Originally Broadcast August 4, 2007

Washington, D.C.

Welcome to The Business of Government Hour, a conversation about management with a government executive who is changing the way government does business. The Business of Government Hour is produced by The IBM Center for The Business of Government, which was created in 1998 to encourage discussion and research into new approaches to improving government effectiveness.

You can find out more about the Center by visiting us on the web at businessofgovernment.org.

And now, The Business of Government Hour.

Mr. Morales: Good morning. I'm Albert Morales, your host, and managing partner of The IBM Center for The Business of Government.

As the United States Air Force continues to transform its capabilities to meet emerging national security challenges, it has sought to ensure the effective and efficient integration of technology, people, and processes to provide the warfighter and decisionmakers with timely and actionable information shared across a worldwide platform.

With us this morning to discuss efforts in this area is our special guest, Lt. Gen. Michael Peterson, U.S. Air Force, Chief of Warfighting Integration and Chief Information Officer.

Good morning, General.

LTG Peterson: Good morning, Al. Glad to be here.

Mr. Morales: Also joining is our conversation is Dave Hathaway, partner in IBM's defense industry practice.

Good morning, Dave.

Mr. Hathaway: Good morning.

Mr. Morales: General, perhaps you could set some context for us by describing the mission of your office and how it supports the overall mission of the Department of Defense.

LTG Peterson: Well, you started off really well in the opening paragraph: integrating processes, people, and systems to deliver information. But if you look at the history of the U.S. Air Force over the last dozen years or so as we really got into the Information Age, we had built exquisite systems but they were independent systems. So my job, and the job of my office, is to go back to our legacy systems, make them interoperate to deliver fused information to anyone who needs it, whether it's a commander or warfighter, an executive in our business and support systems, but deliver that information for the legacy context, but at the same time point a roadmap for the future, so that as we build out future systems, we don't go down the same path of independent non-interoperable capability.

Mr. Morales: General, could you give us a sense of the scale of your operations? How are you organized? What's the size of your budget and your staff, and is this a worldwide footprint that you have with this mission?

LTG Peterson: It is absolutely worldwide, and it touches every aspect of the Air Force's mission, and much of the work that the Air Force does as the joint interdependent partner with the other services. But in terms of scale, we manage an annual budget or portfolio of about $7 billion. Beyond that, there are about $17 billion in systems that are out there operating today. When I say portfolio, that is to set the policy, to set the rules, to build an enterprise architecture that shows us where we're going and how we'll operate today.

Mr. Hathaway: Sir, would you please describe your specific responsibilities and duties as the Air Force's Chief of Warfighting Integration and Chief Information Officer?

LTG Peterson: Sure. And the reason that it's set aside as not just Chief Information Officer, it was clear to our leadership that it wasn't just business systems or support systems. This was the entire arena of command and control, intelligence, surveillance reconnaissance, and all of the business and support systems that make our Air Force run. So warfighting integration included data links, it included the command and control systems. It included the communications networks on which they all ride. So that's why it was Warfighting Integration, and then all of the -- what was passed down in the Clinger-Cohen Act and the Federal Information Systems Management Act later on for the chief information officer responsibilities for the Department. So those two tied together, we put in one office, because everything we do is interrelated.

Mr. Hathaway: Sir, regarding your responsibilities and duties, what would you say are the top three challenges you face in your position, and how have you addressed those challenges?

LTG Peterson: Well, the number one challenge is in this arena of information technology, this audience knows how quickly that moves, and how rapid the turnover is in terms of technology and what opportunities are out there. So my number one challenge is educating the Air Force on what the potential is for information technology -- to allow those people to operate more effectively and more efficiently. So that's the number one challenge.

Number two is that is not the way we operated for years. For years, we operated in mission areas or functional areas, and each of those were able to independently develop and build systems that met their requirements. That gave great capability but it didn't give great interoperability. So my number two challenge was to bring all of those different functional entities together so we can be interoperable across functional areas, across command lines, and especially in the joint arena.

And the final challenge has to do with security of the information -- information assurance, on a broader scale -- to ensure that the capabilities we provide are consistent, that they are safe from losing information or from people treading upon our networks or capabilities that we don't want to be there. So it's the education, breaking down those cultural barriers, and then securing our networks.

Mr. Morales: It sounds like a very broad mission for just one individual, General. Now, you've been in the Air Force for some 30-plus years. Could you give us a sense of how you started your career within the Air Force?

LTG Peterson: I attended the University of Southern Mississippi. And right away, I'm not kidding you, it was "I guess I better find a job." So I joined Air Force ROTC, with a degree that was in the sciences: math, and minor in general sciences. The Air Force looked exciting. I joined the Air Force and they put me in the communications electronics maintenance arena.

After that first dozen years with hands-on kind of work, I moved into the space operations business; at first managing communication satellites, and later commanding space operations units, squadrons and groups.

At that time, literally, the Internet had emerged as the powerful capability we all respect it for today -- that was the middle 1990s -- where I came back to the command and control business and was building air and space operations centers in places like Riyadh, Saudi Arabia, and later on throughout Southwest Asia, where we operate today. That gets into a part of the career where it was more about management and leadership and less about hands-on technical direction, which is where I find myself now after a series of staff jobs with our major commands and our combatant commanders, and now here in the Pentagon.

Mr. Morales: So, General, with the various roles and commands that you've held, how have these experiences prepared you for your current leadership role and informed your leadership style and management approach?

LTG Peterson: Well, you said just a moment ago, Al, that that must be a big job for one person. And as you can imagine, I have lots of help, and very talented help. Early on in my career, it became so apparent that I wasn't going to be able to invent all the great answers. And if you just put out a vision that was understandable that people could resonate with and then step back and listen for the feedback, ask for advice, ask for people to take ownership of an initiative, of a problem, of an opportunity, they would. And that describes my leadership style, or what I think has helped in my success today. Be very clear in what you think we ought to do, but also understand that there are smart people everywhere, and you don't understand their job as well as they do. So ask for advice, give them the freedom to take charge, occasionally make a mistake, and we will all learn from that and be successful from that.

Mr. Morales: What are the U.S. Air Force's IT transformation efforts?

We will ask Lt. Gen. Michael Peterson, U.S. Air Force Chief of Warfighting Integration and Chief Information Officer, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Lt. Gen. Michael Peterson, U.S. Air Force Chief of Warfighting Integration and Chief Information Officer.

Also joining us in our conversation is Dave Hathaway, partner in IBM's defense industry practice.

General, the Air Force has stealthy precise weapons systems and the best airmen in the world; and by adding IT to that mix, the service has been able to make its assets more efficient and powerful.

To that end, could you elaborate on your warfighter integration vision?

LTG Peterson: It was during Kosovo, and we knew that we had to roll back the integrated air defense system around Pristina so we could fly our non-stealthy aircraft in and strike the Serbian ground forces -- without a ground force to flush them, that's a difficult task. There was one SA-6 guarding the capital of Pristina. We've surveyed the area now to bring in a surveillance reconnaissance asset to look at those hide sites, one of them has the SA-6 on it. No, the mission is not done. You don't know exactly where that hide site is until you've sent the image back to another computer, stretched it to fit the grid coordinates on a map. Okay, now we do know where it is, but the clock keeps ticking.

Now it's time to find out if you have an asset to strike the SA-6 surface-to-air missile battery. Sort through available platforms, start to do mission planning, line that strike platform up with the support package -- by that I mean the tankers that will refuel it on the way, the electronic warfare assets that will support it, and to complete that mission in that instance took 4-1/2 hours, and as we like to say, 17 consecutive miracles.

Anyone that looked at the details of what we had done -- this was the 1999 time frame -- that understood information technology would have said, why haven't you modernized, why haven't you linked these warfighting systems together so that critical pieces of information, once you understand the process, will flow machine to machine, it's not someone shuffling papers, it's knowledge that is fused and put together so a decisionmaker, a commander, a pilot, can make a decision and take action and not pass information around?

And that was the genesis of warfighting integration. Today, that same action in Iraq or Afghanistan is down to tens of minutes -- certainly less than 30 minutes that we would be able to go strike any what we call time-sensitive target, because we've planned for it. So plenty of work left to do to make us more lethal, more effective, and certainly more efficient.

The good news is with what industry has been able to offer us, it's quite often more efficient and less costly to pursue the modernized capability than to stick and sustain the legacy systems.

Mr. Morales: So to what extent does your warfighting integration plan deliver a roadmap to the future and ensure that the right investments are made to optimize decision superiority to the warfighter? And what are some of the key benefits and critical challenges to this implementation?

LTG Peterson: That is a great question. The key to all of this, and I'm glad you said roadmap -- the key to all of this is an architecture, an enterprise architecture. And that starts with, as I said earlier, policies, rules, processes, and eventually, it gets down to a roadmap and a technology description of where we need to go so you can make investment decisions.

The Air Force started down this architecture journey in earnest about five years ago, and at first, it was little more than drawings of boxes and linking them together. It was not rich in its description of policy or the rules by which we operate. It has certainly matured. When OMB came to visit six months ago and asked about our architectural work, I could point to the work that we had done in 2006 alone. I could tell them how much money we had spent on building out the architecture, and then show them definitively that we have been able to make decisions about future systems in terms of retiring them in lieu of new capability, in terms of investment, where for every dollar we had spent on architecture, there was $10 of cost avoidance in the outyears.

And so the cost avoidance money that we didn't have but were going to have to find ended up over the next five years $77 million -- that we didn't have to spend those dollars because we made an early good decision based on architecture.

Mr. Hathaway: Sir, DoD is transforming from platform and organization centric to a netcentric operation, and the Armed Services CIOs are providing the leadership to meet this netcentric vision. Would you elaborate on this netcentric vision for the Air Force, and what exactly is netcentricity?

LTG Peterson: Netcentricity, and we throw that term around, everyone wants it to be a technical solution. Certainly technology underpins it, but it starts with understanding of a process. So if I am a joint force commander -- for instance, Gen. Petraeus, he should have access to every single piece of information that we have -- he needs a fused real-time picture of what's happening. He needs to understand the impact of a capability that the Air Force might bring to the fight versus what it would take for other services to create the same effect.

Netcentricity is exposing that information or that data, allowing it to maneuver the network under a framework or a set of processes that we have prescribed so that that commander has exactly the information he or she requires to get their job and their mission done. And it's not just up the chain, it's down the chain. It's so the air component and the land component can exchange information seamlessly and in real time without having to go through 16 different translators.

So the netcentricity comes from understand the process, understand the flow of information, understand the data and then put the technical rules in place so that information can flow. As simple as what is the service that you use to send messages across your network? Is that the same message service that another component uses? If it's not, how do we account for that? Do I describe this type of data one way and you describe it another? That's the reason the CIOs of the services are perfectly poised to really lead this effort. Now, I'm not going to name data, I'm going to find that functional expert and build a team around him or her that can identify the data, create the taxonomy, describe the process, and then we'll provide the technical expertise so when it's time to build an application or a service on this broader network, we all can use it and benefit from it.

Mr. Hathaway: Last year, the Air Force added cyberspace as a mission area, in addition to the traditional air and space operations. What challenges have you faced in creating the cyber command and integrating it with existing Air Force operations?

LTG Peterson: The first challenge is always, so what is that? And I say that tongue in cheek, but it is not simply IT networks, it is also the RF spectrum. It is also -- in the future, it would include directed energy weapons. Cyberspace is a domain in which we operate. Cyberspace is a man-made environment. So anything in a electromagnetic spectrum, in a man-made environment, that would be cyberspace.

So the second challenge is our leadership understanding the important of cyberspace in the future, for us to be able to operate freely in that domain, to know that that domain will always be available for our use. So to operate it, to protect it, defend against attackers. Why would we ever want an adversary to have that same freedom of movement in a similar domain? So to think about ways that we could take that capability away from a potential adversary.

And why did we start now? Certainly, the Air Force, all of the services, do a lot of work in the cyberspace domain today. But we do it for the most part in functional stovepipes, so we have our intelligence surveillance reconnaissance community that does some work in the cyber domain; but they do it separately. What we really must develop is a professional force that is steeped in all of those elements of the cyberspace mission.

And so how do I grow that expert with that breadth of knowledge? Well, it will probably take a decade or more to start to grow. So it's not about Mike Peterson, it's about the captains and the staff sergeants that are out there as well as our civilians that we want to bring into this culture and to train them across the breadth of cyberspace missions.

Mr. Hathaway: Sir, you mentioned the importance of data before. What is the Air Force's data strategy for the new digital era, and how does the strategy seek to make data identifiable, assessable, and understandable throughout the enterprise?

LTG Peterson: Our Secretary of the Air Force, Sec. Michael Wynne, brought some great experience from industry with him, and part of that had to do with exposing data and information. Industry viewing information as an asset, as you would any other item on your tally sheet. And it was really his emphasis that got us moving in the direction of our Air Force data strategy. He asked us as a staff to be able to conduct a clean audit, where we understood the rules, we could expose the information, and then we could repeat the process time and again.

And we're well on our road with the first deliverable of a set of pathfinders that take us on the clean audit. I understood full well that he knew that the Department would operate more effectively, both on the warfighting aspect and on the business aspect, if we could discover data, expose data, share data, and we understood when we spoke about data, what we were talking about: the taxonomy, the vocabulary.

He took us on this journey where each functional community, each mission area has been charged with the responsibility of understanding the data, understanding the processes through which they employ that data to come up with answers. So it's building communities of interest that would go out and do the definitional work, understand the process so you can map out the data flow, the ontology, and then build a vocabulary.

Now that we've done that, the Department of Defense can leverage any work that we've already done. We're leveraging work that the other services have done, and eventually have this very rich vocabulary -- understand the processes, the ontology.

Several seemingly small but very important examples: one I'll quickly highlight. At Patrick Air Force Base, one of our satellite launch facilities near Cape Canaveral, Florida -- but at Patrick, before you could launch a satellite, you had to understand that all of the range systems were ready or what the stage of readiness before we could launch a satellite. And of course, you know what we did; we threw an army of people at it. Instead of going to each of those systems, exposing the data, building a real-time runtime metadata environment, so you simply go to the website, type in the mission number, and all of the supporting systems on the range that are required to launch that mission number -- immediately the database is populated and you get the status.

But that describes our data strategy, finding out where the authoritative data is, describing it and making it available for everyone to use.

Mr. Morales: General, we've used terms such as architecture; we've used terms such as netcentricity. I'm going to add one more to the mix here, and that's service-oriented architecture.

Now I'm going to try to phrase a question that uses all three of these terms. What role does service-oriented architecture play in making your data strategy as well as your overall netcentric vision a reality?

LTG Peterson: The importance of a service-oriented architecture is that services -- what we used to refer to as embedded applications or capabilities or tools -- those services are now able to be shared across the enterprise. So if I built a service that kept track of who is supposed to be on the network, and could certify that yep, it's Mike Peterson on the network, if I built that service, in the past, it would be embedded in a system. And only that system could benefit from the service.

In a service-oriented architecture, I can build that service, I can publish it and expose it for everyone's use. Now, that saves -- because we all know what service we're going to use, there's built-in interoperability. Because we can all share that service, we don't have to reinvent another service. So service-oriented architecture allows you to publish the service, share it.

Now, you are into the issue of identifying which piece of data is authoritative, and because I can always go get it, then I don't have to build data warehouses, because I know what protocols and services to count on, so now I have interoperability.

So the benefits of a service-oriented architecture are huge in terms of access to information, interoperability and cost of sustainment. It's not really easy. And that's why, as I said, we're undertaking a number of pilots or pathfinders, small steps, where we can understand how to expose data, build a metadata environment, build out the communities of interest, working with our acquisition teams, what are those services out there that we think, based on industry advice, are most likely to stand the test of time so we don't replace that service in a few years.

The other big piece of service-oriented architecture is configuration management. Understanding who is providing a service, hosting it on their server or what framework, understanding who the authoritative data sources are and making certain they understand it; and keeping our vendor teams knowledgeable and integrated so that we can continue to build and not repair. We are absolutely excited about service-oriented architecture. It's not necessarily something that you have to take in one entire bite.

But I really do envision that in a dozen years or more that it will be much more a pure service-oriented architecture than it is today, but it will be one bite at a time as we move forward, and allow us to spend our dollars more efficiently.

Mr. Morales: What about the U.S. Air Force's IT innovation?

We will ask Lt. Gen. Michael Peterson, U.S. Air Force, Chief of Warfighting Integration and Chief Information Officer, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Lt. Gen. Michael Peterson, U.S. Air Force, Chief of Warfighting Integration and Chief Information Officer.

Also joining us in our conversation is Dave Hathaway, partner in IBM's defense industry practice.

General, the cost of sustaining about 19,000 legacy applications must be absolutely staggering. I understand that you save approximately $1 million for every legacy application retired or moved onto the Air Force portal or the Global Combat Support System.

Could you elaborate on the development of the Global Combat Support System and the Air Force's portal? How does it enable your force to achieve a broader netcentric data-transparent capability, and are there plans to migrate to a single DoD portal?

LTG Peterson: Al, thanks for the question because it's an important issue. Yes, the legacy platforms are very expensive to sustain. The sustainment is mostly about keeping those legacy platforms or systems talking to or interoperating with sister systems. That's where about 80 percent of the sustainment dollars go. And this is not modernizing, this is just keeping them running.

The Global Combat Support System was built as a framework for our support systems. There's always a fuzzy gray line between what's a support system and what's an operational system. When the Air Force went down the road of a portal, that portal was simply a presentation layer of information that was on our integration framework. So we looked across the Air Force at lines of business -- logistics, human resources, financials, and as we looked at the multitude of systems, you are correct, 19,000 different applications out there that the Air Force sustains every year. But as we looked at those lines of business, we recognize that if we took those lines of business and started building them with common protocols, common standards, common services embedded in them, then the cost in that line of business, sustaining those systems, would go down dramatically.

So GCSS Air Force -- that's the acronym we use for the Global Combat Support System -- was not so much a portal, it was the integration framework on which we were going to host services. So when I ask you to build the next munitions tracking system, you only had to build the piece to track munitions, not the messaging software, not the database administrator. All of those services were already available on the integration framework, and you were automatically interoperable with.

That vision has continued to grow across the Air Force. Today, as we build out GCSS Air Force, the other thing it gives us is a way to put information where it belongs. Example: when we originally built capability in the Air Force, it's wherever that information was created was generally where we plopped down the server that would do business with all of our partners.

So to come in and to access that information, you were able to traverse much of the Air Force network. So now with GCSS Air Force, where we are able to host those systems, those applications, at the edge of our network so you can get to that information without traversing the network -- security, you don't have to run a single server for a single application; efficiency, it's made that network much tighter and much more efficient in terms of running it.

The integration aspect of the framework has made it easier to build systems. The portal, on the other hand, still remains simply a user interface or a presentation layer to that information for different lines of business.

Now, you asked what about eventually a DoD framework and portal. You compare the Air Force portal to today's Army portal, Defense Knowledge Online, which is a joint perspective -- their portal and their presentation layer offers much more service and capability than the Air Force portal. It is a wonderful tool for a unit to manage a deployment of soldiers and to keep them engaged with families back home, for families to be able to understand what the unit's doing. It's a very rich capability.

The Army, on the other hand, has not made the investment on the integration framework. It's not that they don't intend to, it's just where they are in the program. So yes, I would very much like us to come together out there in the future as the contracts for DKO, Defense Knowledge Online, and the contracts for GCSS Air Force, when the timelines come together, I'd very much like to have a single offering. Should that not be possible, there is still the opportunity to have a federation.

What do I mean by that? The real reason you want to be under a single framework is so if I'm the joint force commander and I need information about an Air Force line of business that is hosted on the Air Force portal, the integration framework GCSS Air Force, then somehow I've got to get to that information. The system won't let me get to the information unless it knows who I am.

The way you work around that is you share a common identity management service, you exchange certificates. And you can do those. The technique is called federation; you just have to decide what are those core services that have to be common -- doesn't matter what the look and feel is, it best suits your line of business or your operational need.

Mr. Morales: So it's really about driving interoperability across the DoD as opposed to within the various line of service?

LTG Peterson: Right, because we don't fight as services, we fight as a team. And that is the test of whether or not we will be successful is if some deployed soldier, sailor, airman, marine can get the information that he or she needs exactly when they need it without 15 phone calls and having somebody else log into the computer for you.

Mr. Morales: General, as a component of the Air Force's larger communications and information strategic transformation, would you discuss your efforts to implement an Integrated Network Operations and Security Center, or the INOSC, and how does the INOSC initiative reduce your footprint and increase process and personnel efficiencies?

LTG Peterson: Briefly, I told you how we built our networks. We built them one room at a time, one building at a time, one group of buildings at a time, one base at a time. That's how our networks grew up. Industry brought tools along for consolidation, so you reduce the overhead cost of operating a network. One of the reasons that we did not immediately follow that was we wanted each air wing, space wing to be complete, to have its own embedded capability.

So what we have done is stepped back from our network and said we will operate this as an enterprise. When we started, we had 17 separate network operations and security centers, and well over 120 network control centers. You don't need that many, even as a network as large as ours. Today, we have two integrated network operations and security centers divide up the work and have a continuity of operations plan where one could back up the other, and that's a standard business practice. But to do that, we had to make investments in modern network management tools.

On a side note, when I first arrived on the job, I was very concerned of course about network security, and so we went down the path of a standard desktop configuration, a standard server configuration for purposes of security. Well now, we've implemented a standard desktop solution and we're well along on a standard server solution so that we can do all of the patching remotely, and now, we no longer require touch maintenance.

Today, it's hours to patch the network. And it's because of the tools that we've adopted. We did that for the purposes of security. I didn't understand until later that my goodness, all of the workload we took off the shoulders of those systems administrators.

I was at the Pentagon just a couple of months ago, and a staff sergeant, Air Force staff sergeant got on the bus and he walked by me up the aisle and he stopped and he said, sir,

I'm a systems administrator, I just arrived here from Hill Air Force Base. He said we were working 65 hours a week, me and my team, and we were getting farther and farther behind on patches. We could not keep the systems patched until standard desktop came along. He said, when I left, we already had cut our workload down to just under 50 hours a week.

He says, I think by the time we're done, we'll be working less than 40 hours a week. That's when the actual other shoe dropped. He said, that's really a good news story because you know we're going to reduce the number of systems administrators we have next year.

Mr. Morales: Right.

LTG Peterson: You know, we're reducing the manpower in the U.S. Air Force, but leveraging information technology, whether it's in the IT arena or the human resources or finances or logistics, has played a huge role in being able to reduce the required manpower and still be very effective in an operational environment.

Mr. Hathaway: Sir, you mentioned the personnel cuts being experienced by the Air Force. The Air Force is experiencing these reductions as a result of PBD-720. How are you successfully meeting your mission requirements while at the same time absorbing these reductions?

LTG Peterson: Well, that's a timely question. We knew that if we embraced industry best practices, moved on to next generation software and tools, that we could be much more efficient across the Air Force. And as I said, it's not just IT, it's logistics, it's human resources, it's finance, it's every single thing we do, we could become more efficient.

Understanding that, the Secretary of the Air Force and our Chief were faced with a dilemma. Our Air Force really had not recapitalized its capability through the '90s and into the first five years of this decade. We are flying aircraft whose average age is 24 years. In fact, Navy ships on average aren't that old. We had to get started on recapitalizing, and you've seen what we've done with our next generation tanker, combat search and rescue platform, where we need to go with aging fighter and bomber aircraft. And you've seen that in the news, but the problem is so huge that you have to start now. It will take us 25 years to recapitalize the tanker force alone.

Well, in the middle of a War on Terror, the resources for recapitalization simply are not going to be there from external sources. There's a fight going on in the desert; there's a fight going on globally, and that's where our attention is focused. So to find dollars for recapitalization, what could we do internally? And that's when the Chief and the Secretary realized that we could embrace, as I said, industry best practices and tools and become a process-based organization, and we could create our own recapitalization capital. This was not about taking away warfighting capability. In fact, if you do this correctly, you increase your warfighting effectiveness, at the same time reducing the manpower requirements for the mission support arena, and that's that we've done.

The example of standard desktop, the example of INOSCs, those and some others have allowed us to take the first 6,000 personnel out of network services delivery. We need to do more. If you look at my common operational picture that I spoke about earlier, I can map initiative after initiative to the manpower that it will reduce, and it's already begun to reduce, in the Air Force-IT arena.

For instance, no one in industry would have a help desk at every Air Force base. We do. We're consolidating help desks. No one would have a server farm at every Air Force base, given the modern network paths that are available to us, but we do. Those are the examples of the other -- and there are 13 initiatives that -- every single one was looking over the hedge at industry and asking so how are you doing this? And we're getting great partnership, because we're finally getting some unsolicited proposals for how we might better conduct telephone operations across the Air Force. Companies that have investment dollars and great ideas that I think you'll see us implement.

While at the same time we've done that, I can go back to our air expeditionary force -- that's how we build our packages to deploy and how we go to war -- and I can map all the capability required in each AEF package back to capability that still exists that's not going away.

Now, what do I mean by that? We would have tanker aircraft go into depot for their maintenance cycle that comes every few years, and they would be there so long that aircraft would just pile up in the depots as we worked them through the process line.

But today, they're coming out so much more rapidly, it equates to more than a squadron of airplanes back on the ramp available to fly missions. Those are the kind of efficiencies, and if you can do it quicker, you can do it with less manpower, that's the kind of example. So PBD-720 -- it is difficult because it's something you have to do quickly and move out. The dollars that we would have spent, we will invest in the recapitalization of the Air Force.

Mr. Morales: General, changing topics a bit here, could you tell us little bit about something called ROVER, the Remote Operations Video Enhanced Receiver? How has the ROVER technology tightened the seams in the so-called kill-train in increasing the speed and lethality of air power? And could you illustrate this with a real-life example?

LTG Peterson: Sure. And the ROVER is a great example. In the airborne environment, we have -- it's rich with information, data links, imagery from targeting pods, access to the images that a Predator, an unmanned aerial vehicle, would provide. But as we got into the desert initially, that information wasn't immediately available to the soldier, the marine, the battlefield airman on the ground. Yes, they could get a radio call, but they couldn't see moving imagery or the picture of what was over the hill or what was in the compound that they were focused on as the target.

ROVER came from initially the Predator -- the AC-130 gunship wanted to know if, gee, if Predator imagery can be sent all around the world, why can't I see it? So for the Predator, we put together a very simple receiver in a laptop computer, and so if there is a Predator in your area, you tune to that frequency and you take the downlink to the Predator and you see exactly what the Predator sees. Now we're on version 3 of ROVER, and it's much more capable now in terms of that feedback loop of how I ask for information and provide feedback to the operator. And it's not just Predator, it's many of the targeting pods that are on our fighter and strike aircraft also have a transmitter now embedded in them that allows them to go direct to the ROVER.

Lots of battlefield examples, but one that's a little closer to home, is after Hurricane Katrina, we took 10 ROVER sets, which was a little tiny hand-launched Styrofoam UAV with a camera and transmitter -- that was the picture piece -- and then the ROVER itself was the receiver unit on the ground, and we took them to New Orleans to help with the recovery effort. And initially the thought was these will help with search and rescue as we find those victims that are stranded on rooftops or need assistance across the city.

But with all of the helicopter traffic, it didn't look wise to be flying more UAVs. And since they were Styrofoam airplanes, we cut the wings off and strapped them to the struts of helicopters, and gave great situational awareness to the commanders back at the op centers to see what was going on with the helicopters.

Now, the helicopters were busy doing real search and rescue, so they weren't busy pointing the ROVER around where the commander might want to see something else, so that became a signal of opportunity. You know, watch it, but I'm not going to try to steal the helicopter time from what they're doing. So what we did is on one of the taller buildings there in the city, we went up and put four of the Styrofoam bodies and taped the cameras on an antenna tower on top of a hotel in town, so you had a 360 degree panoramic view of the city.

And that's where we got warning when you saw the fires, where you saw -- and you could steer the camera -- where we had other activities going on on the ground where you could alert law enforcement or search and rescue, that became the eyes of the commander in the op center, and extremely valuable. Today, there are over 3,000 ROVER units over in the theater. More are on the way. As I said, incredibly valuable, but just literally one of dozens and dozens of innovations that were out there that industry has helped us put together that we get to put to use every single day in the fight on terror.

Mr. Morales: That's a great piece of technology.

What does the future hold for the Air Force's IT efforts?

We will ask Lt. Gen. Michael Peterson, U.S. Air Force Chief of Warfighting Integration and Chief Information Officer, to share with us when the conversation about management continues on The Business of Government Hour.

(Intermission)

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Lt. Gen. Michael Peterson, U.S. Air Force, Chief of Warfighting Integration and Chief Information Officer.

Also joining us in our conversation is Dave Hathaway, partner in IBM's defense industry practice.

General, as a CIO, a big portion of your job is to put in place the policies, the cultural change strategies, the educational outreach to help staff recognize that they are part of a much broader enterprise. To this end, what are some of the common pushbacks that you encounter as a CIO?

LTG Peterson: The common pushbacks, it's never really pushback; it's lack of understanding of what the teaming relationship needs to be. I am not going to own the process; I am not going to take over the mission set.

But the common pushbacks are, wait a minute, you don't know anything about my business. And I don't claim to. I claim to be very good at listening, helping plot out the processes; helping those owners of the information understand their data, understand why it is important to name and describe that data, and then we can help with what is the art of the possible with turning on the vendors that are out there that are ready to come and help.

I mean, most recently, our training command came, and their need is absolutely genuine, they do not have a single capability to manage students across the spectrum of training as they flow from recruiting to basic training to those first technical or operational schools and then out to the Air Force. We have multiple systems that don't talk to each other, that you end up what we call thumping data back into them. The need is exactly correct. But they did not have the expertise to understand how to expose their data, build and publish services and capability. Instead, they were on the path of building another monolithic system that would talk to no one else. So after the -- and the good news is we're all friends. But it really took several sessions before everyone understood the right path, and we are going to deliver capability in the same time frame. In fact, better capability, for about 10 percent of the cost. So it's exciting.

The pushback is no longer there in the Air Force. And really, I will point to our Secretary, Michael Wynne, because he didn't point to me and say, Mike, you're going to run data transparency. He said Mike, you're going to support data transparency, and he looked at all the other mission owners across the Air Force and said, you're going to own data transparency. And so the pushback, it started with why are you interested, and it's more into, I'm sure glad you're here, and I'm sincere about that.

Mr. Hathaway: Sir, with the evolving global threat environment, there are many new challenges associated with it. How do you envision DoD and its information technology efforts evolving in the next five years to meet these challenges?

LTG Peterson: The next five years will really be important to us. We talked about one of those areas, the portal, Defense Knowledge Online, Air Force portal, where we have to go to share information. The next five years are critical, because today, it is too hard for someone in the joint arena to access all the information they require to do their mission. So the decisions we make about netcentric enterprise, the decisions we make about data strategy, about protocols, will be very important. But I will tell you that the forums that we work together -- and not just Department of Defense, but the entire federal government -- OMB does a very good job of sharing across the federal government, and they are very quick to identify a best practice and share that with all of the other federal agencies that are out there. We've done that in a number of areas.

So I think the important things will be moving out on the service-oriented architecture, moving out on that technical framework that underpins the portals, deciding what services will be available and who will provide them, how will we build them.

Now, that's all on the producing information and getting at their side. The other most important pieces will be on network security. We face some very talented adversaries on our networks. And you will see us continue to build out that -- some people call it the moat in the castle wall -- of course, we will still continue to do that, because you can't even be susceptible to that weekend hacker, so you build the moat and the castle wall to keep out your average hacker.

But then you have to go beyond that with really redesigning our network, where do we allow people to transit our network? How do we handle identity management? What are the tools so we can do business within the government and with our partners outside the government, but not allow people inside our networks? So network security is an area that once you build that castle wall and the moat, now you can get on with the business and put your real talent, your people, against the threats that are a little tougher to uncover -- where malware has been installed on a system, where you have a disgruntled insider that is willing to push information out.

And those tools that help you understand where data is, where it's moving to -- you know, what appropriate behavior is on the network, those tools are emerging in industry as well, and you'll see us implement those as we not only generate the capability to deliver information to everyone that needs it, but lock down any information that shouldn't be exfiltrated or moving outside the network.

Mr. Hathaway: We mentioned transformation earlier, and transformation creates new and competitive areas and competencies that are needed. What qualities will be needed in the warfighter of the future, and those IT staff who provide support? And to that end, what steps are being taken to attract and maintain a high quality technical and professional workforce?

LTG Peterson: Attracting the high quality workforce, we've been very good at that. And I know that in the news you see concerns about meeting recruiting goals. But I will tell you, the only reason it's difficult is because the standards are so high. I am just thrilled by the airmen and the officers that I see emerging from our basic training in our tech schools. So the challenge is we've got the workforce, there is no question about that.

The challenge is two parts. Number one, we will always have to partner with industry. Anywhere we're delivering network services, you are going to find a complete team, you'll find people in uniform, you will find government civilians and you will find industry partners that quite often bring the latest and most up-to-date technology or the individual with the deepest knowledge base.

On the training side, that is a challenge, it is to ensure that our schoolhouses, number one, are current and they're teaching the most modern technology. The next challenge though is how do we build the forums or the interest amongst our workforce. That is a bigger challenge for us, is to keep the workforce current.

Mr. Morales: General, you've had just a fascinating and very successful career of serving our country. What has been the most rewarding aspect of your Air Force career, and what advice would you give to someone who perhaps is thinking about a career in public service, and let's say is thinking about the Air Force?

LTG Peterson: When I was a First Lieutenant, I was stationed at -- Second Lieutenant and First Lieutenant, three year point, I was stationed at Offutt Air Force Base, Nebraska, at the time, Headquarters Strategic Air Command. And until that point, I had never thought about making the Air Force a career. And I'd been working in some projects with two large companies that -- they're still in business today, so they're successful, and I was their Air Force counterpart, and we were putting in a system that in 1977 you would describe as a cell phone network for the commander so he could travel around the greater Omaha area and still be in contact with the national command authorities.

Well, they came to me and said, well, Mike, what are you going to do when you get out of the Air Force? And that's the first time I was forced to answer the question. And so I sat down to talk with the representatives of the two companies, and they offered me, in those years, a whole lot more money than I was making in the Air Force. And I said no, I said I think I'm going to stay in for another assignment. But that was the point when I figured out why.

It was the people you got to go to work with every day. It was the trust relationship, that it didn't matter who you were if you were in an Air Force uniform, you could pick up the phone, ask for a bit of information, ask for help, and you would get a response. Later on, the second half of why I think it was so important to stay in the Air Force -- and this is true in some elements of the business -- industry -- but in the Air Force, your boss wants you to succeed; he doesn't want anyone to fail. I don't care who you are, he wants you to be a success. Because in the Air Force, we all have a plan, someday we're going to retire.

And you can't go hire your replacement off the street, you've got to develop your replacement. So I have served for or worked for dozens of bosses, and every single one of them wanted me to be a success story. Occasionally there was the good feedback, like maybe you wouldn't do it that way again. But most of the time it was open doors, provide really good advice, include me in decisions and conversations, so later on I would know how to tackle that same kind of problem.

So those two things, of great people and bosses that want you to succeed and move ahead in your Air Force career. And I know you don't expect anything else, but I wouldn't trade it for anything. I've had a great time.

Mr. Morales: That's fantastic, General.

Unfortunately, we have reached the end of our time together. I want to thank you for fitting us into your busy schedule, but more importantly, Dave and I would like to thank you for your dedicated service to our country and your leadership in the U.S. Air Force.

LTG Peterson: Well, Al and Dave, great session here today. So often you want information technology turned into the 30-second sound byte, and that's hard. And so allowing me to go over this in a little more depth, certainly helpful for me, and hopefully for your audience out there. But as I said earlier, it's not me, there is a huge team behind me, both here in the Washington, D.C. area as well as out across the rest of the Air Force that puts this together.

And if you want to dig a little deeper or if you're out there in industry and you've got that new idea that is going to help us be more effective and more efficient, we do need to hear from you. The easiest way to get hold of us is simply going to www.af.mil.

Mr. Morales: Thank you very much for your time.

This has been The Business of Government Hour, featuring a conversation with Lt. Gen. Michael Peterson, U.S. Air Force, Chief of Warfighting Integration and Chief Information Officer.

My co-host this morning has been Dave Hathaway, partner in IBM's defense industry practice.

As you enjoy the rest of your day, please take time to remember the men and women of our armed and civil services abroad who can't hear this morning's show on how we're improving their government, but who deserve our unconditional respect and support.

For The Business of Government Hour, I'm Albert Morales. Thank you for listening.

This has been The Business of Government Hour. Be sure to join us every Saturday at 9:00 a.m., and visit us on the web at businessofgovernment.org. There, you can learn more about our programs and get a transcript of today's conversation.

Until next week, it's businessofgovernment.org.

Thursday, July 15, 2004

Arlington, Virginia

Mr. Lawrence: Good morning and 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 by visiting us on the web at 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 special guest this morning is Michael Montelongo, Assistant Secretary of the Air Force for Financial Management and Comptroller.

Good morning, Michael.

Mr. Montelongo: Good morning, Paul. It’s great to be here.

Mr. Lawrence: And joining us is Glen Gram. Good morning, Glen.

Mr. Gram: Good morning.

Mr. Lawrence: Well, Michael, let’s start at sort of the context. Could you tell us about the Office for Financial Management and Comptroller and how it supports the mission of the U.S. Air Force?

Mr. Montelongo: Well, first of all, let me begin by saying thanks to you and the IBM team for doing what you’re doing. In other words, giving your listeners, really the insights of what government is doing to deliver more value to the American taxpayer. So I really applaud you for doing that.

Let me then answer your question and that is that the Air Force, the United States Air Force, the United States Air Force that serves the American public, is designed to protect the interest of the United States, to defend the interests of the United States using air and space power. And what our role is as financial managers is to primarily deliver the resources that the Air Force needs, the financial management services that the Air Force needs to accomplish that mission.

Mr. Gram: Mike, can you tell us a little about your role as the Chief Financial Officer of the Air Force?

Mr. Montelongo: Well, it really stems from what I just said, Glen, and that is that we’re primarily involved in delivering financial management services and analytical services to the Air Force at large. And then I have the additional role of being the primary adviser, financial adviser to the Secretary of the Air Force Jim Roach, who’s my boss, and my other boss, who is the Chief of Staff of the Air Force John Jumper. And I also provide that kind of advice and counsel, financial resource advice and counsel, to other senior leaders of the Air Force.

Mr. Gram: What’s the size and scope of your organization as you carry out those functions?

Mr. Montelongo: Let me just put in context to say that the Air Force is one of perhaps three or four business units, if I could use that lexicon or that sort of metaphor and analogue, in the Department of Defense, which is basically in many ways the oldest, largest, busiest, and some might arguably say the most successful organization on the planet. As far as the Air Force is concerned, we have something in the neighborhood of about 700,000 professionals that span the active duty, reserve, guard, and civilians that do the work of the United States Air Force.

When you look at what we are involved in, in some ways, you can describe us as the largest airline on the planet. We have a fleet of something like 6,000 aircraft, which is larger than really the fleets of Southwest, Northwest, Continental, United, American, and Delta Airlines combined. Of course, our aircraft is specialized, too, as you might imagine. And when you also compare us to the personnel, budget, and asset base of other companies, I just told you that we have a total of about 700,000 or so people, frankly, that’s more than IBM and General Motors combined, and I think it’s only Wal-Mart that exceeds the number of people employed that we have.

And in terms of budget, just recently I guess in this current budget cycle, we have something to the tune of a little over 120 billion. And when you compare that to the revenue base of, say, the largest six air carriers or airline carriers, we exceed that, and we also exceed the asset base for those carriers by a good amount. So we are a fairly sizable organization.

Mr. Gram: Well, that’s great. Can you tell us a little about your previous work experience prior to becoming this Chief Financial Officer, and how that work experience prepared you for your current position?

Mr. Montelongo: Well, I began public service quite early as a lieutenant in the United States Army, and this -- well, I guess I won’t tell you how long ago that was, but that’s how I started and did, frankly, a full career before I decided that it was time to then pursue another chapter in my journey. And from there, after doing a career in the Army, then went into the private sector, starting first in the teleco industry and then moving on into the consulting industry. And then this opportunity had come up and I was, frankly, very fortunate to have the opportunity and privilege to join the Administration and to serve in this capacity.

Mr. Gram: How different is that experience compared to the typical commercial sector experience?

Mr. Montelongo: Well, you know, in many ways it is quite comparable. And I think that as you have noted in previous conversations that you’ve had with other government officials, I think that they would probably tell you the same, that it’s quite comparable in many ways.

Where it differs I think is clearly in the fact that we don’t have a profit motive. It differs in the fact that the scale, as I just tried to paint for you, is quite different. And the cost of not performing, particularly in this area, in this context, in the Department of Defense, in the business units of the Department of Defense, whether it’s Air Force, Army, Navy, or Marines, the cost of not performing is proportionately I think higher than it would be, say, in the commercial sector. Because here we’re talking about, frankly, the national defense. We’re talking about lives at stake. We’re talking about defending the nation’s basic democratic principles and values. And so in that regard, the stakes are much higher.

But even though we don’t have a profit motive, we still have the pressure to perform. We have the pressure to succeed and win. There still are increasing demands for accountability, efficiency, effectiveness, and productivity. In some ways, I guess you could say that we have a CEO who’s the President of the United States; and we have a board of directors, which is the United States Congress -- as opposed to maybe 15 or so, we have 535 -- which makes things quite interesting, as you might imagine; and our shareholders are the American public. And I think that in some ways, one could arguably say that our shareholders and board of directors are every bit as demanding as any corporation’s stockholders or board of directors.

Mr. Gram: I appreciate that analogy. That’s a neat way of looking at things. What’s been your greatest challenge in your role?

Mr. Montelongo: I’m not sure that I could -- as I think about that, I’m not sure that I could necessarily limit it to a single challenge, because government -- public service in and of itself I think poses some very complex challenges. And I think -- and this is not necessarily a judgment call, but I think from the perspective that I see it doing this in the Department of Defense I think makes it even that much more challenging and complicated sometimes.

But I’ll tell you, as I think about it, maybe the way I would characterize it is that each day I have to fight the tyranny of the urgent versus the important. And that is, and I think you can relate to this, I mean, oftentimes I find that the urgent is always crowding out the important. And another way of perhaps manifesting this comparison between the urgent and the important is that I tell my folks that each and every day, we are involved in building the airplane while we’re flying it. We have to operate while also being mindful of creating the future.

We don’t have the luxury we just went through the Finals here, the NBA Finals with the Lakers and the Pistons. They have the luxury of timeouts, we don’t. We have to operate every day, today, fighting a war, if you will, but we also have to be, as I said, very mindful of creating the future so that when the future gets here this institution will be as ready as it is today to meet the nation’s needs.

Mr. Lawrence: Your description of the scale of the Air Force was very interesting and context-setting. I’m curious in terms of some of the management challenges that scale presents. How do you communicate with a group that large?

Mr. Montelongo: Interesting question. I think that you use several channels to do that. And the one that I -- my preference is face-to-face. So I make it a point -- I don’t travel as frequently, for instance, as my boss does, the Secretary of the Air Force or General Jumper, both of them do, they travel quite a bit. And in fact, they do that primarily to get the word out, to connect with our 700,000 strong workforce: airmen, civilian airmen, and so forth. And so in some ways, I try to mimic that as well visiting as many bases as I can so that I can connect and let those folks know, both let me say not only financial managers at work -- and I have about 10,000 of these folks who are distributed throughout the Air Force -- not only to connect with them and let them know that I care about them, I love them, I love what they’re doing, and I appreciate their contributions, but also the wider Air Force that’s not necessarily involved in the financial management: the maintainers, the logisticians, the civil engineers, all of those folks, the communicators. I go out there to try and reach out and touch them and let them know that folks like myself are back here in the Pentagon doing everything that we can to give them the resources that they need to do their jobs.

So it is a mixture of having face-to-fact connect; it’s a mixture of using these kinds of opportunities that we’re doing this morning to reach out and let folks know what we’re about, what we do, and how we’re contributing to the defense of the nation.

Mr. Lawrence: Interesting. Transformation is taking place within the Department of Defense, and the Air Force’s financial management organization is no exception. What’s the transformational plans for financial management in the Air Force?

We’ll ask Mike Montelongo of the Air Force when The Business of Government Hour continues.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I’m Paul Lawrence, and this morning’s conversation is with Michael Montelongo, Assistant Secretary of the Air Force for Financial Management and Comptroller.

And joining us in our conversation is Glen Gram.

Well, Michael, I understand the Department of the Air Force is in the process of transforming itself to include its financial management operation, and I guess I’m interested in learning about the transformation. My first question is sort of why now, especially while we’re at wartime? And I’m reminded of your analogy, just talking about building the airplane while you’re flying it. So it seems like perhaps a high degree of difficulty.

Mr. Montelongo: Actually a very great question. I must tell you, Paul and Glen, that I vividly recall 9/10, the day before 9/11. And on that day, the Secretary of Defense Don Rumsfeld gave I thought a milestone speech titled “Bureaucracy to Battlefield.” And basically in that speech he was outlining his plan. Actually at that point, it was more of an evolution of a plan that he had already introduced when he came into office, but this one was a bit more specific about taking sort of the negative aspects of bureaucracy that we’ve all heard about, that in many ways pose stumbling blocks and barriers to good government and effectiveness and efficiency, and diverting all of the resources that go to those kinds of barriers, if you will, over to battlefield, if you will, the tooth of the Defense Department.

So basically what he was doing was rallying the troops and exhorting all of us to say, folks, we really have to move forward here and begin to translate all of this stuff that we have been experiencing from a bureaucratic point of view into more productivity and more capability. So that’s the whole notion of Bureaucracy to Battlefield.

And then, all of a sudden, 9/11 hits. So one would think, as your question implies, gee-whiz, how can you continue to be on sort of a transformation journey while you’re also fighting a war? Well, I would tell you that the global war on terrorism increases the imperative for change. It actually makes it that much more imperative for us to do the kinds of things that the Secretary was laying out on 9/10, the day before 9/11.

The President and the Secretary laid out a vision when they came into office for a much more agile, nimble, flexible, lethal, and integrated force, supported by a business operation or a set of business operations, back office if you want to use that term, that are just as agile, just as responsive to the war fighter. And then my boss, Secretary of the Air Force, and General Jumper, the Chief of Staff of the Air Force, have basically taken that charter, that mandate to say in the Air Force, we’re not about necessarily platforms, we’re about building, sustaining, and strengthening capabilities.

Well golly gee-whiz, if that’s what the institution at large is trying to do, then it’s imperative upon me and my financial managers to support that kind of change, to support that kind of transformation. We have to be every bit as sophisticated in our financial service delivery as the weapon systems that we support and the war-fighting concepts that we support. That’s what transformation’s all about.

So for me, I have explicitly told our folks that when we grow up, metaphorically speaking, we have to be strategic partners to our commanders, to our decision-makers. We have to be the ultimate choice for financial and management information that is reliable, that’s timely, that’s accurate. And we have to be part of a world-class team that is delivering the absolute best in customer-focused financial services, but primarily what I call decision support services. That means, I want to make a distinction there, and I’m drawing a distinction between sort of the analytical capability that we can deliver versus transactional kinds of services.

Mr. Gram: Human capital, that is getting the most out of people and helping to promote top performance, is a major challenge in the federal government. How many people work for you and what are you doing to help them develop their potential?

Mr. Montelongo: Human capital, people stuff. Man, I’ll tell you, you’ve hit a button for me. That is a key piece that I spend a great deal of time on, because if we’re going to succeed at any of the kinds of things that I’ve sort of been outlining with you and our listeners, it’s going to be because we have dedicated, committed, skilled, competent people that are doing the nation’s work, frankly.

In my shop, I have something like 150 people, and that’s supplemented by partners in business, yourselves for instance, and you know this, Glen. And across the Air Force, and I mentioned this a little bit earlier, we have something like 10,000 individuals that are doing financial management work across the Air Force. And, you know, what we’re doing to manage their careers better, to give them the tools, the skill sets, the competencies that they need to succeed each and every day, we have embarked on what we’re calling a force development process, meaning that we’re now in the process of developing, training, educating, grooming, growing them purposely, purposefully, on purpose rather than sort of a pick-up game or an ad hoc game, which I think we had been doing in previous decades. It’s important that we do that.

Business, as you know, does or puts -- in some of the better organizations in business, put a premium on succession planning. And the idea being there is that you’re actually on purpose looking at your talent and strengthening that over time, and on purpose putting people into the right positions so that they can grow and ultimately take the reins of leadership in the organization. That’s what we’re doing with this whole force development concept in the Air Force and in financial management.

Mr. Lawrence: We noticed that your office is working with Harvard MBA summer interns. I’m curious about the objectives of this program and what type of work they do over the summer.

Mr. Montelongo: Paul, in addition to strengthening the folks that we currently have on the payroll and doing the kinds of things that I just outlined, we also have to be very mindful of bringing in new talent. You know this very well; one of the challenges the government at large is facing is the aging issue; that a good solid number, a large percentage of the public service workforce is in the retirement window. Now thankfully, we haven’t lost, at least in a large scale, that leadership capability, that skilled leadership capability just yet. But, I mean, as time goes on, it’s inevitable. So we have to be mindful to be sure that we can bring in some new talent.

My view is that we ought to have every bit of an opportunity to go after our fair share of America’s top talent. You know, we -- and I don’t want to make light of this, but certainly, you know, we’re in a war, global war on terrorism, but I also tell our people we’re in a war for talent. You folks are after the same talent that I want. In the past, we, I think, maybe unconsciously, have ceded the first-tier talent to business. So we haven’t aggressively recruited at first-tier schools, like Harvard or Wharton or Stanford or Chicago or any of those places. Well, I say we need to do that.

We need to visit these young people and say that in addition to the plethora of choices that they have to pick from, there’s another one that they haven’t heard, and that’s public service, and that that is every bit as rewarding and challenging as any other opportunity. And this an area, public service, of all the areas in American society that needs that kind of first-tier talent that is being produced at places like Harvard and all the other places that I was talking about. So what we’re doing is going through an experiment to see if we can introduce this young talent to government, to public service, and see what they think, because they’ve never met a government person before. They’ve never met somebody in uniform before. All they’ve heard is what they read in the papers, if you will.

And we also want to introduce our people to this top talent, because all they’ve probably heard is, oh, these are these young whippersnappers who think that they know everything and they’re Wall Street types who are, you know, arrogant and so forth and so on. Well, I got to tell you, this is our third year; we’re going into our third year of this experiment. We’re bringing in an intern this summer. Last year we had four, and the previous year we had one, and it’s been marvelous.

Those young people roll up their sleeves, go in, and they really do nuts-and-bolts work with our people, and they have impressed the pants off of our folks. Our folks really are marveled at the dedication and work ethic of these students. And in turn, the students, when they leave, the feedback that they’ve given me is that this has been an experience of a lifetime. Although we haven’t yet gone to a point where we’ve hired them, we’re looking to at least plant the seed in them that public service is an option that they may pursue in the future.

Mr. Lawrence: That’s fascinating, especially the people focus.

Transformation also involves technology and process. How is the Air Force addressing these? We’ll ask Mike Montelongo of the Air Force when The Business of Government Hour continues.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I’m Paul Lawrence, and this morning’s conversation is with Michael Montelongo, Assistant Secretary of the Air Force for Financial Management and Comptroller.

And joining us in our conversation is Glen Gram.

Well, Michael, in the previous segment, we talked a lot about people with the right skills and attitudes to make transformation work, but I’m also curious about technology. How is your organization using technology to promote transformation?

Mr. Montelongo: Paul, technology is part of a three-prong strategy or three-prong attack in our strategy to begin to make our change and transformation a reality. As you say, we did talk about the people a second ago, and that’s obviously a key element in making all this happen. Processes, streamlining them and making them efficient, that’s important. But having integrated systems that talk to each other is tremendously important so that we are not doing what we’re doing today, and that is relying on human interfaces to move information, to move data back and forth. So today, at the very extreme, we would have to download information from one system only to fat-finger it into another.

And as you well know, having the experience that you have in the private sector, all that does is introduce that much more error, not to mention the inefficiency and the time that it takes to do that. So we’re spending so much more time in this time-honored ritual called “data calls” than in spending the time -- in other words, by that I mean, and your listeners who work in government probably are chuckling because they understand what it means, unfortunately, but what that means is basically spending so much time collecting the data, collecting the information, going out manually using a telephone or whatever it is, e mail, to say, hey, folks, I need the following data because I can’t get it out of a system. I want people to spend most of their time analyzing, putting together courses of action so we have to fix our systems.

As you probably well know, the Defense Department launched on an effort that the Secretary asked us to launch a couple years back called the Business Management Modernization Program. And that really is a very bold and ambitious plan to basically modernize the business systems in the Department of Defense. And it’s a very ambitious one, because we have something like when we did the inventory of current systems that we have in place, we have over 2,000 first-tier systems that, in essence, are disconnected. They don’t talk to each other. They’ve got lots of information, lots of data that we need to run this organization, this institution, but they are not integrated comprehensively. And so the BMMP, as it’s been called over the last several years, is a key element in attacking the systems piece.

We have others that I’m concentrating on in the Air Force. One is basically putting in, for the first time, a general ledger, honest-to-goodness, 21st century accounting system into our Air Force, which we haven’t had. And that’s called DEAMS -- that’s the acronym, Defense Enterprise Accounting Management System.

And we’re also trying to make better use of tools that we currently have for self-service operation. We’re calling it My Pay. And basically My Pay is probably version one of what you and I use when we go to the website and do our banking, our personal finance stuff. And My Pay is the right solution, we just have to add even more functionality so that in the future, when our airmen need to basically do personal financial transactions, they can do it self-service rather than having to do it face-to-face as we do today.

Mr. Gram: Yeah, that’s a big change in the way things used to be.

Mr. Montelongo: Absolutely, culturally it is. We have to wean people off of that. But look, you know this as well as I do: when you look at what it costs on average for a face-to-face transaction, we’re talking anywhere between, I don’t know, $16 to $20 per visit. When you handle the same transaction in a centralized call center operation, now we’re talking maybe perhaps something along the lines of $7 to $10 per phone call. We do the same transaction on the web, it’s 5 cents a transaction. There’s a time for the personal face-to-face, there’s a time for perhaps the call center, and there’s also I think now, finally, a time to leverage this kind of technology, web technology, so that we can still deliver quality services, but at a much lower price point.

Mr. Gram: We know that you’re a proponent of cost and performance awareness. How do you change the culture and promote that type of behavior or those thought processes as you go through those changes?

Mr. Montelongo: Glen, in many ways, what that really amounts to is aligning the incentives that we currently have so that what we’re doing is promoting and encouraging and motivating folks to perform; in other words, to let them know that, at the end of the day, what’s going to count is not a set of inputs or how many transactions you did, but what was the outcome. What value did you produce? What service did you deliver? What product did you give to the war fighter? That’s what is going to be measured at the end of the day. That’s what people are going to be rewarded for at the end of the day.

So I will tell you that what the Secretary of Defense has done, and it was challenging, but partnering with Congress, has been able to enact -- I should say that this is something that the Secretary had asked Congress for and Congress has enacted and the President signed into law, is the National Security Personnel System, which basically is going to upgrade the current personnel system that we have for our civilians so that basically we can do the kinds of personnel actions with much more agility and nimbleness than we have in the past.

You know, so the ability to hire people on the spot, which is something that we haven’t been able to do except for maybe certain circumstances. I know that some of my people, for instance, tell me that when they go to job fairs, the company at the booth right next to them is able to on-the-spot hire somebody, give them their bonus or loan forgiveness or whatever the case may be, whatever package it takes to bring that person on board, and then we, on the other hand, tell our folks here’s all this paperwork that you got to fill and it’s going to take a couple of months to process. I mean, it’s ridiculous.

I told you before we’re in a war on talent. And so I think our NSPS, when we finally implement it and get it executed, is going to give us the kinds of flexibility that we’ve been seeking so that we can, in fact, again, going back to what I was saying a second ago, motivate our folks and let them know that they’re going to be rewarded for behavior that stresses performance.

Mr. Gram: That sounds like that system will go a long way towards leveling the playing field a little bit. What are you doing in the service delivery model areas? And as you streamline your supply chains to improve cost and quality, what are some of the changes you’re doing there and how you’re looking at providing services?

Mr. Montelongo: Glen, I sort of alluded to this a second ago when we were talking about how we’re leveraging technology or how we’re perhaps using technology to transform the delivery of financial services. A couple of things going on here.

First, I asked our folks to take a hard look at what it is that we do as financial managers and to filter all of what we do through a core competency lens. In other words, the Air Force does three things, three core competencies better than anybody on the planet: it develops airmen, it brings technology to war fighting, and it integrates operations from an air and space point of view. Better than anybody on the planet. Nobody else can do that. So in the financial management world, what is it that we’re doing that strengthens, promotes those core competencies? And the notion being is that whatever it is that we do that does that, that’s what we should keep doing. Whatever it is that we’re doing that doesn’t necessarily do that, then perhaps we should examine that for divestiture.

So with that kind of insight, I then want to say now that we know the kind of services that we want to deliver, in other words, the what that we want to deliver to the Air Force, to the war fighter, now let’s figure out how we’re going to deliver that. What channels are we going to use to deliver those services? And in doing so, can we leverage technology so that we’re delivering those services at a lower cost point?

So again, to what I was saying previously, rather than relying and defaulting solely to face-to-face delivery, which is very costly, let’s use the face-to-face for advisory services; in other words, the financial manager advising commanders and decision-makers. But for routine financial management service delivery, perhaps we can do that with call centers, perhaps we can do more of that with the web. And that’s how we’re trying to streamline our service delivery model so that we’re delivering just exactly what the Air Force needs from us, but at a much lower price point.

Mr. Lawrence: That’s a good point.

What’s the appropriate level of government interaction with the private sector? We’ll ask Mike Montelongo of the Air Force for his perspective 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 Michael Montelongo, Assistant Secretary of the Air Force for Financial Management and Comptroller.

Joining us in our conversation is Glen Gram.

Mr. Gram: Mike, can you share with us your vision for Air Force financial management operations over the next 5 to 10 years?

Mr. Montelongo: Glen, we talked a little bit about this in the previous segments, but I will tell you, I’m very optimistic about our future. When I think about perhaps a 15-year reunion that I might have with some of my colleagues that are my present-day colleagues, I really am very optimistic about what I think I’m going to be seeing. I think that I will see auditable financial statements. I really feel that. I think I’m going to see clean opinions. I’m going to see the fact that our financial and management information is indeed reliable, accurate, and timely. I’m going to see people that are currently in the workforce then who will look at me incredulously when I mention the term “data calls.” They’ll look at me and say, geez, we don’t do that around here, we just hit the Enter key and, in fact, I just hit this little switch here on my PDA and everything that I need is available to me.

I really do think that we’re going to be in a position, a much better position to actually do the kinds of things that we’re envisioning now 5, 10, 15 years from now. In other words, being the strategic partner to our decision-makers and commanders, being individuals that will leave our footprint, our collective footprint, on the future of the United States Air Force. I feel really good about that.

Mr. Lawrence: I understand that you’re a great proponent of the interaction between the public and private sectors. Why do you think this interaction is important?

Mr. Montelongo: 9/11, Paul, has really dramatically changed the landscape, more so than well, it’s hard for me to certainly compare this to back in other eras, like World War II, World War I, and others. I guess I can only speak to this era because this is the era that I am here in. But to me, I think it’s dramatically changed. So much so that we just can’t leave the business of taking care of America entirely, exclusively to just those of us in public service.

America’s scarcest asset is her talent. And over time, what we have done is bifurcated that talent, compartmentalized it between public and private sectors. And in some cases, the relationships have been adversarial and confrontational. We can’t afford that anymore.

I read the other day that 85 percent of America’s infrastructure is owned by the private sector. Goodness gracious, if we’re going to win this global war on terrorism, we have to have the private sector -- business -- partnering with us here in the public sector. I, frankly, think because of the fact that I think America would like to have its best and brightest at key positions in public service, well, then we have to then figure out ways to have exchanges and have this talent move back and forth between both sectors.

Now clearly, we have to figure out how we can do that, facilitate that, and still make sure that there aren’t any conflicts of interest, and I think we can work that out. But I think over time, what we’re going to have to do for the sake of America is be sure that we can have some permeability between the two sectors that in the past has been almost in some cases, at the very extreme, a solid wall. We have to take advantage of every bit of talent that America has regardless of where it is.

Mr. Gram: Mike, we know that you’re very active in the Hispanic community and promoting, you know, the participation in the military and public service and education. What advice would you give a new person joining the public sector or considering joining that as a career?

Mr. Montelongo: Glen, great question, because I have spent the better part of my lifetime, both professionally and personally, in promoting opportunities for everyone. And because my background is Hispanic, I guess I’m a bit sensitive to the fact that this particular segment of our great society is growing leaps and bounds. And as we sort of project demographically how things are going to be, gosh, in the next 30 to 40 years, that segment is just going to continue to grow and be much more of a percentage of our population than it is today.

My view is that America has to take advantage of, as I was saying before, every bit of its talent regardless of where it is, regardless of what color it is, regardless of what background it is, regardless of what faith it is. It has to use every bit of its talent to remain competitive in this very global and increasingly global society.

When I go to neighborhoods that I grew up in that are predominantly a minority, in my case Latino, I encourage our young folks to explore opportunities, to be involved in society, to contribute to society, to make a mark on society, to give back to society, and that if they prepare if they prepare -- they will have every bit of opportunity to contribute. They will have every bit of opportunity to step up to the plate and knock the cover off the ball, but they have to prepare. They absolutely have to prepare. This is big league stuff.

And once again, this issue of 9/11 has really changed the complexity I think of things. And so we need the very best that America can prepare to lead America into the future. So I think that one of those opportunities that young people have from all walks of life is public service. And it’s one that I think sometimes our young people in our colleges and grad schools aren’t introduced to enough. And that’s kind of our fault a little bit, because I’m not sure that we have made a concerted effort, at least on the civilian side, to get the message out that, hey, there is a significant civilian workforce in the federal government that needs the kind of talent that we have in our schools.

So I would tell young people give us a look. There is an extraordinary opportunity here, I think a very compelling value proposition for public service. It is an opportunity to give back to society. It’s an opportunity to be part of something larger than yourself. It’s an opportunity to give a little bit back to America for what it has given an individual. It’s an opportunity to touch lives in a very meaningful way that very few professions can do. That would be my advice to young people.

Mr. Lawrence: In the earlier answer this segment, you talked about the 15-year reunion with your colleagues. And I’m curious, when you’re at that reunion, how would you want them to describe your legacy as the CFO of the United States Air Force?

Mr. Montelongo: Gosh, Paul, it is tremendously early in the game to talk about legacies. I think that what I would feel very good about is that along with the wonderful people that I’ve had the privilege to serve with in the United States Air Force, supported by the leadership, starting with the President, frankly, and the Secretary of Defense and my boss and General Jumper. We are well on our way to launching a journey here and have had some modest success with transforming and strengthening our capability as financial managers. And that in the process of doing that, we are then delivering that much more value to the United States Air Force so that the United States Air Force can be that much more capable 5, 10, 15 years from now.

And I also want to sort of look back in having sort of done that, or at least started that process and be able to feel good about the fact that while we were doing that, we stayed loyal and true to our values. And it’s tremendously important.

I think that one of the things that is also part of that compelling value proposition to young people that I was talking a second ago about, Glen, is that certainly in the Department of Defense, but I would say this extends to public service in general, we’re talking about a values-based organization, an organization, an institution that places a high premium on values, on deciding, on doing things on the basis of values, and using that as an anchor. We talked throughout this entire set of segments of the imperative to change, of the imperative to transform, because if we don’t do that, then we are doing a disservice to the American people. But what we can count on that will transcend change and transformation is the fact that we will remain true to values. And if we can do the kinds of things that we’ve described in the course of this broadcast, but remain true to our values, then we have really accomplished a great deal. And those values for us in the Air Force are that we place a high premium on integrity, selfless service to the nation and to each other. And then finally, excellence in everything that we do.

So if we can have that 15-year reunion, Paul, and look back and say that we did all those things, I think that we can feel pretty good about what we did.

Mr. Lawrence: Well, that’ll have to be our last question, we’re out of time. Glen and I want to thank you for squeezing us in your very busy schedule.

Mr. Montelongo: Paul, I want to thank you and Glen and certainly the crew at IBM once again, as I mentioned earlier this morning, for doing this and, frankly, giving our listeners an opportunity to gain, frankly, an insight as to what government -- what public service is all about and what government is doing today to meet the demands of the American people. And this program in particular is quite innovative and gives listeners, I think, an opportunity to just have that kind of glance as to what’s happening. Because oftentimes unless you’re actually doing it, you don’t get that perspective. So thank you for doing that. My hat’s off to you and your colleagues.

And I just want to mention one last thing parenthetically to our audience. If there’s anything that you’ve heard this morning, based on what I’ve said, or anything that certainly Glen and Paul have mentioned that interests you, that piques your interest, and that you’d like to pursue a bit more, I’d welcome your feedback or comments; or anyone who might be interested in pursuing a career in public service, then I invite you to contact us. And you can get ahold of us by hitting our Air Force website, and I believe that’s www.airforceaf.mil. And then from there, you can navigate to my website and you can certainly contact me through that. So if you’re so inclined, I welcome that very much.

Mr. Lawrence: Thank you again, Michael.

Mr. Gram: Thank you.

Mr. Montelongo: You bet.

Mr. Lawrence: This has been The Business of Government Hour, featuring a conversation with Michael Montelongo, Assistant Secretary of the Air Force for Financial Management and Comptroller.

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 fascinating conversation. Once again, that’s businessofgovernment.org.

This is Paul Lawrence. Thank you for listening.