1. Financial Management Modernization Program
Gerald Thomas, Director,
Financial Management Modernization Task Force
Office of the Under Secretary of Defense (Comptroller)

2. Vision
“The Department of Defense will be managed in an efficient, business-like manner in which relevant, reliable and timely financial information, affirmed by clean audit opinions, is available on a routine basis to support informed decision-making at all levels throughout the Department.”
Point of Slide: We understand what you want and what is needed.
Words paraphrased from “Friedman Study”
Except, added “…efficient, business-like manner…”

3. Scope
People
Processes
Policies
Systems
Enterprise
Architecture

4. More Funds for the Warfighter
Approach
Execute Management Plan to Attack Problems
Reengineer Business Processes to Model Private Sector
Establish Defense-wide Standards
Consolidate & Modernize Systems
Enhance and/or Augment Financial Management Workforce
Simplify Accounting & Reporting Rules
Near-term Improvements
Efficiency =
Long-term Solutions
Improved
Public
Confidence
Accountability =
Manage Using Performance Metrics
More Funds for the Warfighter
Stabilize Systems & Initiatives
Point of Slide: How we’re going to attack the problem?
The path to full transformation is a long one. (Friedman Study)
The complete solution is key to ensuring that the transformation has a permanent impact on DoD. (Friedman Study)
Performing an industry benchmark -- lessons learned, benchmarking for both success and failures with similar efforts
Twin-track approach (Friedman Study) provides
Near-term improvements (Management Plan) -- increased management attention--
Accounting Adjustments
Late Payments
Overpayments
Long-term solution (Enterprise Architecture)--business processes and systems--
Business Process Reengineering, modeling highly-successful private sector enterprises.
Establish Defense-wide data and process standards.
Consolidate and modernize systems
Enhance “core competencies”
Engage Congress and the Office of Management and Budget to simplify accounting and reporting rules.

5. Enterprise Architecture Community
Core Project Team
Senior Steering Committee
DoD Components
Office of Management & Budget
Project Direction
Extended Project Team
Treasury
Industry
Financial Management Working Group
Extended Project Assistance

6. Typical Procurement Process
8. Clerk inputs receipt into order system
10. Comptroller Certifies Invoice
Invoice
Certification
2. Supervisor approves request
3. Clerk inputs order into order system
Requisition
Purchase
Order
Non-financial Feeder System
4. Comptroller authorizes funds
Establish
Commitment
Accounting and Finance Systems
Establish Obligation
Record Accounts Payable
Process Payment
Request Payment
1. Maintenance worker requests a part
Purchase
Order
Requisition
5. Contracting Officer Awards Contract
Contract
Point of Slide: Demonstrate complexity of a single process: Ordering a Part
Depicts an ideal process:
steps minimum
people - 6 government employees as a minimum
documents (Task Force effort has identified to date 431 unique documents) (i.e. 46 different documents to represent a purchase order),
DoD 112 SF 62 Air Force 67
Army 65 Navy 76 Others 38
Electronic 11
non-financial feeder systems -- three identified (ordering systems, acquisition systems, and inventory)
Unfortunately many of the steps are manual, systems are not integrated or even interfaced.
Annual DFAS Statistics
100M accounting transactions (commitments, obligations, payables, disbursements, adjustments, etc.)
14M invoices
5M travel payments
Business Process Reengineering example: Electronic Invoices (Step 10);
DFAS rate manual vs. electronic ($18.77 vs. $8.45)
Computerized Accounts Payable Systems (CAPS) DFAS cost $12.00 to perform match and batch and prevalidation
DFAS overall cost $16.37 to perform match and batch and prevalidation
Non-financial Feeder System
7. Dock worker receives and deliveries part
Receiving
Report
9. Vendor Sends Invoice
6. Vendor ships part
Packing
List
Invoice
Non-financial Feeder System

7. Inefficient and Costly Jeopardizes Reliability and Timeliness
Systems Environment
Point of Slide: To illustrate complexity of the current systems environment.
77 Core Systems - Systems which primarily provide accounting and finance functions (General Ledger, Accounts Payable, Accounts Receivables, Disbursing, Payroll, etc.)
DFAS has reduced the number of core systems from 324 to 77 since (DFAS strategic plan)
Tier 1 - Directly feeds financial information to a Core system
Non-financial feeder - supports mission functions and provides financial data to a core systems (I.e. inventory, property, acquisition, etc.)
To date we have identified more than 560 plus systems that support greater than 1000 different interface requirements
Data call underway expect completion end of September.
Tier 2 & 3 - Tier 2 directly feeds information to a Tier 1 systems, etc. -- Data call underway expect completion end of January.
The C3I System registry identifies 273 systems classified as financial systems and over 1100 systems that would be consider support systems (validation of the data call against the C3I registry is on-going).
Actions to stabilize existing inventory:
First step is to Identify inventory through data call(s)
Capture both operational and development budget through the budget process -- modifications to the budget submission for financial and non-financial systems
Issue letters to insert Comptroller approval in the process for any new system initiatives and systems moving from prototype to deployment or production
Tier 3
??? Systems
Tier 2
?? Systems
Tier 1
500+ Systems
Core
77 Systems
Inefficient and Costly
Point of Entry
Jeopardizes Reliability and Timeliness
Statements & Reports

8. Schedule
FY 2002
FY 2003