News | Dec. 1, 2009

Defense Business Transformation

By Jacques S. Gansler and William Lucyshyn

Over the past 20 years, information technology has been rapidly advancing, producing new capabilities that enable organizations to greatly enhance visibility into their business operations. While many private organizations have successfully taken advantage of these new technologies to develop enterprise-wide information systems that reduce costs and improve performance, the federal governments still lags far behind. DoD, one of the largest organization in the world with an annual budget over $500 billion, still relies on several thousand, non-integrated, and noninteroperable information legacy systems, that are error prone and redundant and do not provide the enterprise visibility necessary to make sound management decisions. Moreover, between FY07 and FY 09, DoD has requested from Congress over $47 billion in appropriations to operate, maintain, and modernize these business systems.

There is an urgent need for DoD and the components to modernize their business systems and processes in order to reduce costs, improve efficiency and performance, and, most importantly, improve warfighter support. Currently the U.S. is facing a number of fiscal challenges that will directly affect DoD funding. Government debt is at an all-time high, and still growing due to the 2008 financial crisis and the ongoing conflicts in Iraq and Afghanistan, and the growth in mandatory spending programs, such as Social Security, Medicare, and Medicaid, are exacerbating this problem. Given these fiscal pressures, DoD funding has likely reached its high-water mark, and as budgets are reduced, there will be a tough choice between weapons and business systems.

This report attempts to develop an understanding of how developments in information technology have impacted business operations, tracks the Department’s business systems transformation efforts, evaluates its performance and achievements, and recommends policy actions to improve the transformation effort. Overall this report intends to help speed up business transformation efforts at DoD, and improve their prospects for success. In addition to the University research, this report relied upon the guidance of a Senior Advisory Group, comprised of experts with extensive experience in business transformation from private industry, the federal government, and the military services. The Senior Advisory Group helped to guide the research, assist in the development of the findings and recommendations, and review our report.