Cost ManagementCertificate Course (CMCC)Naval Postgraduate School

CMCC 12-5 Week 3

Cost Management and U.S. Army

Section II: General FundEnterprise Business System

Frank A. DiStasio

19-20 March 2012

© DISTASIO ASSOCIATES, LTD

Course Outline

• Section I: Cost Management– Why cost management?– Focus– Concept of Operation– Analysis– Exercise

• Section II: Cost Management and GFEBS– Development– Implementation

• Section III: Using Cost Management– Cost culture– Cost controlling

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General Fund Enterprise Business System (GFEBS)

Goals:

•Provide decision support information to sustain Army warfighting capability

•Provide analytic data and tools to support the Army enterprise

•Reduce the cost of business operations

•Improve accountability and stewardship

Enable decision-makers across the Army to – • Better capitalize on the resources we have• Better determine and justify the resources we need

As of 5 Jan 2010

OSD approved in May 2005

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Secretary And Chief Of Staff Of The Army Testimony

“… we must give our people the essential tools that will enable them to carry out their cost management responsibilities. Toward this end, we have fielded the General Fund Enterprise Business System (GFEBS) to more than 11,000 users at 14 major installations. As reported by the Government Accountability Office, GFEBS development is on schedule and on budget. Much more than an accounting system, GFEBS is the Army’s new business system. It gives managers a greatly improved capability to manage the cost, schedule and performance of their programs and, at the same time, is the centerpiece in our progress toward full auditability of our financial statements.”

The Honorable John M. McHugh, Secretary Of The Army andGeneral Martin E. Dempsey, Chief Of Staff United States Army,

March 2011, Army Posture Statement

The Honorable John M. McHugh, Secretary Of The Army andGeneral Martin E. Dempsey, Chief Of Staff United States Army,

March 2011, Army Posture Statement

2011

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Why Continuing Leadership Emphasis? Well-Informed Decisions Begin With Good Data

• Situation:– Army leaders and managers need to make well-informed and timely

decisions – Most decisions impact across many functions and organizations– Well-informed decisions require relevant, accurate and timely analyses

that integrate data from many functional areas

• Requirement: – Move to modern systems that include open, horizontally integrated data

to enable better informed decisions; including: General Fund Enterprise Business System (GFEBS) Logistics Modernization Program (LMP) Global Combat Support System-Army (GCSS-A) Integrated Personnel & Pay System (IPPS-A)

GFEBS integrates data from across the Army

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Where We Are and … Where We Are Going

As of 31 Dec 2009

GFEBS Solution

Involves maintaining many systems Requires many costly interfaces Requires entering data in several systems Inhibits efficient sharing of data Impedes producing comprehensive and accurate decision data Hinders responding timely to questions Requires time-consuming and costly reconciliations

Current Situation

CCSS AMCISS ETOS RATS

MDMS

MEPRS DTRS EFR WAWF WinS

DTRS-A

DefenseMilitar...

EDM

EDA

DCWCHCS GSA

systemDLA LogBSM...

DNCS/DAAS

ItalianLoca...

KoreaPay...

DCPS(T&A)

OtherForei...

DIFS CISIL CEFTDCAS

DCD

LMP

ADS ULNTAP CCR

PADDS

URL

MOCAS

TPOCS EFR

DEBX

PowerTrack

PBAS-OC

DPAS SCTIMSPBAS-

FDULNAPS

IULNATI

S

TDYTrave...

TAMMIS SARSS

SRD1 (orSTANFINS-R)

SDS HAS

SABSIFS

PPBEEnter...

EAS

DMLSS TDYTrave...

I2S GOALSII

DCPDSODC PaySystem

DIMHRS DDS AFMIS

Predator

ATLAS

STANFINSDJAS

STARSOne Pay

Fadtool

MSAcce...GTS

DbCAS/WebCAS

DARSISBFMIS

MED...IPAC

Wizard

SOMARDS

ODS CRP SCRT

OLRV

SLAD

ARCS

ASK-FM

PARSS

On-BaseACQUI LI NE/ PRWeb

AVPRATCAMS-ME

RSBUX VPIS AORS

CAPS

AFCOS 218DBR FADSIMA

ONLINE

ARMS

AMDBES

WSMISRM

Onlin...ABIF CEEMIS TBS CBS DUBOSDCPS CAB

HQARS

TROUPERS

PRIDE RLAS

PROBE

TBG

CMS2SLAMIS

(G8)

ATAAPS FPSIBRIMSBRIX

TSIMS

APCSNASKDDRS DTS

AWPS

FC/SSF

DSOM

SOFIMS RINO OH OFD CMOS CIMS DARTS DASIS eSTADIS JR

OADatab...

GCSS-A CDS (2) IPAC DEPSfor... DEAMS

DJMS

IATS TWELS IBO DOPS

FMSS FPU

RM On-line... IDSS

FAS ACCPAC

SPS RMS CARE

CEFMS FMSS FPU

FAS (2)

AVKINPUT

CFRS FEDS FPBG PBMS PYF DB RM On-line...

RM On-line...

RM On-line...

ATTCMIS

BISCOSTDI

SEACOBS/EABA...

FFMA FIRST OPA2DBOPA2-SOM...

PAOblig UFRDB WIMSI M ET/ FM SSBS

JUSTI S LNPAYI NT- I TPACIOL

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ASARS

BBDBBRAC

FMFM TP MSN DB OTDA

RM On-line...

STAR-PBA

STAR-PBA

CDS WARSAMEDD

PASCOPS

WebTAS

EAS IV

APVM

CT 1081

IMET/FMS SBS

JUSTISLNPAYINT-IT

FMTP

System View (SV) 1System View (SV) 1

SAP

Implements a single web-based system Standardizes processes Armywide Implements standard data structures Records transactions in real-time and provides real-time access to data Integrates financial and non-financial/ performance data from functional areas Applies commercial-off-the-shelf (COTS) Enterprise Resource Planning (ERP) Complies with DoD’s Business Enterprise Architecture (BEA)

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Technical CharacteristicsOf The Army’s GFEBS Solution

• Commercial Off-the-Shelf (COTS)– Configure and not custom-building software– Provides ‘best practices’ inherent in software– Enables system updates and enhancements without re-writing code

• Enterprise Resource Planning (ERP) Systems– Integrates and optimizes business processes across the enterprise– Includes most business processes for an optimized solution– Enables sharing of common data among all business processes

• SAP product– The most widely used ERP solution in the world– Customers include DLA, Navy, NASA, IRS, Wal-Mart and Daimler AG

• Benefits Include --– Complies with over 1,100 accounting and real property requirements– Enables transformation to a cost culture

Capitalizing on COTS and ERP benefits requires

accepting business process changes As of 31 Dec 2009

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General Fund Enterprise Business SystemObjectives

Financial Accounting system:

•Records financial transactions in single system Army-wide

•Complies with statutory & regularity requirements for funds control and accounting

•Includes real property and other asset data for accountability

Cost accounting system:

• Allocates or assigns cost data and provides full cost

• Relates costs to outcomes/outputs/ services and performance

• Enables cost-benefit, comparative, and other cost analyses

• Enables cost planning & control

Management support system:

• Provides visibility of transactions in real time across the Army

• Provides access to continuing data

• Enables analyses

• Supports well-informed decisions to:

Leverage available resources

Improve program & budget decisions

As of 28 April 2011

Estimate of progress:Estimate of progress:

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Transaction IllustrationSimultaneously Updates Related Records

FI – Financial Acct. & Mgmt.

FM – Funds Acct. & Mgmt.

CO – Cost Acct. & Mgmt.

MM – Materials Mgmt. and Procurement

PPE – Property, Plant & Equipment [PM, PS, RE, AA]

SD – Sales & Reimbursables

Transactions Entered

Purchase Request

• FI - None• FM - Commitment• CO - None

Purchase Order

• FI - None• FM - Obligation• CO - None

Goods Receipt

• FI - Expense/AP• FM - Expenditure• CO - Expense

Payment

• FI - AP/Cash• FM - Disbursement• CO - None

Simultaneous Updates

Financial Accounting Compliance Statistics

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98% Full Compliance Self-Assertion

95% “Substantially Compliant” Designation from AAA

91% SFIS CompliantDetermined by DCMO Audit

RPIR Compliantwith BEA 8.0

RIPM ComplianceOSD Evaluation Pending

Cost Accounting CapabilityIncludes

• Implements a standard cost structure for collecting full and comparable data from across the Army

• Includes cost planning, cost analysis and cost control capabilities for use as cost data become available

• Enables cost reporting, reviews and analysis across the Army

• Supports cost management training to develop skilled analysts and to capitalize on cost management capability

• Provides data and tools to enable the Army to institutionalize a “Cost Culture”

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Cost Management applies across the organization

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Cost Accounting Capability Enables Cost Management

PersonnelMilitary -$ / SoldierCivilian -$ / FTEContractor -$ / FTE

Base Support$ / Service$ / Brigade$ / Installation

Training (Ind)$ / Student Tng Day$ / Course Day

Training (Unit)$ / Mile$ / Flying Hour$ / Weapon System

Equipment$ / Brigade -New$ / Brigade -ConversionRatio: Spt $ / Brigade $

Force Generation $ for Reset $ for Ready/Train $ for Available

Heavy

X X

Light Stryker

X

Heavy

Light StrykerXSUSTSUSTSUST

XSUSTSUSTSUST

XBde

Flexible and responsive to Army information needs

Brigade data may be for: • specific brigade • average Bde in command • average Bde across the Army

Functional data may be for: • total cost for school • total cost for course • specific costs of

interest

ARFORGEN data may be for: • specific pool, e.g., Ready • specific function in pool • average Bde in pool

As of 7 Jan 2010

Management Reports

Cost Management ReportUnit Cost ReportCost By Budget and Plan ReportCost By Cum Cost by Non-CumCost By Partners CumCost By Partners Non-CumCost By ActualCost By Real Property

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PP&E ReporterReal Property Inventory ReportUsage of My ObjectsUsage of My Objects (%)Vacancy by Usage TypePortfolio by Regional LocationLease-In by Regional LocationOwned Real Estate by Regional LocationOccupancy Report

HQDA/OA22    FORSCOM          

TRADOC          USAAC  

AMC      EUSA  SMDC      

USARNO

USARSO  USARCENT

USARPAC  USAREUR

USARAF    USAASC      

ARCYBER

ATEC  USMA  

USARC      MDW  CIDC

MEDCOM            NETCOM            

IMCOM              ARNG              

AFRICOM  EUCOM  

SOUTHCOM  JIEDDO

Deployment Schedule By Command And Wave

5% 20% 80% 90% 100%

5% 20% 80% 90% 95% 100%

100%

0.5% 1% 2% 100%

100%

2%

100%

100%

90%

100%

5% 100%

100%

10% 20% 100%

10% 100%

100%

90% 100%

1% 2% 50% 100%

100%

100%

1% 10% 40% 60% 80% 90% 100%

1% 10% 40% 45% 78% 90% 100%

5% 10% 30% 40% 80% 85% 100%

5% 10% 100%

100%

100%

100%

100%

1% 5% 7% 10% 100%

100%

10%

92%

20%

50%

98%

98%

30%

100%98%

We are at 86% of all users

We are at 86% of all users

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Wave 7 Go-Live And Cumulative Deployment Data

• 4,200 additional end users– 39,050 end users cumulative

• 10,280 additional civilian employees for payroll– 168,232 cumulative civilian employees for payroll

• 343 additional Funds Centers – cumulative: 1,506• 12,120 additional Cost Centers – cumulative: 51,152• 22 additional locations

– 180 total locations

• 6 additional commands went fully operational– FORSCOM, TRADOC, USARPAC, USARC, CIDC and

USSOUTHCOM

– 13 commands were fully operational: OA22, Accession Command, EUSA, USARNO, USARSO, USAREUR, USARAF, ARCYBER, USMA, MDW ARNG AFRICOM and EUCOM

• $ 24.5 billion allotted (as of 2nd Quarter FY12)

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End Users -- Most Are NOT From Resource Management Office

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GFEBS is a transaction based system andthe preponderance of transactions begin in operational organizations

End Users

Most common positions of nearly 40,000

• Accountant • Budget Analyst• Engineer & Scientist• Health Specialist• IT Specialists• Legal Admin• Logistics Supervisor• Operations Analyst

• Technician

• Program Manager • Property Manager• Purchasing Agent• Quality Assurance

Specialist • Resource Manager• Staff Assistant• Supply

NOTE: As of Wave 7 October 2011

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ImplementationIs Not The End Of Development

• O&S examples– Establishing internal “help desk” capability at commands

• E.g.,OA-22, ARNG, MEDCOM, FORSCOM and DFAS

– Redesigning Purchase Request workflow and MIPR process

• Refining and enhancing initial functionality– Public works: Day-in-the-life ‘end-to-end’ cases– Project systems: developing for acquisition processes– Business Intelligence:

• Improving current reports– Splitting cumulative and non-cumulative

• Adding new reporting capability, e.g., “Cost By” reports

• Future new capabilities– Procure to Pay (P2P) – Sensitive Activities

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General Fund Enterprise Business System Is Transforming the Army

• New system with analytic tools and capabilities

• New business processes– Capitalizes on “best practices” embedded in ERP

• New management structures and data concepts– Single Instance of entering and then sharing data

• New roles, skills and knowledge for end users– Opportunity for individuals to develop skills with state-of-

the-art ERP system and cost management techniques

• Complies with statutory and regularity financial accounting requirements

GFEBS is transforming financial management and management practices in most functions with

the new cost management capability

GFEBS And Army Audit Readiness

“… I've directed the department to cut in half the time it will take to achieve audit readiness for the Statement of Budgetary Resources so that by 2014 we will have the ability to conduct a full-budget audit.

We owe it to the taxpayers to be transparent and accountable for how we spend their dollars.”

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Secretary of Defense Panetta:

Audit readinessre-enforces the case for the GFEBS solution

Achieve Audit Readiness By 2014Assertion And ERP Deployment Timeline

GFEBS waves correspond to deployment at specific sites. “Assert” means Army is ready to be audited in that area. Exams are evaluations by independent public accounting firms.

Notes:

We are here

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The cost accounting features of GFEBS captures cost and related performance data,

and supports cost management

GFEBS And Army Cost Management Concept of Operations

Capture and Valuate Data in GFEBS (CO module)

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General Fund Enterprise Business System Leadership

Mr. Doug Wiltsie Program Executive Officer for Enterprise Information Systems

COL Patrick W. BurdenGFEBS Project Manager

Ms. Kristyn E. JonesDirector, Financial Information Management

Mr. Roger A. PillarDirector, Functional Program

LTC Stephen LockridgeDirector, Deployment & Transformation

As of 12 September 2011

https://wiki.kc.us.army.mil/wiki/Portal:GFEBS

A collaborative team of ASA (FM&C) and PEO-EIS

LTG Joseph E. MartzMilitary Deputy for Budget, Assistant Secretary of the Army (Financial Management & Comptroller)

Robert M. SpeerPrincipal Deputy

Assistant Secretary of the Army (Financial Management & Comptroller)