeadership endorsing reduced compensation increasesGlobal uncertainty and mixed messages from senior leadersLoss of confidence in the institutionImproving economy without a clear call to serve = predictable outcomeDoD can't compete with industry on compensationCAN do a much better job selling the value of service todayCompensation structures providing loyalty and longevity incentives WORK
21Key to Success: Standard definition of Innovation Managing Innovation‘Innovate’, ‘innovation’, ‘innovative’ found 33 times in 2014 QDRWhy is innovation important?Need to reduce acquisition time – get products to warfighter fasterNeed to reduce cost due to budget cuts, sequestrationNeed to maintain technology advantage on the battlefieldWhat 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
22Managing Innovation Industry’s innovative technology experiences Development not a short-term propositionA journey requiring a significant time (3 -5 years or more) to implementRequires a change in the overall culture of an organizationRequires sustained, long-term commitment from LeadershipRequires training and buy-in at all levels of the organizationRequires funding and dedicated personnelCan not be an additional dutyBetter to start programs with experienced contractor personnelDo not try to build internal teams too earlyHave to accept there will be failures when reaching for stretch goalsInnovation is a process that must be managed and requiresmanpower, time and funding to be successful
24Acquisition Process Improvement Large joint/combined requirements programs not delivering promisesConsuming resources that could be used to address real needsExpectations vs. RealityFuture Combat System, Littoral Combat Ship and Joint Strike FighterAdverse industrial base impactsSimplify programs and shorten acquisition/development cyclesImprove success rate and keep high tech engineers in the gameMinimize requirements; define needs at highest acceptable levelProvide flexibility in system solutionsFocus on effective platform capabilities and open architecturesIncorporate follow-on capability upgradesFail FastMassive joint/combined requirements programs are not delivering on promises and are consuming resources that could be used to address real needsExpectations 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 ReportAdverse industrial base impactsAtrophying contractor design team capabilitiesSingle capable contractor for future systemsSimplify acquisition programsHigh complexity leads to continuous re-scoping of requirements and threatens program survivalSmall 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 programLong, slow acquisition cycles stifle innovationInsitu fly-fix-fly model = half priceThe 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 gameRetaining personnel with STEM (Science, Technology, Engineering, and Math) is difficult if they are not actively employed and challengedEngineers 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 atrophyBest engineers going to enterprises where their work makes a differenceThe 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 matterMinimize requirements; define needs at highest acceptable level to provide flexibility in system solutionsOpens up greater solution space and provides for increased competitionNumerous KPPs and Key System Attributes (KSA) will “over- constrain” the solution and eliminate most or **all** optionse.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 solutionsFocus on effective platform capabilities open architectures that can incorporate follow-on capability upgradesAdhering to open architectures allows for extensibility. Extensibility allows for external interfaces and interoperability you cannot foresee or afford at the initial time of system designFail FastAmgen mantra, SpaceX and MicrosoftFailing 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
25Acquisition Process Improvement Traditional requirements based acquisition ineffective/inefficientLocks in requirements before understanding what is achievableLong system development timelines lead to excessive costsCapability delivered to the warfighter much later than neededEmbrace capabilities based acquisitionApproach to be use when looking for revolutionary changeCapitalize on innovations ready nowOff-the-shelf solutions often provide 80-90% of desired capabilityRemain agile to prevent technical surpriseTraditional requirements based acquisition is ineffective and inefficientInevitably locks in wrong requirements up front, before we understand what is achievableToo many, disparate requirements leads to unnecessary compromises and reduced overall system capabilitiesRequirements allocation to too low of a level based on paper analysisBuild, 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 needOften leads to program cancellation or restructuring (longer timelines)Component and sometimes system obsolescence by the time system is fieldedToo slow and too costly to effect revolutionary changeSacrifices the forest for the treesEmbrace capabilities based acquisition approach when looking for revolutionary changeAllow the state of the art and what is technically achievable to drive solutionsCapitalize on innovations ready now; Off-the-shelf solutions often provide 80-90% of desired capabilityMuch greater bang for the buckCOTS 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 laterRemain agile to prevent technical surpriseCommitment to investments in innovation encourages contractor IR&DCapabilities based acquisition can save costand deliver greater capability to the warfighter sooner
26Acquisition Process Improvement Program offices are incapable and/or not empowered to develop and execute streamlined, innovative acquisition approachesDevelop and empower Program Managers to be innovativeOpen to planning and executing non-standard acquisition strategiesOvercome institutional adversity to changeRestructure program offices with right expertise and technical supportUse full flexibility that Federal/Defense Acquisition Regulations allowTailored acquisition approaches should be the normShepherd strategies through approval processProgram Executive Offices and Acquisition ExecutivesValidate engineering and cost modelsEnsure effective Human System Integration issues understood/addressed earlyProgram offices are incapable and/or not empowered to develop and execute streamlined, innovative acquisition approachesProgram 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 strategiesGrow PMs through the system with experience across the full acquisition timelinePM tenure should ensure that they will be in place to execute based on their acquisition decisions for increased responsibility and accountabilityOperational experience required to understand true warfighter needsConsider increased joint acquisition billets for broader exposureOvercome institutional adversity to change; restructure program offices with the right expertise and technical supportBe bold; do the hard things and get on with it – Northrop, Morgan Stanley, and other CEO’s speaking about implementing needed changeCertain jobs and functions need to be redefined or removed; More is not always betterCulture change is hard but required!Broader expertise needed to execute streamlined approachesMust be capable of more than just evaluation and enforcement of technical requirementsNeed to fulfill the oversight requirements without stifling innovationUse the full flexibility that Federal/Defense Acquisition Regulations allow; tailored acquisition approaches should be the normNot just for urgent operational needsStrategies should be aligned with larger acquisition goals i.e.. Better Buying Power initiativesContracting Officers must be able to operate differently and utilize their full authoritiesMany 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 warfightersEnsure that Program Executive Offices and Acquisition Executives shepherd strategies through approval processSimplify and shorten the approval processNeed early buy-in from OSD CAPE (Cost Assessment & Program Evaluation) and congressional oversight committeesProvide stability to the contractorsInvest in validating engineering and cost modelsValidated cost and performance models reduce riskCorrectly employed Modeling &Simulation toolsProvide similar insight to live Development /Operational TestFar less costEnsure that effective Human System Integration issues are understood and addressed earlyDemand contractor use of "interactive designers" to reinforce user-centered (vice system engineer-centered) designCapable and empowered program offices are critical toapplication of larger acquisition goals i.e.. Better Buying Power initiatives
27Acquisition Process Improvement Strict FAR part 15 application drives costBarrier to new market entrants and reduces competitionExpand usage of FAR part Commercial Item AcquisitionMany high-tech domains no longer belong solely to Govt/DoDAffordable form, fit, function trumps need for excessive documentationCost Plus contracting incentives not aligned with cost savingUse fixed price contracts where practicalNegotiate mutually beneficial milestone paymentsStrict FAR part 15 application drives cost, is a barrier to new market entrants and reduces competitionShould be more deliberate and fiscally responsible in application choicesExpand usage of FAR part 12 Commercial Item AcquisitionSubstantial cost savings potentialLeverages commercial market forces90% ready solutions for fraction of the costNontraditional DOD contractors, especially start- ups and small businesses, do not have the do not have the capabilities and expertise to competeCommercial markets don’t require the rigor, documentationCommercial markets do require innovationAcknowledge the fact that many high-tech domains no longer belong solely to government/DoDSpace launch, UAV’s, robotics, etc.Affordable form, fit and function trumps need for voluminous documentationCost Plus contracting incentives not aligned with cost saving goalsEndless churn in requirements space still rewarded with full paymentNo financial incentive for the contractor to push back on costly or unnecessary requirementsDoes not allow contractor to spend more on one program to save much greater costs across his portfolioEarned Value Management focuses on development and procurement costs, not the full life cycleUse fixed price contracts where practicalProvides simplicity in contract execution and allows for streamlined program officesEncourages cost savings innovations at the contractorNegotiate mutually beneficial milestone paymentsProvides government with stable budget execution performanceEnables the contractor the flexibility to plan workCommercial procurement practices better posture DoD to capitalize on commercial capabilities and innovation
28Acquisition Process Improvement Compliance with government Cost Accounting Standards (CAS)Drives substantial overheadOnly slightly more accurate than commercial dataEvaluate the actual value to the customerForce compliance only when absolutely necessaryLeverage Generally Accepted Accounting Principles (GAAP) dataRely on far less expensive independent accounting auditsRecognized industry experts (Deloitte, KPMG, Ernst & Young, PWC)Cost Data Reporting requirements add additional cost burdenDo not levy requirement on fixed price contractsReplace collection of rearward looking dataUse market research to predict commercially derived systems future costsCompliance with government Cost Accounting Standards (CAS) drives substantial overhead and is only slightly more accurate than commercial dataDoes not provide actual system cost – reflects how costs were “allocated”Forces contractors to change their business model to be less efficient than their commercial peerCosts are passed on to all customers and may risk their commercial competitivenessCAS documentation is rearward looking and does not improve the probability of program success over commercial accountingGAAP is more affordable and perhaps more useful than CASEvaluate the actual value to the customer and force compliance only when absolutely necessaryLeverage Generally Accepted Accounting Principles (GAAP) dataRely on far less expensive independent accounting audits from recognized industry experts (Deloitte, KPMG, Ernst & Young, PWC)Cost Data Reporting requirements add additional cost burdenDo not levy this requirement on fixed price contractsReplace collection of rearward looking data with market research to predict future costs on commercially derived systemsElon 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
29Acquisition Process Improvement Excessive operations and support costsNot adequately addressedLack of focus on systems sustainmentCombine life cycle support for platforms with common componentsIncrease Common Automatic Test Systems for common componentsUse Original Equipment Manufacturer (OEM) Special Test Equipment (STE)Place Field Service Repair (OEM STE) closer to the flight lineIncrease Centers of ExcellenceEliminate redundancy by combining facilities that have like workExcessive operations and support costs are not being adequately addressed; lack of focus on systems sustainmentCombine life cycle support for platforms with common componentsAviation Platforms across the services use common systems with separate Life Cycle support Increase Common Automatic Test Systems for common components throughout the servicesUse Original Equipment Manufacturer (OEM) Special Test Equipment (STE)Place Field Service Repair (OEM STE) closer to the flight lineIncrease Centers of Excellence; Eliminate redundancy by combining facilities with like workJoint Aviation Engine Maintenance Repair and OverhaulJoint Communication System Repair sitesJoint Radar System Repair siteAcronyms:ATS – Automatic Test SystemsCASS – Consolidated Automated Support SystemsIFTE – Integrated Family of Test EquipmentMRO – Maintenance Repair and OverhaulO&M – Operation and MaintenanceOEM – Original Equipment ManufacturerSTE – Special Test EquipmentVDATS – Versatile Depot Automatic Test SystemsWCF – Working Capital FundsWRA – Weapon Replacement AssemblyCapitalize on efficiencies in life cycle support
31Cybersecurity & Leveraging IT PeopleProcessTechnologyPeople – Get the right people on the busRecognize, understand, build capable cyber forceOperates within cyberspace as an operational domainPrepare trained and ready Cyber ForcesIdentify cadre of IT Acquisition ProfessionalsIdentify distinct skills and training for offensive AND defensive cyberPeopleIt 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 forceTrained and Ready Workforce: - Services produce operators “certified” to operate in the Joint arena; Creation of Cyber MOS/Designators or development of Cofield roadmapsCyber 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.
32Cybersecurity & Leveraging IT PeopleProcessTechnologyProcess - Take acceptable risks & avoid analysis paralysisClearly articulate product / solution requirements to industryEnsure funding availability is programmed into solution deliveryResist “requirements creep” that increases cost and time-to-targetAvoid imposing unnecessarily expensive security controlsDon’t buy an insurance policy which costs more than what is being insuredProcessesRevisit 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) certificationsIt 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).
33Cybersecurity & Leveraging IT PeopleProcessTechnologyTechnology – Use the right weapon for the targetDramatically improve IT Portfolio ManagementMore efficiently leverage commonly used IT toolsIncrease operational reach and business efficienciesDevelop, articulate, execute unified departmental enterprise strategyImplement Joint Information Environment (JIE) aggressivelyReform IT Acquisition ProcessMore Cyber engineersReduce layers of unnecessary administrative reviewMore driving instructors and fewer traffic copsToolsGain 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…leverageIndustrial innovation.
35Corporate Management through Budget Uncertainty Fully Centralized Cost Management OrganizationsCEO level sponsorship and mandateOrganized adjacent to Company Sourcing OperationsBusiness units partnerships; not just mandated changesBenefit reductions forced to business units via CEO / COOCompensation reductionsTargeted outsourcing, location strategy, salary/bonus deferrals, manpower reductionsNon-Compensation reductionsSourcing contract renegotiations, targeted expense reductions & furloughsNon-operational business units Included in efficiency programsCompany-wide sourcingSilo’d organizations forced to utilize firm-wide sourcing synergiesExceptions tracked and monitored by a central authorityIncentives: 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 reductionsYou WILL do more with less (and it is up to you to figure out how) and you WILL reduce discretionary expensesIf 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
36Managing through Budget Uncertainties Recommendations for DoD Fully Centralized Cost Reduction Effort across ALL businessesExceptions destroy cost reduction effortsIncentives for behavioral change must have teethHighest level sponsorship and backstopIndustry partnerships with Business unitsNot simply mandating reductionsStrategic Sourcing mandatedIncentivize away from exceptions (negative or positive)Organizational effectiveness programs for overhead/operational functionsCultural shift from wartime spending mindset for all Services and componentsReduce individual and institutional complexityAchieve increased Operational efficienciesBusiness 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
37Industry trends & recommendations AgendaProgram overviewIndustry trends & recommendationsTalent ManagementManaging DoD InnovationAcquisition Process ImprovementCybersecurity & Leveraging ITManaging through Budget UncertaintiesFurther discussion / Q&A