“These projects tend to be extremely large and complex, easily bog down, and have tremendous integration problems with existing systems,” says Dave McClure, director of government research for technology researcher Gartner Inc. of Stamford, Conn.

Nevertheless, the military sees potentially great rewards for accepting the risks.

If they overcome ERP’s technical, cultural and political trip wires, the services will bring conglomerations of outdated systems into a unified enterprisewide framework. In turn, the broader access to data from across the Defense Department will let Pentagon leaders achieve other goals: clean financial audits, effective personnel management and logistics systems that reliably deliver materials where and when they’re needed.

But military operations add their own layer of complexity on top of difficult to launch ERP rollouts because of the size and the custom nature of the legacy programs planners must replace. “Worst case, [military planners] don’t get to the point where they can deploy a system or they deploy a system that is so fraught with problems it doesn’t achieve the performance levels that were anticipated,” says Eric Stange, president for defense and homeland security for systems integrator Accenture LLP, which holds separate ERP contracts with the Army and Air Force.

Military ERP managers are tired of poor results, he adds, and are “looking for ways to protect themselves and mitigate that risk.”

Now, some project leaders in the military believe they have a workable ERP game plan thanks to maturing best practices for ERP in general and new ways of designing contracts with commercial partners. “In the future, if someone moves money from one pot to another, we will know specifically who did it and when, down to the second,” says Cherie Smith, program officer for the Army’s General Fund Enterprise Business System (GFEBS). “We’ll be able to decide if we should spend money on bunk beds or bullets by doing the analyses at an enterprise level.”

Past Difficulties
Over the last decade, the Government Accountability Office has found much to complain about when it comes to the military’s ERP attempts. In September, GAO noted that Defense’s problem in launching efficient and effective business systems “continues despite the billions of dollars that it invests each year.” In particular, GAO highlighted four Navy ERP pilots implemented in 2000 that suffered from design and implementation inconsistencies, which blocked interoperability. “In short, the efforts were failures and $1 billion was largely wasted,” GAO concluded. An earlier report criticized the Army for “pervasive weaknesses in internal control, processes and fundamentally flawed business systems.”

Part of ERP’s difficulty lies in its mercurial nature. Under the ERP umbrella lie a number of related but distinct systems that, depending on individual implementations, may manage everything from financials and real estate to human resources, supply chains and logistics programs. As military branches automated these operations in the past, they typically built discrete systems that couldn’t easily exchange data with one another, even when information traveled from one application to the next in a natural workflow. Bringing old, separate systems into one modern, tightly integrated framework makes logical sense, but the practical realities of doing so can be daunting.

The problems aren’t all or even most significantly technical. Once auditors, accountants, workforce managers and other end users commit themselves to change, they need retraining in new ways of working. And progress for projects that can span years is difficult to measure. “Success is in the eye of the beholder, and you have many beholders,” notes Teresa Bozzelli, managing director for federal consultant Government Insights of McLean, Va. “And the more you start to change a lot of moving pieces, the more complexity you’re creating in the short term.”

Large-scale ERP projects also “ask people to give up their comfort zones,” says Donna Ryan, vice president in the ERP practice of systems integrator CGI Federal of Fairfax, Va. And “the scale of the military and the complexity of its inventory and supply chain add another dimension,” she says.

Consequently, keeping these efforts on track sometimes requires brute force. GFEBs’s Smith says a sticking point in the project’s pilot has been reluctance among some stakeholders to fully participate in the modernization. “When we tried to get information from them, they hadn’t always been as helpful as they could be because they see us as the guys getting ready to replace them,” Smith says.

Strong senior level involvement proved to be influential. “When we happened to mention this to Lt. Gen. Jerry L. Sinn, military deputy for budget, he said, ‘Give me the names of the individuals and who their senior government person is. I will freeze their budget.’ When we called the individuals to give them a heads-up, they couldn’t jump quick enough to give us the information that we needed,” Smith recalls.

Gartner’s McLure says purse string consequences hover over large projects through all of their implementation

Chris Cone
Though it’s a slow progression, the payoff of having an enterprisewide view of Air Force spending makes the ERP effort worthwhile, the service’s Dick Honneywell says.

phases. “Problems around improperly managing change begin at the annual budget cycle. If you can’t show progress, you’ll begin to lose funding,” he says.

Future Gains
If ERP’s so tough, why even attempt it? The military branches have little choice, given congressional and executive branch mandates for better financial accounting. But there’s also the promise of inherent benefits promised by the ERP apps.

If successful, the $850 million GFEBS project will affect almost 80,000 staff members, consolidate 200 financial programs and manage about $100 billion in spending for the Army, National Guard and Reserves. GFEBS will also introduce tighter cost management than what the Army has ever achieved previously. The foundation will be commercial ERP software from technology giant SAP America Inc. of Newtown Square, Pa.

“So if the chief wants to know what it’s going to cost to conduct one more training session for a group that’s getting ready to deploy, we’ll be able to tell him that with some level of expectation that we are right,” Smith says. That information is available today only by “hand jamming” numbers, manually pulling the data from many systems and aggregating it into a custom report, Smith says.

Similarly, the Air Force, for its Defense Enterprise Accounting and Management System, will install Oracle Corp. financial software for a pilot at Scott Air Force Base, Ill. The service wants to launch DEAMS next year and roll it out servicewide by 2010. The first installment will focus on providing new financial capabilities for organizations at the base, which is home to the U.S. Transportation Command.

“This will give us the capability to look at the data within our financial management system at an enterprise level,” says Dick Honneywell, director of financial information systems and DEAMS program manager. Specifically, DEAMS will integrate new general ledger reporting, cash management fund control, and property plan and equipment analyses into one system. The current legacy applications sometimes force financial managers to create paper reports by pulling data from separate systems and then re-entering it into other reporting programs, “which obviously creates opportunities for disconnects across those systems,” Honneywell says.

Pay Platform
The Navy Standard Integrated Personnel System targets another ERP area: pay and personnel applications for the active duty and Navy reserve members. NSIPS, which the service is installing with the help of systems integrator Lockheed Martin Corp.’s IT division in Seabrook, Md., will replace four existing personnel and pay systems. The commercial component is human capital management software from PeopleSoft Inc., now part of Oracle. The estimated completion date is 2011 for the $800 million project.

The Army, Air Force and Navy each believes it has found a key to ERP success: a pilot before full deployment. Each branch has chosen a single facility to implement pieces of a full system and use the experience to uncover problems on a more manageable, small-facility scale. For the Navy, which a couple years ago suffered GAO’s wrath for four failed pilots, there’s an element of chance even in this approach.

“With the four parallel pilots, there were concerns about stovepipes versus the alternative of incrementally deploying one complete process,” Bozzelli says. “Now, they’ve taken a smaller community of users and are giving them something that addresses the full lifecycle of their roles.”

The gamble may be paying off. In September’s review of the Navy’s current effort, GAO commended the leadership capabilities of the central program office and the management discipline that’s keeping the pilot on track. “The strong emphasis on requirements management, which was lacking in the previous efforts, is critical,” GAO said. Project managers also commit themselves to blocking software customization, the scourge of any leader who wants to avoid missed deadlines and long-term maintenance headaches. Ironically, off-the-shelf packages play into complexity creep by touting design tools that make it easy for individual IT departments to tailor software to particular needs. But when vendors release new versions of their apps, coders must then manually comb through their own deployments of the software to migrate over code changes.

To dampen customization creep in the GFEBS pilot at Fort Jackson, S.C., the Army requires anyone who’s suggesting a change to craft a white paper detailing the justifications. Senior financial leaders, including Lt. Gen. Sinn, eventually review the proposals. So far, three such plans have reached the draft stage. “Once they wrote them out and people understood what was being talked about, we were able to work through it and realize there were other ways of resolving the concerns,” Smith says. “And guess what? None of the paper had to go up for their review” to senior officials, she adds.

Successful military ERP managers also have to manage the expectations—and fears—of users steeped in the traditional ways of doing business. “If you believe information is power, than you realize you’re asking individuals to give up their control of information. There’s angst there,” Bozzelli points out. The antidote to angst is trust, she adds, and effective communication is the best way to cultivate trust. “Include the affected people early in the decision process,” she advises.

Finally, Bozzelli warns that managers shouldn’t shoot just for end-user buy in to the program; they should sincerely solicit opinions as a tool for bringing about concrete productivity improvements. “If the project doesn’t make their jobs easier, you’re not going to keep them as champions,” Bozzelli says. “Communications shouldn’t be just a political exercise.”

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