- Radio hour
- About us
|Friday, July 18, 2003
Mr. Lawrence: Welcome to The Business of Government Hour. I'm Paul Lawrence, partner in charge of The IBM Center for the Business of Government. We created The Center in 1998 to encourage discussion and research into new approaches to improving government effectiveness. You can find out more about The Center and our work by visiting us at www.businessofgovernment.org.
The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our conversation this morning is with David Wennergren, Chief Information Officer of the U.S. Department of the Navy.
Good morning, Dave.
Mr. Wennergren: Good morning, Paul.
Mr. Lawrence: Joining us in our conversation is Tim Connolly.
Good morning, Tim.
Mr. Connolly: Good morning.
Mr. Lawrence: Dave, let's start by talking about the military. Could you tell us what's the role of the Navy?
Mr. Wennergren: The Department of the Navy is a large organization, and of course it includes both the United States Navy and the United States Marine Corps. Its mission is to project force and protect the sea lanes around the world, which makes it a very unique organization to work in: 800,000 people deployed in virtually every time zone, tens of thousands of them literally on mobile offices, ships, deployed Marines, and to be able to be connected around the world in real-time is one of the great challenges of that organization.
Mr. Lawrence: Tell us about the activities and the programs of your office.
Mr. Wennergren: As the chief information officer, I am responsible for information management and information policies across the Navy and the Marine Corps. It's a fascinating opportunity because it's a very big organization. We have an information technology budget of over $6 billion a year, and as I mentioned, hundreds of thousands of people, and to try to bring those people together to work your way through the entire range of information technology work, networks, knowledge management, e-business, security transformation, is a wonderful opportunity.
Mr. Lawrence: What types of skills would your team have? You just described a whole range of functions, and I would have thought they would have all been computer science folks doing that sort of stuff.
Mr. Wennergren: We certainly have some excellent computer scientists in the mix, but it is really a broad range of people, because a CIO's responsibility spans the gamut from making sure that you're giving the right oversight to your systems, all of your systems, weapons systems, information systems, because of course, they all have to work together. To the other end of the spectrum, caring about your work force, making sure your work force is changed and IT proficient. So we need people with lots of different skills in the IT business.
More and more, we see folks with a strong bent towards business, towards management, towards understanding the missions of the Department and how those missions could be improved. Business process reengineering is a very important element of the work that we do in the CIO organization. We have a small cadr� of folks that actually work in the headquarters organization. CIOs have to report to the Secretary of the agency, or in our case, the Secretary of the Navy. So we have a small team there, but then we draw upon the resources of technical experts from throughout the Navy and Marine Corps teams, so there are literally hundreds of thousands of folks who are really adept at being network engineers and being software developers, and then all the other skill sets that you need to actually run a business as big as this.
Mr. Lawrence: When people ask about the budget for technology in the Navy, is there a way to describe it to give people a sense of the size?
Mr. Wennergren: Yes, it's big, and the way that we track the budget the way that OMB and Congress asks us to is kind of interesting because it covers a very broad range. So the Department of the Navy's information technology budget is $6 billion, with a B, and that's a lot of money. The biggest single initiative that we have is our Navy-Marine Corps Intranet, which is over a billion dollars a year.
It also includes a lot of very significant national security systems, the E-2C Hawkeye and other programs that are heavily IT-oriented that make up that bill. So it is not just $6 billion spent on back office functions, it's $6 billion spent on command and control systems and command support systems and all the things that go into running the business of the Navy.
Mr. Connolly: Dave, can you tell us a little bit about your roles and responsibilities as chief information officer of the Navy?
Mr. Wennergren: I work directly for the Secretary of the Navy, and my job is to provide advice and counsel on the mission of the Department. I'm part of the leadership team for the Navy and the Marine Corps, where, of course, my responsibility would be making sure that we do our information systems and our information management correctly. So I have a responsibility for policy development, for oversight, for ensuring that we have a trained work force, ensuring that our systems are operable, that we have a robust enterprise architecture structure, that we're complying with the President's management agenda, and working your way through that whole portfolio of IT initiatives that happen in the world today. We are big proponents of electronic business and the web and wireless technologies.
Again, it's about having a small team of change leaders that can work with all of the commands across the Navy and the Marine Corps to help them as they do their jobs, because one of the things that we learned early on in this adventure as we were walking through the Y2K days is that IT is everywhere. It's embedded in every plant floor, every weapons system, and almost nothing works by itself anymore. So it really is all about the difference business lines of the Navy and the Marine Corps, and we view our job as intergrators.
What we want to do is to help you understand that you can use technologies in the work force, but in the end, it's your business process, your mission area, and so the E in e-business is just get people excited that there is a need to change away from paper processes to electronic processes, but the key part of that word is business. It's not about me doing your business for you; it's about me helping you to see a way to reinvent your business to take advantage of the digital age.
Mr. Connolly: So it sounds like you have pretty broad responsibilities on both the business side as well as on the technical side. Can you tell us a little bit about your previous career and how that prepared you for your roles and responsibilities today as the CIO?
Mr. Wennergren: I've had a varied career, I guess you'd say. I've spent my entire government career with the Department of the Navy, right out of college into the Navy as a young management analyst and kind of worked my way up through the organization.
I've had a lot of different kinds of jobs. I used to do outsourcing work, the A76 program, private-public sector competitions. I was involved in the base closure rounds of the 1990s. After the base closure rounds, I had the job of working in the installation management world and restructuring all of the shore establishment that didn't close.
Then I came to the CIO world, and my first adventure was Y2K there. So sometimes people say you must wander from one program of hate and discontent to another, but I'm a hopeless optimist. So I think that the thread there is complex organizational issues, so I think both me and my predecessor, Dan Porter, the last CIO of the Department of the Navy, shared this r�sum� of having worked complex issues and having to work issues that require integration and a good understanding of the mission of the organization.
So while I have had some technology-related responsibilities in my career, clearly my selection as CIO was driven by the idea that we need people that can lead change and integrate it across complex organizations.
Mr. Connolly: Based on that, how do you see that those experiences have really brought you to today to the visionary role of CIO of the Navy?
Mr. Wennergren: The common thread, again, I think is integration. The Navy and Marine Corps is very big and very decentralized. In fact, we have a culture of over 200 years of independent ships at sea and being the captain of the ship and the captain of your destiny. That presents tremendous opportunities for innovation. Having the wherewithal to manage your own resources and go make your own choices gives smart people great opportunities to think of new ideas, and our organization is just full of smart people.
The challenge that comes in this world of being so connected is that pieces have to work together. So the premise of sending a ship out and it will come back some day and you'll have entrusted the captain to have done the right mission is a little different in a world where you're constantly in contact from sensors to shooters to logistics support and those sorts of things. So now there's a great need to take this very decentralized organization and make sure that it's integrated. Integrated doesn�t always necessarily mean centrally controlled or centralized, but that the pieces work together.
One of my responsibilities is the critical infrastructure assurance officer, of the CIAO. I always get a kick out of that acronym. The critical infrastructure assurance officer is responsible for critical infrastructure protection, so physical security, security of our key infrastructures. It's not a job that you would necessarily have associated with being a CIO, the information officer, but we're finding more and more organizations starting to get their CIO that responsibility because protecting all of our physical infrastructures has a lot to do with integrating the efforts of numerous organizations, in our case organizations like our force protection people, our antiterrorism people, our investigative service people, our computer forensics types and those sorts of organizations. So bringing all these pieces together to actually work towards a common good is the resounding theme that we see in CIO work.
Mr. Connolly: Have you seen that the role of the CIO in the Navy has evolved then over the last 10 to 15 years from being much more technically focused to being much more organizationally focused and focused on taking the Navy to the 21st century?
Mr. Wennergren: Yes, I would have said it just slightly differently, because CIOs are kind of a new concept for us. With the Clinger-Cohen Act passing in the 1990s, the first Department of the Navy CIO only arrived on the scene in the late 1990s, the 1996-1997 time frame. If we look at the last 10 or 15 years, I think your point is right-on. While they weren't called CIOs, the CIO predecessor organizations were clearly focused on technical- and acquisition-related issues, and as we stood up a CIO organization through the Clinger-Cohen Act and a lot of the other pieces of legislation, the E-Gov Act, the Federal Information Security Management Act, the Paperwork Reduction Act, and the list goes on and on, there's a recurring theme in both the intent of Congress and the intent of the administrations that CIOs are there because information, knowledge, the intellectual capital of the organization, has to be managed effectively so that it's available.
As the most classic case, a statistic from Gartner, I believe, about how over 70 percent of an organization's information lives on a C drive, and in a world where you're imagining people thousands of miles away from each other trying to get work done together, that just doesn't cut it. The intellectual capital, the wonderful knowledge and learning that we each have and can bring to the table, has to be available for people to share.
Mr. Lawrence: That's a good point, especially about the C drive.
What's NMCI and what lessons have been learned? We'll ask David Wennergren of the Navy to tell us about this when The Business of Government Hour returns.
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with David Mr. Wennergren, Chief Information Officer of the Department of the Navy.
Joining us in our conversation is Tim Connolly.
Mr. Connolly: David, the Department of the Navy has been pretty much a pioneer in outsourcing. With the Navy-Marine Corps Intranet, affectionately known as NMCI, can you tell us a little bit about the background of this effort, and what is NMCI?
Mr. Wennergren: NMCI is a fundamentally important part of our transformation. It is the foundation of much of the IT transformation that's going on in the Department of the Navy.
I sometimes tell folks a story about a place called the Winchester Home, which is out in San Jose, California. If you're familiar with it, you know the story about it, but you've probably near heard it as an IT analogy. The Winchester Home was built in the late 1800s by the heir to the Winchester Rifle fortune. There's a whole story about why she built this monstrous house, but she built it for 30 years. It has hundreds of rooms and tens and thousands of square feet. It's one of the biggest houses in the entire United States. There were hundreds of builders involved in building it and no architect, no orchestra conductor, if you will. Lots of builders with lots of money to spend built lots of really cool stuff. There are patents associated with this house, innovations in the 1800s that had never before been seen in homes in America. If you translate the $5-1/2 million price tag to today's dollars, it was a $160 million job building this house.
But because they each worked independently, some odd things occurred. There are doorways that open into a wall; there are stairways that lead to nowhere; there are skylights embedded in the floor of the ceiling above; there's a chimney that starts in the basement and rises up four stories, only to stop three feet short of the roof. So without that common infrastructure, architecture, enterprise vision, big organizations tend to build lots of little things. Each little thing might be innovative on its own, but they don't work together so well, and that was the environment that we found ourselves in in the Navy and the Marine Corps team.
We found two apparent problems. We had organizations that were haves, and organizations that were have-nots. Some organizations, because of the way money flowed, had pretty robust networks, and some of our organizations had pretty pathetic networks. Unfortunately, a lot of the organizations that were not wired properly were our operational commands, which clearly needed to be.
We also found ourselves with a problem of not being able to refresh technology well enough. It takes government sometimes a long time to buy stuff, and of course you know the way technology is. I remember several years ago buying myself a 450 MHz computer and thinking that was a real hot machine there, and six months later it was who cared because technology changes so fast, and having refresh rates that take years and years and years will leave you always behind.
So we reached the point where we imagined in our minds that it was probably a couple billion dollar job to actually bring the Navy's infrastructure up to a level where you could be a really seamless enterprise network. So we have a hundred disparate networks, they didn't talk together very well, they had different security structures. We had a work force of network managers and network engineers that we were having trouble retaining. They come and they'd get trained by us, and they'd go for more lucrative salaries in the private sector. So we had to do something different.
So we landed upon the concept of the Navy-Marine Corps Intranet, which is a performance-based contract approach to buying IT as a service. This was basically a big seat management contract. There are lots of seat management contracts in industry, but this was a big deal for the government. It's the largest IT contract in federal government, it's the largest seat management effort in federal government history. So it really was a change of course as it was this basic premise that said electricity, the outlet here in this room, I plug my plug into it and if the light comes on, I get billed for the electricity of using that light. If the light doesn't come on, I don't pay a bill for it. I don't really care about what kind of transformer, what kind of stuff is on the other end of that power line out there, Virginia Power or something.
I care about service being delivered. I care about performance. So that was the path we embarked upon. It really was a novel path, because the beauty of the Navy-Marine Corps Intranet contract is that the services that it provides are the computer on your desk, the software that runs that computer, the help desk support, the long haul connectivity, to bring that enterprise network together for almost 400,000 people, 400,000 seats. It basically encompasses the entire United States and a couple of our overseas locations. Bringing that together into a performance-based contract has provided us with a world of wonderful change management experiences that we'll probably talk more about in a few minutes.
But getting that basic premise across that you could have somebody do this work for you and do it by providing a service, and the best way to take care of that would be to have a fixed price contract in terms of seat price. I'll have a menu, I'm a command and I'd like a laptop, I'd like a desktop, I'd like these kind of additional services and those sorts of things, and I understand the price and I'm willing to pay that. Then the contractor team is motivated for success by a lot of incentives. So the contract is really a wonderful novel contract vehicle because it's based on the premise of numerous service level agreements that are measured. So what I want is lots of access; I don't want latency. I want a good refresh rate, I want good security, and I'm going to measure you on that. If you exceed my expectations, then you get incentive payments.
Over half of the potential incentive payments that the contractor can get are based on customer satisfaction as measured by the individual users. What a novel concept for all of you that have relied on help desk support before, that you actually get to grade your help desk team, and that's part of how they get paid is that they've responded well to your needs.
It was an interesting adventure to go on. We're a couple of years into it now and we're making great progress now, but the early days were really a challenge because we had a fascinating dynamic. We were able to explain to people that this idea of seat management and this idea of performance-based contracting was really important and the right way to go. But you'd have this interesting dynamic when you would explain this to members of Congress, the Office of Management and Budget and the Office of the Secretary of Defense. We would almost consistently get back the answer that would say, yes, this sounds like a really great idea. You'll want to do this very quickly. You'll want to do this over a two-year period. Isn't that like awful fast for something this big and this different?
Then we would go to audiences like the Naval Postgraduate School, where we have young officers who are working on their master's degrees and are really savvy on technologies, and of course the postgraduate school is out in Monterey, not far from Silicon Valley, so they had a lot of exposure to the Internet age, if you will. So they would go, this really sounds like the right thing to do, but you're going to take two whole years to do this? Why can't you do it in months?
So it was an interesting set of dynamics, and it took us a long time to get the project actually started. We awarded the contract, and EDS is the prime contractor. Then there's a pretty august group of subcontractors: Microsoft, Dell, Raytheon, MCI. So it's a robust group of teams. But again, the important point was that we didn't say we wanted Dell computers, we didn't say we wanted Windows 2000 as the operating system. What we said to the bidders was we want good service, we want to be able to measure it, and we want service delivered well to all of these places with these service level agreements, and then you pick the teaming arrangements that you want to have to make that happen, so I don't have to be the one that goes out and buys all the servers and routers and worries about every computer and every help desk, every network operations center. I worry about getting service delivered well to me and being able to measure that service being delivered well to me.
Mr. Connolly: Tell us about the timeline. The idea began in the mid 1990s. Walk us through the big things. We're two years into it. Then what's out there?
Mr. Wennergren: We did a lot of thought work about this in the late 1990s. The contract was awarded at the end of 2000. From there, it took time. Again, it got back to this idea about seems like a good idea, but we're very nervous, it's very different. I probably shouldn't say this, but we tested this thing like it was some nuclear submarine. We were talking PCs. They only cost hundreds of dollars each now. We're talking about Microsoft Office. We're not talking about nuclear power plants. So there was a lot of initial testing and a lot of initial turmoil to get the thing up and rolling.
This year has really been the year that made a difference. You go through a two-phase process, of course, as they come in. The first thing that happens is the team comes in and assumes responsibility for your existing network. Of course then, after they assume responsibility for the network, they cut over to the new equipment and the new processes. So you assume responsibilities and then you cut over.
We've cut over about 88,000 seats at this point. We have assumed responsibility for over 200,000 seats, we, the contractor team, and our hope is by the end of the year, we're up to about 300,000 seats, assume responsibility, and a couple hundred thousand seats cut over.
So this is the year now that we're actually seeing the power of it. So had we all been having this conversation a year or so ago, I would have told you about this vision about interoperability, access, greater security, but now I can actually talk to you about the results, and there are some wonderful examples of the results.
After September 11th, in addition to the tragic loss of life at the Pentagon, the Navy also lost 70 percent of its office space there. So we had literally hundreds of people that had no place to go to work. We were able to leverage this information strike force, this EDS team, to help us reconstitute that capability literally over a weekend. By Friday after the event on Tuesday, we had found an office building in Crystal City that had been vacant. It was pretty gutted, and the EDS team had tractor-trailers full of Dell computers and Sisco routers and everything on the road. They arrived in town, and virtually over the course of the weekend, put together the network and the infrastructure inside that office building for hundreds of people. If you think about it in the old view of the world what would have had to have happened, we would have had to have people buying computers, buying software, buying telecommunications services, buying servers, and installing all those things, and integrating all those things together would have taken days, weeks, months.
The other place where we've seen dramatic improvements is because you're moving away from this idea of a hundred disparate networks with different kinds of security strategies, seeing a significant improvement in our security posture, it really is beginning to pay dividends. But it also really is the foundation of transformation, and that's the thing that oftentimes confuses people, because they think NMCI is the whole IT game for the Department of the Navy, and it's really not. I often use the description of a highway system, local story right here, just interstate 95. I've got a great superhighway now, and NMCI is that superhighway. On the interstate heading down to Richmond, I don't have to get stuck in traffic. Maybe I picked a bad example. I don't have to stop at stoplights all along the way. But all the cars and all the drivers of those cars are still fundamentally important to the success of your organization. So imagine NMCI as the big superhighway we just built, so that where you are is connected to where you need to be, and wherever you are, you have the power of reaching back to the intellectual capital of the organizational team. But you also have to then focus on all the things that have to ride on that highway system if you're going to be successful.
Mr. Lawrence: The Department of the Navy includes both the Navy and the Marine Corps. How does the CIO make decisions for the entire department when it consists of these two unique groups? We'll ask David Wennergren of the Navy to tell us about this when The Business of Government Hour returns.
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and this morning's conversation is with David Wennergren, the chief information officer of the Department of the Navy.
Joining us in our conversation is Tim Connolly.
Mr. Connolly: David, we spent the last segment talking a lot about NMCI. Now as we look forward, if you had a choice of starting over again, what would you change about NMCI to make the process more effective and more efficient?
Mr. Wennergren: I wouldn't change a thing about the performance-based contracting concept, and I wouldn't change a thing about the team that we have. We have a great team working with us on the project.
How we began the implementation both from our side and from the contract's team, we learned a lot, because it really was something different for us. People really enjoy personal control, and federal agencies don't always do a good enough job of public relations work. So I think we probably could have done a better job of selling the value proposition to our individual organizations so that when they went through the pain of having to give up something that they used to control, to allow somebody else to do the work for them, although I don't know how much you could ever stop some of those cultural change issues from happening. So there was a lot we learned about how you could do the implementation smoothly. But I think that's really the only place that you probably could go back and have done it better.
What I really have seen happening out of this is that it was an amazing opportunity for us because it proved to be this wonderful forcing function. If you don't build yourself an enterprise network, you have no idea how many applications you own. I remember in the Y2K days, we were keeping track of our mission-critical and mission-essential applications and systems. We were looking out for a couple thousand of them. Then when we put into place the Navy-Marine Corps Intranet, we said to these hundreds of commands that had their own local area networks and had built the stuff to run on it, just give us your applications, identify them by name, we'll check them out to make sure they're complying with security rules and they work on Windows 2000 and we'll put them on the network, and those couple thousand mission-essential applications grew to almost 100,000. A hundred thousand applications, what could you possibly do with that many? Somebody told me they were at the Gartner conference last year in Orlando, I think it was somebody from Disney was there, and they were talking about their 4,000 legacy applications that they were trying to work their way through. Somebody from the audience stood up and said, how could you have allowed that to happen? I thought I'm glad I wasn't the one up on stage there. I would have had a hard time explaining tens of thousands of them. But because you didn't have that central visibility, that ability to do configuration management, you didn't know.
So NMCI has been a wonderful forcing function to get us to do things like designate functional area managers, functional leaders for business lines in the Department of the Navy that are now responsible for looking at all the logistics applications that these different commands have built and says this is the supply chain management program we're going to use, this is the online purchasing solution we're going to use, and we're going to get rid of these other ones. It's a phenomenally complex problem. We've done a great job of working our way down from that first initial list of 100,000 to several thousand now. But you wouldn't have been able to do that, nor would you have been able to achieve the significant cost reductions that you will get by not having to build each one of these solutions over and over and over again unless you have built this enterprise network.
We used the NMCI as the fulcrum point for bringing on board infrastructure and SMART card technology. Every computer is going to show up with a SMART card reader and Middleware. You'll be able to use your PKI digital certificates. Those kinds of changes wouldn't have happened if you didn't have this forcing function of building the enterprise network to get you going.
Mr. Connolly: You talk about NMCI as a transformation, and transformations are about change. What change would you say occurred in your own roles and responsibilities as CIO, and how do you see that continuing to change going forward with the implementation of NMCI?
Mr. Wennergren: I think we've greatly benefited from a really strategic leadership team in the late 1990s as this whole vision got created that recognized that there is a road map of transformation that you had to do, and you had to start with your infrastructure. If you couldn't get your infrastructure right, you had no hope of doing things like digital marketplaces and knowledge-sharing and those sorts of things. But having the NMCI network now being implemented is allowing the Navy and Marine Corps team to turn attention away from those network tasks, to focus on the rest of that transformation agenda.
The NMCI contract is a really big contract. Like I said, it's over a billion dollars a year, but it is just that superhighway system. There is a whole bunch of other really important work that is being focused on, and that needs industry participation and working together, creating knowledge management structures, business electronic government, web enablement of our legacy applications, building of an enterprise portal, greater security, all those pieces of work are the rest of that transformational agenda that actually gets you to be that interconnected organization that's secure and a learning, knowledge-sharing community.
Mr. Lawrence: The Navy includes both the Navy and the Marine Corps. How are decisions made for the entire Department?
Mr. Wennergren: We've gone through a significant restructuring over the last year, and I think that one of the great benefits of that restructuring was a tightening of those organizational relationships. So in our new vision of the world, as the CIO, again, I report directly to the Secretary of the Navy, I have a deputy CIO for the Navy. That's Rear Admiral Tom Zelebor, who is the command and control leader for the Navy chain of command. I have a deputy CIO for the Marine Corps, who is General John Thomas, who is the director of C4 for the Marine Corps. So there's this wonderful match-up now of the person who is responsible for the command and control and computer systems for the operational chains of command now has a working relationship with me and a very close relationship in terms of dialogue and problem-solving together to make sure that the information management agenda is working in synch with those chains of command. I then have a third deputy, Rob Kiery, who works in my office, who is the deputy CIO for policy integration, who works with me to help shape and integrate those transformation efforts along those two chains of command.
We then said that each of our major commands, or what we call echelon 2 commands in the Navy and major subordinate commands in the Marine Corps, imagine business units under the Chief of Naval Operations and the Commandant of the Marine Corps, each must have a command information officer, and that command information officer must have a working relationship with Admiral Zelebor and General Thomas. We sort of leveraged some of the things that we learned from visits to GE about the way that they managed IT, this idea that if you're a business unit or a command information officer, you really need to make two people happy if you're going to be successful. You need to make that business unit leader happy, and clearly our command information officers in the past did that. They worked for the commander of the Naval Air Systems Command, and if you didn't make the Naval Air Systems Command's mission work, then you weren't getting a good CIO for that command.
The second piece of that puzzle that the folks at GE realized a while back was you also have a reporting relationship with the agency CIO, because otherwise, you'll suboptimize because you'll build great systems for -- I need an online small purchase system at NAVAIR and so I go out and build one. But I'm over here at the Naval Supply Systems Command and I say I need an online small purchase system so I go build one, and I'm out at the Pacific Fleet and you see how it goes, and each one of those cost me millions of dollars. So if you only focus on that command, you miss the important point, that we are an enterprise. Up until a couple of years ago, enterprises for us were organizations like the Atlantic Fleet, the Pacific Fleet, because that's the way the money flowed and that's where your responsibility flowed. So this new set of organizational relationships really kind of helps everybody think a step up, to say that the enterprise is the Navy and Marine Corps team, because if you don't think that way, you can't build a Navy-Marine Corps Intranet, you can't build a Navy-Marine Corps enterprise portal, you can't align yourself about interoperable single authoritative data sources, et cetera.
Mr. Lawrence: One of the things driving management is the President's management agenda, and it calls out specific items. One of them is e-government. What are you doing in the area of e-government?
Mr. Wennergren: Absolutely. E-government is so crucially important to us. There were some terminology things we had to work our way through first. I have a PowerPoint slide whose title is �a constantly changing world� that goes e-commerce, e-business, e-government, e-war fighting, because you go out and talk to an audience in the Navy and they go we're not business. What do you mean e-business? We don't do that kind of stuff. We're not selling products. And you're like absolutely, you're a business. Your business is national defense and you still have labor-intensive, cumbersome paper processes that you do and that's eating our lunch, and you need to find ways to leverage technology and get with it, and get with the web, and get with wireless technologies and develop E kinds of solutions. So we have done a lot of work to really take the President's management agenda, and even before the President's management agenda, to build ourselves organizations that will help us achieve that goal.
We established a Department of the Navy E-Business Operations Office that is a single innovation center for the Navy and Marine Corps team. There's a small cadr� of government folks with a number of private sector partners that basically helps you. If you're a command and you say I need some help trying to figure out how to do this e-business stuff, they'll bring out consultants, they'll come work with you and help you develop solutions.
They actually operate a pilot fund. We put aside $20 million and say let's go find great ideas and pilot new ideas. What classically happens in large organizations in I think government or the private sector is that you have this great idea, it's going to save us a million bucks a year, I need $100,000 to make it go. The controller says feel free to use your savings. I don't have those yet. Well, I don't know, I guess you're going to have trouble getting started. So we have found there is tremendous power in planting these small seeds of change.
I can tell you one quick story. A hospital, the Naval Medical Center in San Diego, California, a neonatologist and a CIO for that hospital came up with an idea regarding a very cumbersome process about how a patient goes from visiting a general practitioner to getting a specialist's appointment. It was bad. It was just really cumbersome. You didn't know whether the person actually made the appointment or whether they kept it, your general doctor didn't know if the person was getting treatment, whether he was well until he saw the person again in six months. They said what a great way to leverage web technologies and wireless devices to change this experience. So they developed this wonderful solution where the doctor sits in the room with the patient, he's got a little wireless device in his hand and he's saying you have a problem but Mary is really good at this and she has an opening next Wednesday at 9:00, can we lock you in for that, and he just pushes a button on his wireless device and locks the patient in for the appointment right there. Here come your lab results, and all the while maintaining that face-to-face contact as they work through this issue; $100,000 they needed to do this.
I have to tell you, $100,000 is not a lot of money for the Department of the Navy, but it's an incredibly large amount of money for a hospital. So the e-business operations officer comes and brings the $100,000, brings the private sector partner in for the solution. The neonatologist and the CIO, which I get a kick out of because when they both talk, you really can't tell who the IT person is because the neonatologist can talk babies, he can walk web. They build the solution; they love it so much. They, not us, they the hospital folks, take it to the Department of Defense Health Affairs Board, the surgeon generals for the Army, the Navy, and the Air Force, and say you can implement this solution DoDwide for $2 million. The surgeon generals say we were about to do something like this that had less functionality and was going to cost $20 million. We can take this idea and put it across DoD and avoid spending $18 million. That's a powerful example about how planting that $100,000 seed will help the Department of Defense avoid spending $18 million.
I have the benefit of being the best practices co-chair now for Federal CIO Council, so I'm able to start to take these ideas and the ideas that are going on in lots of other federal agencies and build this portfolio of best practices that are going on that tie directly to all parts of the President's management agenda.
Mr. Lawrence: That was an interesting point about the collaboration between the doctor and the CIO.
What role does IT play during a military conflict? We'll ask David Wennergren of the Department of the Navy when The Business of Government Hour returns.
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with David Wennergren, the Chief Information Officer of the U.S. Department of the Navy.
Joining us in our conversation is Tim Connolly.
Mr. Connolly: David, we spent a lot of time this morning talking about change. The real question I have is, what do you see as the CIO's role in not only delivering change in programs like NMCI, but really in creating and leading change as the Navy progresses toward the future?
Mr. Wennergren: I think the measure of an effective CIO is the ability to lead change. You have to understand technology, but I believe firmly that technology is only a percentage of the answer. I may spend 20 percent of a day worrying about some technology issue and 80 percent of the day worrying about the cultural change issues that go along with actually making an organization transform. There is so much that you can learn from that. I could have spent the whole hour talking about that, but there are some important nuggets that you pick up.
Change takes on two forms. There are evolutionary types of change. When we go and do knowledge management, it's a real grassroots kind of thing. You go to a command and you say you could do this kind of stuff, you'd be a learning organization, that's great. They all get excited about it and they go off and do it. The beauty of evolutionary change is that it has great consensus and support. You can build a great little solution there. The problem is that evolutionary change on its own doesn't do sweeping enough change. So while we've embraced this theory of teaching people to fish, we've developed tools. We have tools about how you do knowledge management, how you develop a work force, how you do critical infrastructure protection/vulnerability assessments, CDs or web-based tools, and we give these tools to commands.
If you think about it, if each command takes that tool and uses it to do knowledge management, they all end up doing knowledge management in a consistent way, and I get the same kind of answer that I would have gotten if I had just mandated that they all do knowledge management, but of course, they all did it willingly.
The problem is they may not all do it, and so sometimes in order to get broad, sweeping change, you have to embark on a revolutionary change. We would not have a Navy-Marine Corps Intranet if we had not just said you will do it. We would not have 2-1/2 million access cards, SMART cards, in the hands of DoD people if we had not just said we're going to go to a single SMART card. So you have to couple these evolutionary change approaches with revolutionary change approaches.
Of course, the challenge with revolutionary change approaches is I didn't get each of your buy-in. So I have to then deal with the personal/cultural issues of change is coming to you, and there's a book about managing transitions that's out now. Or the guy makes an interesting point about we don't like change, we don't like transitions because in order to have a new beginning, you must have an end, and people tend to not like endings. So every time I do something that's sort of forceful, you have to worry about how you're going to deal with those cultural change issues. But you have to embrace them, because the world is changing at such a fast pace, if you don't think about change which means accepting some risks, you really do risk irrelevancy. So we've learned a lot.
We've learned about moving with speed. The solutions that are working best for us right now are those that we do in months. Take an e-business pilot like the one we talked about, put it in a place in three months, leverage industry best practices and go. The things that are not working well for us are the things where we try to build this perfect solution, build it to death, and two or three years later try to deliver it. Because in our world, over two or three years, technology changes, military people rotate in and out, political leadership comes and goes, and you never quite close the deal. You have to move with speed. You have to look for forcing functions. You have to say if you're going to change a little, you might as well change a lot. There is no point in just getting a few computers. At the moment that you're going through that stress of a change in a computer, I'm also delivering you new processes and those sorts of things.
You need to think about how you change the status quo. We had a culture where once you're in the budget, I'm a legacy application, I got approved, and now I get $5 million a year, and next year I want $6 million. So people go why do you need an extra million, but you're basically in the game. Of course, with those legacy applications that are the old mainframe client-server kind of solutions, they're not my web services view of the future of the world, so it's the new stuff that is going to be wireless and web-based that really is where we need to focus, but of course they're new and so they get tortured to death. Where is your testing plan? Where is your business case? Where is your this, where is your that, before you ever get to the place where you say let them go or let them try because that's where I want to spend my money.
That's why our legacy application process is so important, because that's where we're going into each of those people with the baby and saying that's not a web-based thing, that's not PKI-enabled, that's not available on the enterprise portal, you are not part of the future vision. The status quo stuff needs to go in favor of the new path.
I think finally and most importantly, it's this idea about the Indiana Jones movie, "Indiana Jones and the Last Crusade," and he's on the search for the Holy Grail. This is another IT analogy, because he's got the little book and he knows what his vision is. His dad has been shot and he has to find the Holy Grail to save his dad. He gets to that chasm and he has to get across and the book says it's a leap of faith. His reaction is don't you hate that? But of course, he eventually takes the step and there's a pathway and he gets across. That's what this is about for all of our commands. There is that moment when you do have to take that leap of faith. So you need to give people as much confidence that they should be trusting to take that leap of faith, but in the end, you have to find some way to encourage them to take it or you'll never get this change in.
Mr. Connolly: Can you tell us a little bit about web enablement means to the Department of the Navy? And can you expand on the role of the Department's new portal policy in achieving this objective?
Mr. Wennergren: We've been getting it for a while. We have a senior leadership course that we teach at our Naval Postgraduate School where we send our senior flag officers and general officers, and they go spend a couple of weeks talking to folks in the Silicon Valley and elsewhere about what's going on in the world, and they come back very energized. They get it. They understand the power of the web, the power of the web in terms of access, the flow of information, better security structures, all the things that go into being web-enabled. But then you turn around and look at your organization and you still have a lot of old legacy systems that aren't that kind. So we've embarked upon a lot of work to try to change that.
We created a task force web team whose job was to go encourage and push for web enabled solutions, and Monica Sheperd and her team of folks that have been doing that for the Department of the Navy have been doing an outstanding job.
In order to have a web strategy work though, you have to have a place for that stuff to hang. So we've just released our policy for the Navy-Marine Corps portal, our enterprise strategy that says we're going to have a constituent portal structure where you really will have a single front portal that you get to do work whether you're aboard ship, you're ashore, you're in a hotel, you're at your wireless device waiting for the bus, whatever kind of channel delivery you need, you have a common access to the intellectual capital of the Department. That will again be like the legacy application process where we have hundreds of portals. Portals became cool, so everybody wanted to build one. I don't really need the Surface Warfare Officer's School in New England to be the 505th place to build another portal. What I need them to do is to focus on content. They may have content they want to deliver to students. You find that content, we'll give you the portal to hang it on as a database, as a transaction. I don't need you to be the next person to worry about a customized look and feel.
So with this portal strategy linked with the Navy-Marine Corps Intranet, linked with this web-enabling path, what you see is this change now. In the past, you were the aircraft maintenance technician out on an aircraft carrier thousands of miles from home in the Pacific Ocean and all you had to go by was your knowledge, your tech manuals, your engineering drawings, the knowledge of your supervisor, and you had to fix the plane. Now through a distance support portal, you can reach back to the engineer in Crane, Indiana who actually designed that part that you're trying to work on and have like a voice/video/data whiteboard exchange with him. So now these young men and women that you would be so proud of deployed far from home in harm's way have the power to reach back to the literally hundreds of thousands of people that are back here in the United States. And all that expertise, all that knowledge, all that intellectual power is now available to them, and that's compelling.
Mr. Lawrence: Could you tell us about your role as the chair of the Defense SMART Card Senior Coordinating Group?
Mr. Wennergren: I have a lot of great jobs, and that's another wonderful one, being the chair of the SMART card effort across the Department of the Navy. We talked about NMCI being a big change management issue because it's going to touch 400,000 people's lives. The SMART card program is touching 4 million people's lives across all of DoD. So everybody has an opinion about that.
We're really thrilled. I think there are great kudos that go out to Mary Dixon, who runs the access card office for the Department of Defense and is my partner in crime in this adventure, and the folks at the Defense Manpower Data Center who actually do the programming and such that makes this program happen, because this is truly a testimony to the power of industry/government partnerships. We knew we needed a SMART card. We knew we needed them for millions of people. We couldn't afford to build some government-only solution, and we really did get it. We worked with industry and we came up with standards where there weren't any and we leveraged standards where they were, and we did the right things. PKI digital certificates were going to live on this card, x509 version 3, standard base certificates, Global Platform, the security structure that Visa and others use, JavaCard, using all the common approaches that would make this thing be affordable and that we wouldn't have to build all the things that make it work. The x509 version 3 certificate is recognized by Microsoft Outlook. I don't have to build special stuff into every commercial product that I want to have touch this SMART card. So I think we really got it right, and we got it right because of the work of people like Mary, Ken Shefflin, Robbie Brandaway and all the other folks who do this kind of work.
We have 2-1/2 million SMART cards out there now. It is one of the largest SMART card deployments in the world, and it really is changing the way we work and live. So if you followed me around today when I go back to the office, I'll use this SMART card to get into my office as my physical access badge. When I get up to my computer, I'll use the PKI digital certificates on the computer chip on the card to get on my computer and do a cryptographic logon, much more secure than user IDs and passwords. I'll use the digital certificates to launch myself to secure websites, again getting past the idea of about 50 websites I need to go to, so I have 50 passwords I'll keep on a yellow sticky. I use the digital certificates to do digital signatures, which of course are the key to electronic business. So I'll file a travel claim this afternoon and digitally sign it. Then when I leave to go to lunch, I'll pull the card out of the computer, the screen will lock up and nobody else can be me, and off I go. So this power of having a digital key in the hands of every sailor, every Marine, every airman, every soldier, every civilian, every contractor that works on our facilities is really a key part of this vision. It's the way that we'll get PKI in the hands of everybody, and it's the way that we really get this idea about e-business and digital signatures in place.
Mr. Lawrence: What advice would you give to someone considering a career in public service?
Mr. Wennergren: I think it's a wonderful calling, and you have to want that. As I said before, I look around the nation and I see young men and women doing phenomenal things on behalf of all of us in defending this nation, and it just makes your heart glad and you feel really proud.
There's a wonderful team spirit. I think it's particularly true of the military departments. There's a wonderful team camaraderie about being part of this together. So there are some great opportunities, great opportunities for public service, and it is that idea about service to the nation that is so important. So if that's the kind of stuff that turns you on, there's are such opportunities now. The work force is aging. People are retiring. The skill sets that are needed are different. We need people who are web-savvy. We need people who are Internetmeisters. So the skill sets that we need are the skill sets that the people coming out of high school and college have and live this kind of multitasking kind of work. So there are phenomenal opportunities for those that feel that calling to help serve the nation.
Mr. Lawrence: Dave, thank you very much for joining us today. That has to be our last question, but Tim and I want to thank you for squeezing us into your busy schedule.
Mr. Wennergren: Thank you, Tim. Thank you, Paul. It's been great being here with you. I guess I could point out that if you liked anything you heard today, www.doncio.navy.mil is our CIO website and has more information about everything we talked about today. So thank you again.
Mr. Lawrence: Thank you.
This has been The Business of Government Hour featuring a conversation with David Wennergren, chief information officer of the Department of the Navy. Be sure and visit us on the web at businessofgovernment.org. There, you can learn more about our programs and research and get a transcript of today's fascinating conversation. Again, that's businessofgovernment.org.
This is Paul Lawrence. Thank you for listening.
Friday, November 1, 2002
Mr. Lawrence: Welcome to The Business of Government Hour. I'm Paul Lawrence, the co-chairman of The IBM Endowment for The Business of Government. We created The Endowment in 1998 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about The Endowment by visiting us on the web at www.businessofgovernment.org.
The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our conversation this morning is with Patrick Pizzella. Patrick is the assistant secretary for administration and management and the chief information officer of the U.S. Department of Labor.
Good morning, Patrick.
Mr. Pizzella: Good morning.
Mr. Lawrence: And joining us in our conversation is Morgan Kinghorn.
Mr. Kinghorn: Good morning, Paul.
Mr. Kinghorn: Good morning, Paul.
Mr. Lawrence: Well, Pat, let's begin by setting some context. What functions does the office of the assistant secretary for management and administration perform?
Mr. Pizzella: Well, the Department of Labor, for the benefit of your listening audience, is a $56 billion, 17,000-person/employee department, with 568 locations spread out across the country.
The assistant secretary for administration and management handles several functions there. One has to do with the budget development for the Department, human resources function of the Department; administrative services, dealing with things that go on actually inside the building; mail management, and some of the sort of nuts and bolts things of a government agency; information technology. And we also supervise the Civil Rights Center, which makes sure that recipients of financial assistance that the Department provides to the citizens is being done in an equitable way.
Mr. Lawrence: How big is your team, and what type skills do they have? You described such a wide range of activities.
Mr. Pizzella: The right people are in the right jobs I guess is what I'll say. They have a variety of skills. The professional staff has a terrific background to accomplish the tasks and missions of the Department. And administration management is really a service part of the Department. We really work more with our fellow employees and my fellow assistant secretaries than we work with our recipients of federal aid or the other people we serve in America.
Mr. Lawrence: And what are your specific roles and responsibilities as the assistant secretary?
Mr. Pizzella: I'm at sort of a 50,000 feet view of it. I provide advice to the Secretary and the deputy secretary on those administrative matters that I mentioned earlier. I coordinate much of the President's management agenda. President Bush, from early in his administration, laid out a management agenda for the entire federal government. And the coordination of that, or most of that in the Department, falls within my responsibilities.
Mr. Kinghorn: Pat, you also serve, as Paul said, as chief information officer. And those are sort of very broad responsibilities in and of themselves. What are those responsibilities, and how do you integrate, really, those two different positions you have; head of administration and broad management of the information technology resources?
Mr. Pizzella: Right. Well, let me go back to the President's management agenda for a minute, because one of the key components of his agenda is the expansion of e-government, which really falls to the chief information officer to implement and carry out. And I think your listeners are probably aware that the Office of Management and Budget has a scorecard that they put out annually, that rates all the departments and agencies regarding how they're doing against the President's management agenda.
We're very proud at the Department of Labor to have been the Cabinet department with the highest rating in the recent scorecard. On the red, yellow, green rating system, we had three yellows. And one of those was for e-gov.
And I think the success of our e-gov efforts are very much attributable to the integration of the role of assistant secretary and CIO. We have a very strong, capable professional staff. The President's management agenda helps focus everybody -- political appointee or career, it's very clear. And so that serves as sort of a real guide stick. And so there's not so much a division of time as it's really making sure that we integrate well the various components and responsibilities that I have, so that the agenda moves forward.
Mr. Kinghorn: You've had a very varied career, I think both as a career employee and now as a Presidentially appointed. Tell us a little bit about your career prior to coming to the Department of Labor, and perhaps a little bit about how you got to the Department of Labor.
Mr. Pizzella: I have always been in the excepted service. I have always been an appointee. And I came to town with the Reagan administration. And I've served in six federal agencies between the Reagan and the Bush administrations now. And in between that time, I spent 5 years working as a government affairs counselor, a lobbyist, for a Seattle-based law firm here in Washington, D.C.
And I wanted to come back into public service if the candidate I was supporting ended up winning. And President -- Governor Bush succeeded. And I volunteered, and was assigned the task of heading up the transition for the Bush-Cheney team regarding the General Services Administration, which is an agency I spent almost 4 years at in the Reagan administration.
And then on the first day of the new administration, I was asked to go over to the Office of Personnel Management and serve as chief of staff. I was one of those people who were on the landing parties that arrived on the first day. And so I spent 8 weeks there, which was a very useful experience leading up to the assistant secretary position at the Department of Labor. And then after about 8 weeks there, Secretary Chao asked me to come over and prepare for the role at the Department of Labor.
Mr. Kinghorn: Yes. I think our paths first crossed in the early '80s when I was at EPA and you were there also. And it's been about 10 years, I think. Eight to ten years. Do you find anything significantly different in how you approach what you're doing now than you might have approached it 8 years ago, when you first came into public service?
Mr. Pizzella: Well, I don't want to embarrass both of us, Morgan, but back then there were very few personal computers. And --
Mr. Kinghorn: What were they?
Mr. Pizzella: But I think the difference is -- a lot of it has to do with just agenda, and the way agendas are approached and advocated. From the standpoint of management issues, the President's management agenda is a superb roadmap for people in that area of government to follow. There's even a website, results.gov, that sort of focuses on the President's management agenda.
And the team that Secretary Chao has assembled is a team made up of both veterans from previous governments' experience and newcomers to government, but those with real specialized talents in the areas they've been assigned. And so we have a very coordinated and good working relationship. And it helps us move the agenda forward.
Mr. Lawrence: You indicated you were deeply involved in the transition. And I'm just curious, because your description of the first landing seems to conjure up the picture I have in my mind. What are the management challenges of being there on the first day and working through the transition like that?
Mr. Pizzella: The challenge is to sort of immediately meet the right people who are there and really know what's going on. And the career staff that is in place, I think most people will tell you are very helpful and provide some sound advice. But on your first day, you have a lot of questions that you ask. You have some assignments that you're expected to carry out. But you've got a lot more questions that you need answers to, so that, you know, you can keep sort of the ball rolling, and you can be responsive to the other parts of the Executive Branch, where everybody is calling everybody else, and making sure they've got the right phone number and then the right e-mail address, and so on.
But it was a very good experience at OPM. There's a very talented staff that was there. And it was an area that I had some knowledge of human resources issues from my previous stint at Education and GSA, and so forth.
Mr. Lawrence: Are there cultural differences? Morgan was asking you to compare across different time periods. How about across different administrations, having been in the Reagan administration and the Bush administration there?
Mr. Pizzella: I wouldn't say that there's cultural differences. There's - I guess a few of the differences - those of us who were in the Reagan administration and now are in the Bush administration are much more experienced. So, we come with a bigger knowledge base.
The President's management agenda was extremely helpful to new managers, because it answers a lot of questions even before you have to ask them. And I guess also just the idea of, certainly from my own experience, just there's a difference between coming to Washington for the first time and taking a position, versus leaving your office at one end of, you know, Pennsylvania Avenue, and going to a building at another end. So, that made it a lot easier.
Mr. Lawrence: And that's a good stopping point. Rejoin us in a few minutes as we continue our conversation with Patrick Pizzella of the U.S. Department of Labor.
What's the state of e-government at the Department of Labor? We'll ask Patrick when The Business of Government Hour returns.
What's the state of e-government at the Department of Labor? We'll ask Patrick when The Business of Government Hour returns.(Intermission)
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence. And this morning's conversation is with Patrick Pizzella. Pat's the assistant secretary for administration and management and the chief information officer at the U.S. Department of Labor.
And joining us in our conversation is Morgan Kinghorn.
And joining us in our conversation is Morgan Kinghorn.
Mr. Kinghorn: Pat, let's begin with e-government and the Department. Labor is the lead agency for one of the e-government initiatives. I think there are something like 24 across government. This one is govbenefits.gov. We know the website was recently updated to include more benefit programs. Can you tell us a little more about what the citizen might find when they reach that site, and what your objectives are?
Mr. Pizzella: Sure. govbenefits.gov was launched -- it was a public launch in April of this year. And it was the first really major launch, as you've referred to the 24 e-gov initiatives, that the administration is working on. And primarily, it's to provide citizens a 24/7 access to find out if they might be eligible for the many federal government benefit programs that exist. Hopefully, it reduces the runaround time that people had to do in the past, where they had to go walk from office to office to figure out where they really belong regarding their situation, or if they had to start calling -- you know, dialing for information.
The site. I'd encourage people to visit the site because you enter it, and your identification is not known. But you answer a series of specific questions, and then you're steered towards benefit programs that you might be eligible for. And then from there you can drill down on those sites and find out more information. And like I say, you can do this 24/7. Right now, we've got about 180 or so federal programs up on the site. And we're hoping by January to actually have all -- close to 300 federal government benefit programs listed. So, it will be -- this is Phase I. The first one is really inventorying and getting them all linked to the site, and then we'll go on from there.
Mr. Kinghorn: You mentioned that you got some yellows on the PMA, which are hard to come by. So congratulations.
Mr. Pizzella: Thank you.
Mr. Kinghorn: And a lot of it I think was to do with e-government initiatives. And this one, like e-gov itself, the concept requires you to go beyond the walls of Labor. And you mentioned hundreds of programs you're trying to consolidate for our citizenry. What were some of the challenges that you faced as a department trying to coordinate and develop improve their website that crossed the labor borders?
Mr. Pizzella: Well, it was challenging; it is challenging. You've heard those analogies of people of sometimes trying to work on these joint efforts with a lot of different agencies or individuals is like herding cats. Well, this is more like herding tigers, because some of these are rather large government departments that we're working with as partners.
We had really good coordination assistance from OMB. We were very focused on what our objectives were. The President's management agenda -- the existence of it -- really made some of what we had to do a little easier, because we weren't -- this isn't something sort of we created. We were assigned the task of being the managing partner, and we got to work on it. And there's always some places that cooperate more than others. But in the end, we really had good cooperation. And I think that the site itself is a testimony to that.
Mr. Lawrence: As managing partner for the initiative, what were your roles? Do you get to make decisions, or do you facilitate?
Mr. Pizzella: There's a lot more facilitation goes on than just sort of decisionmaking in a vacuum. And we had a project manager on it, we had a regular e-newsletter to the partners. And we set some specific time frames with goals and objectives, and that seemed to work well.
Mr. Lawrence: What can other departments and agencies learn from the implementation of govbenefits.gov?
Mr. Pizzella: As a matter of fact, we thought it would be useful to other departments and agencies if we did a little lessons learned ourselves. And our deputy secretary at the Department, Cameron Findlay, provided the President's Management Council and the Chief Information Officer's Council a "lessons learned from govbenefits memorandum" back in June. Because we wanted to do it very quickly after we launched it. Because like I say, we were the first ones to launch. There were 23 other initiatives.
And the lessons learned was -- I'll run through them for you rather quickly. One was to make sure you secure upper management's commitment to deliver results. We had that at the Department of Labor for sure, with Secretary Chao and the deputy secretary. Communicate effectively was lesson two. We had lots of meetings with partners. We set up a regular newsletter for them. And we really tried to keep everybody in the loop.
Lesson three was to develop an indisputable value proposition. And that proposition is, is building govbenefits the right thing to do for the citizens? And every time we ask the question, the answer is yes. So we kept working back to that with our partners, and to make sure that we had the cooperation that was necessary.
Lesson four is to recognize project champions and then channel their energy. Like every endeavor, there's some who have a higher degree of energy towards the project than others. So we try to recognize that and make sure we could maximize that. Lesson five was to demonstrate tangible results quickly. And sometimes in partnerships, there's a tendency for perhaps a lot of agreement and then not results. And we set an aggressive 100-day time frame for producing the first release, and we met that.
Lesson six was to promote risk-taking. And we wanted our partners, as well as the people we had working on the project, to think outside the box and look at ways to be creative in gathering up all these programs and the information. Lesson seven was to understand what drives your partners, because your partner is always asking the question, how does my organization benefit from this? And we were always mindful of that. And I think that very much contributed to the success of it.
Lesson eight was to apply pressure when appropriate. And we had, like I mentioned earlier, good coordination from OMB on that. Lesson nine, we found, was to appoint a full-time project manager. And we did that early. And actually, our project manager was hired away by the private sector just recently, but we have another project manager on board. The idea of someone full-time focusing on this is really a key. You cannot just sort of have collateral duties, if you're a managing partner.
Lesson ten was to build for the future. We focused on coordinating govbenefits with firstgov. From the beginning, our sites hosted firstgov. So as firstgov grows, we grow, too. And lesson eleven was to solicit citizen feedback. And we get feedback. And we utilize it to make adjustments and improvements.
Mr. Kinghorn: What's interesting is OMB, in a report they did after the summer process, where they gave the report card, the second phase of the report card, really indicated there were two factors. And you've named them, so you may have been the poster child. One was the fact that someone was in charge of each initiative. And the second, the agencies that did well saw the integrating force of all the five elements. So it sounds like you were probably one of the promoters of those two rules.
Mr. Pizzella: Yes. Well, our deputy -- and Cam Findlay was recently named, I guess in the last 4 or 5 months, as chairing the President's Management Council e-gov subcommittee, which I think was another credit to the Department, that this is an area that we spent some time on, an issue that we really are interested in.
Mr. Lawrence: Let me ask you about a couple of the lessons learned. One of them talked about the importance of involving top leadership. And often in the cases, people have great intentions, but top leaders have so much on their plate and so much to deal with. How is that actually done?
Mr. Pizzella: At our department, I had a weekly meeting that we still have on just our e-government strategy group. It includes a member of the deputy secretary's staff, someone from our intergovernmental affairs staff, obviously folks from the CIO's office. And so we go over a variety of e-government issues, and govbenefits -- obviously, the project manager would always be in those meetings. And so we would in essence have a weekly update and report on this.
And we also assembled an e-gov team at the Department, which is made up of the individuals from our department that are our representatives on the other e-gov initiatives that we're not the managing partner of. And that group meets about monthly, so that we have a continuing update of what's happening with all the e-gov initiatives that we have an active interest in.
And we exchange information, and keep each other posted so we can sort of -- sort of our own best practices session that goes on on a monthly basis there.
Mr. Lawrence: Another one was taking risks. And I'm just curious. At some level, that seems counterintuitive in the environment you're in. I wonder if you can give me some examples or some insights into how that was done.
Mr. Pizzella: Some of the risk was to keep meeting with agencies who maybe were not so enthusiastic at first. Don't take no or "not interested" for a final answer. And again, try to play to the partner's best interests as to why they should participate, and increase their participation. So I guess I would cite that as probably the key one.
Mr. Lawrence: That's a good stopping point. It's time for a break. Come back in a few minutes as we continue talking about management with Pat Pizzella of the U.S. Department of Labor.
Who's hiring MBA these days? Would you believe the Department of Labor? We'll ask Pat about this when The Business of Government Hour returns.
Who's hiring MBA these days? Would you believe the Department of Labor? We'll ask Pat about this when The Business of Government Hour returns.(Intermission)
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence. And today's conversation is with Patrick Pizzella. Patrick is the assistant secretary for administration and management and the chief information officer at the U.S. Department of Labor.
And joining us in our conversation is Morgan Kinghorn.
Well, Pat, could you describe the Department's Management Review Board for us, and how it monitors the progress of performance goals?
Mr. Pizzella: Sure. The Secretary established the Management Review Board early in her tenure, actually in August of '01. And how it works is it's really -- we meet monthly. And all the agency heads from the Department are represented. And we largely tackle the President's Management Agenda and the issues that relate to it. And we always have a guest from the Office of Management and Budget. And we often have guest presenters also. We've had Mark Everson and Mark Forman and Angela Stiles come and make a presentation before the Management Review Board; Dan Blair from OPM has been over.
We've had Maurice McTeague from the Mercadus Institute come over and talk just a little bit about their approaches to things. So we get input from outside, and then we focus internally on a variety of issues: e-gov, human resources issues, budget issues and so forth.
Mr. Kinghorn: One of the areas, when you talk about in government service anyway, but management, you come back to the budget at some point. And you do have the budget under your umbrella. What are some of the techniques you've used to sort of use the budget to deliver results for the Secretary in terms of budget performance and that portion of the PMA?
Mr. Pizzella: Well, budget performance and integration is one of the five components of the President's Management Agenda. So we have spent a good time focusing on that, to make sure budget and performance are linked. The Secretary's priorities, because she's been so articulate in spelling them out throughout the Department, we don't get as many surprises in the budget request process, because agency heads know that their budget requests should reflect the Secretary's priorities and the President's Agenda.
It's very useful to utilize the budget process in order to eliminate redundancies, and to minimize, not maximizing the resources that are available within the Department of 17,000 people and $56 billion. If you coordinate that money well, you can get the results you want. And that's been a big part of our success.
Mr. Kinghorn: Let's turn to the other really critical factor of getting things done, and that's people. And as you know, the administration has, as one of its five elements, the human capital challenges. The General Accounting Office, obviously, has been discussing that. What do you think for the Department of Labor are your most significant human capital challenges? And what do you think you'll be able to do about it, and are doing now?
Mr. Pizzella: Again, going back to the OMB scorecard, that was a -- strategic management of human capital was one of those categories we scored well on. And we did that because we really focused on that early. The Secretary's a firm believer that personnel is policy, and that if you don't have the right people in the right jobs, you're going to have a tough time implementing your programs.
One of the things we tackled immediately was the performance management system at the Department. Through the Management Review Board, we overhauled that. When we first got there, there were three different performance management systems. We were at the end of the year, we were looking at comparing apples and oranges and grapefruits, because one agency had a three-level rating system, another had a four-level. A few had a five-level.
So we tackled that, and we now have one five-level performance rating system. We have moved -- we're in the process of moving everybody to the same cycle, because actually we had people on different cycles. We've connected it now to the fiscal year, which helps us in budget and performance integration. And we also successfully negotiated the inclusion of this with the union representing 8,000 of our field staff. So it's not only senior executives, but it's all about 2,400 or so supervisors and managers, and now the field staff, the rank and file. And we have also set parameters on critical elements.
We found, in the previous management systems, some agencies had four critical elements in our department, some had -- one had 12. So what we did in order to have some consistency, we set eight critical elements down for everybody. Four of them were going to be consistent in all performance agreements. There were four sort of managerial competencies that are expected in each one of the performance agreements. And then we left four up to each individual agency so they could be more focused on their particular missions. So now we're going to be able to evaluate both ratings as well as just individual performance, because we'll be talking about -- off the same performance management system. That was very helpful to us.
We are very -- obviously, like most agencies, concerned about succession planning. We had an SES candidate development program. There was one at the Department a few years ago. We decided to have another one. And actually, the Secretary just welcomed 27 new entrants into our SES candidate development program just a couple of months ago.
As we're in the 21st Century here, we knew that job skills are changing. In order to sort of create some liquidity in that, we sought a voluntary early retirement approval from OPM. And they provided that to us. We had 4,000 employees that were eligible for voluntary early retirement. And in the end, a little over 250 accepted it. So about 6 percent.
So I'm fond of saying that when it comes to the idea of mass retirements, that, you know, many are cold but few are frozen. There's quite a few people that are eligible, but not everybody always takes that. But you have to be prepared for that succession that goes on.
Mr. Lawrence: One of the initiatives that the Secretary set up is the MBA Outreach Program. Could you tell us about this program?
Mr. Pizzella: The Secretary -- as you know, we have an MBA President, the first time ever in history. And at the Department of Labor, we have an MBA secretary. Secretary Chao is a graduate of the Harvard Business School.
And so we thought it would be worthwhile to try to attract MBAs in these changing economic times. There are around 400 or so MBA schools out there that offer MBAs. And the Secretary as an MBA herself was very enthusiastic about this. And she as a matter of fact first announced it at the Society of Human Resources Professionals organization gathering in Philadelphia last June.
And our -- we have two objectives. One is to make people who are graduating from MBA school -- to take a look at the federal government, because historically, I think they tend to look towards Wall Street, the private sector, Silicon Valley, and so forth. And the government might be not in their immediate sights. And secondly, we want those people who already have MBAs and are out there in the workplace, who may be looking at changing a job, or in recent times may have provided them incentives to see what else is out there, to look at the Department of Labor and our job postings. Like I mentioned earlier, we're a $56 billion department and 17,000 employees. So if -- you know, we'd be in that Fortune 100 somewhere.
And we actually just completed the application process. And we're going to have very few slots for this program. We expect to have maybe 12 to 15 slots for the first MBA class, which we anticipate starting in January. But we had 250 applicants from across the country. So we face a challenge now of finding, you know, the best and the brightest.
One newspaper columnist referred to this as sort of a man bites dog approach, with the Department of Labor going after MBAs. But again, Secretary Chao is always challenging us to sort of think outside of the box as to how we can do things a little better and a little different at the Department. And the MBA outreach program is one of those things.
Mr. Lawrence: Have you had any early intelligence on what it is the draw was? Because you did describe a difficult situation. The investment bankers hire MBAs, and people would have us believe that the pay and other benefits are often not comparable to the private sector. So what's bringing all these people in?
Mr. Pizzella: We'll probably know more after we've gone through the resumes and interviewing them. But when you get 250 applicants on a brand-new program you announced, something's caught their attention. So we're looking forward to that.
Mr. Kinghorn: Even in the MBA schools, I know historically at Harvard or at Syracuse, many of them weren't really into non-profits. And in the last 2 years, that shifted dramatically -- that they're going back into public sector federal. So it sounds like you're catching the wave at the right time.
Mr. Pizzella: I also think that the President's Management Agenda, that the way he spelled that out may contribute to the interest in business schools where people actually see something that sort of reflects the things that they've studied: human capital, you know, e-government, financial and performance and so forth.
Mr. Kinghorn: People talk in the private sector on how you retain people. And I come out of the public sector, where me, my compatriots and myself remained, you know, in a lot of different jobs, but maybe 20, 30 years in an industry called government, federal government. How do you expect you'll be able to retain? What kind of things are you going to retain? Because we have trouble retaining MBAs and MPAs because they want to do a lot of different things.
Mr. Pizzella: We've set up a program where they will be on rotational assignments within the Department. We've assigned mentors -- we will be assigning mentors to them. So we're going to try to exercise some good care and feeding from the Department standpoint. And we think that some of the programs we have there, they'll find interesting. And you've just got to find the right fit. So we're cautiously optimistic that we'll be able to retain them.
I think the fact that they've applied to come to the Department of Labor is a first big step. They've probably -- we anticipate they have visited our website and looked at a lot of the programs. And they may even have some particular interest themselves, which we would facilitate them working on.
Mr. Lawrence: It's time for a break. Come back in a few minutes as we continue talking about management with Pat Pizzella of the U.S. Department of Labor.
What does the future hold for the Department? We'll ask Pat for his perspective when The Business of Government Hour continues.
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, and today's conversation is with Patrick Pizzella. Pat's the assistant secretary for administration and management, and the chief information officer at the U.S. Department of Labor.
And joining us in our conversation is Morgan Kinghorn.
Mr. Kinghorn: Pat, going back for a moment to sort of the human capital issues and expectations. In the future, how common do you think it will be for people to switch back and forth in mid-career?
Mr. Pizzella: I think in the non-career ranks, political appointees, I think it will be very common. And I think in the career ranks, it will be more common than it is today. You know, portability of pension plans, the government's thrift savings plan approach, and so forth makes the likelihood of that occurring more likely because of the similarities between the systems that used to be so distinctly different.
Mr. Kinghorn: Do you think there is a value? Because you've sort of done it in your career. Not only of being able to come back -- come and go -- but also work in different entities. I mean, the career public service rarely has a lot of movement, even at the SES level historically. Have you found that's helpful to you in terms of approaching different agencies and bringing with you some experiences, good and bad?
Mr. Pizzella: Yes. I mean, obviously, the experience is always a plus, because the government does have its own culture and its own systems. And when you arrive at it the first time, it all seems very foreign to you. But after a while, you know, you adapt. And like any other situation, you figure out what works and how you can advance the agenda that you've been assigned.
Mr. Lawrence: What's your vision for the strategic management of the Department over the next, say, 5 to 10 years?
Mr. Pizzella: Well, I think that the Secretary has often talked about the workforce and the 21st Century, and how the Department of Labor needs to play a role in that, a leadership role. I think internally to the Department, regarding its management, I think the e-gov initiative in particular will impact how we serve customers. The 24/7 concept just keeps growing and growing, and it's inevitable from that standpoint.
I think you'll see more and more people visiting the Department of Labor through its website, dol.gov, rather than walking into an office or sending a letter. So I guess from a visionary standpoint, I think you're going to see a smaller, more efficient, smarter department. And probably government in general will be that way, as more people sort of make a lot of decisions on their own by just acquiring information by visiting websites. Rather than always having to go to a government agency, they can go to a website, and they could spend some time, and make some of their own decisions.
Mr. Kinghorn: In our business approach, we're really approaching sort of this whole area of e-government sort of in an idea of on demand; on demand finance, on demand information. And we'd like to get your thoughts, having been very successful in these initial probably very difficult forays into integrating government through e-government, how far do you think we are as a government in becoming a truly seamless and integrated government through the use of technology and better business processes?
Mr. Pizzella: Well, it's really, you know, yard by yard to get to truly seamless. There are certain factors that drive everything. The effort of everybody to be more efficient, to do things quicker, faster, and better sort of just drives the process.
The technology is another driving aspect of the process. And when you combine those things, it's a healthy race as long as you're being cautious and avoiding mistakes and pitfalls. I think that the U.S. obviously is a leader in this. I mean, if you just look at the industries, the private sector here, we are leaders in that field as a country. And I think the government, particularly now with a lot of interaction with the private sector, we are gaining knowledge as to the best practices that are happening in the private sector as fast as they are happening. And we're just applying them to government.
Mr. Lawrence: As you've been rolling out the e-government initiatives, what changes are you seeing to the sort of classes of people -- their employees? And so at some level, paper-based processes are now being replaced by electronic processes. I'm curious sort of how that's being digested, and if we're seeing any changes. And then even that's understandable, but I'm wondering, is it changing the way the managers are now managing, because one might have imagined a long time ago they had a big staff of lots of people processing stuff, and now with e-government, they don't have those people or they don't need those people. And as a result, the need for that type management would disappear?
So I'm curious how you're seeing changes roll out.
So I'm curious how you're seeing changes roll out.
Mr. Pizzella: Well, the people joining the government today are -- have already sort of experienced the advent of the technology age. So newer employees -- it's not new what they're arriving at, or what they're seeing. The knowledge and skills they're bringing with them are knowledge and skills that the government is implementing as quickly as it can.
So there's obviously that sort of transition period where programs go from being very paper-intensive to being web-based. But that's happening daily. The challenge is to make sure you prioritize those items that you want to accomplish more quickly than others, and make sure that you allocate the resources in a way that you can focus on that.
Mr. Lawrence: Is this leading to additional expenditures on, say, training as people learn new things?
Mr. Pizzella: I don't know if you have to label it additional expenditures. A lot of training is web-based now. So in the past, where you had to send someone away or they could only do it at a certain time, but people can take web-based training. So again, the whole idea -- the 24/7 nature of the way the world works and government is starting to work, is transforming the way we manage.
Mr. Lawrence: How is it transforming the way we manage? Is it changing the way the managers interact with the staff?
Mr. Pizzella: Well, just e-mail alone, the flow of information. People -- you don't have to wait so long for a memo to be answered, so to speak, because e-mail shortens all that. And I think almost certainly all our managers -- you know, e-mail is just something that is constant. And it particularly makes what I'll call the easier, the low-hanging fruit decisions, occur quickly, because people can comment within 10 minutes on a proposition that's served up on one e-mail. And then people can leave that and spin away from their desk and go into motion as to what they need to do.
Mr. Kinghorn: Management reform. Obviously, most administrations have had some form of management reform. I think what's unique from my observations on this is its comprehensive nature. And you've mentioned it many times, that it's not only comprehensive, but it gives you some powerful impetus behind what you're doing as head of administration.
Do you find that there is on your other stakeholders -- some of your customers, some of the citizens you interact with, or the Hill, or the GAO outside the administration, a similar interest now? Is there anything changing there that when you go up to the Hill in appropriations, they're actually interested in how well you've done on the e-government initiatives, or how well you've done on integrating budget. Is that changing?
Do you find that there is on your other stakeholders -- some of your customers, some of the citizens you interact with, or the Hill, or the GAO outside the administration, a similar interest now? Is there anything changing there that when you go up to the Hill in appropriations, they're actually interested in how well you've done on the e-government initiatives, or how well you've done on integrating budget. Is that changing?
Mr. Pizzella: One of the things in our budget, we have something that's been in there a few years called the IT crosscut. We manage our -- not all of it, but a portion of our IT funds from a crosscutting aspect, where we look at the proposals from a department-wide view and decide whether there's some duplication, whether there's another way to address this rather than just everybody's IT request is assumed to be the best request.
And we've had good success with that in making sure we maximize our resources. And I think OMB views it as a best practice, as a way to manage some IT spending. And in our current budget proposal, we've developed a management crosscut for the first time, where we -- again, agencies will have, as an example, human capital needs that they're looking at. And rather than sort of duplicate need after need in agency after agency, we're trying to coordinate that in a management crosscut, and then utilize it during the course of the year.
Because in the budget process, there's a planning part, and then there's the execution part. And sometimes between planning and execution, a manager's or agency's priorities may change or may shift. And by having a crosscutting approach to that, you're able to maybe move resources from one agency to another without harming sort of one agency, because their priorities have shifted, and to the benefit of another agency, who was hoping to do something that they originally didn't think they'd be able to do.
Mr. Lawrence: We're almost out of time, but I want to ask you one last question since you've had such a unique perspective. What advice would you give to a young person considering a career in public service?
Mr. Pizzella: The short answer is, you know, try it, you'll like it. But my experience of course has been as an appointee. And so my motivation was one of a leader who had an agenda that I wanted to assist in implementing. So that was sort of an easy motivation.
For someone who is looking at it from a different standpoint of just the idea of government and a career, I would -- the government is large. And I would try to shop around. There's a lot of different programs and a lot of sort of unique responsibilities, particularly in the area of homeland security now and technology, where the concept that there's only sort of paper-pushers in the government is not entirely accurate by any means. And there are some really unique challenges that -- where the government is looking for really competent people, and they have to compete with the private sector. So it would be a good experience, if that interests somebody.
Mr. Lawrence: Well, Pat, we're out of time. Morgan and I want to thank you for joining us this morning.
Mr. Pizzella: Thank you.
Mr. Lawrence: Thank you very much. This has been The Business of Government Hour, featuring a conversation with Patrick Pizzella, the assistant secretary for administration and management and the chief information officer at the U.S. Department of Labor.
Be sure and visit us on the web at businessofgovernment.org. There you can learn more about our programs and get a transcript of today's very interesting conversation.
Be sure and visit us on the web at businessofgovernment.org. There you can learn more about our programs and get a transcript of today's very interesting conversation.
This is Paul Lawrence. Thank you for listening.
Thursday, August 9, 2001
Mr. Lawrence: Welcome to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and the co-chair of The Endowment for The Business of Government. We created The Endowment in 1998 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about the Endowment and our programs by visiting us on the Web at endowment.pwcglobal.com.
The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our conversation this morning is with Karen Cleary Alderman, executive director of the Joint Financial Management Improvement Program. Welcome, Karen.
Ms. Alderman: Pleased to be here.
Mr. Lawrence: And joining us in our conversation is Ken Breznahan (phonetic), the director of PWCs ECFO practice. Welcome, Ken.
Mr. Breznahan: Good morning, Paul.
Mr. Lawrence: Well, Karen, let's start by finding out more about JFMIP. Could you tell us about its history and its activities?
Ms. Alderman: Well, the Joint Financial Management Improvement Program was established about a half century ago with the passage of the Budget and Accounting Procedures Act of 1950. At that time, it was known as the Joint Program for Improving Accounting in the Federal Government. The sponsors included the General Accounting Office, the Bureau of the Budget, and the Treasury. And the focus was on streamlining and improving accounting operations, which at the time were choked with even more red tape and conflicting requirements than they are today.
Over time, JFMIP has been called upon to facilitate solutions to a host of financial management challenges, particularly in while we're transitioning to new technology and processes to help facilitate that process.
Mr. Lawrence: Could you give us a sense of how many people are in the program and the types of people?
Ms. Alderman: Well, it's a very small program. Right now we have nine full-time, permanent employees. We have a number of folks who rotate through on developmental assignments. I'm very proud to say we've had -- hosted a CFO fellow for every year that that program has been in existence. But basically our ability to get work done is because we are enabled to work throughout -- bring teams from throughout the federal government to participate on projects. We do our projects jointly.
Mr. Lawrence: And what are the skills of these people? I imagine they're all accountants from the description.
Ms. Alderman: They're not. I'm not an accountant myself, actually. We do have systems accountants, basically. The folks we have there today are a mixture of skills, heavily in accounting backgrounds, but I think we have -- I'm an economist by training, frankly. So a mixture of folks.
Mr. Breznahan: Karen, you mentioned something about GAO in your opening remarks. Could you tell us a little bit about the relationship JFMIP has with GAO, other central agencies, governmentwide councils, and the like?
Ms. Alderman: Well, the JMFIP principals, currently include the comptroller general, David Walker; the Secretary of the Treasury, Paul O'Neill; the director of OMB, Mitch Daniels; and the director of OPM, Kay Cole James (phonetic). The JMFIP steering committee, which runs the day-to-day operations, is chaired by Jeff Steinhoff (phonetic), and he is the managing director for GAO's Financial Management and Assurance Organization. It also includes the chief financial officers from OPM, Cathy McGedigan (phonetic), and GSA, Bill Early (phonetic). And the fiscal assistant secretary of the Treasury, Don Hammond (phonetic) and Joe Cowell (phonetic), who is the OMB deputy controller.
The steering committee sets the major milestones and agenda items for JMFIP. But since the inception of the CFO Council in 1990, we work closely with the CFO Council and very closely, particularly, with the Financial Systems Committee and the HR committees to help bring about governmentwide policies and studies.
We also, in the conduct of our organization's mission, for instance, in setting systems requirements, we work with the other related committees, like, the Human Resources Technology Committee and the personnel payroll requirements process and the Procurement Executive Council in establishing acquisition system financial requirements.
So we work with everybody who will work with us.
Mr. Breznahan: Keeps nine people pretty busy, doesn't it?
Ms. Alderman: Yes, it does.
Mr. Lawrence: Well, you intrigued me, because you said you were an economist. I'm also an economist. Tell us about your career.
Ms. Alderman: Well, I became the executive director for JMFIP in 1998, but that was after I had served about 20 years in the Department of Defense at the Office of the Secretary. But even before that, I served a number of years at the Center for Manpower Policy Studies, working for a gentlemen called Sar Levitan (phonetic), where I co-authored books on veterans policy, the transition to the old volunteer force, and women in the labor force, at that time transitioning to continue working even though they were having children. That was in the early seventies.
Since 1983, I've been in the Senior Executive Service. so I've had a long career and served in a variety of different areas manpower, productivity programs, civilian personnel policy, and financial management.
Mr. Lawrence: Was there a plan to connect those things? Such a wide range. How did it all end up this way?
Ms. Alderman: I can't say that when I started I had a plan. When I started, I was just so grateful to be employed, but I happen to work for great teachers and mentors who, I guess, brought me along in my career. It wasn't always an easy process because they set very expectations, but every position I was in, I learned a lot and built on it, built networks and found new opportunities as a result of it.
I can remember going from the Center from Manpower Policy Studies in 1976, having finished a book on the all-volunteer service and looking in the newspaper about a presidential commission on military compensation. And I called up people I knew and said, do they need staff. And then was hired by Charlie Zwick (phonetic), who was the ex-director of the Bureau of the Budget, who was the head of that commission to work on that commission. So it's those type of opportunities that arose in my career by simply working very hard, but keeping my eyes open for other opportunities.
Mr. Lawrence: I heard a rumor and I wonder if you can confirm it. I understand one of the -- you're one of the youngest members of the SES?
Ms. Alderman: Well, in 1983, I was 33, and at that time, I was a woman in the Department of Defense, who became a member of the Senior Executive Service. There was a very few women and very few senior executives under the age of 40. So yes, I was very young. Sort of -- if I had thought about it a lot, I probably would have felt very uncomfortable.
Mr. Breznahan: It's good that you didn't.
Ms. Alderman: Yes, it was.
Mr. Breznahan: Along the way, was there any particular job or challenge that you faced that you think best prepared you to be executive director of JMFIP?
Ms. Alderman: Well, every position has been an education. I would say in the early seventies, the opportunity to write about child care and women in the labor force and the transition to the all-volunteer force, these two areas were, you know, basically analysis of major institutional changes in how government deals with institutional changes of that magnitude.
In the Department of Defense, there's two types of positions or experiences that I draw upon every day, continuously. One, part of my portfolio for 10 years was managing the productivity in enhancing the Capital Investment Fund. That was a fund of about $100 to $200 million -- it varied year to year. But it financed high payoff capital investments that we selected through a competition for -- based on return on investment, discounted return on investment, total return on investment and manpower savings. The projects allowed -- the management of that process gave a real good education on the cost of current processes and the potential for reducing costs and improving mission capability through doing things differently.
Examples, things that we funded through that pot of money included bar-coding, the introduction of bar-coding for logistics in the Department of Defense; chip-based technology to track transactions -- this was back in the eighties, when this was just cutting-edge desktop computing, even such things as tank washers, which allowed -- those gadgets reduced the time to task the manual labor, the water usage and pollution. Something, you know, that's vitally important to the troops on the ground who are mucking around with these tanks.
Another type of experience that, I guess, was a real stretching experience was heading up the Defense Travel Re-engineering Initiative in the Department of Defense. Now, that was more recent. That was under the leadership of Dr. Don Hammery (phonetic), who was the comptroller. In that project, I was responsible for making it all happen, and it required identifying a vision, changing basic business practice, partnering with industry, using electronic commerce principles, when they weren't really commonplace -- this was in '94 through '97.
So we also had to change rules and regulations, and that sort of reintroduced me to the Joint Financial Management Improvement Program, because we went to Virginia Robinson (phonetic), my predecessor, and said, help us get these laws changed, things like Telephone Act Requirements of 1939, that were still in place that said you had to authorize every long-distance telephone call, even though the authorization process cost more than the call.
Mr. Lawrence: That's a good stopping point, because it's time for a break. But stick with us, because when we come back, we'll ask Karen Cleary Alderman of the JMFIP to update us on the latest from the current financial modernization projects.
This is The Business of Government Hour. (Intermission)
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and today's conversation is with Karen Cleary Alderman, executive director of the Joint Financial Management Improvement Program. And joining us in our conversation is Ken Breznahan, PWC director of our ECFO practice.
Mr. Breznahan: Thank you, Paul.
Well, Karen, you know, financial management continues to be a pretty high-profile issue around town here. Can you tell us a little bit about your take on the current financial management environment in the federal government?
Ms. Alderman: Well, I think the financial management environment and the priorities are continuing to evolve. For a number of years, the agencies have focused and made significant progress in -- on achieving timely, clean audit opinions on their financial statements, "timely" meaning 5 or 6 months after the close of the fiscal year.
The goal has been shifting to improving the value and utility of financial information. Specific goals outlined in this Administration's draft for and content have accelerated reporting deadlines, established interim reporting on a quarterly basis, comparative reporting focused on program performance.
The goal has also been established for us getting clean opinions for all civilian agencies by 2003, and a government-wide clean opinion by 2005.
I would say right now, the focus is shifting more to getting timely information for management in performance, though.
Mr. Lawrence: In the first segment, you talked about the steering committee and the relationships at JMFIP. How does JMFIP develop priorities?
Ms. Alderman: Well, the JMFIP priorities are established through consensus of the steering committee and reflect JMFIP responsibilities that are in statute and regulations. We also work closely with the CFO Council to help facilitate their governmentwide priorities for financial management. We are in a very good position to deal across agencies and work on these governmentwide issues.
And the current priorities? Those include finishing up the systems requirements documents that we've been developing, issuing those; updating core financial system testing and qualification process; and also, as of the last year, we've been asked to focus on trying to come up with a strategy and recommendations on how to reduce the unreconciled differences in intergovernmental transactions. And that's -- there's about $250 billion worth of those in the last governmentwide financial statement. It's too big a pot to dismiss -- you won't get a government-wide, clean opinion unless we figure out how to reconcile buying and selling activity between agencies.
Mr. Lawrence: Now, when you're updating these documents, is it a matter of pulling things together and standardizing them or is it a matter of clarifying and expanding the body of knowledge? What takes place?
Ms. Alderman: Well, for the functional system requirements, those really are getting together the affinity groups, whether it's direct loans or core financial system or personnel payroll, and defining what is the minimum mandatory functionality to operate a system and to comply with the laws and regulations.
And it's really just pulling information that's distributed in a whole variety of different sources together in a manner that communicates effectively to government systems folks and to the private sector, who is now principal source of our software and applications to support these functions. What it is that the government operations have to be able to perform to do their jobs.
Mr. Breznahan: We hear a lot about the need to modernize financial systems to meet some of the requirements that JFMIP is articulating. What is the current landscape for financial systems modernization? What kind of work needs to be done?
Ms. Alderman: Well, there's a lot of activity in that area. A lot of agencies currently rely on very old systems. There has been a tremendous wave of system replacement effort since 1999. Right now, we do an annual survey and publish who is in the market to buy new -- or replace their systems. And since 1999, 20 of the 24 CFO agencies, '99 to 2006, indicate that they are replacing their core financial system in some or all of their organizations.
Comparable numbers are replacing feeder systems. These are things like property systems and direct-line systems. So there's a tremendous wave of activity, and they are replacing home-grown or highly customized systems with commercial products, or they're trying to. So that's a great -- great deal different approach to the issue.
Some of them are actually looking for application service providers for certain areas.
Mr. Lawrence: What's the main reason these are all being replaced?
Ms. Alderman: Well, some of them were built in the sixties and the seventies using system language that there isn't anybody left in colleges or anybody else who understands it. Some of them actually have language that predates COBOL, and COBOL isn't even taught anymore in U.S. colleges.
I think, you know, the old systems, a lot of them are stove-piped and inefficient. But I think the principal reason there's a wave of replacements is because agencies are concerned that the stuff that they have today will totally break down by the time they -- you know, unless they act and it takes several years to get a new system in place.
Mr. Lawrence: Ms. Daniels, the Director of the Office of Management and Budget recently spoke to an Endowment sponsor luncheon and told us that clean opinions are a means to a means to an end, where the end is good financial management information. What advice would you give to your listeners about both the means and the end?
Ms. Alderman: Well, I think a clean opinion is a -- indicates a baseline level of financial discipline and accountability. It's good to have. It's a -- it communicates responsibility to the American public about stewardship of funds. But I think it's important to get to that step for timely consistent information that supports decisionmakers in everyday management. That's where action can be taken based on financial information and performance information.
Mr. Breznahan: I want to come back to a point you were discussing a couple of minutes ago about the systems modernization efforts that agencies are undertaking.
Some of our other guests have mentioned that they're looking to partner across agencies or even with the private sector to build systems, including financial systems, when they have similar business processes. Does JMFIP have a role in this kind of endeavor? And how would you -- how would you see to facilitate these kinds of partnerships?
Ms. Alderman: Well, basically, the JMFIP requirements documents and the testing and qualification process have helped communicate standard functionality. And that provides private sector companies critical information that allows them to develop administrative systems that will work in the federal environment and meet requirements. And will allow federal agencies to take advantage of commercial off-the-shelf offerings without having to customize, which is expensive and risky, you know, will undermine the system if you change a lot of the code.
We also have facilitated cross-servicing. Most of the cross-servicing occurred -- well, most of the cross-servicing is now using federal agency systems. But I see a future where there will be opportunities to use application service providers that are commercial offerings in the future.
And I would have to say that there are examples of using commercial infrastructure every day in federal processes. Think about all the transactions that are now handled through charge cards. That was not the case 10 years ago.
Mr. Lawrence: It's interesting you mention the possibility of commercial application service providers. Is financial management something that should always be run by government employees?
Ms. Alderman: Well, there are certain aspects of financial management that's important that the government control -- just basically stewardship. But in terms of the infrastructure that runs it? I -- there's going to be different models emerging over time. Part of the challenge has been that the government requirements were sufficiently different that there weren't commercial providers that could provide that type of service.
And the whole model of application service provider, actually, is a relatively recent model. With the exception of transaction processing through electronic fund transfers, the banking infrastructure, and charge-card transactions. But the applications, even in the private sector, largely have been run by in-house operations.
Mr. Lawrence: Okay. It's a good stopping point. Come back with us after the break. We'll ask Karen Cleary Alderman about how one buys a financial system.
This is The Business of Government Hour. (Intermission)
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and today's conversation is with Karen Cleary Alderman, executive director of the Joint Financial Management Improvement Program. Joining us in our conversation is Ken Breznahan, PWC Director of our ECFO, practice.
Mr. Breznahan: Thank you, Paul.
Karen, you talked a little bit earlier about the role JMFIP plays in developing functional requirements that agencies can use for financial systems.
Can you tell us a little more about the process that you use for developing those cross-agency requirements?
Ms. Alderman: Well, we look for a senior-level team leader from an agency with a strong incentive to develop system requirements. For instance, the Department of Education led the process to update the direct loan system's requirements document. They manage a huge direct-loan portfolio and they also were looking to replace their direct loan system. So they were a strong advocate of doing that. The Department of Defense led the development of the property system requirements.
After identifying a leader from an agency, we organize representation from all around the federal government -- who has an interest. We get work teams together. JMFIP staff facilitates the process. We don't consider ourselves the expert in every area. We are the facilitator to bring the experts together. We develop the document. We vet it around within the federal environment first, to the interest groups and to the organizations -- make sure we haven't said anything really dumb.
And then after the steering committee is satisfied that the document is reasonably complete, we put it out through a formal exposure draft process. We put it in the Federal Register, we put it out for open comment, and we get thousands of comments on these documents. And we resolve every comment before it's issued in final.
That's basically the process and we've done it about 12 times in the last 3 years.
Mr. Lawrence: I was going to say, how long does the whole cycle take?
Ms. Alderman: Depending on the difficulty -- when it's a update of an existing document, it usually takes, maybe 6 to 8 months. The development of a new document that's never been done before -- grants, property, we're currently doing benefit systems. That may take a year to 18 months.
Mr. Lawrence: How should we measure how well our financial systems are doing? What indicators should we be looking at?
Ms. Alderman: Well, the high-order measure is whether an agency can get a clean opinion. On that measure, 18 agencies succeeded in 2000. There are a variety of debates about how to measure the goodness of your financial systems. In addition to clean opinions, there has been whether the systems support the requirements of the Federal Financial Management Improvement Act, and those high-level requirements or whether the systems comply with the U.S. Standard General Ledger; whether they support federal accounting standards; and whether they comply with systems requirements.
Based on those measures, the -- I will tell you that auditors and agency heads disagree, but agency heads said that nine agencies complied with the requirements of the Federal Financial Management Improvement Act in 19- -- no, in 2000. And the General Accounting Office has a somewhat lower number, about half that number.
But those reviews do suggest that many agencies do not have integrated systems. They -- their systems do not support accounting standards. In some cases, they do not apply or use the U.S. Standard General Ledger. Many organizations have trouble fully complying with security requirements associated with systems. So based on those types of measures, they paint a little less optimistic picture than the clean opinions.
And then finally there's other types of benchmarks you might want to look at for systems. How -- what is the process cost? The process is the system support. What's the cycle time? What's the access to information by managers? These types of benchmarks are not audited for, but I think they're very important.
Mr. Breznahan: Karen, can you tell us a bit about JMFIP's role in redesigning the procurement process for financial systems?
Ms. Alderman: Well, when I came to JMFIP in 1998, I knew that a principal job I had to do was to facilitate the transition from the existing mandatory FMSS schedule. That was the mandatory schedule where agencies who wanted to buy a commercial core accounting system had to buy it from a specific schedule that GSA managed.
The vendor offerings on that schedule were tested as part of the procurement process, but because the testing and procurement were linked, agencies did not know what was tested, how it was tested. Vendors did not know what was on the test until they walked into the test. The testers were volunteers. The test itself was not comprehensive. They didn't really find that out until after they acquired their system off of this and found that out.
So basically the -- and a study called the Joint System Solution Team Study had made a series of recommendations to separate the procurement and the testing process for core financial systems provide a mechanism to provide a lot more information about what these systems entailed and how it was tested. Get rid of the mandatory schedule and JMFIP was tagged to facilitate this transition process. So that's how we got into the business of testing and qualifying a core financial systems.
Mr. Breznahan: What about your role in actually doing the testing of vendor systems?
Ms. Alderman: Well, what we do, we issue the core financial system requirements document. That's part of that series of documents that I talked about. Then we develop a functional test that the goal was to test 100 percent of the mandatory requirements. We hit about 91 percent the first time we managed this test. And to do an end-to-end functional test that tests each requirement and tested whether the accounting calculations were done and the general ledger effects were appropriate and so forth.
We built that test and we started testing software in 1999. In 2000, a major new requirement came out, FACTS 2 (phonetic), so we did an incremental test on that software. The impact on the community, I think, it's a very effective communication device to industry that, unless they pass this test, they can't -- their products can't be used by the federal government. So they got a lot more interested in finding out what the federal requirements were.
And I think on balance, the federal agencies got much better products than they would have had absent this process. We published the test. We published expected results. It's an open-book test. Federal agencies can have full disclosure about how we test, what we test.
Now, the testing process has helped organize the market; helped get better products available to federal agencies, but it doesn't do the whole thing. Federal agencies still have to do a selection of what best fits their environment. They have to figure out how this product fits with their legacy systems, their feeder systems. So there's still a lot of work on the agencies in terms of getting these products to work in their environment.
Mr. Lawrence: How difficult was it to organize this process? What was the feedback from the agencies?
Ms. Alderman: From the numbers that I told you before, all these agencies that were replacing their systems -- the agencies were very anxious to have a better process than what was available to them prior to 1999.
The agencies would have liked, I think, even more centralized quality assurance, because it's a -- it's a very tough business replacing systems. The type of feedback that I've had generally is great acceptance of what we've been doing; they just wish that we could actually do more in terms of mitigating risk. It's still a very tough business, getting -- successfully transitioning to new systems.
Mr. Lawrence: We know that more and more agencies are moving towards using COTS (phonetic) packages. Could you describe the challenges and the benefits of this approach?
Ms. Alderman: Well, basically, for COTS, you have to look at what the economics of software is these days -- the economics of administrative systems. Agencies are moving from a period where they built their own systems, basically, back in the seventies and eighties or, in some cases, they acquired products from commercial vendors, but those products were actually almost custom-built for the federal environment.
The current environment is that the agencies are taking advantage of products that are built for mass markets, in many cases -- the Oracle, Enterprise Resource Suite, the SAP, the -- even the AMS has a fairly broad marketbase. The benefit, I guess, of commercial, off-the-shelf software is that companies which are expert in building these systems and also are investing significantly in R&D are supplying products that the government sector can use.
Our core competency is not building administrative systems. It shouldn't be. We should try and take advantage of this when it's available in the commercial place.
Mr. Lawrence: It's a good stopping point, and it's time for a break. Stick with us. When we're back, we'll ask Karen Cleary Alderman of JMFIP about the effects all these planed retirements will have on financial management.
This is The Business of Government Hour. (Intermission)
Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and today's conversation is with Karen Cleary Alderman, executive director of the Joint Financial Management Improvement Program. Joining us in our conversation is Ken Breznahan, PWC director of our ECFO practice.
Well, Karen, as we finished the last segment, you were talking about COTS packages. I wonder if you could tell us some lessons learned for people who are considering a COTS approach?
Ms. Alderman: Well, one of the things that JMFIP has done at the behest of the CFO Council is that we've created a section on our website, and that's -- www.jfmip.gov is our website, called the Road Map, and that is on systems planning, selections, implementation issues. There are many challenges in implementing a new system. They're not all technical. Some of them are change management and things of that nature, but we've tried to organize information so it's readily available to the community, so everybody doesn't have to do all their own original research.
Mr. Breznahan: Well, Karen, let's shift our attention now to human capital issues. How do you think the financial management community in the federal government will be affected by the impending retirement wave that we keep hearing about?
Ms. Alderman: Well, I think the retirement wave is a challenge and an opportunity. Agencies will not have the resources in the future to do business the way they've done in the past. I expect for agencies to look for ways to consolidate, streamline, simplify, automate, and use commercial infrastructure.
The shear competition for resources will foster cross-servicing and, perhaps, use of application service providers in the future. Think about the use of charge cards. If we were not using charge cards to serve all these transactions, we'd have people doing it the old way. I expect we'll be taking advantage of different ways of doing business, simply as a result of not having the resources to do it the way we did it in the past.
I think the future workforce will have different tools, and I think that critical capability for the future workforce will be analysis and advice, rather than transaction processing.
Mr. Breznahan: What's JMFIP's role going to be in this?
Ms. Alderman: In human resources in general, we have tried to serve the community by defining the core competencies in the different business areas. Most recently, we issued a core competency document for project managers implementing financial systems, simply because there was a huge demand in the community and they need to know what skills they need to have.
Mr. Lawrence: What advice would you give to a young person who's perhaps interested in a career in public service, and maybe even who is interested in financial management?
Ms. Alderman: Well, I think there's lots of interesting opportunities in the federal government. I've loved my federal services. I've had opportunities to work with some of the best. Come in for a while and just look around. There's many different areas in the federal arena that I think will teach you a lot. It's taught me a lot.
Mr. Breznahan: Looking down the road a bit, what do you see as the future demands for financial management in the federal government? And what will users of that information need to be successful?
Ms. Alderman: I believe that the managers of the future, the financial managers, will not be -- I mentioned this before -- will not be responsible for transaction processing shops. A lot of the manual integration work that people cut their teeth on in the past, that's going to be automated in the future.
They will be responsible for understanding what all that information means and providing advice on how to use that information in better managing government operations.
Mr. Lawrence: How in terms of technological changes for the workplace? To do this kind of activity you're talking about, what changes might you foresee?
Ms. Alderman: You know, one of the questions here was, how will technology change the workplace in the next 10 years, and how will it impact financial management? And I thought about that question. And I said, you know, if my colleagues -- if I had said to my colleagues in 1990 that by 2000, we would be routinely using the Internet to order our supplies and access our retirement information, and file our taxes, folks would have figured I needed a rest, you know, I was breaking up.
The basic technology that's common in our lives today, really wasn't that accessible in 1990. It was there, but it wasn't widely used. So basically I think we've lived in the last 10 years through an information revolution, even though we haven't fully digested the impact of that. And that revolution is not complete.
I expect that there's going to be a shake-out in the industry that drives this. I think there's going to be consolidation of information technology with some dominant players in networking and databases and application development and service providers.
And I think, as a result, I think the industry will move more towards standards and seamless integration. I think they recognize opportunities for end-to-end integration.
Government will have to find ways to use industry standards to conduct their business, because government will not be able to afford to have unique infrastructures for administrative purposes. I think that's one thing that'll happen.
I expect electronic processes will become the norm for transaction processing. I think the mantra of enter the data once and reuse it will become a reality in the next 10 years. The source of that data, I think, is largely going to be customers and front-line workers with managers electronically approving these types of things. The specialists who were in the middle of those processes in the past, I think will be replaced by electronic edit checks built into the systems. Self-service without intervention by financial personnel and other specialists, I think, will become a norm.
So that also has implications for how the business gets done. I think brick-and-mortar will disappear, you know, installations. I think there will be a lot more consolidation of processing centers. And there'll be more end-to-end integration of systems, supply-chain management all the way back into financial management.
So I think the emphasis in financial specialists will change from interpreting information put into the system, which is where we have specialized in the past, to interpreting the information that results from the process.
Mr. Breznahan: You mentioned at the outset that JFMIP has a 50-year history in its existence. How would you -- how would you think ahead in terms of how JFMIP will evolve over the next 10 years?
Ms. Alderman: That's a really hard question. As I said, you know, 10 years ago, if I had thought all the things that would have occurred -- if I had seen it and pressing, people would have thought I was nuts.
Basically, the JFMIP vision really is shaped by the steering committee. I anticipate that we're going to continue as an organization to be a cross-agency facilitator, a facilitator for change, and a barrier-removal agent. I think we've played that role in the past, and I think we'll play that role in the future. We're specifically chartered to enable collaboration across government entities, and particularly for cross-cutting issues. In a network world, where resources are tight, I see demand for both those roles increasing over time.
Mr. Lawrence: You did a very interesting job a question back of describing sort of the future in the different roles, and I want to take you back to that and maybe work through the employees at different levels.
It seemed as though, in the description, you envision that there will be many fewer employees, certainly, doing the work as we know it. They'll be much more specialized and much less general, is that -- did I get that right?
Ms. Alderman: I don't know that they'll be more specialized. I think right now we have a system that's built on a tailor model, where you have work breakdown and specialization and people who do vouchers and people who do specific types of functions and lots of data entry associated with those functions. I actually think that there will be demand for much general analytic capability. I think there will be fewer personnel. And I think that stove-pipe -- you know, if you expect to stay in a narrow functional stove-pipe as to progress in your career, I don't think that model's going to be there in the future. I think that people are going to have to be broader and more analytic.
Mr. Lawrence: And how about the managers? Your tailor analogy, perhaps, is apt, because I imagine what you describe, those type of activities, a certain management style. And now if that work changes, what skills will the managers need?
Ms. Alderman: Well, I think that managers in general -- well, leaders, specifically, are going to have to be able to establish a vision, organize work around that vision. They're going to have to reach across functional boundaries, facilitate partnering, both within organizations and externally. And their skills are going to be more broad. They'll have a technical component to it, but I think managerial breadth is, I hope, what gets rewarded in the future, because I certainly see, with technology, you're going to, you know, look more broadly.
Mr. Lawrence: Karen, Ken and I want to thank you very much for joining us today.
Ms. Alderman: Well, it's been my pleasure. Thank you very much.
Mr. Lawrence: This has been The Business of Government Hour featuring a conversation with Karen Cleary Alderman, executive director of the Joint Financial Management Improvement Program.
Be sure and visit us on the Web at www.endowment.pwcglobal.com. There, you can learn more about our programs in research into new approaches to improving government effectiveness. You can also find a transcript of today's interesting conversation. Once again, that's endowment.pwcglobal.com.
This is Paul Lawrence. See you next week.