Published on October 31, 2007
DFAS Transformation: DFAS Transformation L. J. Krushinski Deputy Director, Strategic Business Management Defense Finance and Accounting Service March 13, 2007 Agenda: Agenda DFAS Transformation Vision Transformation Blueprint People Structure Process Technology Information Summary Transformation Vision: VISION: Transforming Today To Be The Trusted Financial Partner For Tomorrow’s Warfighter Transformation Vision Why Are We Transforming: Why Are We Transforming Current environment Manual processes and non-standard internal controls Numerous barriers to achieving unqualified audit opinion Stressed and disparate systems containing static financial data Evolve in accordance with Department objectives Execute Agency strategic goals Manage more complex programs to respond to increased demands Improve processes and realize new efficiencies Transformation far exceeds BRAC Includes multiple agency initiatives Organizational Realignment High Performing Organizations NSPS Electronic Commerce Systems Implementation BRAC facilitates DFAS Transformation Slide5: Transformation Vision Business Intelligence Benchmarking Information Security BRAC Centers of Excellence Human Capital Strategy Enterprise Transition Plan eCommerce High-Performing Organizations Lean 6 Sigma People - Human Capital Strategy: People - Human Capital Strategy Succession Planning Skills Inventory National Security Personnel System (NSPS) Implementation is event driven Labor relations portions of NSPS delayed due to court ruling DOD successfully implemented for 11,000 non-bargaining unit employees in spiral 1.1 in April ’06 and plans additional 60,000 in October ’06 through January ’07 in spirals 1.2 and 1.3 DFAS Human Capital Strategy: Leadership Ensure DFAS leadership approach is incorporated into our environment Develop professional cadre of supervisors with strong managerial versus technical skills Talent Ensure right skills are available in right place at the right time Environment Develop culture that supports and rewards continual growth and learning of those professional financial management skills critical for DFAS transformation DFAS Human Capital Strategy Structure - 2005 BRAC Law: Structure - 2005 BRAC Law Grow the DFAS site at Cleveland, OH, to not less than 1,500 Full Time Equivalents (FTEs) Grow the DFAS site at Limestone, ME, to not less than 600 FTEs Grow the DFAS site at Rome, NY, to not less than 1,000 FTEs Maintain not less than the current FTEs1 at the DFAS sites at Columbus, OH (2,064 FTEs), and Indianapolis, IN (2,632 FTEs) 1 FTEs effective EOM August 2005 (Geographic Location Report, Military Personnel Report) What Does BRAC Mean for DFAS: What Does BRAC Mean for DFAS Reduced Staffing Meet BRAC staffing floors Reduced Overhead Fewer locations Reduced Footprint Use existing excess capacity Continued business process improvements thru Transformation DFAS BRAC 2005: DFAS BRAC 2005 Indicates site scheduled for closure in fiscal year Indicates site scheduled for realignment in fiscal year Indicates site closed Sites Closed as of January 31, 2007 Lexington, Oakland, San Bernardino, Seaside, San Antonio, Lawton, Dayton, Norfolk Slide11: Where We Are Today Of the 5,103 total permanent DFAS employees at the 20 closing sites and Arlington realignment, 1,173 were assigned to the 8 sites that have closed to date (23%); 3,930 employees (77%) are at the remaining 13 sites scheduled for closure Data as of: Jan. 24, 2007 Slide12: Disposition of Employees at Closed Locations Of the 1,173 permanent employees at closing sites: 30% placed at enduring sites 27% accepted VERA/VSIP 19% placed thru PPP 12% other attrition 8% RIF 4% DSR Data as of: Jan. 24, 2007 Organizational Structure - Current : Organizational Structure - Current Deputy for Strategic Business Management Office of Strategy Management Director Policy & Performance Director Business Requirements & Integration Director Transformation Director Cleveland Site Director Columbus Site Director Denver Site Director Indianapolis Site Director Kansas City Corporate Accounting Mission Area Director Accounting Operations Mission Area Director Disbursing Mission Area Director Director Standards & Compliance Finance Mission Area Director Sites included: Charleston Pensacola Norfolk Japan Pacific San Diego Sites included: Dayton Limestone Omaha Sites included: Lawton Rome Orlando Seaside Rock Island St Louis Texarkana Europe Client Executives Information Technology Corporate Resources Internal Review Office of General Counsel Chief of Staff Deputy for Operations Director Deputy Director Director Human Capital Organizational Structure - FY 2009: Organizational Structure - FY 2009 Deputy for Strategic Business Management Office of Strategy Management Director Policy & Performance Director Business Requirements & Integration Director Transformation Director Cleveland Site Director Columbus Site Director Indianapolis Site Corporate Accounting Mission Area Director Accounting Operations Mission Area Director Disbursing Mission Area Director Director Standards & Compliance Finance Mission Area Director Oversight Japan Limestone Rome Europe Texarkana Client Executives Information Technology Corporate Resources Internal Review Office of General Counsel Chief of Staff Deputy for Operations Director Deputy Director Director Human Capital Process - FY2009 End State - Operations Highlights: Process - FY2009 End State - Operations Highlights Retired and Annuitant Pay Garnishments Center of Excellence Columbus Centers of Excellence Indianapolis Center of Excellence Limestone Centers of Excellence Rome Centers of Excellence Cleveland Acquisition Accounting including Contract Pay Security Assistance Accounting Out of Service Debt Transportation Working Capital Fund Accounting Medical Accounting Special Ops Accounting Technology: Technology Enterprise Transition Plan Enterprise Priorities Defense Travel System (DTS) Defense Integrated Military Human Resources System (DIMHRS) Service Enterprise Resource Planning Systems General Fund Enterprise Business System (Army) Defense Enterprise Accounting & Management System (AF. USTRANSCOM) Merged ERP (Navy) eCommerce E-Commerce Strategy Overview: E-Commerce Strategy Overview Optimize EC Capabilities Leverage Business Opportunity from BRAC Implement Selected Legacy System Changes Actively Engage Customer, BTA, and DFAS Enterprise Identify Short and Long Term Opportunities Leverage New Systems and Technologies Identify Unnecessary Manual Activities Across Core DFAS Business Mission Areas DFAS E-Commerce Review: DFAS E-Commerce Review Conduct end to end organizational scan to identify pockets of manual Identify pockets of manual by customer, system, and location Identify key targets areas Identify benefits Identify costs Identify schedule Tasks Status/Outcomes Completed organizational scan of key business areas: acquisition, entitlement, accounting, and disbursing Identified manual by Army, Navy, Air Force, Marine Corps, and Defense Agencies Identified locations and identified strategic opportunities at Rome, Rock Island, and San Diego Identified 223 potential targets of opportunity and selected 49 Identified target reductions in manual events Cost identification underway Schedule under development as part of tactical plan Scope: 223 Targets, 49 Priorities, 3 Waves: Reduce Manual Disbursements Automate Prevalidation between Entitlement and Accounting Systems (EUD) Add additional required elements for DCAS Implement DCAS at remaining disbursing sites Add additional required elements in the IPAC trading partner agreements Automate IPAC disbursement process in Accounting Promote timely and accurate recording of obligations to Services/Agencies Conduct Lean 6 study to resolve MOCAS Contract/CLIN/SLIN/ACRN/SDN accounting interface and over-disbursement issues* Conduct Lean 6 study to automate the DITCO/State Department/ Tricare/ Transcom/GSA financial process that are causing manual disbursements* Automate Contracts/Inv/RR to Entitlement Systems* Automate Obligations/ Expenses to Accounting Systems* Expand use and functionality of DTS (add PCS and MISC Pay functionality)* Accelerated WAWF Usage for Contract Invoices/Receiving Reports and MISC Pay* Accelerate Powertrack usage for freight/HHG* Increase use of Purchase Card Increase use of Purchase Card (contracts <$3000) and accelerate Army, USMC & DAGY usage* Improve Credit Card Processes with the use of the correct Fund Codes and signal codes Resolve e-Mall Credit Card Issues Implement CEDM across DFAS, starting at BRAC Closure Sites* Accelerate use of MyPay* Accelerate use of MyInvoice* Automate the Manual Check Collection Process through the use of TGAnet, PCC and Pay.gov Automate AOPs for travel/vendor pay Deploy BSM Deploy DIMHRS Deploy SDI Deploy ERM/BAM Tool * Supported in detail on subsequent pages Wave 1: 2007-2009 Wave 2: 2008-2010 Automate IPAC Reimbursable transactions Automate the elimination reporting process Automate Budget Distribution/Funding Process/Cost Management Enhance PBAS functionality Automate Treasury Warrants AFM - Automated Interface of Funds Distribution (Majcom to Installation Level) Automate Military/Civilian Pay Processes Automate Mil Pay Vouchers/Interfaces [ref: CDS] Conduct Lean 6 study to evaluate Payroll Deductions and miscellaneous 8552 disbursement/collection transactions Automate DCPS accounts receivable interface to accounting systems. SCR transmits both the AR and collection Automate the DCPS to Accounting System reconciliation Automate FMS Processes Analyze and resolve Interfund breakpoints Interfund – Web Based Ordering Systems (DLA/GSA) Obligation Interface [ref: GAFS-BL] - EDI 855 Deploy IVAN Deploy Navy ERP, DEAMS, DAI, GFEBS (Further Review Needed to Determine Priorities for Wave 2) Transfer responsibility of original source of entries to customers/Services/Agencies. Implement e-Form Fix foreign currency issues in DDARS for OCONUS TBO transactions Automate the Reporting Processes for Departmental, Taxes, manual disbursements and Treasury Cash Automate accounting process for “Classified” LOAs Automate the Journal Voucher process Automate recording capital transactions Automate the CIP/WIP write-off process using DPAS Implement PowerTrack interface for DLA (BSM) (Further Review Needed to Determine Priorities for Wave 3) Wave 3: 2009-2011 Scope: 223 Targets, 49 Priorities, 3 Waves Information: Information Business Intelligence (BI) Benchmarking Information Security Business Intelligence: Business Intelligence Intelligence is the ability to learn, to understand or to deal with new or trying situations Business intelligence is the set of concepts, methods and processes DFAS is developing to improve business decisions Information from multiple sources Apply experience and assumptions to develop an accurate understanding of business dynamics Gathering, management and analysis of data is optimized to produce information that is distributed to decision makers to improve strategic and tactical decisions BI Value Chain BI VALUE – The Right Information at the Right Time: BI VALUE – The Right Information at the Right Time Business Intelligence provides decision makers with information that enhances Financial Management on 3 planes: Business Intelligence : Business Intelligence Current Business Intelligence Initiatives DFAS Balanced Scorecard Automation Integration of Enterprise Planning capability Delivery of the DFAS Executive Dashboard Visual delivery of Corporate level Balanced Scorecard Linkage of execution to Key Performance Indicators Enhanced Cost of War and Contingency Operation Reporting and Views Creating of a single, authoritative data source for special interest items Delivery of Global War on Terror, Cost of War, Hurricane Relief, and other Contingency Operation reporting Emerging Business Intelligence Initiatives Improvements to Status of Funds Visibility Enhanced Budget Execution Analysis Delivery of interactive visual representation of the execution of DoD budget Deliver capability for ad-hoc analysis of plan to execution Establish interactive user-controlled method to forecast execution into the future Incorporate Military Pay improvements and actions into Executive Dashboards Integration with Enterprise Risk Management and Business Activity Monitoring Information - Benchmarking : Information - Benchmarking Accounting DFAS Summary: DFAS Summary Fewer locations: 101 9,9152 employees 18 systems $1,368M operating costs3 70% professional / 30% technicians Right employees with right skills Optimum number and mix of civilians/contractors Pay for performance under NSPS 30 locations1 13,8792 employees 92 systems $1,615M operating costs3 70% technicians / 30% professional Aging workforce General Schedule Pay System 1 Includes Europe & Japan 2 Source: HR Flash Report September 2005 (civilian & military) 3 Current $ 1 Includes Europe & Japan 2 Projected Civilian & Military 3 Current $ FY 2005
Economies of scale, diseconomies of scale, constant returns to scale. Efficiency in production. Also, economies of scope and how to maximize profit when ...