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“Driving Change in Financial Management across the Army Enterprise”

Army Financial Management Optimization

AFMO Army Financial

Management Optimization

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“We live in a changing and competitive world . . . Our force of the future has to be as great, if not even better, than our outstanding force of today. Our (national) security depends on it.”

Secretary Carter, November 2015

“Developing a lethal, professional and technically competent force requires an openness to new ideas and new ways of doing things in an increasingly complex world. We will change and adapt.”

CSA Milley, August 2015

The changing world around us…

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“Achieve efficiencies and effectiveness to redirect resources to direct support of combat, combat support, and combat service support elements of the DoD.”

“Improve financial processes, controls, and information via audit readiness.”

“Establish an enterprise framework for valuation and accountability of results, outcomes, cost, and risk.”

Strategic Objectives of Goal #5: Reform and Reshape the Defense Institution, DoD Agency Strategic Management Plan 2015 – 2018

31 July 2015

Meeting the challenge of the changing world around us …

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“By informing decisions with performance management the DoD leadership is empowered to focus on both efficiency and effectiveness to build value across the department.”

DoD Agency Strategic Plan 2015 – 2018, 31 July 2015

“I think the value of doing the audit is better information for decisions, but also better use of the resources and better outcomes. We are moving from a budget culture of "get the money executed" [to] a cost culture of "what is the outcome for the dollars that you execute." So the real outcome of [AFMO] is . . . better financial data for the decision-maker . . . and outcomes . . . we expected and asked Congress for the money for.”

HON Robert M. Speer, Assistant Secretary of the Army (Financial Management & Comptroller), April 2015

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Meeting the challenge of the changing world around us …

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Why Army FM Optimization? The FM Strategic Environment

General Fund Enterprise

Business System (GFEBS)

Integrated Personnel and Pay

System – Army (IPPS-A)

Global Combat Support System –

Army (GCSS-A)

Logistics Modernization Program (LMP)

Four Technologies

Advancing the Force

+

Internal and External Influencers

- Auditability by FY17 – Congressional Mandate - Shrinking budgets – Budget Control Act of 2011 - Shrinking Army forces = military & civilian reductions

- Demand for more Readiness inside smaller force with fewer resources

- 13+ years of War - Cost Management – tools for analytics to support decisions

Desired Outcome

Army Enterprise Resource Planning (ERP) Systems

=

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. . . more efficient and effective use of resources to achieve Army outcomes.

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What is it? A holistic approach to change management integrating financial management across the Army toward improving support to the warfighter

Who does it pertain to? Financial managers engaged

in resource and financial operations support Why do we need it? To effectively integrate efforts

toward meeting auditability goals and improve effective use of limited resources to Army priorities

Army FM Optimization Campaign Plan

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Directed by the Secretary of the Army, Army Financial Management Optimization Supports the Army of 2025 and Beyond

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Innovative FM enterprise solutions resourcing the Army of 2025 and Beyond*, enabling the essential qualities of ready Army forces that are:

–Agile –Expert –Innovative –Interoperable –Expeditionary –Scalable –Versatile –Balance

How Does AFMO Support Army of 2025 and Beyond?

* Source: The Army Vision

Agile, resource-informed decision support to commanders Increased full spectrum FM capability at reduced cost Dynamic costing of the full readiness life cycle Fully certified professional workforce experts in the ERP environment Enterprise solutions for Joint, Inter-organizational, Multi-national land operations

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. . .integrated effective and efficient end-to-end financial management enterprise operation,

optimized to provide necessary resources to meet the Army’s missions

with proper stewardship and accountability of resources

and providing accurate and timely financial information and analysis for actionable decision making

that will receive a favorable Financial Statement clean audit opinion.

AFMO Campaign Plan Outlook

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Like the Army’s journey to Army 2025 and Beyond, AFMO does not envision an end – AFMO will continue to frame change management as we adapt to a changing Army

inside a changing, complex world.

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CO 1 Achieve and

Sustain Auditability

CO 2 Deliver FM Operations

Efficiently and Effectively

CO 4 Provide Financial Information and

Business Analytic Support

for Improved Decision Making

CO 3 Improve and

Sustain Operational

Readiness in FM Elements

• Public confidence in stewardship of DoD resources is high

• Business processes are standardized and auditable across the Army

• Automated Internal Controls systems are implemented throughout the FM environment

• FM Elements have access to enabling ERP systems

• FM Elements are high performing in any business or operating environment

• FM Elements are integrated with Home Station Mission

• Systems & processes are standardized & integrated by trained people in all FM operating environments

• FM Organizations are high performing

• Governance, decision and communication support are aligned

• Standardized Business Analytics are integrated leveraging breadth of financial cost data

• Business Intelligence (BI) capability delivers advanced analytics to commanders

• Improved decision making creates value capacity for commands and customers

AFMO Campaign Objectives

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Strategic Environment

LOE 6: Army Cost Framework

LOE 4: FM Professional Workforce

LOE 5: Internal Controls Environment

LOE 1: Systems Domain

LOE 7: Strategic Management & Communications

LOE 2: Business Processes

LOE 3: Organizations

“Driving Change in Financial Management across the Army Enterprise”

AFMO Campaign Plan AFMO Objectives

(1) Achieve and Sustain Auditability (2) Deliver FM Operations Efficiently and Effectively (3) Improve and Sustain Readiness in FM Elements (4) Provide Financial Information and Business Analytic Support for Improved Decision Making

AFMO End State An integrated effective and efficient end-to-end financial management enterprise operation, optimized to provide necessary resources to meet the Army’s missions with proper stewardship and accountability of resources and providing accurate and timely financial information and analysis for actionable decision making that will receive a favorable Financial Statement clean audit opinion.

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Legend: • Global Combat Support

System-Army (GCSS-A) • Logistics Modernization

Program (LMP) • Integrated Personnel & Pay

System-Army (IPPS-A)

• Fielding ~ 2020 • Will provide military pay capability • Will be source of pay transactions • Will interface with GFEBS to trigger

GF posting

• Fully deployed to depots & PEOs • Enables some GF Procure-to-Pay and

Asset Accounting processes • Interfaces with GFEBS to trigger GF

posting

• Increment 1 fully deployed • Consolidates Army General Fund

(GF) data for reporting, management and audit

• Deploying worldwide by 2017 • Source of supply, maintenance and

property book transactions • Leverages GFEBS financial template • Interfaces with GFEBS for GF

execution

• Beginning development • Includes secure capabilities • Will interface with GFEBS

LOE 1: Systems Domain

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~ 75 legacy FM Domain systems

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As-Is Process

Decomposed To-Be Process

Goal: Standardized business processes are critical to achieving audit readiness. Standardization is enhanced through use of ERP IT capabilities.

- Understand ERP opportunities - Reduce legacy systems - Exploit system capabilities

•Through Business Process Reengineering processes are standardized for efficiency and effectiveness. •Systems technological capabilities are leveraged and optimized.

LOE 2: Business Processes

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Pilot Sites

Commanding General

Deputy to the Commander

for Field Operations

Systems Support

Operations (SSO)

Deputy to the Commander for Financial Management

Operations

Army Financial Services

(AFS)

Financial Audit &

Compliance (FAC)

USAFMCOM CSM

Special Staff

Exists In USAFMCOM

Near Term Focus Areas

Financial Audit & Compliance

Audit compliance Training Monitoring

Mid Term Focus Areas

FMSOCs

USAREUR

EUCOM

AFRICOM

USARAF

XVIII Corps

I Corps

III Corps

USARC

OCONUS FMSOC

CONUS FMSOC

FORSCOM

Financial Management Support Operations Center

Standardize processes Improved performance Reduce errors/re-work efforts

Systems Support Oversight Systems oversight/management Functional financial analysis support Cost Management support

The Army’s Financial Management Enterprise Operational Headquarters

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LOE 3: Organizations US Army Financial Management Command (USAFMCOM)

Key USAFMCOM Outcomes: FM systems support Process

standardization Auditable financial

statements

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Financial Management Support Operations Center (FMSOC) Outcomes: Standardized business

processes Reduced errors and re-

work Centralized support – more

expertise at reduced cost Systems integration (ERPs –

IPPS-A, GCSS-A, etc.) Training opportunities for

BC36 soldiers build FM readiness

USAFMCOM

CONUS FMSOC – Ft Bragg

TBD OCONUS FMSOC – Germany

HQDA DFAS

Operating Agencies (OA) and Fund Centers (FC)

What is the AFMO Pilot?

The AFMO Pilot explores improved standardization of transactional work, centralized to build expertise, reduce errors and improve audit readiness. Simultaneously, command RMs achieve enhanced capacity for analysis supporting optimizing resources toward command priorities.

Command Support Outcomes: Increased decision

support capacity Agility in influencing

current year execution; optimize toward readiness Increased cost

management Systems integration (ERPs

– IPPS-A, GCSS-A, etc.) Training opportunities for

BC36 soldiers build FM readiness

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GOAL The Right People, At the Right Place,

With the Right Skills, Trained and Certified

Our people are the key to continued success …through enterprise Talent Management and validated workforce professional skills at all levels

Multi-disciplined training, OJT, customer focused, technical systems Training

Standardized DoD FM competencies to guide training and development

Certification

Leadership FM leadership competencies & talent

Organization Right mix of civilians and military, job series, grades and structure

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LOE 4: FM Professional Workforce

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LOE 5: Internal Controls Environment

Priorities Actions Goals

Existence and Completeness (E&C) of Assets & Liability

General Equipment (GE) Operating Materials and Supplies (OM&S) Real Property (RP) Inventory Other Balance Sheet Items

Standard processes Effective internal

controls Proper

documentation Accurate, timely,

reliable and supportable financial data

Establish effective control environment Assess

documentation & processes Implement

corrective actions Assess financial

statement data for accuracy

Enterprise Resource Planning (ERP) Systems

General Fund Enterprise Business System (GFEBS) Global Combat Support System–Army (GCSS-A) Logistics Modernization Program (LMP) Integrated Personnel and Pay System–Army (IPPS-A) Material Feeder Systems

Compliant Systems (FFMIA, FISCAM*)

Assess system controls Correct control

deficiencies

Army is auditable

*The Federal Financial Management Improvement Act, and Federal Information System Controls Audit Manual

Information is timely, accurate,

relevant

Statement of Budgetary Resources (SBR) Funds Receipt, Dist., and

Monitoring Payroll (Civ. & Mil.) Acquisition of Assets Reimbursable Inbound Grants, Cooperative

Agreements, Subsidies, Contributions, and Advances

FBWT / Disb. & Collect. Financial Reporting Contractual Services/

Acquisition of Assets: - Reimbursable Out

(MIPRs) - Purchase Cards - Supply Requisition - Contracts - Other

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Capture and Valuate Data – Accurate, timely and relevant data – operational output/performance

data tied to financial data – Allocated Overhead

Cost Analysis – Variances – Depreciation – Trends and forecasting – Cost by element (labor, contract etc) – Understanding full costs of

organizations, operations, products and services

Cost Planning – Set Cost Targets and

Efficiency Goals – Compute Standard Rates

Cost Controlling – Adaptability based on analysis – Change targets – Change resources – Change quality

LOE 6: Army Cost Framework Resource Informed Decision Making

Managing business operations efficiently & effectively through accurate measurement & understanding "Full Cost" of an organization's business processes, products & services to provide Best Value.

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LOE 7: Strategic Management and Communications

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“Resources to Win in a Complex World”

“Driving Change in Financial Management across the Army Enterprise”

Achieve and Sustain

Auditability

Deliver FM Operations

Efficiently and Effectively

Provide Financial Info and Analytic Support for Improved

Decision Making

Improve and Sustain

Operational Readiness in FM Elements

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• Better decision support to commanders • Standardizes processes and systems controls to improve audit readiness

• Leverages Army FM workforce and maximizes ERP systems to optimize

and streamline financial operations

• Improves oversight of Army enterprise-wide Financial Management operations

• Acknowledges key role of highly skilled workforce in shaping financial management change adapting to a changing Army

What are the Benefits of AFMO?

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Ultimately, AFMO frames the path to achieving audit readiness, building value across the Army to direct more resources to core mission priorities.

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What Can I Do?

• Assess business practices and processes – streamline and standardize

• Understand ERPs and controls, explore untapped capabilities for standardization

• Train and certify your team in the right skill sets and job series

• Share lessons learned from getting “Audit Ready”

• Increase cost analytics in the Commander’s decision-making process

• Demonstrate ability to optimize resources toward mission priorities

CO 1 Achieve and

Sustain Auditability

CO 2 Deliver FM Operations

Efficiently and Effectively

CO 4 Provide Financial Information and

Business Analytic Support

for Improved Decision Making

CO 3 Improve and

Sustain Operational

Readiness in FM Elements

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To achieve audit compliance and improve support to commanders, we must change and adapt to the changing,

complex world around us.

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Questions?

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"Change is hard because people overestimate the value of what they have and underestimate the value of what they may gain by giving that up." - James Belasco and Ralph Stayer Flight of the Buffalo (1994)

"After living with their dysfunctional behavior for so many years (a sunk cost if ever there was one), people become invested in defending their dysfunctions rather than changing them." - Marshall Goldsmith Mojo

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Questions?

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For more information please contact: COL John Vogel (703) 692-8529 john.t.vogel.mil@mail.mil COL Andrew McConachie (703) 693-2689 (301) 833-8314 andrew.j.mcconachie.mil@mail.mil LTC Claire Lindley (703) 693-2698 claire.lindley.mil@mail.mil