Military struggles to integrate servicewide planning systems
Schedule delays on ERP programs impede savings, incur additional costs
Despite spending billions to modernize its business operations, the Defense Department's enterprise resource planning systems are running over budget and behind schedule. As the Army, Navy and Air Force implement their respective ERP systems, they are struggling with the problems inherent in creating single, integrated systems.
In the quest to rectify DOD’s longstanding financial and business management problems, ERP is becoming the Holy Grail of defense IT programs. DOD is in the process of implementing nine ERP programs, of which six have had schedule delays ranging from two to 12 years and five have incurred cost increases ranging from $530 million to $2.4 billion, according to a Government Accountability Office report issued in October 2010.
“DOD has stated that the ERPs will replace over 500 legacy systems that cost hundreds of millions of dollars to operate annually. However, delays in implementing the ERPs require DOD to fund the legacy systems longer than anticipated, thereby reducing the funds available for other DOD priorities,” GAO concluded.
Brig. Gen. Kenneth Moran, Air Force program executive officer for enterprise logistics systems, argues that DOD cannot continue to do business as usual, especially in an environment of constrained military budgets.
“We simply won’t be able to afford our Air Force in the future without making some substantive changes,” said Moran, who oversees the service’s Expeditionary Combat Support System (ECSS) program, an Oracle-based ERP system that seeks to provide the Air Force with a single, integrated logistics system that includes transportation, supply, maintenance, repair, engineering and acquisition.
Moran said that after it is fully deployed, ECSS will replace 240 legacy systems and save the Air Force $12 billion over 10 years. In the meantime, the program is facing significant problems.
Air Force ERP
The size, scope, and complexity of the ECSS program are enormous. Initially, ECSS will support 40,000 users and grow to 250,000 users at 187 installations worldwide in full operational capability. However, full deployment is now slated for 2016, a four-year slip in schedule, according to GAO.
ECSS will be deployed in four phases instead of the original three-phase strategy. The program was restructured, and in June 2009, the Air Force decided to pursue only the revised phase one, pending a demonstration of the program’s ability to deliver to the revised schedule.
When ECSS was scheduled for three phases, the estimated life-cycle cost was $3 billion for the entire program. However, GAO reported in October that the current ECSS life-cycle cost estimate has ballooned to $5.2 billion — a $2.2 billion increase.
Since last summer, Hanscom Air Force Base has been serving as a pilot program site for ECSS. Moran said the pilot is “going fairly well” but has hitches.
“We didn’t expect it would be rosy and perfect, and it’s not,” Moran said. “It’s doing exactly what we expected in terms of identifying areas where we need to further refine either the solution or the process that we blueprinted.”
While the Air Force’s ECSS is still in the pilot phase, the Navy's ERP deployment continues full steam ahead. With SAP as the software backbone, Navy ERP is a business management system designed to update and standardize the service’s business operations and provide financial transparency and total asset visibility.
“Navy ERP is one of the most mature DOD ERP systems. We’ve overcome many of the key challenges that a lot of ERPs in the first phases are still working through,” said Jennifer Carter, the Navy's ERP program manager. “With every successive deployment we have fewer issues, a smoother transition, and we leverage lessons learned.”
To date, four major system commands have implemented Navy ERP, and the system has more than 40,000 users. Ultimately, with full deployment, Navy ERP will support about 66,000 users worldwide and manage about half of the service’s budget and one of the world’s largest supply chains.
The deployment of Navy ERP has enabled the retirement of 19 older systems, a number that Carter said seems small but is caused by earlier pilot programs that successfully consolidated systems. An additional 86 Navy systems are expected to be retired by 2013, she said.
Originally, Navy ERP was scheduled for full deployment in fiscal 2011, but now full deployment is planned for fiscal 2013 — a two-year slip. According to GAO, the slippages are because of problems in data conversion and adopting new business procedures at the Naval Air Systems Command, which affected the deployment schedule for the other commands. In addition, there have also been increases in the life-cycle cost estimate from $1.87 billion to $2.4 billion.
The Army has also struggled with its ERP systems. In December 2009, the Army Test and Evaluation Command cited concerns with the data accuracy, reliability, and timeliness of the service’s General Fund Enterprise Business System (GFEBS), recommending limited deployment until the problems are resolved. And the GAO reported in October 2010 that full deployment of the Army’s Logistics Modernization Program (LMP) slipped by six years because of ineffective requirements management and system testing.
Meanwhile, the Army is moving forward with plans to create a single, integrated ERP system throughout the service. The Army Enterprise Systems Integration Program (AESIP) is designed to integrate business processes and systems by serving as the enterprise hub for the service’s logistics and financial ERP business systems.
This hub includes data brokering, master data management and cross-functional business analysis capabilities, and it will be responsible for the complex integration. The goal of AESIP is to bring together the Army’s three main ERP programs: the Global Combat Support System-Army (GCSS-A), GFEBS, and LMP.
“There’s so much data out there and the Army’s got some particular challenges because of the way they use their data,” said Mark Roddy, defense industry principal at SAP Public Services.
AESIP integrates common data to allow for the harmonization of common practices between GCSS-A, GFEBS and LMP. All three of these systems use the commercial SAP product suite, with three separate instances of the software.
“SAP now offers very sophisticated Master Data Management and you take that and superimpose it on the three instances of SAP to create one virtual ERP system,” said Manish Agarwal, chief technology officer at Attain.
Attain and two other prime contractors — InSap Services and Oakland Consulting — will compete for task orders from the Army under the recently awarded $240 million AESIP ERP Enterprise Application Services indefinite-delivery, indefinite quantity contract. The initial task order Attain proposed under the AESIP contract awarded in April was a “Master Data Management-type” proposal, according to retired Army Col. Scott Lambert, a former LMP program manager now at Attain.
“You have to have standardized data across the disparate systems that allow business processes to function in a common way,” Lambert said. “Unless and until you get that data standardization, you can’t achieve that synergy across the disparate systems.”
As one of the most complex and largest implementations of SAP in the public sector, the Army’s AESIP is stretching the capabilities of the ERP software “to the maximum”, said Agarwal, but there is cause for optimism.
“Unfortunately, the ERP landscape [in DOD] is littered with many failures,” said Greg Baroni, chairman and CEO at Attain. “What is exciting about [AESIP] is the nature of convergence and integration opportunities around this particular initiative. For us, it is a chance to help rewrite the legacy around chronicled failures into one of successful outcomes.”