Originally Broadcast May 17, 2008

Washington, D.C.

Announcer: 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 National Aeronautics and Space Administration celebrates its 50th year, it remains one of the most complex and exciting missions in the federal government. With its cutting-edge research in aeronautics, space science, and earth science, NASA expands our knowledge of the universe, and applies these insights to our daily lives. A few years ago, President George Bush gave NASA a defining challenge for the 21st century: to expand human presence in space. The success of this ambitious vision rests on NASA's pursuit of an effective information technology strategy.

With us this morning to discuss NASA's critical efforts in this regard is Jonathan Pettus, chief information officer at NASA.

Good morning, Jonathan.

Mr. Pettus: Good morning.

Mr. Morales: Also joining us in our conversation, from IBM, is Paul Kayatta, partner in IBM's General Government Practice.

Good morning, Paul.

Mr. Kayatta: Hi, Al. Good morning, Jonathan.

Mr. Morales: Jonathan, many of our listeners are probably generally familiar with NASA, given its wide public recognition, but could you take a few moments to provide us an overview of NASA's history and its mission today?

Mr. Pettus: Sure. What we like to say is that we're about pioneering the future of space exploration, scientific discovery, and aeronautics research. So if you think about really what we do, it's really about innovation and exploration, and in part inspiration, in terms of the human desire to explore and discover. Many, and especially those of who work at NASA, find that to be inspirational, and we believe the public does as well, in general.

And in terms of our history, this is a particularly important year to our history because it's our 50th anniversary. And the roots of NASA date back to 1958, when the agency was spawned, in part as a reaction to the launch of Sputnik. Of course, from there, the '60s were about getting to the moon, the Apollo program building on Mercury, Gemini, and then ultimately Apollo. And so that era that so many people are familiar with and one of our greatest achievements, man reaching the moon, is obviously something we're very proud of, but NASA has had a broad history beyond just that.

And in fact, from there, we moved into, in the '70s, a focus on -- you may recall Skylab, which was that early version of an orbiting laboratory for experimentation -- as well as actually the beginning of the development of the Space Shuttle Program during that era, along with many different scientific missions. For example, the Voyager missions, which basically spanned the solar system and actually continues on out beyond the solar system in terms of those two spacecraft.

Then again in the '80s, where the shuttle program moved into full-fledged operations as well as continuing, you know, many different science missions. And then the development and then the construction of the Space Station, which is an international partnership including 16 countries. And you really see of late the international flavor of the Space Station, as you've seen European components be launched and assembled. And of course, we have a significant partnership with Russia in terms of the operation and habitation of the Space Station.

So we focus a lot on human space flight, but I should mention the scientific missions, the robotic missions, like most people would be familiar with our Mars Rover projects and the fact -- the amazing lifespan of those Rovers that are still operational on the Martian surface. Then with our full portfolio of science missions -- and many people probably don't know this, we have over 50 or so science missions either in-fly or in preparation to fly. So our portfolio of projects that NASA is about these very large, long-term, human space flight efforts, like the shuttle, the station, and you mentioned the President's plan and strategy for us to begin to work to return to the moon and then on to Mars with humans, as well as our large set of smaller scientific missions.

With the aeronautics research, the scientific discovery, and the human space flight, those are the major themes within NASA, and really what we're about from our earliest days.

Mr. Morales: Well, that's certainly a very broad portfolio of missions, and certainly, you know, NASA's about making history in all those events and accomplishments that you mentioned. So to help provide our audience a sense of scale, can you just tell us a little bit about how NASA is organized, the size of its budget, number of full-time employees and contractors, and perhaps its geographic footprint?

Mr. Pettus: Yeah, I can start with the numbers, give you a little bit of information about our organization. We have roughly 17,000 government employees, civil servants, and then around 40,000 contractors, contractor partners, which are a huge part of how we accomplish our mission at NASA. Our budget's roughly $17 billion annually. Our geographic footprint really consists of 10 major locations -- we call them "centers" -- spread throughout the country, with headquarters in Washington, D.C. And your listeners will be familiar with some of our major centers, like Johnson Space Center in Houston, Texas, where Mission Control for shuttle and station operate out of; of course, Kennedy Space Center is another example, down at Cape Canaveral, where we launch from; as well as centers like Ames Research Center out on the West Coast, which has a major role in our scientific programs as well as supporting some of our human space flight efforts. So in all, 10 centers spread throughout the country, all headquartered in D.C.

Mr. Kayatta: Now that you've given us a great sense of the larger organization, could you tell us a little bit about your role as NASA's chief information officer? And could you tell us a little bit about your organization, also, how you're organized and the size of your staff, budget?

Mr. Pettus: Yes. Of course, the chief information officer role is the senior most IT official in the agency, responsible for IT policy. I'm responsible for the agency's IT infrastructure, our data centers, networks, end-user devices, those components that make up our infrastructure, as well as facilitating and architecting our overall applications landscape, our systems that are used to automate business processes and to exchange information/store information. And obviously, especially in this day and age, also responsible for information technology security, information security for all of those assets.

Then in terms of our organization, we have a federated model for our IT organization. Here in headquarters, our office consists of about 50 employees. But across the agency, we have each of those sites that I mentioned has a chief information officer that's part of our IT community, and I coordinate the efforts of those IT officials across the agency. The total workforce across the agency consists of about 700 NASA civil servants and about 2,000 contractors.

Mr. Kayatta: That's an expansive purview. I'm sure in that responsibility there are many challenges that you face. Could you highlight perhaps the top three and what you're doing to address them?

Mr. Pettus: Sure. Well, it is a challenging responsibility, as you state. I'd say there are many challenges. It's hard to hone in on three specific ones, but I'll give it a try.

First is ensuring that given the expansive nature and diversity of our overall mission and programs, ensuring that our IT investments are focused on enabling the mission. And so in our federated model, making sure that we have at least enough visibility of IT decisions that are made, and ensure that there's some consistency around infrastructure. Then interoperability from an application and infrastructure perspective is a significant sort of overarching challenge, and many of the other challenges fall from that.

So a second challenge, sort of related, is that our tradition at NASA is for those centers to be very autonomous. And the work profile in the past, in our history, has been much more focused on specific sort of big footprint roles for each of those centers. Whereas with our future and the role of what we call our Exploration Program coming from President Bush's mandate to NASA to develop the plan to return to the moon and then to move further into the solar system in terms of human exploration, the model going forward is for our agency to collaborate and to leverage resources that exist across those centers in a much more granular way. So from a CIO perspective, what that means is that our organizational model and our style of how we execute our programs is changing. And so from a CIO standpoint, that has an impact on our strategy, which is ensuring that IT is a key tool in helping that integration, collaboration across those center boundaries.

And then the third challenge is given our role at NASA, you know, if you think about what we're about, which is creating knowledge, sharing information for the advancement of humankind, then we're all about openness in terms of our information and systems. But we also have the challenge of security and securing the information. So balancing this need that's fundamental to our mission to share information and to collaborate with academia, education at the lower levels, with our business partners, and with the public at large, while also ensuring that we have the appropriate level of security on some very important national assets is a big challenge.

Mr. Morales: It's certainly a delicate balance to strike between those two. Now, Jonathan, I understand that you've been with NASA now for roughly about 17 years, but you didn't necessarily start in government. So can you tell us a little bit about how you got started?

Mr. Pettus: I can. My first job was a high school math and history teacher and a basketball coach. I started out for a couple of years at least in education. My parents were both teachers, so I knew I was interested in teaching. I also loved basketball, in particular, and so thought I would -- my plan all along was to actually get an education that would allow me to have some mobility between my number one thought, which was to follow in my parents' footsteps and be a teacher, and then also be able to move into the technology field. And so I earned a degree in computer science and a master's degree in computer science, along with degrees that would allow me to teach. So I started out as a school teacher.

And then I gave technology a try with a job. My first job in technology was with a software firm that developed human resources and benefits systems for the private sector, and I did that for about a year.

And then I moved over to an aerospace company that was a contractor for NASA, and that's how I got into the NASA business. And so I worked on payload integration software for our Space Shuttle Program as a contractor, and then finally moved over to the government side about 17 years ago, when I first came to work for NASA and came into the IT organization down at Marshall Space Flight Center, which is in Huntsville, Alabama.

Mr. Morales: So as you kind of reflect back on some of these experiences and some of these decisions, how do you feel they reflect your current management approach and your leadership style?

Mr. Pettus: That's a good question. I think that -- and again, this may be surprising to some, but I like to say -- as I think back about it, I think this gets truer every year -- is that those first two years when I was a teacher right out of college and a basketball coach, the skills I developed in terms of communication, teamwork, how to coach kids into not all wanting to shoot the ball, but some being willing to pass the ball up and set screens so that teammates might be able to score, that whole sort of environment and experience, I can translate that into what I've been challenged to do through my career in IT in the government. You know, as important as understanding technology is to that, I think I believe this more strongly again every year, is that relationships and communication and teamwork are the keys to success in IT probably as they are in any endeavor. And so what I learned there was really important.

I think having a job in IT in the private sector taught me a little bit about business, even though I was in that job for a short time, but just gave me a sense of what it was like in the private sector from a business perspective. And then working as a NASA contractor was really important for me, because my job at NASA is so much about working with our contractors and partners -- given the size of our IT workforce that's made up of so many contractors, I think having that experience on that side of the fence has been very useful to me to maybe understand all the perspectives.

Mr. Morales: That's a great set of lessons. Thank you.

So what is NASA's IT strategy? We will ask Jonathan Pettus, chief information officer at NASA, 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 Jonathan Pettus, chief information officer at NASA.

Also joining us in our conversation from IBM is Paul Kayatta.

Jonathan, you referenced earlier the IT strategy at NASA. Perhaps you could tell us a little bit more about that. Specifically, how have you sought to modernize and standardize the use of technology so it benefits both the agency and the constituents that you serve, as well as align the resources to NASA's overall strategic goals?

Mr. Pettus: Well, we spoke a little bit in the last segment about the shift in terms of how we go about executing our programs. And that's been a huge driver in terms of changing our IT strategy. When we talk about our IT strategy at NASA, we talk about four principles; one overarching principle, which is IT should serve to enable the mission. Now, that sounds like motherhood and apple pie. Who could disagree with that? But what it means to us is, if you think about our history again, we created a lot of IT. Back in the early days of, say, the Apollo Program, everything that that program needed in terms of technology, they created. And so things like routers and networks and protocols and things of that nature, which today are commonplace and commodity items, we created.

We're about innovation, as I said earlier, but sometimes perhaps we have not adapted to the availability of commercial IT quickly enough. And so when we talk about ensuring that our IT's about enabling the mission, what we really mean by that is that we don't create IT just to be innovative in IT. We are innovating around our mission. And where IT supports that is where we innovate, but we rely on the private sector where we can, especially where we have commodity style type IT.

A second principle is that our IT should be about integrating information and business processes across the organization. I spoke to that a little earlier in terms of using IT as a way to allow our workforce to collaborate across our center and organizational boundaries in order to design and develop our new space flight systems as well as our science missions and so forth.

A third principle is that IT at NASA ought to create efficiencies. And along with that, we ought to be efficient in our implementation of IT. It sounds like it's a duplicative statement, but it's really not. IT is about creating efficiencies through automating processes and integrating information, so you think about things like business cases and investment style processes to ensure that. But also, at NASA through the years, in some cases we've had no shortage of efforts to try to be efficient through implementing IT, and in doing so, we've created some inefficiencies in our IT itself. So in our rush to create automation, we've done so, in some cases, without an eye toward ensuring that we're efficient with our IT.

And then the last principle that I'll mention is that as we implement information technology solutions, we ought to ensure that they're secure. At a high level, we've used those principles to sort of outline our IT strategy going forward.

Mr. Morales: Great. Now, in your IT strategy, I was excited to see a reference to my old alma mater, the MIT Sloan School of Business. And MIT's research has found that effective IT governance is a key to an organization's ability to respond quickly and effectively to changing needs. So to this end, could you tell us more about your efforts to enhance IT governance within NASA? Specifically, could you elaborate on efforts to foster an enterprise-wide view of IT rather than a stovepiped model of IT?

Mr. Pettus: That's one of those big challenges, and we referred to that topic a little bit earlier. But in fact, we've actually used some of the research from MIT that you refer to, and also research from folks like Gardner and Forrester, to look at different best practices around governance for IT. And so what we've done at NASA is, number one, we've tried to clarify the difference between the information technology solutions that support the mission versus those that are embedded in the mission. And let me explain.

So if you think about our financial systems, our networks that allow our employees to collaborate and communicate, even our CAD design tools that our engineers use, that's all IT that supports the mission. If you think about, though, on board a spacecraft, the avionics systems that guide the spacecraft, the operations systems that are embedded in the spacecraft, tons of IT there, but not so much IT that needs to be governed by the CIO. It's IT that's part of the program. And so one of the difficulties we've had in the past at NASA is sort of distinguishing between the two in the sense that the programs themselves would oftentimes be responsible for sort of the governance of, if you will, each of the supporting IT elements in addition to those core sort of mission elements. And so we've tried to clarify that definition.

Then also, we've tried to implement some processes -- and we're in the midst of doing this; we've by no means completed it -- where we provide better visibility into IT investments. Because you can't improve decision-making if there's not really better visibility into those decisions that are being made at a broader level. So we've established a strategy and investment board at the most senior level in the agency. The role of that board is to look for opportunities, and the CIO facilitates the process for cross-enterprise implementation versus stovepipe implementation, so looking at the big-ticket items in our budget in terms of investments.

And then we have -- in the federated model, we have similar structures that link up with that agency structure that exists at each of the centers. So focusing on using that committee and that process, clarifying the role of the CIO in managing the support IT, and then of course, budget visibility, so that we really understand where in the budget, from a financial perspective, having that transparency relative to where the IT spend is -- all are important in terms of helping us improve our IT governance, which, in the end, is being clear about how we allocate decision rights for IT.

Mr. Morales: So, like many organizations, NASA's IT infrastructure comprises things such as hardware, software, and the processes that all together deliver the IT capabilities that you have. Having said this, NASA's IT infrastructure is now being challenged to meet your IT principles. Could you tell us a little bit more about these principles? And to meet the challenges, could you elaborate a bit more on three aspects of the NASA infrastructure?

Mr. Pettus: Yeah, we like to talk about the infrastructure consisting of -- if you think about you as an end user and you have to interact with an IT solution, you're typically starting that interaction from an end-user device: a laptop, a desktop computer, a PDA. That end-user device component is a component of our infrastructure.

Then the communication that takes place, if you're at one of our centers, it's either over a land line or a wireless network, you're communicating on a local network. If you're trying to access a service that's running on a server or a computing engine that's remote to that site, you're then traversing our wide-area network. So we think about LAN/WAN together as our com infrastructure. And then finally, the data center component is those facilities and operations capabilities that house the computing environment on which applications run. So together, those make up our IT infrastructure.

Now, I found at NASA that it's been helpful to sort of simply describe what we mean when we talk about IT infrastructure, especially to our stakeholders and our leadership, because the word is thrown around a lot, but just sort of getting clarification about what are we really talking about when we mean IT infrastructure? Where we're focusing from an IT infrastructure perspective, back to those principles of efficiency, of integration, and security. Number one, we want to make sure that our networks are not -- and our infrastructure itself is not stovepiped such that it's actually a B-to-B type of transaction when an employee needs to interact with another employee who happens to be at another NASA center. We like to say that sharing a CAD joint (?) across centers shouldn't be a B-to-B transaction. We're trying to simplify that through standardization, integration, and in some cases, consolidation.

In terms of the data centers, for example, we're moving to consolidate the number of data centers that we have down to a much smaller number, so that we're clear in terms of our computing environments being housed in secure, well-managed data center facilities.

And end-user devices, you're probably familiar with the mandates from the federal government to all agencies in terms of standardizing configuration, at least on Windows platforms. And so we're moving to have a more complete service-level management of the desktop environment to help us ensure that systems are patched and appropriately configured to help us from a security standpoint, and also to help us from an interoperability standpoint as applications need to be delivered across those end-user devices across the enterprise.

Mr. Kayatta: Being a mission-focused enterprise, NASA has generated a significant number of applications; currently over 2,500, I believe, including over 8,000 websites. Could you tell us a little bit about the IT application management strategy, and specifically, what you're doing to create a CIO-facilitated process that drives standardization and efficiencies that you mentioned earlier within NASA?

Mr. Pettus: Well, we think when you look at the role of the CIO, and the role of IT in general, if we just focus on infrastructure, then at the end of the day, the value that we're providing is not what it should be and not what it could be. And so for CIOs to sort of move up the stack and to have a close relationship with the business or the mission, applications have to come into play.

Now, the tradition at NASA is that applications in many cases have been developed within the business units, within the centers, within the programs for specific needs, and that's appropriate in many cases. However, it's led to, as you described, a large number of applications. And in fact, a difficult time for us as an agency to understand even what our inventory is of applications and where are those opportunities for cross-center, cross-enterprise implementation and rationalization of our applications?

And so our strategy is to, number one, educate our leadership and our key business partners around "the application problem" so that people begin to understand why it's not such a good thing to have such a proliferation of tools. It may seem obvious to IT people. It's not necessarily obvious to all of our business partners why that's actually a significant issue that needs attention. So we talk about it in the context of those principles again, and why it's important to have rationalization of your application environment to gain some efficiencies to allow for better integration, and then obviously from a security standpoint.

So we see the CIO's role in that process as much more of a facilitator, being clear about our sort of sub-portfolios that exist within the overall application portfolios; clear about who the owner is. So for example, if it's financial, it's the CFO that owns that portfolio from a business perspective. And then understanding what does that portfolio look like? What are the opportunities for rationalization? Where are the gaps in terms of business processes in that particular area? Then it helps us to be much more logical and structured in how we invest in the future, and also, rationalize to save money. And so we like to use words like "facilitate," "coordinate," and we talk about applications. Words like "control" and "dictate" don't work so well in the applications environment.

Mr. Kayatta: The entire stack that you had mentioned to spend is approximately $2.2 billion, which represents nearly 13 percent of NASA's total budget. And recent industry research suggests that for some enterprises, that could be another 10 to 50 percent of actual IT spend that's hidden among program budgets. Earlier, you were talking about visibility and the review board. I'd like to know, how's that working? And are there other things that you've done to be able to manage a capital investment plan that results in a mission aligned and cost justified?

Mr. Pettus: That's a good question and an important one. Because ultimately, in terms of things like governance and trying to drive rationalization and integration, it typically comes back to budget. And so it's an important aspect, I think, of an overall plan, and we've tried not to ignore it.

The first order, we've been trying to better understand that 2- to $2.2 billion figure that you quoted. That's actually what we report to OMB in terms of our IT spend. Earlier, when I talked about sort of this differentiation between support IT and that embedded mission IT, when we report to OMB, we include a lot of that embedded mission IT. So if you think about the big-ticket items, like the software development processing facility for Space Shuttle, some of those things, which are -- when you start comparing us to other agencies and other entities, it's not quite apples-to-apples if you're throwing in those kinds of sort of heavily mission-oriented IT. So one of the things we're trying to do is better understand sort of that total cost and IT spend related to that support IT and be a little clearer about what that entails. So we've had some success in terms of defining that.

We were working with OMB in terms of how that impacts our overall reporting and what that means. But internally, we've worked to create within our financial system the ability to more clearly track the IT spending. We've worked with our procurement officers and the associated procurement officers at each of our sites. The linkage between the procurement officer and the CIO is so important because the shadow spending occurs, in many cases, where a program has an IT need. Maybe they don't even know that it's available from the CIO, but perhaps they do and would prefer to actually have local control themselves of that particular IT solution. And so they might look to a contractor that they're using to provide some other mission service to do some IT work.

Well, that can oftentimes become visible through the procurement process. And so partnering with the procurement officer to help gain visibility into the actual acquisitions so that we can see where there are big-ticket IT buys that perhaps may not be consistent with our overall IT principles and where we're trying to head, it allows us to have some dialogue with the businesses in cases where that occurs.

And then we have this governance process that we've structured so that ultimately the major issues can actually be brought to that group. Now, when you're talking about a $2 billion IT spend with 17,000 employees, it's not possible from a top-down perspective to manage every IT spend element. But the big-ticket items, like someone who wants to create a new data center, someone who wants to implement a new ERP application, someone who's developing a new collaborative tool, that's a pretty big -- it's a sizable investment -- those things, we'd want to have visibility to.

So we've taken what we've done for years, this capital planning process, but we've kind of -- frankly, in some cases, maybe we're just kind of going through the motions, and we've tried to more completely link it to the budget process so that it actually is not just a reporting process, but it actually drives some of the decision-making that occurs during the budget process.

Mr. Morales: That's great. Jonathan, I only have a minute left and I want to shift gears here for a moment.

But as you know, the e-Government Initiative has been a critical component of the President's Management Agenda. Could you just take a brief moment to tell us about your agency's efforts in this area, and what are some of the challenges faced that remain to get accomplished?

Mr. Pettus: Sure. We're an early adopter, one of the first out of the chute in terms of the -- one of the first big e-Government projects was the payroll consolidation, and NASA was an early adopter. We used Department of Interior's offering there, and have been running that for four years or so. And we found that to be a very successful implementation in terms of cost savings, in terms of allowing us not to focus precious IT resources on that kind of sort of more commodity-style application. So we were an earlier adopter there.

Also, in the human resources side of our business processes, some smaller footprint applications, like position description, management tools, and resume management tools, that were early e Gov projects we have implemented. And in fact, actually, some of our first experience with web services and service-oriented architecture style sort of interaction occurred with some of those HR small projects. So we benefited from that not only through the implementation of the tool, but the learnings that we got in terms of -- or received with the experience with the web services piece.

The challenges are ensuring that -- balancing the internal needs of the organization with the overarching sort of strategy that the federal government has in these particular e-Gov areas. We're in the process of implementing the travel management solution. We think it's going to be a good tool. However, if we looked at our overall portfolio of investments and the needs that existed, quite frankly, there was an internal debate around the fact that we already had a travel system that people felt worked. And so what's the compelling need to move to this new travel system? And so that creates some interesting discussions around prioritization internally.

And so that's one of the challenges, is understanding that it's the right thing to do, but also needing to make it fit within your overall portfolio.

Mr. Morales: So what is NASA doing to advance its IT security efforts? We will ask Jonathan Pettus, chief information officer at NASA, 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 Jonathan Pettus, chief information officer at NASA.

Also joining us in our conversation from IBM is Paul Kayatta.

Jonathan, the President's vision for space exploration, as we discussed earlier, defines a challenge for the 21st century, and sets a compelling new set of objectives for your organization. Now, recently, NASA conducted an assessment of its current state of IT. Could you tell us a little bit about what some of these key findings were, and what are some of the critical lessons learned going forward?

Mr. Pettus: Well, we've actually had a couple of different studies. One was focused on IT security, but then we had a more general one focused on the overall state of IT and the role of the CIO. And so maybe I'll start with the latter and then we can speak a little bit about security.

In terms of the work that we did, the assessment of IT, it was actually something that I started when I came on to the job roughly 17 months or so ago. And it was a process where we actually went out and talked to key stakeholders across the agency and the mission specifically about their views of IT. And so what we learned was that at the infrastructure level, at the local level, people were generally okay with the infrastructure delivery in terms of e-mail services, desktop. Yeah, there were some complaints, as always, about particular issues. But in general, people, in terms of availability and that sort of thing, were okay.

However, they did see that it was extremely difficult to interact, to work, to collaborate with people across other organizations. And that in terms of being mobile, as you move from one NASA center to another, which our people often do, it's very difficult just to plug-and-play at NASA. And so feedback was, we need better support for mobility both within the agency and as we work outside of the agency after hours and that sort of thing.

Another finding was that there was a recognition that -- they didn't refer to them as "applications," but the discussion was typically around there was a proliferation of tools, and that perhaps there was a better way to manage our tools such that there was better interoperability and then perhaps some efficiencies to be gained there.

And then lastly, there was a note from our stakeholders. They were aware because of some issues we've had relative to our scorecard, our PMA scorecard, and such that we have had some IT security challenges. And so there was a general awareness that there were emerging threats that were significant to the agency and IT security and that overall, there were certainly some issues with IT security that needed to be addressed. And so those were findings that all sort of led into this discussion that resulted in these principles that I talked about earlier.

Mr. Morales: So given the complexity and just the sheer size of the programs that you all manage, how has your agency sought to improve its project management discipline and structure for monitoring project performance?

Mr. Pettus: Project management at NASA is sort of a core fundamental competency, because that's what we do. If you think about how we operate running these large programs, multi-year, very significant dollar value-wise and content-wise programs, but the processes that had been set up in the agency for project management were geared around these flight programs. So the basic fundamentals of project management are the same regardless of the domain. However, when it comes to IT projects, we were having some difficult times trying to sort of fit some of the necessary sort of components of an IT project into this overarching framework that people are familiar with in terms of flight projects. So what we've done is we moved to create a similar but separate project management methodology and governance model for projects that are IT projects in nature.

And we've established a Project Management Oversight Board that reviews major IT projects. And for important key decision points and milestones and gates for those projects, that's done at an agency level. For lower order projects, similar to the governance discussion we had earlier, each center has a project management board for their own sort of local projects where they would use that framework, that new framework we've developed, and then use that Project Management Governance Board to see those projects through.

Mr. Kayatta: As a CIO managing in the federated environment that you described earlier, I would imagine that a big portion of your job is to put in place policies, cultural change strategies, educational outreach that will help staff recognize that they are part of a broader enterprise. To this end, what are some of the pushbacks that you encounter?

Mr. Pettus: Certainly in terms of some of the things we've talked about, transformational type things that we've talked about, there's always going to be people who don't understand the compelling need to do some of the things that we've talked about; or the strategies create such a change in the way that they're used to working, they perceive them, the changes, to be non-value added. And so some of the common sort of complaints that we'll see is, you know, using, say, this new project management process that we just talked about is too slow. It slows down the project. So this notion of sort of using these processes to add visibility, to add some discipline to IT investments in project executions, slows things down. And so we have to sort of combat that and be -- as an IT community, we have to ensure that the things that we're doing don't slow down the ability of solutions to be created for people.

Another key area of pushback, or if you look at kind of the root cause, in many cases they're battles over control. Who gets to control a particular system or solution? Who gets to control and specify an architecture? And the more important it is, depending upon the domain or the subject or the problem that's being addressed -- the more important it is to the enterprise, the more need to have sort of a larger view of that effort. If you're an individual who has a particular problem that's a piece of a bigger problem and you're just focused on the solution for your sort of finite, very discrete problem, you can kind of not understand the big picture as to why -- although it might optimize locally, it may really sub-optimize at an enterprise level.

And so having those discussions, I found we have very intelligent and brilliant people at NASA, and they educate me every day. But I found that when we have these discussions, that people are logical and rational in general. And as long as you have a solid sort of reason and basis for what you're trying to do, you can make progress.

Mr. Kayatta: NASA's a very unique organization, simultaneously engaging science as well as development. And you've had a lot of experience, the agency has had a lot of experience, in managing a large contractor base. I think you mentioned 40,000 contractors to 17,000 actual federal employees. Some of the agencies out there might not have had as much experience as that. What kind of recommendations can you give to federal managers that need to effectively manage the ever-increasing blended workforce that's becoming more and more apparent?

Mr. Pettus: Well, I would say you have to think about the relationship as being a partnering-type relationship. And I know that sounds very simple and high-minded, but the reality is it's very true. And we do have a lot of experience doing this. And I have found in talking to the other agencies that we may be somewhat unique in terms of the length of time in which we've been sort of contracting out, and in some cases, really outsourcing IT.

And so in our world of IT, it will sound contradictory, but you have to create an environment where that partnering environment is where there's sort of a win-win opportunity for the contractor and the internal government organization -- if everything from day one is drawn up as sort of ensuring that things are scoped so that it's going to be very clear who's at fault and who's to blame if something doesn't work, it's important to be clear about deliverables and roles and responsibilities, but it's also important to establish the execution of the project -- or the endeavor where you're partnering with a contractor -- it's very important to establish an environment and a culture in which the contractor feels part of the team. It's a difficult skill, I think, to move people from an environment where they're actually just doing the work themselves to where they're actually having to coordinate with external partners.

But I found in talking to other organizations outside of government, I mean, this notion of the days where a particular task is done specifically by an organization in-house and there's no partnering or collaboration with other external entities are long gone. There's almost no work left that doesn't require some level of partnering. So I think creating that culture of partnering, that shared sort of win-win type model, but also not losing site of being clear about deliverables and roles and responsibilities.

Mr. Kayatta: We talked earlier about the IT management model and improving security to achieve efficiencies. Could you elaborate a little bit about the security threats and the challenges that face the agency?

Mr. Pettus: Yes. I think the speed at which those threats emerge just increases every day, it seems. And so it's a race. It's sort of an arms race that you have to be in to basically try to stay ahead of all the vulnerabilities that exist. And so what we're doing is, number one, going back to our infrastructure, we want to simplify the complexity of our infrastructure because of some of the stovepipes we've talked about in the past in terms of our model of how we implemented infrastructure created a very complex sort of web of infrastructure with layers of firewalls, which is not necessarily a bad thing, but if those firewalls are implemented in a sort of disconnected way, it could make it very difficult to interoperate. So we want to simplify our infrastructure.

So part of our focus is on our network perimeter, is hardening our network perimeter. If your focus today is just on the network and building sort of that fortress, you're probably going to lose. Because endpoint security is probably as important or more important, because you have to expect that no matter how strong your perimeter is, it will be breached, partly because of this amount of interoperability and interaction we have with the external world that we've already talked about. The reality is we have to be able to share. We have to be able to interact. And by virtue of that, you are creating some risk. And so if you're creating that risk, then you also need to make sure that you're protecting your information assets at the client or endpoint level. So endpoint security is a big deal.

Things like this Data at Rest Initiative that all agencies are pursuing, where we ensure that we're protecting encrypting information stored no mobile computing devices, is important. So simplifying and then having this multi sort of layered, multi-pronged approach to security, and then leveraging the tools that are out there that help you with things like vulnerability scanning, intrusion detection. In some cases, these tools are really becoming integrated, so that there's a platform for security that are available to you. We think those are really important to our IT security program going forward.

Mr. Morales: I would imagine that also the proliferation of types of devices also presents a challenge, right? It used to be just workstations, and workstations become laptops, laptops become PDAs and BlackBerrys and --

Mr. Pettus: Right, just mobility in general, I mean, creates -- because our employees -- it creates the challenge because our employees expect -- in fact, for our discussion today, I was a little early, so I went next door and plugged in and in two minutes, I was online and doing work. And so our employees expect to be able to do that, and you want to provide them with that capability. It's important to the organization. But when you provide that, it also presents some security challenges. So you have to balance the two, and that's one of the toughest jobs I think we have in IT today.

Mr. Morales: Sure, sure. Now, Jonathan, I would imagine that as you continue to transform your organization, you're creating new competitive areas and new competencies. So what key competencies will be needed for IT staff to provide proper IT support in the future? And specifically, what steps are being taken to attract and maintain this high-quality technical and professional workforce that can build on these competencies?

Mr. Pettus: Good question. And it's really important to us and I think to any IT organization to think about what competencies are important in the future, and with our model, where we rely so much on contractors and our partners to help us with certain IT implementation. And we haven't always done a good job of this, but we've really focused on this in the last year, is being clear about the role of the government IT employee. And we focused on competencies like project management, enterprise architecture, relationship management, which is sort of a soft competency, but this goes back to those communication and interaction skills that are needed to communicate with the business so that we can explain IT to the business and also explain the business to IT.

And so that actually gets to this next piece, which is -- I think to have a future in IT, it's really important to have competency in the business that you're in. So we're working with our IT employees on strategies to allow them more access to some of our programs and missions, so they get a better understanding of what the actual business is: again, enterprise architecture, relationship management, project management. We think IT security, given its importance, is still obviously a very important competency to hold within the government role.

The other thing I would say is financial and resource management, having people that understand how to relate from an investment perspective, sort of the spin to the investment, to the actual benefits. So business case development, that sort of thing, are all important competencies that we want to maintain and grow in-house.

Mr. Morales: That's great.

What does the future hold for NASA's information technology efforts? We will ask Jonathan Pettus, chief information officer at NASA, 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 Jonathan Pettus, chief information officer at NASA.

Also joining us in our conversation from IBM is Paul Kayatta.

Jonathan, given the critical role information technology plays in mission and program delivery, would you give us your view on how the role of the CIO has evolved? But more importantly, what are the key characteristics of a successful CIO in the future?

Mr. Pettus: I think the role has obviously evolved and evolving. I think in government, we've struggled in the federal government with the role from the outset in terms of whether it's a policy-oriented role, a delivery-oriented role, so we've had that struggle. I mean, that's somewhat unique to government in terms of my interaction with other CIOs outside of government.

I think the other component, though, in terms of evolution is very similar to what has happened in the private sector, and that is the CIO as being focused on infrastructure, where it's almost as if the "I" should stand for chief "infrastructure" officer instead of "information" officer. Sort of moving -- I see it evolving, and I think many people see it evolving, from sort of a technology focus as so much of the sort of base technology becomes commoditized, moving up the stack, as I said earlier, into process. And I think the CIO has a unique view, a cross-organizational view, that many executives don't have, because you're interacting with all of the business units to help solve problems.

And in doing so, you're getting sort of this unique view, so you can offer some value to the organization in terms of a perspective. But you can't do that if you're focusing all your time on the technology and the infrastructure. You have to kind of let some of that go in terms of allowing your staff, allowing your partners to help you with that. You still have to deliver on that because that's the price of admission to sort of the "seat at the table." But I think that creating the relationships that I think are so important allows you then to perhaps offer up some of those things that you see that could be of value to the organization. So I think the future's in process, it's in the business, and it's less about just nuts-and-bolts technology.

Mr. Kayatta: We talked earlier that with the President's impetus, NASA is in the midst of a very major shift: retiring the shuttle in 2010; replacing it with a new manned flight mission to the moon and then eventually to Mars. How do you envision the IT needs evolving as this major change occurs?

Mr. Pettus: Well, I think the reliance on off-the-shelf solutions, as I said earlier, is already there at NASA, but I think it will continue to grow. We don't have an Apollo-era budget to execute our new mission, and so we're constrained from that perspective. And so we want to look for opportunities to be efficient. That means, in many cases, buy versus make. Things like service-oriented architecture is a very important concept for us as we look at ways to integrate and collaborate across our organization. We acknowledge and understand that we're going to have a heterogeneous environment, and so SOA helps you deal with that. But also, just sort of throwing that term out doesn't get you very far, because I think it demands a level of governance and a level of discipline that only mature organizations have.

And so part of what we've discussed today here in terms of governance and discipline in terms of IT overall is important to really effectively implementing service-oriented architecture. But I think that's an important component in a technology that will be important to not just the Exploration Program, but to all of our future mission at NASA. Plus, just the Web 2.0 technologies themselves in terms of the participatory style of -- capabilities that they provide really help us engage with the public, and draw the public more into some of the problems that we're working on at NASA, and we're looking at technology as a way to make that happen. And I think the Web 2.0 toolsets that are becoming so popular are ways to do that.

Mr. Kayatta: There are a lot of changes that take advantage of it, I think, in industry. Clearly, the issues continue, but the need for standardization and lower costs also continues. So as far as government-wide, this exists also. Given that, can you give us some perspective on what emerging technologies you hold? You mentioned the Web 2.0. What do you think are the most promising ones for the federal IT and CIO?

Mr. Pettus: Well, I think the ones that I mentioned, this whole collaborative style of computing, you hear sort of the way it's characterized by many people as we went through this sort of Industrial Age, then the Information Age, and now we're into the Collaborative Age. And I think it's very true, if you look at -- you know, I have a 14-year-old daughter, and I look at how she interacts with her friends and her comfort with technology, I think that sort of this social style of computing, social networking, using the "social computer" to solve problems, which is this interconnected set of human minds that are interacting, is a really interesting way to solve the kind of problems that NASA works on. The emergence of those kinds of tools is really critical.

Now, for the government, I think what we have to do is understand what it means to adapt to using those tools, both in terms of policy and in terms of organizationally, how do we do that, because we oftentimes can be somewhat resistant and slow to adapt to those kinds of fast-moving changes. I think it's important for us at NASA to do so for many reasons, not the least of which is to be able to adapt the next -- or to attract the next generation of explorers to NASA.

Mr. Morales: Jonathan, I talk with many of our guests about the impending government retirement wave. How are you handling this retirement wave, and what's your organization doing to ensure that you have the right staff with the right skills to meet some of these future challenges?

Mr. Pettus: Well, one is to focus on the core competencies that are really critical to the government employee.

The second is to look for ways to leverage the NASA brand name. Because we still -- you know, we talk to people out there, young people out there, who are interesting, who have an IT background. And they have an opportunity to come to work for NASA, they find that -- you know, many of them find that very compelling. In some ways -- and sometimes we can't compete when it comes to financial incentive with perhaps the private sector for certain types of skills, but we can offset that in many ways by this sort of desire by many people who have that sort of skill set to contribute to the space program and what we do at NASA, so leveraging that brand name in what we do to recruit younger workforce.

And then finally, to make sure that the tools and technologies that we're involved with or that we're investing some segment of our portfolio in progressive tools and technologies, so that the new generation that comes to work for NASA are as interested in coming to work for NASA will see us as an organization that is not slow to adopt those kinds of tools that I think they will see so important to where they want to work.

Mr. Morales: So given your career in public service, what advice might you give a person who's out there considering a career in government or perhaps in IT in government?

Mr. Pettus: Well, I think I would say consider public service, because the ability that you have to influence and to make a difference in a particular field. And for me, it's something I think is very important, that I'm very interested in, which is space exploration. Having a role in a government organization gives you some unique opportunities. I think it also provides you with some ability to gain some experience more quickly in terms of responsibilities that perhaps may not be available to you in some other areas. So I would say don't rule it out.

And then from an IT perspective, I would say that your success will be determined as much by how you communicate and build relationships, articulate a particular need or persuade the need for a particular project or initiative, as it will on your technology prowess.

Mr. Morales: That's great. Good perspective. We've reached the end of our time, Jonathan. I want to thank you for taking time out of your busy schedule to join us here. But more importantly, Paul and I would like to thank you for your dedicated service to our country across the various roles you've held at NASA.

Mr. Pettus: Well, thank you very much. It's been a pleasure to spend some time with you talking about what we're doing with IT at NASA, but more importantly, just to share a few comments and thoughts about what we're doing at NASA with our overall mission. And we certainly would encourage your listeners, if they're interested in learning more about the current projects and programs at NASA, both our mission and IT as well, they can go to our website at www.nasa.gov.

Mr. Morales: Great, thank you.

This has been The Business of Government Hour, featuring a conversation with Jonathan Pettus, chief information officer at NASA.

My co-host has been Paul Kayatta, partner in IBM's General Government 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 might not be able to 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.

Announcer: 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.

Originally Broadcast February 2, 2008

Washington, D.C.

Announcer: 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.

The quality of our lives, the shape of our communities, and the productivity of our nation's economy rests on the existence of a safe, secure, and efficient transportation system. Today, the U.S. Department of Transportation stands at the forefront in promoting an efficient and interconnected national transportation system.

In doing so, it relies heavily on the use of information technology to both sustain the nation's transportation system and make it safer.

With us this morning to discuss his efforts in this area is our special guest, Dan Mintz, chief information officer at the U.S. Department of Transportation.

Good morning, Dan.

Mr. Mintz: Good morning.

Mr. Morales: Also joining us in our conversation is Pete Boyer, director in IBM's federal civilian industry practice.

Good morning, Pete.

Mr. Boyer: Good morning, Al.

Mr. Morales: Dan, I always like to start by providing our listeners some context about the organization; in this case, the Department of Transportation. Can you just take a minute to give us an overview of DOT's history and its mission today?

Mr. Mintz: Glad to do so. The idea for the Department of Transportation began in the mid '60s, when under President Johnson, the thought was that there was a need to have a focused department dealing with these transportation concerns. It was proposed in 1965; passed in 1966. The first official day of operation was, of all dates, April 1, 1967.

It was taken a large part initially from the Department of Commerce. And in fact the Under Secretary of Commerce for Transportation became the first Secretary of Transportation. The strategic goals for the Department -- currently there are five of them. One is safety, making all the modes of transportation safe. The second is the reduction of congestion. The third is global connectivity, understanding that transportation goes across the world. The fourth relates to environmental stewardship; that is making sure we protect the environment. And the fifth regards security, both of the passengers and commerce, and the information associated with them.

The current focus, in particular, that the current Secretary, Secretary Peters, and our Deputy Secretary Barrett have relates to congestion, safety, and making sure that we use 21st century solutions associated with them.

Mr. Morales: That's great. Now, to provide our listeners a sense of scale, can you more specifically describe how DOT is organized, give us a sense of the size of the budget, number of full-time employees?

Mr. Mintz: We have approximately 56,000 employees, a budget of almost $67 billion. We are broken into organizational units which are called operating administrations or modes, and I believe we will use that terminology during this discussion. That stands for the modalities of transportation we use. There's a significant number of employees, in terms of location, in the Washington area, both the departmental headquarters is here, a block and a half from the new baseball stadium that will be opening later this year. And also the FAA headquarters are a couple of blocks away from that. We have offices all around the country, including, of course, with the Federal Aviation Administration at all the airports around the country.

Mr. Boyer: Dan, now that you've provided us with a sense of the larger organization, perhaps you could tell us more about your area and role within the Department. Specifically, what are your responsibilities and duties as the chief information officer? And could you tell us about the areas under your purview, how you organize the size of your staff and budget?

Mr. Mintz: First, I'm the departmental chief information officer. So each of the modes within the Department also have a chief information officer that have responsibility for optimizing the investment and managing it within the mode.

I have sort of two broad areas; the first is policy-related. That is the creation and management associated with policy across the Department. That has three pieces to it. One is information assurance, or security, and that would include privacy issues. The second, I call business partnership. That would include things like our enterprise architecture, which is a way of describing how we do the business architecture at the Department, and the second part being capital planning, that is how we manage our investments.

And the third piece, which is a piece we've really stood up this year, is focused on project management, so that we have coherence in terms of how we implement processes, make them repeatable across the Department. The term that's used a lot these days is called earned value management, a way of tracking whether the project is being performed in a way that the earned value that we expect to achieve is achieved with the right amount of investment over the right amount of time.

The other part of my responsibility, it relates to operations, or we call it shared services. That is shared amongst all the operating administrations. And that's another group.

We have approximately 250 staff people that are part of my office. Most of them are actually contractors, and a lot of them are associated with our shared services operation. We interface to the IT staff in each of the operating administrations.

We have -- from my staff, approximately a $12 million budget that supports the policy creation, about $65 million that is associated with the operational activity. The entire Department spends about $2.4 billion a year on IT. So relating to that dollar amount, we have policy impact, but the implementation is done by the CIOs at the operating administrations, and in some cases, by the business leaders within the administrations.

Mr. Boyer: Great. Now, regarding your responsibilities and duties, what are the top three challenges you face in your position, and how do you address these challenges?

Mr. Mintz: It's interesting you ask that, because almost from the first day I started at the Department, I would put out a one-page list with a list of bullet points with my top priorities. And typically they've had about six, and this year even though my office still has those six, I've limited it down to three, coincidentally. I will tell you last year, we may talk about this a little later, probably the most distracting responsibility I had was moving to our new headquarters building, and I think we'll touch on that.

So I have three priorities. The first priority is relating to security, that is information assurance. The goal there is to come up with a sufficiently robust approach in implementation that we can protect the information and the applications that we're running. And that's across the entire Department. We've done a number of things there; for example, one of the things we did was we have what's called a cyber oversight function -- the ability to look into the computer systems and decide whether or not there's -- some bad guy has gotten in, or something is going wrong. And that's called the cyber cert operation.

We used to have two of them: one of them at the FAA, one of them at the departmental level, which didn't make a lot of sense really. We merged them together and we created a joint oversight board consisting of senior leadership again from the FAA, and then representing the rest of the Department, to manage it, which is working really well. We just started this October 1st of this fiscal year, and that's a big plus.

Second, we are trying to move the organization from being purely tactical, that is responding to day-to-day activities, and looking more at strategy and context. And that's a very difficult problem that we face. The third is -- and this is one of the focuses that are going on right now -- is we are trying to re-look our whole approach to how we physically deal with the network. It's sort of grown over time, we want to bring a more -- a better approach to how we place systems, how we protect them, create different zones of security, so that there might be some that have a very high protection level, some that have a less protection level. This deals with risk investment. We don't have infinite money, so we have to be very careful about where we put our resources. So we have to decide what we have to highly protect as opposed to that we want to do somewhat, but it's open, perhaps more open to the internet or the public.

My second priority is a governance priority. It's a challenge in terms of making group decisions. The problem there is that everybody has a day job, and it's hard doing that job. So to say that we want everyone to stop for a moment, get together, put together a group plan, which takes time, because there will ultimately be a reward to that by being more efficient, better security, more optimal behavior, it's hard to not take the step and wait. So we've done a lot of work in terms of enhancing our governance

We revised our chief information council to add a representative to help run it from the operating administration so that we had more buy-in from them. We've revamped our investment review board and done a lot of activities to make that robust. And the third priority, unfortunately, is our day job. The reality is that every day, something happens that we have to deal with, that we have to get done. And the balance we always have to do is balancing out the tactical demands of getting through the day with these more strategic long-term goals.

Mr. Morales: Dan, I understand that you came to the Department directly from the private sector. Could you tell us a little bit about your career path and how you got started?

Mr. Mintz: I stumbled onto computers while I was in high school, and I was sponsored by Vitro Corporation, and they allowed each of us to do something technical. And I didn't know what I was asking, but I asked them, could I have some time to learn to program on their IBM 704 computer in FORTRAN II.

Mr. Morales: Wow.

Mr. Mintz: And I wrote a program to bid bridge. My career I guess I divide into sort of three pieces, though I've noticed the third piece has gotten longer. The first piece, I was very technical, I did a lot of programming work and systems analysis, worked on operating systems. The second part, I moved into management, system analysis, RAM projects and things like that. And the third, I expanded my activities, got involved with marketing and project -- how do you sell both internally and externally; how do you deal with the management issues in technology. And really the focus at that point became much more involved with the business issues; that is, how you could use technology relating to business. And I will say that through all that activity, I was lucky enough in terms of this job to be supporting federal business often during that in my entire career. So that's made it a little bit easier.

Mr. Morales: So Dan, from this vast wealth of experiences, what lessons have you learned and have brought to the culture at Transportation, say, from your private sector experiences?

Mr. Mintz: Two things. First of all, I want to say that the general rules associated with management are not so different between private and public sector. The things I learned from the people I respect in the private sector were to respect individuals and to treat them well and to give them the ability to be successful. And I think that's very important, to be transparent in terms of how you act, to try and do a good job in terms of defining goals. And I think that works in both areas.

The challenge you have I think in government, which I've tried to bring some of what the lessons are -- is that the government has a very complex set of stakeholders. In private industry, you have a relatively simple existence -- you have to make a profit. But in the government, you have many masters, and you have to satisfy them all at once. And often, they have contradictory demands on you.

What happens because of that is there tends to be a focus on process, which stays the same, as opposed to goal, because not only is it difficult to define what is the precise goal of the government program, but in addition, the goals change, so that people will make a big investment and then two years later, the goals have been moved.

So it tends to make it harder to get people to focus on the goals. But at the same time, that's very important. So the things I've tried to do is to make sure we understand that at the end of the day, we have to realize we are trying to accomplish certain things. So you have to define them. The second is, we have to be transparent in what we are doing, sharing of information, good or bad. And the third is to make sure people have some kind of ownership that they feel comfortable enough that they'll take responsibility for their work.

Mr. Morales: That's great.

What about Transportation's IT strategy? We will ask Dan Mintz, chief information officer at the U.S. Department of Transportation, 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 Dan Mintz, chief information officer at the U.S. Department of Transportation.

Also joining us in our conversation from IBM is Pete Boyer.

Dan, can you tell us a little bit more about the IT strategy at the Department? Specifically, could you elaborate on the efforts to align information technology to support the departmental and modal business goals and strategic priorities?

Mr. Mintz: I'd be glad to, and I want to start by saying you have to look at why this is a problem. People tend to jump into answering it, they don't think through why does it happen, and there is a number of complications with it. The first is, one of the issues -- and it's certainly true at the Department, but it's true, I think, in a lot of the civilian agencies -- is that to some extent there are conglomerates of responsibilities. So you have to think through what are in fact the broad strategic goals.

One of the things that's been very good for us in terms of Secretary Peters is she's defined a relatively small number of strategic goals that we can focus on. If you don't do that, there may not be an obvious theme that you can talk about in terms of the goals. There's often disagreement about that.

The second problem that you face is that there's a tendency to be outward-focused related to that. We get a lot of demands put on us in terms of initiatives and requirements. And so what happens is the focus tends to get to satisfy that demand, as opposed to looking inward -- that is, how does that requirement allow us to do our job better. And so you have to change the focus to also look inward a lot more.

And the final piece problem is that a lot of times you have to build up to accomplish these goals. So what happens is you may have to do what I call a two-step process, make a series of investments that may or may not have obvious reward in order to achieve the strategic goal. This is a problem, by the way, that's in the private sector also. People want the immediate return.

Mr. Morales: Immediate satisfaction.

Mr. Mintz: Immediate satisfaction, and what happens is with the two-step processes, you have to make an investment, and then the second step is to get the satisfaction. It's very difficult to get that investment to allow you to do that. Having said all that, I'm trying to get to what I call an 80-20 goal. That is that 80 percent of the time we're doing the right thing collegially, and only 20 percent of the time is because we have to impose some kind of structure as opposed to the reverse, because at the end of the day, if the staff don't take ownership of what the goals are, they're not going to do it. You can't impose it completely from on top. I'm trying to get to that collegial activity.

One of the ways we did that is we added a modal CIO to take over ownership of the CIO Council, working with me on that to get more buy-in from the staff across the Department. The second is, there's always a tension when you have a single agency that's an enormous part of the Department; the FAA is approximately 80 percent of the IT spend of the Department.

So what I've done, and what the FAA CIO and we have done working together is that we focused on the value-add proposition. That is, rather than fighting over whose territory is what territory and who has control over what budget, we've identified those areas which would be of mutual benefit to the entire Department, and help the individual agencies, including the Federal Aviation Administration, and those are the things that we work on.

The final thing is, one of the recent initiatives that OMB has wanted us to focus on relates to performance measurements, and the performance measurements initiative. I'm not sure that the CIO community and people in general realize how important that is in the long term, because that's a mechanism really for the first time if done correctly -- to start tying a lot of these activities into strategic goals, because this is -- now you have the opportunity to do that, because you can see how making these investments can eventually have an impact on results.

Mr. Morales: Right, the cause and effect.

Mr. Mintz: Yes.

Mr. Morales: Now, not to get too controversial here, but it's been my experience that information technology is an area that's sometimes noted for its turf battles and proprietary views. Could you elaborate on your efforts to foster a more enterprise view that enhances the overall IT governance at the Department?

Mr. Mintz: I've mentioned a couple of the activities already. That is -- again, the goal you have to get to is how you can get the staff in general to buy in to working together. Steve Kelman, who is now a professor at Harvard, wrote a book about how to effectuate change in large organizations, focused on particularly the government. And what you find is that you will have a number of change agents that actually want to accomplish the goal that you just articulated. You'll have a small group of people who will be interested in these turf battles. And then you have a large number of people who really just want to do their job and swing back and forth.

One of the goals you have to do is identify those change agents, and then figure out how to empower them and then grow that desire, because I think you'll find that people do want to accomplish good things. The other challenge -- and this is still a work in process -- is how you set up a governance organization and process that allows the touch point for this decision process to happen at the beginning, because typically what happens is we tend to put it at the end, yes, no; that's far too late. You have to set it up so that as these individual people start doing their planning on their projects, how do you set it up so it's at that point or close to that point that you start having the dialogue to see how there's value add that will actually make them successful too. We're not there yet, but that in fact is one of the top goals I have, as I mentioned earlier, for the rest of this calendar year.

Mr. Boyer: Dan, we understand your Department's information technology capital investment portfolio is in the hundreds of millions of dollars. Would you elaborate on how you have strengthened the Department's IT capital investment process to assure that investment decisions are mission-aligned and cost-justified, and what role does your DOT CIO Council, which you mentioned earlier, play in establishing a robust results-oriented investment review process?

Mr. Mintz: Actually, the total IT investment is in the billions of dollars every year. It's really a major component of the Departmental work. The CIO Council is critical; most of the alignment to the individual mission is done at the operating administration, the modal level. So one of the focuses we've had over the last year and a half has been how do we make sure that that process is sufficiently robust and moving in a more robust direction. That is that they are integrated with the business owners within the operating administrations supporting the mission correctly. And in fact, we've made a lot of progress in that area.

The second step relates to then, now that we have that working, how do we bring it together so that when there are commonalities, that they can be dealt with in a more efficient fashion. And we're just -- we're really don't -- we do it but we don't do it as well as I would like right now. And that will be a focus going forward this year.

Mr. Boyer: Now, the E-Government Initiative is a critical component of the President's Management Agenda, which seeks to improve and expand services to citizens, businesses, and agencies alike. Would you tell us about your Department's efforts in this area, and what are some of the challenges faced and what remains to be done?

Mr. Mintz: First, I want to emphasize, I'm a very strong supporter of the e-government programs within the federal government. I suspect it's not been a very easy road over the period of years. I know over the year and a half that I've seen it that it's been often difficult -- the kinds of turf battles that you've referenced and things like that have been a problem. We are a center of excellence in the financial area, so we have experience both in terms of being a participant and a provider.

The challenges that you have are fundamentally cultural. One problem it seems in this city, in Washington these days, being reasonable seems to be perceived as a weakness. So that the problem you have sometimes is you have to be somewhat dictatorial to cause things, which as I've indicated a number of times I think is not the most efficient way of doing it, but sometimes is necessary, unfortunately.

The second problem you have is people have that darned day-job, and therefore, doing e-government means they have to now be involved in a planning process, working with other agencies, how to work together. It means you add that second step, you make what seemed to be a one-step process into a two-step process. Even though the result might be better, people don't enjoy having to take that second step.

The other thing is that there's a lot of learning that had to go on. We are asking people to work together, but the other thing we're asking is we're asking government agencies to be service centers, and it takes a while for people to learn how to do that. I think there were some growing pains, but right now, I think it's working much, much better. The other thing is it's countercultural -- my experience with all organizations, but perhaps -- it's certainly true in the government, too, people have a sense that the bigger their budget, the more span of control they have, the more powerful they are, which in fact is often not the case, but this means giving that up for a greater gain. And that's hard for people to get used to. It makes them question what's the value that they then bring.

The other issue that we've had to wrestle with -- in fact, OMB has been sensitive to this, and we've had some conversations about it -- is you have what I'll call a horizontal versus a vertical problem. We're creating what I would call vertical integration. We take all of the issues regarding rulemaking, for example, which is something the Department of Transportation just finished up its transition with. And we make it into a vertical application. At the same time, we've integrated some of these applications horizontally within the Department itself, so we have to make two adjustments.

First, moving it to another -- to the center of excellence, but second, figuring out how do we then make sure that this horizontal integration within the Department is still optimized. And we're still learning how to do that together, and I think you're going to see the second wave of e-government will start being more sensitive to that goal.

Mr. Boyer: Now, from a technology perspective, can you tell us about the federal government's migration to Internet Protocol version 6, or IPv6?

Mr. Mintz: Yes. Tim Schmidt, who is my chief technology officer for the Department, has been the co-chair of the IPv6 activity, and has been a leading thinker related to it, which has helped the Department a lot.

For those people who are not familiar with the issue, everything on the internet has an address, just like you have an address for a letter you send in the post office. The internet has grown so much that we're literally running out of addresses, which is an amazing thing. There was a commercial I saw one time where the person got to the end of the internet and then he didn't know what to do. Well, unfortunately, amazingly, we are in danger of getting to the end of the internet.

So what this does is, in the same way the number of digits in your address at home, if you make it longer, it gives you more flexibility, we're going to increase the size of the address dramatically in the internet address. So one of the things it's going to do is allow us more addresses, and that's important just to survive in the internet.

It turns out in the transportation sector, that's a very important thing also for our stakeholders, because what's happening on the internet is we're moving away from just person-to-person connectivity, but person-to-thing and thing-to-thing connectivity. You know, when you have a GPS locator in your car or even a cell phone, you have internet connectivity, and you may have, you know, your car now someday talk to something in your house. So you now have to do thing-to-thing addresses -- or you may want to manage the car. GM announced that they are going to come out with a car that can drive itself in some number of years.

So you need all that additional connectivity to allow all those things to address other things. You have some other peripheral benefit related to it. It turns out that by having this longer address, you can build in additional security, you can also build in some optimizations so that the transport of information across the internet becomes more efficient.

Mr. Morales: Now, along similar lines, new social networking ideas and technologies are redefining the relationships of citizens with their government, both at the federal level and certainly at a local level. So to that end, what is the private virtual world, and what are some of the potential business applications that you're identifying?

Mr. Mintz: There's a joke that Don Tapscott, who was one of the co-authors of a book called Wikinomics says if you want somebody to understand these concepts, ask them if they remember when a man first stepped on the moon. If they answer yes, disqualify them. So the private virtual world, anyone under 35 knows exactly what you'll be talking about with a private virtual world, because they have an avatar, which is a representation of a person, they've played some game online where they were a person, or they were in a second life, or they've done one of these things already. People who haven't used it, it's almost like trying to explain the color green to somebody who is colorblind. You have to try it to understand the power.

Psychologists have studied the brain response, and it turns out the human brain relates to the human interaction in these virtual worlds in a way very similar to human interaction in the real physical world, which may not be such a good thing, but it's true. We in fact have created what I call dotworld, though people are trying to get me to change the name, a very small virtual world. We're almost finished with it, it will just be a couple of classrooms and an auditorium internally. And we're going to use it for training for employee -- as an experiment initially, a pilot. We're going to use it for employee orientation, training in general.

One of the things that other people are using these kinds of things for is for emergency situations and emergency simulation. When you do these very large exercises in simulating a potential emergency, the reality is you can't invest in making all the alternatives happen, you can't do that in the real world. Generally, these are set up to be successful, but in fact, emergency training is supposed to teach you how to deal with the situation you don't expect. The question that really is being asked is what do you do when you don't know what to do.

In a virtual world, you can simulate anything, and therefore, you can do with much less investment, do much better or more complex, or more varied kinds of training. So that's something eventually you want to tag on to when that becomes more robust.

The challenges to the government is that the -- and this is a problem with the internet and what we call Government 2.0, which is becoming a focus of OMB and the Federal CIO Council, is that it's unpredictable and to some extent uncontrollable. And in fact, that's why you do it, because you're coming up with unpredictably interesting responses and ideas. That's a problem with government, because we have policy requirements, we have privacy requirements that are very serious and very important to us. They do not go away, so when you combine an unpredictable environment with the policy requirements, it's a little bit difficult to figure out how to deal with it.

Mr. Morales: Interesting.

What about Transportation's cyber security efforts? We will ask Dan Mintz, chief information officer at the U.S. Department of Transportation, 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 Dan Mintz, chief information officer at the U.S. Department of Transportation.

Also joining us in our conversation from IBM is Pete Boyer.

Dan, given the composition of the Department which you described earlier, and the various modal agencies, there must be many opportunities to employ shared services, which you also talked about. Could you elaborate on how the Department approaches the use of shared services, but more specifically, how you identify Department-wide IT activities that would benefit from this type of centrally-managed approach?

Mr. Mintz: First, it might make sense to talk a little bit about what my goals currently are related to shared services, because I suspect I may take a slightly different prioritization in terms of the goals than a lot of people that I have talked to do. We have a fairly active shared services organization at the Department right now.

The reason I think we want to do shared services in general is -- there are three. The first is, by having some consistency in terms of how we approach the IT infrastructure activities, we are able to have a more robust security architecture. So one of the issues we have -- and I think government in particular has a great responsibility for -- is making sure that we have sufficient levels of security that people deal with us are confident that their information is being protected appropriately.

The second is, we have to optimize the human resources at the Department. The reality is, for all the talk about budget issues, the biggest scarcity we have is talent. There is retirement issues associated with that. We are going to lose a lot of the institutional memory. So the question is, how do we optimize the human resources?

When they're focused on things that we can centralize and manage that are -- activities that are not directly related to the mission -- for example, video conferencing, do we need video conferencing worried about by staff and every one of our operating administrations, or would it make sense to centralize that activity and have them focus on how that operating administration can do a better job of supporting the American citizen and their stakeholders? It makes sense to me to optimize people.

The third area is, if we do it right, we can have better service level agreements; that is, we can do a more professional job, and if we work hard at it, we can save money. People tend to emphasize that last piece the most. But it's actually not the most important value we bring. We obviously can't spend more money, that's not what we are optimizing. We are optimizing the human resource, which is the precious resource within the organization.

Right now we're doing desktop and network infrastructure at the Department. We have combined information assurance, that is cyber oversight with the FAA - we do e-government initiatives, if you really think about it, are shared services activities. We also have a number of initial projects, one related to document management, and the other is, we're doing a study with the FAA in terms of how we can bring in more coherent approach to data centers in general. We have a lot of different data centers run by a lot of different parts of the Department, and so we're working on how we can best consolidate the management and deal with it more intelligently.

The issue you ask is how do we identify Department-wide IT activities that benefit from central management. In fact, it's a discussion I'm trying to change, because that historically has been the approach -- that is, what is it now we can centrally manage? And in fact, when you start with that approach, there's 1,000 reasons why you don't want to. I think the approach has to be different. And this is the hard part. We have to start with the approach that what shouldn't be centrally managed. We should start with the assumption that anything that is not completely tied directly to the mission should be centrally managed.

So therefore, we're trying to change the dialogue -- this is what's going on right now -- let's start by assuming everything should be done centrally. And by the way, centrally doesn't necessarily mean by my shop. We could centralize it in a center of excellence within the Department. We could centralize it at our Federal Highway's operating administration, or the FAA, or wherever. I mean, it doesn't all have to be with me, but we want to centralize it for the Department.

So let's start with the assumption everything should be centralized, then look at those things that we have to break out. And we're going to try and change that dialogue, we're having a lot of discussions right now as to how can we take that concept which everyone has begun to believe in, but then how do we take that and make that a practical process.

Mr. Morales: Interesting approach.

Dan, I want to go back to something that you mentioned earlier in our first segment, which was the move to the new headquarters building. And I think I saw you twitch in your seat when you mentioned that. Could you tell us a little bit more about this effort and how it affected your IT operations, but more importantly, what were the benefits of the move and some of the lessons learned?

Mr. Mintz: So let me take care of that in those three parts. The first is to just give a sense of the sizing, we moved something over 5,600 desktops and phone systems, and we had to move the individual desktops desk-to-desk. Everyone kept their same extension, both in the old building and the new building. We moved over 40,000 data connections. At the very same time we were doing that, there were something over 700 application servers that were scattered around the old headquarters building. We moved them all for the first time to a central data center out in Frederick, Maryland.

So we were doing that, and at the very same time, we were decommissioning the building under the lease terms, the headquarters building, which had been occupied for over 30 years, had to be restored in a state approximately that at the beginning of the lease. All being done at the same time, while we are moving a Cabinet-level Secretary that had to have constant communications working all the time. It was an impressive process. We reflect on it, and we're not quite sure how we got from there to here.

The IT space, the second part of your question, we in effect created a parallel organization, because it required so much focus that we needed a group of people that really were paying attention to that. Unfortunately, because we always have limited resources, a lot of the people underneath the management structure were the same people. And so we did have two separate focuses, but we actually -- unfortunately, people had to go back and forth between the two. So for a while, we actually were running two different infrastructures; one at the old headquarters building, and one at the new headquarters building, both at the same time. It is a compliment to all the people involved and to the employees of the Department that we got through it, because it made everything much more complicated. And people were very, very patient. I think the reasons why are the lessons learned; we tried very hard to be transparent in whatever we did. We tried to treat the management and the staff with the respect I talked about at the beginning of this discussion. They deserve to know the good news and the bad news.

And as long, in my opinion, as we kept them informed as to what was going on, they worked with us to make sure it happened. And we treated them all with respect in that way, that we knew they'd be trying their best.

The other thing in addition to transparency -- and if I had one lesson to learn, it's the transparency part -- as part of our IT effort, a very detailed project plan mapped out. There's always unknown activities and surprises that occur, but if you don't have the vast majority planned, then everything is a surprise. The other thing is, when you are communicating the information by having a plan, you allow people to understand where they fit in, and they appreciated that.

It actually had some side benefits in terms of the move. We were in the process of doing a lot of this consolidation that ended up with the shared services organization, a lot of that actually was enhanced. I don't know if we would have -- been as easy to get all those service in one building except that we had to move. The other thing is it created a lot of teamwork between the IT group and the staff with -- across the Department. This whole effort made -- it showed that people could work together and do it successfully. And having evidence on the ground is always better than having a philosophic discussion about some gold at the end of a rainbow when no one yet can see either the rainbow or the gold. And proving that it was possible to be successful made the Department stronger.

Mr. Boyer: Dan, I understand at one point your Department had issued a moratorium on upgrading desktops and laptops with the most recent operating system. Would you elaborate on your rationale for pursuing such a course of action, and what is your current plan in this area?

Mr. Mintz: One of the things that surprised me was, doing something that made sense, such basic sense, which was, come up with a plan before you do something, caused such a reaction. So the answer is, and I want to emphasize, this had no reflection on the software at all.

My issue was we have tens of thousands of employees, we're spending a couple of billion dollars on IT a year, we have mission critical systems all over the place, my feeling was we should not take a step until we put together a plan. So what I said was we should take a breath, let's hold up right now, everything is working okay. There are features that we want to look at that would be of value to us. Until we come up with a transition strategy, I don't want us to move, and I certainly want us to move coherently as a Department, and that takes time.

The building move got a little bit in the way of putting together the transition plan. So we are still working on that. My expectation right now is sometime in calendar 2008, we will put together a plan that will deal with the issues of what we want to do with the operating system and what we want to with the versions of office. We'll pass it through our CIO Council and then we'll do that. So we have not yet made a decision, we are still exactly where we were when that came out.

Mr. Boyer: Previously, you had mentioned the importance of security and information assurance as one of the key goals in your department. Now, technology has clearly enhanced the ability to share information, but it has also made organizations more vulnerable to unlawful and destructive penetration. Could you describe your efforts around encryption of data, and specifically your strategy to strengthen the protection of personally identifiable information?

Mr. Mintz: Yes. First of all -- and I'll get to the encryption. We have to understand that most of these issues are fundamentally cultural. There was a study done where people called up an organization -- and I don't remember right now whether it was private or public. But they called up an organization. And it was people in the IT shop, and the phone call was hello, I'm from the help desk. We are resetting your password and -- I mean, this is true. That we are resetting your password, and we need your ID and password just to confirm it so we can do the reset correctly. Fifty percent of the people gave it.

The point of that being, I don't care what technology you put in place or what protections you put in place or how you do identity management, that is, identifying who is signing on or accessing the system. When somebody does that, they're let into the system and they can do anything they want. So the problems are fundamentally cultural.

With encryption, one of the things -- when I looked at some of the problems that have happened across the government, there were at least two or three things that came about that occurred to me when I looked at the lessons learned. So one was just a technology issue, that is encrypt the data. So certainly, everything in particular that's mobile is encrypted now at the Department, it has been for some time. We were very aggressive in following the mandate that was given to us by OMB. I thought was it was a good one, and we do that now.

Second, one of the problems was communications. A lot of times, people are afraid to bring bad news, and one of the comments is when you punish the messenger, you end up having no messages. So we've tried to create a culture where we can deal with bad news and not -- and deal with the news, as opposed to who brought it to us. In some cases, it took weeks or months before the bad information made its way up the management chain.

I have a policy that I inform senior management at the Department essentially at the same time we report any incident into the Department of Homeland Security, what's called US-CERT, where we report incidents. I have a commitment that I report it to them very shortly thereafter whether I have perfect information or not, so they were alerted to that. And that's -- luckily I work for a group of people that are able to handle that kind of interaction.

The third thing is an auditing activity. Typically, we put these policies out and we create what I call policy on a shelf. And what I mean by that is we create these huge three-ring notebooks or the functional equivalent of three-ring notebooks on the web, and no one knows which ones to follow, and we don't check to see if they are actually in place. So one of the things we're doing is we are doing a lot more aggressive job of going back and auditing each of the policies to make sure they're effective.

We do a lot of training programs associated with this topic, we have a week-long security conference which has existed really for many years at the Department. FAA does a security conference. We've done a lot more online training trying to make that more robust.

Mr. Morales: So Dan, along similar lines, there's obviously a rise in telecommuting and working from home, and many government employees are accessing IT infrastructure via non-government PCs, which increases the potential for system vulnerabilities. Now, my understanding is that peer-to-peer software applications resting on home PCs is one of the major reasons that increases the security risk.

First of all, can you tell us a little about what is the peer-to-peer software, and what are some of the challenges and benefits represented by these applications, and how you are dealing with them?

Mr. Mintz: Peer-to-peer software is software that allows multiple computers to access each other's disk drives as if the disk drives were all connected to the computer doing the access. And like a network, peer-to-peer -- because each computer is a peer of the other -- a lot of it's used for copying music and things like that, which are other activities that you really don't want to encourage.

We've taken a number of steps to try and deal with it. First of all, we have a policy that says you can't keep personally identifiable information or sensitive information on non-government computers anywhere. Second, the software we use that accesses our own systems prevents data from being downloaded on their home computer, though a user who wants to can obviously go around that requirement by just copying and taking it.

We are doing education processes to discourage people from doing that kind of activity associated with peer-to-peer work. We discourage people, frankly, from using that kind of home use peer-to-peer software. In addition, we scan for that software on our own networks to make sure that it doesn't exist on the Department's.

packages that merely do peer-to-peer work are not good applications in general for us to use. The security dangers are much too great related to that.

Mr. Morales: So your main line of defense here is really the education of the employees and making them aware of the dangers and the policies.

Mr. Mintz: Yeah, that, and the final thing is, we also have started changing the policies of the Department for those people who are doing a lot of telework, we are encouraging their primary computer to be a laptop, a government-provided laptop. So while we can't afford typically two computers, we can afford the one, and so more and more of the time, the primary computer's becoming a laptop.

Mr. Morales: What does the future hold for the U.S. Department of Transportation?

We will ask Dan Mintz, 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 Dan Mintz, chief information officer at the U.S. Department of Transportation.

Also joining us in our conversation is Pete Boyer from IBM.

Dan, given the critical role IT plays in mission and program delivery, could you give us your view on how the role of the CIO has evolved, and what are some of the key characteristics of a successful CIO going into the future?

Mr. Mintz: I see the CIO function breaking into two directions. One direction will be those CIOs that will focus on technical issues and potentially operational issues. And the second will be those CIOs that will focus more on strategic and policy issues, and I think over time that actually may separate out.

The characteristics of the CIO, therefore, will depend on which person, which role they have. The latter role, which I think is the more interesting -- I think people have to have experience with business issues and business background. Technology is a useful piece of knowledge to have, but will not be the primary driver of the CIO function. Their ability to translate between technology and business goals I think will be what they have to bring to the table.

Mr. Boyer: Now, continuing our focus on the future, can you give us a sense of some of the key issues that will affect CIOs government-wide over the next couple of years, and given this perspective, what emerging technologies -- and we've talked about some of them already -- hold the most promise for improving federal IT, and any advice you would give to the next administration in this area.

Mr. Mintz: My opinion is the biggest -- and it's in a sense not an emerging technology, but the technology I think that the CIO function needs to pay the most attention to is the continuing impact of the internet on organizational structure. Historically, the technology challenge has been how to optimize technology, which however difficult, is actually manageable and understandable.

With technology being completely pervasive, the issue now becomes how do you optimize organizations? That's a particularly difficult problem in the government, where making organizational changes is very, very complex.

Mr. Morales: Is this the flat-world issue?

Mr. Mintz: To some extent, yes. What happens is it empowers the people at the top who have much greater visibility into an organization; it empowers the average employee, which is a good thing, particularly for younger employees, because they have access to policy and things like that they otherwise wouldn't have. But the vast number of people in the middle who historically have -- get value by passing information up and down the organization, their self-worth is under attack. So the question becomes how do you make sure that they are able to give a valued contribution to the organization, because they have great talent.

Mr. Boyer: More specifically, Dan, what are some of the major opportunities and challenges your organization at DOT will encounter in the future -- and this is pulling out your crystal ball, but how do you envision your office will evolve over the next five years?

Mr. Mintz: I wouldn't be surprised that the challenges in five years are going to look a lot like the challenges today. The focus right now -- there are three focuses, two of which I've already talked about. One is how do we make sure that we have architecture that supports security needs, particularly when we have all these other emerging technologies and the internet breaking apart the relationships internally and externally.

which is how do we relate operational responsibilities and policy responsibilities, and how will that evolve over time.

Mr. Morales: And then you touched upon this a bit earlier, but you know, the pending retirement wave is a big issue across the government, and certainly within your organization. So more specifically, how are you handling this issue, and how are ensuring that you have the right mix of staff to meet some of the future challenges that you've outlined?

Mr. Mintz: I suspect that one of the issues evolving with retirement, because we are losing some very senior and valuable people -- the solution may be possible if we can figure out how to have more robust relationships from a variety of different external resources, because I'm not sure we can hire fast enough to replace all of them.

I think, however, in many ways the major problem is with the people we still have right now, because the nature of what their job role is just changing dramatically because of this internet impact. We have people who are used to working in a hierarchical relationship and are relatively comfortable with it. We need to move that to being able to deal with a horizontal relationship with partners. It takes different skills.

When you look at the private sector, a lot of the companies who failed at outsourcing failed because they didn't know how to relate two horizontal activities. And they didn't realize it was a core value that they had to develop.

The government will need to figure out how to interface to private partners more, academic institutions, state governments, international organizations, in ways that people may not yet be comfortable with. We also have to be spending, I think, a lot more focus on that human capital issue. And I think we need to spend actually a little bit more on that. And that's what we are doing right now in IT.

Mr. Morales: So it really comes back to your point about different organizational modes, and different ways of managing the business.

Mr. Mintz: Yes, and I think the private industry is moving much faster, and eventually government will be forced to catch up because all of its partners will be doing this.

Mr. Morales: So Dan, given the wide breadth of experiences that you've had in your migration from the private sector over to federal government, I'm curious, what advice might you give a person who's out there considering a career in pubic service?

Mr. Mintz: I'd highly recommend it. I mean, I've had a wonderful challenge. One of the things I say when I speak in different groups is this is honestly the first job I ever had where I love coming to work every day. I've obviously had jobs that I've enjoyed, but I can honestly say every day I've been at the Department, I love coming into the office.

And it's a rare opportunity. There are great people within the government, you have a sense of mission; you're trying to accomplish something that's really helping the citizens and the public, which is a very wonderful thing. It's the best job I've ever had.

Mr. Morales: Dan, that's great advice. Unfortunately, we have reached the end of our time together. I want to thank you for fitting us into your busy schedule today, but more importantly, Pete and I would like to thank you for your dedicated service to our country at your role at the Department of Transportation.

Mr. Mintz: I'd like to thank you for having me here. I love to talk about the Department and my office. For those people who want to know further information about the Department, they should access www.dot.gov.

Mr. Morales: Thanks.

This has been The Business of Government Hour, featuring a conversation with Dan Mintz, chief information officer at the U.S. Department of Transportation. My co-host has been Pete Boyer, director in IBM's federal civilian 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 may not be able to hear this morning's show on how we are 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. Announcer: 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.

Friday, August 26, 2005

Arlington, Virginia

Mr. Morales: Good morning and welcome to The Business of Government Hour. I'm Albert Morales, your host and managing partner 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 www.businessofgovernment.org.

Ms. Combs: Good morning.

Mr. Morales: And joining us in our conversation, also from IBM, is Debra Cammer. Good morning, Debra.

Ms. Combs: The Budget and Accounting Act of 1921 actually created the Bureau of the Budget in the Department of the Treasury. The Bureau of the Budget later moved to the Executive Office of the President in 1939. And the Bureau of the Budget was actually reorganized into OMB in 1970. It serves, actually, a couple of primary roles, Al: the budget itself and management. The budget responsibility of OMB is to assist the president in overseeing the preparation of the federal budget and actually to supervise its administration in the executive branch agencies. And the "M," or the management part, of OMB, is responsible for helping to improve administrative management, such as coordinating many of the administration's procurement, financial management, information systems, and various regulatory policies.

Mr. Morales: Linda, would you tell us about your office within OMB, specifically the Office of Federal Finance Management?

Ms. Combs: The Office of Federal Financial Management, as we call it, OFFM, was created by the Chief Financial Officers Act of 1990. We are responsible for implementing the financial management improvement priorities of the President, carrying out financial management functions of the CFO Act, and overseeing federal financial management policies such as taxpayer dollars not being wasted, making sure that the government books are in order, and making sure that our government decision-makers have access to accurate financial information.

Ms. Cammer: And Linda, you were recently appointed controller. Congratulations.

Ms. Combs: Thank you, Debra.

Ms. Cammer: What are you responsibilities as controller at OMB?

Ms. Combs: I'm actually head of the Office of Federal Financial Management, and the responsibilities entail providing government-wide leadership for strengthening financial management in the federal agencies and programs government-wide. In December of '04, for example, we issued some revised internal control financial reporting requirements relating to the Circular A-123. Now, those are requirements that are similar to requirements of internal controls that many of us have heard about that private or publicly traded companies are required to do through the Sarbanes-Oxley requirements. We also require management to implement a strengthened process for assessing the effectiveness of their own internal controls throughout government over financial reporting. And these are based on widely recognized internal control standards. We also lead the improved financial performance criteria. We have, as our responsibility, an initiative for eliminating improper payments, and a federal real property initiative that's part of the President's management agenda as well.

Now, these specific initiatives set out to improve financial management practices across government, and we're trying to ensure that managers have all the accurate and timely information they need for appropriate decision making. We're setting out to see if we can't reduce the number of improper payments. We actually have $45 billion a year that the federal government makes in improper payments. We hope that we can reduce that by more than half -- by $25 billion -- by 2009. And the real property initiative -- we're trying to see if we can't dispose of excess property that's no longer needed and that would be, of course, costly to maintain. Our projections indicate currently that the size of the federal real property inventory could certainly be decreased by 5 percent, or $15 billion by 2009, so you can see we have some long-term goals that we're shooting for that we believe are very realistic and very doable.

Ms. Cammer: What were your previous positions before becoming a controller?

Ms. Combs: Immediately before becoming controller, I was the assistant secretary for budget and programs, and chief financial officer, at the U.S. Department of Transportation. Prior to that, from 2001 to 2003, I was the chief financial officer at the Environmental Protection Agency. During the first Bush administration, I was the assistant secretary for management at the Department of the Treasury, and in the Reagan administration, I was deputy undersecretary for management at the Department of Education. Before I actually came to the federal government, I was manager of the National Direct Student Loan Division for Wachovia Corporation. Before coming back into government in 2001, my husband and I owned our own company, and I served on some corporate boards and have actually been an elected official back in Winston-Salem, North Carolina, which has been our home for about 30 years.

Mr. Morales: Linda, I noticed in your background that you spent approximately 10 years working at the Winston-Salem/Forsyth County School District. Can you share with us your experiences in that role with what you currently do today?

Ms. Combs: You know, I think in every single position that I've been involved in, somehow financial management in one shape or form has come to play in those various positions. And in the school system, while I was beginning as a teacher, when I moved into the administrative roles of assistant principal in the various schools in which I served, it seemed to me that budgets seemed to come my way, or helping to streamline things seemed to fall into my bailiwick. And I truly enjoyed my experience with the school system. And even though that was a very long time ago, I think one of the things that I learned from that experience was that if you can manage a classroom with 26 students, you probably can manage just about any other management role anybody throws at you.

Mr. Morales: Do you find yourself still using some of the techniques from back then?

Ms. Combs: Oh, absolutely. They come in quite handy.

Mr. Morales: That's great. How are shared services changing government operations? We will ask OMB Controller Linda Combs to share with us when the conversation about management continues on The Business of Government Hour.

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Linda Combs, controller of the Office of Federal Financial Management at OMB. Also joining us in our conversation is Debra Cammer.

Ms. Combs: I think that the Lines of Business Initiative is a perfect complement to the president's management agenda. This administration certainly sees cost savings in standardization and consolidation of government business processes, and that is the way we feel like it's the most productive way to conduct the people's business. And it's similar to creating a draftsman's blueprint, as I would say, in the way that we are adjusting the blueprint right now to reflect these particular improvements. But the line of business concept is basically built around three premises: all agencies will use common solutions; the solutions focus not just on standardizing business processes -- although that's a huge part of it -- but in making them more efficient, more effective, and of course, more cost-effective as well; and that all of these solutions, the business processes, and the systems, will be developed using common architectural tools. The five distinct lines of business are: human resource management, grants management, federal health architecture, case management, and the one that I'm directly responsible for, financial management.

Mr. Morales: With respect to financial management line of business, what are the specific goals for this LOB?

Ms. Combs: The primary goal is, of course, to assist the agencies in getting to green on the President's management agenda, and of course, what that really means is that the financial management line of business is going to help come into the agencies the standardizing processes, improving those internal controls so that there won't be any negative findings as a result of the annual financial statement audit. I think the other goals would be things like reducing the likelihood that internal control weaknesses exist, because when we start consolidating and using common systems, that makes everybody more sure of what they're doing and being in more control. It also -- one of the goals is making sure that we can compare data across agencies, you know, common business processes, solutions, and common systems. Certainly creating cost savings opportunities for agencies is a primary goal for making it easier for agencies to take advantage of specific common solutions in financial management. We also think a goal is simplifying the procurement process. That, too, reduces the risk that agencies have and allows for greater contractor oversight. But the one primary goal that I think we will also see is the momentum that we're going to create as we continue to standardize and consolidate.

Ms. Cammer: Linda, you often hear people talk about shared services in the same breath with the financial management line of business. Would you define what you think shared services is for our listeners, and then also describe the concept and the history and the benefits of it?

Ms. Combs: You know, I think shared service, to me, means exactly what we've been talking about, where agencies share common systems and common business processes. The ones that we have found to be most effective in the financial management community are based on the concept of economies of scale. I think you go back to the model that's been demonstrated in industry over and over again of gaining process efficiencies through either mass production or through common procedures. That's a proven concept; it's one we need to continue to embrace in the federal government. If that means consolidating services, consolidating productions, and the kinds of work we do -- applying often a heavy dose of technology is important, but a business process that can be done faster and cheaper, regardless of whether it includes hardware, software, or supporting infrastructure, or whether it merely is just a tweaking of a process that somebody has found to be effective from one agency to another -- I think those are the very important things that we have to look forward to. We intend to gain many similar process efficiencies by this standardizing that we're embarking upon in our financial business processes.

Ms. Cammer: Do you reference this coming from private industry as a best practice? In private industry, you understand, the shareholders are motivating it, so for you, what's the big driver in government improving their financial management in this way?

Ms. Combs: Just as the private sector is interested in the motivators, we, too, are interested in getting the best we can for our shareholders, who are the taxpayers -- you and I -- as well as our audience today. We think they deserve these economies of scale. They deserve a situation where, in essence, we can buy once and use many times over, in federal government. Whether we were in our previous private sector enterprises, or whether we're here doing the work that needs to be done for our taxpayer-shareholders, the interests are the same: economies of scale, business processes changes that are productive for the entire enterprise, and our entire enterprise happens to be the entire federal government. We intend to gain these process efficiencies and standardizations for our shareholders as well.

Ms. Cammer: Now, I've also heard about this COE, or centers of excellence, concept in relationship to the financial management line of business. Can you describe that and how it relates, for our listeners?

Ms. Combs: The center of excellence concept allows our government agencies to meet some of the goals that we've set forward in the financial management line of business concept that we've put out. It emphasizes these common business practices, it emphasizes common systems solutions, and it emphasizes what I think is becoming somewhat of a term called "economies of skills" as opposed to, and in conjunction with, I should say, economies of scales. We have some very well trained experience systems accountants, for example, software and hardware technicians, and program managers in specific places in the federal government, but they may not be in the place that we need them to be at all times. So if we look at this shared service concept, we can take better advantage, I believe, of where these skills, these economies of skills, are located. I think we've often looked at hardware service centers or software in terms of economies of scale, we continue to look at the specialization of running one of the CFO council-approved financial systems, and how that is going to work for other departments. But it allows agencies not only to outsource, when they need to, their hardware and software, but I think it opens an opportunity for the centers of excellence to perform agencies' accounting operations. If they do a very, very good job of that, and they're approved as a center of excellence, we need to take full advantage of that and take the competition aspect into each and every department that needs to embark upon changes in their financial management systems.

For example, we have over 50 of our smaller non-CFO -- non-Chief Financial Officer -- Act agencies, of which there are 24 of the largest departments and agencies. But there are 50 smaller non-CFO Act agencies that are currently using centers of excellence. There are four government-managed centers of excellence currently within the CFO Act agencies, and that's the Department of Transportation, General Services Administration, Department of Interior's National Business Center, and the Department of Treasury's Bureau of Public Debt.

Mr. Morales: Linda, you made reference to the CFO council. Can you describe what this is and what the goals of the council are?

Ms. Combs: Well, I'm happy to talk about the CFO council because that gives me a great opportunity to brag on my fellow CFOs and deputy CFOs of the council, which are really the largest 24 federal agencies; they're actually named in the CFO Act of 1990, which I talked about earlier. But these are the senior officials of the financial community throughout the federal government and the career deputies who are very, very instrumental in working collaboratively with their fellow CFOs and with those of us in the Office of Management and Budget. And we're looking at improving financial management across the federal U.S. government enterprise. And the council has several committees, and these committees are led by chief financial officers or sometimes deputy chief financial officers. And the priorities that we currently have reflected in our subcommittees of the CFO council are a Best Practices Committee, an Erroneous Payments Committee, Financial Management Policies and Practices Committee, Financial Statement Acceleration Committee, Grants Governance, Performance Management, and Financial Systems Integration.

Mr. Morales: Linda, you mentioned Best Practices Committee. Is that best practices within government or do you also look to the private sector?

Ms. Combs: We actually do both. We have made it a point at all of our chief financial officer meetings, which we have probably seven or eight of those a year. We don't meet every single month, but we make it a point to share best practices, whether it's a dashboard, for example, that one agency has had good success with, or whether it's a best practice that people have embarked upon in internal controls or a best practice of looking at ways to improve our erroneous payments. It could be anything. We actually looked at some best practices early in -- when I was actually a sitting CFO in terms of whether or not we could have economies of scale and economies of skill. We've done a lot of searching within the CFO community to determine which CFOs have good best practices in many areas that they're working on. And we bring those to the council, and it's a good chance for the CFOs to showcase what many of their opportunities have been, and how they've successfully implemented good business practices.

Mr. Morales: What are the challenges of implementing government-wide financial systems? We will ask OMB Controller Linda Combs to explain this to us when the conversation about management continues on The Business of Government Hour.

Mr. Morales: Welcome back to The Business of Government Hour. I am your host, Albert Morales, and this morning's conversation is with Linda Combs, controller of the Office of Federal Finance Management at OMB. Also joining us in our conversation is Debra Cammer.

Ms. Combs: There are some concerns about changing the way agencies do business. I think there're also some concerns about continuing to have a flow of reliable and timely financial data that is needed to carry on day-to-day operations. One of the things we're doing at OMB to help ensure the flow of reliable data is that we are actually requiring the use of only those financial systems that are hosted by a government Center of Excellence or a private sector Center of Excellence that have been approved by the CFO council. Placing a larger share of implementation responsibility on contractors has also been a must, as we've implemented new systems, and we've increased the use of fixed-price and cost-sharing contracts as well. I think the real key here, though, is that we have continually tried and will continually make it our approach to work very, very closely with each and every agency and department as it moves through the entire implementation process by reviewing these strategies that are so important and ensuring adequate communication between us and all of the stakeholders that are involved in making these significant changes.

Mr. Morales: Linda, implementing government-wide financial systems across all agencies sounds like a monumental task. How do you address the competing priorities and agendas to achieve true collaboration towards a common goal?

Ms. Combs: You know, I think one of the things that we talked about earlier in terms of the CFO community coming together to address government-wide issues -- we've been able to create a number of partnerships between the CFO agencies in the CFO community. I think it's been important that we've involved other functional communities as well, such as the CIO community, the acquisition community, property managers, supply and inventory managers. It's been important for us to address the issues that the Hill has seen fit to be involved in, and these functional communities and their leaders are extremely important to all of our efforts. I think the processes that we have used and have been created throughout the CFO community to support the President's management agenda addresses a number of issues, and many of these issues overlap, and particularly in the areas of e-gov and financial management. We will continue to use our greater community to bring the necessary measures into focus that we need to focus on, that we need to address, and that we need to make sure not only we have collaboration in, but that we also have success in.

Ms. Cammer: Now, as you move more towards a shared services approach in the federal government, there's likely to be a lot of concern amongst the agencies, and I'm wondering what steps OMB is taking to address change management?

Ms. Combs: You know, I think those of us who've been in change management for a number of years have one word to say about change management, and that's communication, communication, communication. I don't think we can over-communicate, and we're constantly looking for ways to communicate, not only our vision, but our actual strategy in moving this forward. We work through a number of forums from time to time to ensure that government mangers can understand everyone's role and everyone's responsibility. And I can't say enough about our partners in the CIO and the acquisition communities, the meetings, the briefings, and the other discussion forums that many of our private sector partners bring to play, bring us all to the table, and serve a most useful purpose, along with things like what we're doing right now is a great way to communicate with our federal partners and people who are involved in our federal CFO community.

The president's management agenda, because it incorporates systems and business process initiatives -- we have various requirements of the PMA, but our policies and our guidance that modify and support and consolidate these standardized approaches probably have an awfully lot to do with making these changes happen, and making them happen in a positive way. But we do need to always continue to find forums, find better ways to communicate what kind of changes are expected, but we also need to find ways to make sure that people understand our vision, and where we're going to be when we finish. And we will finish some of these things during our tenure, and I want us to be able to look back and say, here's where we were in 2005, here's what we've accomplished by 2009, and say we've made a tremendous difference because we were all willing to embrace this change.

Ms. Cammer: That's great. You can obviously see that this work requires a great deal of partnership with shared services providers and customers and agency heads and the private sector and -- what are these types of partnerships important and how are you encouraging the federal government agencies to build them?

Ms. Combs: Because financial management touches almost every business and every business process in the federal government and outside the federal government, it is extremely important to get this right. And financial data, I think that is used by our outside accounting organizations, whether it's a human resource, property management, supply inventory management, or whether it's used by managers on a day-to-day basis to make better financial decisions -- all of those things are so important because I think the small amount of actual financial data that is used in the financial community is small compared to the huge amounts that mission area managers need in order to effectively manage their program. And I think it's really important to help mission managers understand that their mission is part financial management as well; it's just as much a part of their mission, and I know they want to embrace it that way. I think it's up to us as federal financial managers to help these mission managers accomplish their missions in a more productive way.

Ms. Cammer: We've talked about the challenges of transition leading to new systems and the change management involved in the challenges of a partnership. Could you talk about what other major challenges that agencies could encounter as they integrate their financial systems, and what are they doing to overcome those challenges?

Ms. Combs: I think some of the tenets that we're advocating to reduce implementation risk actually address significant challenges that agencies encounter when they're implementing new systems. And having done this as a sitting CFO myself, I know how important it is to develop the right simple strategy, and a strategy that actually supports and fits in well with the department's or the agency's overall approach to financial management. I think it's important to minimize the changes to the business process that is already certified; in fact, I would say don't change it. I think it's important to use phasing of projects; in other words, don't try to do too much too quickly. Implement one functionality at a time. If you're going to implement multiple functionalities, such as core financials, procurement, and asset management, I'm not sure I could have done all of those at one time myself, so we tended to concentrate first on the core financials. But using a simple contractual vehicle, introducing competition when you're selecting the right host -- agencies, I think, continue to have to take implementation risk, but we need to be very, very careful that we are simplifying our approach as much as possible, both from a technical and a procurement perspective, and we need to work very, very closely up front and all the way through with the end users of the data in our agencies and departments. It's really, really important to find out what managers actually need, but to focus them on the fact that we've got to have standardized business processes, and we have to change our processes rather than changing the product. That's where I think we have, in the past, had some difficulties, and I hope that my mantra of change the process, not the product, will become a standard throughout government.

Mr. Morales: Linda, we talked a lot about change management and collaboration, but I would imagine that another major component of these types of transitions is employee training and retraining. What can you tell us about the plans or implementation of training for government-wide systems implementations?

Ms. Combs: Training is extremely important. Hiring and retention of specific skill sets is extremely important, as well. And I think, as I talked earlier about the advantages of these economies of skills as we've embarked on the Centers of Excellence approach, that will continue to become an even more important element within our financial management component. Training cannot be overemphasized any more than communication can be overemphasized when you are changing processes particularly. That's why I think it's so important to optimize the skills we have within the Centers of Excellence because these are people who have not only gone through this already, they have the right skills in place, and we just need to be able to replicate and duplicate what has gone on there to take advantage of the skill sets that are already there with these specific communities.

Mr. Morales: What does the future hold for the OMB's Office of Federal Finance Management? We will ask Controller Linda Combs to explain this to us when the conversation about management continues on The Business of Government Hour.

Mr. Morales: Welcome back to The Business of Government Hour. I'm your host, Albert Morales, and this morning's conversation is with Linda Combs, controller of the Office of Federal Financial Management at OMB. Also joining us in our conversation is Debra Cammer.

Ms. Combs: You know, particularly in the financial management line of business, one of the things I've learned from personal experience that I hope to continue to pass on to my fellow CFOs and people in the CFO community is start simple and keep things simple. Whether you're using procurement vehicles, systems implementation, schedules and timeframes, make it clear, make it consistent, keep it simple. And the huge systems implementations that have been attempted, particularly in the financial line of business, I think a lot of people have learned some very valuable lessons from those, and it goes back to keep it simple and don't attempt to do too much at one time. Also, I think it's important for timing to be considered. If you're implementing a new financial line of business or a new financial system, you have to continue to keep control of your financial systems all during the year, regardless of whether you're changing systems or not. So developing a very good, viable, long-term strategy, and shorter tactical methods to know when you succeed, is an extremely important thing to keep in mind. I think you have to constantly reevaluate your strategy as you go along and make sure it's still being relevant to the community you're doing this for, communicate with the various leaders that touch your area, and certainly involving these end users in the design, the testing, and the awareness of making sure when we finish an implementation that we're going to be giving people what they feel like they need to manage better on a day-to-day basis.

Mr. Morales: Keeping it simple is certainly a well-learned lesson and often one of the most difficult ones for all of us to keep in mind. But specifically, what advice would you give a government executive today who will be implementing government-wide financial systems?

Ms. Combs: I think one of the things that I just talked about -- avoiding mid-year financial conversions -- is pretty important. We would hope that we could have our long-term strategy and even our short-term strategies to the point that we would be able to bring up financial systems early in the year rather than waiting longer and later in the year. We talked about simplicity already and developing a long term strategy and -- not just developing a long-term strategy, but keeping in mind what are we going to have when we finish, making sure that this design and the strategy that we've embarked upon is not just a simple strategy, but it's also a strategy that's going to help us to implement all of the financial management systems later on that we will need to add to that. I would say start with your core financial system and make sure that's tweaked to the point you want it and operating well, make sure you've got the processes worked out -- make sure you change the processes, not the products.

Ms. Cammer: How do you envision the use of shared services and its implementation in five to ten years?

Ms. Combs: I think if we look out five to ten years from now, we'll be closer to the end of the journey, whereas now we're probably closer to the beginning of this journey. I think that the shared services concept is being embraced. It's being embraced in the corporate world, and it continues to be embraced in the federal sector as well. But the applicability of the economies of scale and the economies of skill will drive us and help to drive us through technology, through training, and toward becoming as practical as we possibly can in the world of the service industry, as we are in heavy industry. We have a lot of guidance out there; we have a lot of best practices to look at in the private sector, and my hope is, as we go through this journey, continue to use the best practices that we possibly can and optimize utilizing the skills of our good federal employees to make these come about.

Ms. Cammer: We've been talking a lot about shared services as an operational change. Could you talk about how you see the future of government financial management and their statements being generated different in the future?

Ms. Combs: You know, one of the things that continues to drive people to better financial management is the indicators that we have, and our financial statements are really indicators of our ability to show that we have things under control. So achieving a clean opinion on our financial statements and using them fruitfully depends, in large part, I believe, on using common accounting standards throughout government, standardizing our business processes, and consolidating the systems that we need to help us bring this about. I think those are the things that we need to continue to look at, we need to continue to do anything we can to improve our processes, our internal controls, and all those things will help us build and publish our financial statements in a more timely and effective way.

Ms. Cammer: How do you plan to further expand the PMA's e-government initiative for the future?

Ms. Combs: You know, the federal financial e-gov proposal -- our financial line of business -- is very important in our CFO council work. The CFO council is committed to making positive experiences work for each one of our federal partners. Our agencies talk to one another, we continue to figure out ways to help agencies talk to one another even better, and I think working together with our CIO partners, working together with many of our other partners, is a very, very important element to bringing this about. I think we're definitely aware of what agencies have done and are doing. Having been a sitting CFO, even a couple of times already in this administration, I know what my fellow CFOs are going through, and having been through many of the things that some of them are just now going through and setting up a financial management system, it's very, very important to make sure that we now in OMB are great partners. Hopefully, we can be even better helpers in making agencies aware of what has been done and what other agencies and departments are doing to support the financial management line of business. We look for any and all ways that we can actively participate across the financial management community to generally and specifically support agencies as they go through changing their financial management systems.

Mr. Morales: Linda, you've had a fantastic career, and I wish we had another hour to talk about all the different jobs that you've held in government and the experiences we've had. But what advice could you give a person who's interested in a career in public service, especially in financial management?

Ms. Combs: I would say to anyone who's interested in public service to consider it strongly. It's an avenue that you cannot find anywhere else. The scope and responsibility of the decisions that are made on a day-to-day basis, whether you're in a department, or whether you're in OMB, are significant. And so significant that one would never have the opportunity to do that in any other place except in public service. Public service is definitely a public trust and added to the overall scope of responsibility, the public trust aspect of what we all do in public service is a leadership role that one can have and embark upon and have a wonderful career if they choose to stay there their entire career. But I would say to any person who's interested in a career in public service that they should prepare themselves and prepare themselves well for a leadership role, prepare themselves in financial skills in any way they possibly can because whether they're going to be working in a program area or in a financial area, these financial skills are going to become more and more important as we move through the next few years. But I would say work hard, be bold, and think big.

Mr. Morales: Linda, that's great advice.

Ms. Combs: Thank you so much. It's been a great pleasure to be with you today. We appreciate this opportunity to get our message out there. And if people would like to know more about the things we've talked about today, I invite you to go to whitehouse.gov/omb or to another website called results.gov and learn more about financial management in the federal sector.

Mr. Morales: Linda, thank you.

Tuesday, August 17, 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 Lieutenant General Steven Boutelle, Chief Information Officer and G-6 of the Department of the Army. Good morning, sir.

Lt. Gen. Boutelle: Good morning, Paul, great to see you this morning and I appreciate the opportunity to talk about what we're doing in our service.

Mr. Lawrence: Great. And also joining us in our conversation from IBM is Chuck Prow. Good morning, Chuck.

Mr. Prow: Good morning, Paul.

Mr. Lawrence: Well, General, perhaps you could begin by describing the mission of the Department of Army's chief information office, G-6?

Lt. Gen. Boutelle: That's a great question. The CIO and G-6 of the Army really has multiple roles. As the CIO we hold that traditional role, which is providing IT services across the force. Now, when we say "across the force" for the Army that's significantly different in some corporate worlds, that is, global requirements for IT wherever you are in the world, any time, any place. And generally and quite often in today's environment that is in a place where there is no infrastructure.

Under the G-6 role we actually provide the soldiers, the young men and women who operate many of those services, be it in Afghanistan or Djibouti, Horn of Africa, South America, or here in the continental United States.

Mr. Lawrence: Tell us about the people on your team, especially the skills.

Lt. Gen. Boutelle: The skill set is a varied skill set but they do have a common core and that is somewhere they're involved in the IT industry. We do have those people that are in the resourcing business but really in the IT industry and that is all the way from software and computers up to transmission systems via satellite, tropospheric scatter, microwave, or hand-held tactical radios.

Mr. Lawrence: And how about the size of what you're taking place in terms of a budget, don't want any secrets but it's always interesting to put what's going on in the service in the context of other Fortune 500 companies?

Lt. Gen. Boutelle: Our IT budget is about $6 billion and that runs over our palm so it's a significant budget in the size of business.

Mr. Lawrence: And then you were describing how combat operations in Iraq and Afghanistan and the like are involved. How do they affect the budget?

Lt. Gen. Boutelle: We have the normal budgets that we have in peace time although our budget doesn't significant change although it's increased with the current supplementals in the war in Iraq and Afghanistan. So those are usually supplementals on top of our normal budget where we buy and push services be they leased services of satellite services or information services or actually buying systems, commercial systems, to put on the ground in Pakistan or Afghanistan or Iraq or other places.

Mr. Lawrence: A while back we interviewed Kevin Carroll, the program executive for Enterprise Information Systems for the Army and he talked to us about how his organization was now falling under the CIO/G-6. Could you talk to us about the reorganization?

Lt. Gen. Boutelle: Sure. The Army has, like many of the services, program executive officers. Those are the acquirers. They award the contracts for research and development and eventual production, whatever the system is, be it an airplane or a helicopter or in Kevin Carroll's place it's enterprise services. Most of the work that Kevin Carroll does in PEO EIS, and he would tell you 50 to 60 percent of the work is resourced or funded by my organization, those are large-end satellite systems in Baghdad or enterprise systems around the world.

Mr. Lawrence: So by putting it under the CIO does that make things more common?

Lt. Gen. Boutelle: Makes it much more common. There are about 12 program executive officers in the Army, one for aviation to buy helicopters, one for ground combat systems that buys tanks, another one for missiles, and it was a natural fit for Kevin Carroll and EIS to roll underneath the CIO/G-6. The other 11 PEOs currently work under Lieutenant General Joe Yakovac and he's responsible for providing those services.

Mr. Prow: Good morning, General. As CIO and G-6 for the Army what are your chief roles and responsibilities?

Lt. Gen. Boutelle: Well, several chief roles and responsibilities separated. As the CIO I do provide the enterprise services and the direction and the guidance and that is to ensure that the user at whatever level, be it the tactical level, the young soldier in the field, or back in the United States, whether he's operating at a depot or an office or behind a desk, has the appropriate IT services. That means bandwidth to the desktop or to the soldier moving across the battlefield or to the attack helicopter, provide all of those services. Some of those are leased services, some of those are products, and some of those are buying at an enterprise level.

Mr. Prow: Can you share with us a few of the highlights prior to you becoming CIO and G 6 of the Army?

Lt. Gen. Boutelle: It's a long road to be the CIO/G-6 and I will tell you if you look at my predecessors each one of them has had a different path. My immediate predecessor was Lt. Gen. Pete Cuviello. He came up pretty much more of a traditional communications role. But in my case I started out as an inductee back in 1969 and elected to join the Army and started out in nuclear weapons electronic repair.

At one point in time I went to artillery officer candidate school, probably because I had reasonable math scores, and in the wind-down of Vietnam I also had a background in electronics and electrical engineering and was shifted over into communications and electronics, spent quite a few years in that. Most of us spent a lot of years initially in combat divisions and I was in the 3rd Infantry Division, the 8th Infantry Division, and 5th Corps, 7th Corps in the United States, in Korea, and, of course, various places around the world.

At a certain point I went into the acquisition business and that is looking at buying products from the commercial world. And when you get into that business you make a shift. You're no longer primarily working communications. You're more working general electronics, software, computers.

And probably the defining event was about 19 -- probably about '87 when the PCs first started to hit the market and I worked in an organization where they were coming in. And I came home one day and I said I think these new things called personal computers are going to go somewhere and spent many nights and evenings doing some very, very basic programming and rebuilding and building computers and have been at it ever since.

Mr. Lawrence: When you look back at those experiences are there any one you talk about when you talk about your career that prepare you for where you are today perhaps from going from a doer to managing a doer or understanding the role that you would play as a higher ranking officer?

Lt. Gen. Boutelle: Well, I think that's a great question and one of the most difficult things we do, as our chief says, is build a bench and that is identify those people who need to take your job should you depart that job or who your replacement's going to be. And I don't think we do that all well or as well as we could both in industry and in government. And one of the things we do as senior officers is we look out across the landscape of those people who work for us or who are around us and try to identify those young people who are starting to broaden their horizons and no longer looking down at just doing the function that they're trained to do but start looking at where the Army is going, where the nation is going, where the world is going, looking at the geopolitical environment and how to start to apply the technologies to where we need to go, not where we are today but where do you need to go in the future. And so identifying those people is one of the things we as leaders need to do and then mentor those people.

We seldom want to send our superstars off to school for a year or six months. We want to keep them close to us. And we need to make those hard calls and send those people out and make sure they get the right experience, they get the right schools, they get the right exposure so we can bring them up to take our job and hopefully do a better job of it than we've done.

Mr. Lawrence: I have a pretty good idea from your description of what drew you to public service but what's kept you in? I imagine from time to time you might have thought about going into the private sector. What's kept you?

Lt. Gen. Boutelle: I think a combination of two things. You go along for a certain period of time and you do it strictly because you really enjoy the feeling of accomplishment. And in my business on a day to day basis and some days are better than others but you generally feel that you've accomplished something and you're pushing this technology the right direction. And I think probably over the last few years it's probably been a knowledge that since I have been in this business for a long time, I've been a program executive officer, I've been a project manager, I've built systems, that I thought that I had a bench of knowledge where I could apply those or help apply those to the young soldiers in the field and in the current war and what I believe will be the future wars on terrorism.

Mr. Lawrence: Tell us about some of your personal style in managing and leading, for example, communication. A lot of people talk to us on this show about the importance of getting your message out and communicating to your team but yet you have a big team and it's spread all over the world. How do you do that?

Lt. Gen. Boutelle: One of the things we do and one of the things I've tried to do is right up front have a very narrow set of objectives that everyone can understand, six or seven things that you want to accomplish in the period of time you're going to be there, two or three years or whatever it may be, and don't change or adjust those unless absolutely necessary. And then you will find that if you put that out to the senior leaders that you'll find that everywhere around the world globally they all understand what you're trying to do and where you're trying to go and be consistent. You need to know where the boss is trying to go. You may not agree with him but you need to know where he's trying to go.

And the second thing is visit them as often as possible. I don't believe we need to micromanage these professionals. They know how to do good work and make things happen. Draw the white lines in the road and give them the objective and the direction, surround yourself with some really good managers and senior people, and I have a superstar staff, and periodically check on them and praise them when they do a good job and give them guidance if they don't. But I am extremely pleased where the Army people are going around the world.

Mr. Lawrence: How do you think about the speed of decision-making in government? Is it fast enough? Is it slow enough? I know we've talked to a lot of people who've come from the private sector who joined government and are somewhat surprised at the speed by which decisions are made. How do you think about that?

Lt. Gen. Boutelle: I think we're in a hybrid right now. In peace time we build very strong armed forces but we do it very methodically and we do it within the system. The exponential growth in the IT world, specifically in IP, XML, web services, that's happening around us does not lend itself to making decisions and putting those systems in the field as quickly as we want. Every circuit board I buy for a system in six months is outdated and there's a new one to replace it. Our process does not support that.

Having said that, in the current war and with the nation in the state it's in today and still in national emergency after 9/11 we are able to do things very, very quickly based upon supplementals and a wartime environment and bring systems in very quickly, replace old systems. So I would suggest today we can make a decision today and make things happen in a matter of sometimes hours or days. That is not true in a peace time environment and that's okay. In a peace time environment you want that structure, you want to build that underpinning and that base to have a stable Army or a stable Navy or Air Force. But right now we can make decisions very, very quickly and execute very quickly with industry.

Mr. Lawrence: That's an interesting point about the speed. What does the term "network-centric operations" mean and why are we hearing so much about it these days? We'll ask General Steven Boutelle of the US Army to explain this to us 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 Lieutenant General Steven Boutelle, chief information officer and G-6, Department of the Army, and joining us in our conversation is Chuck Prow.

Mr. Prow: General Boutelle, can you tell us about some of the IT lessons learned from Iraq and Afghanistan and how those lessons are affecting Army technology?

Lt. Gen. Boutelle: I'd be glad to, Chuck, and, as you can imagine, Afghanistan and Iraq have many lessons that we've learned. Probably the one lesson I've learned, and I just returned from the theater, is where there's a vacuum today or something doesn't exist today with the pervasiveness of the tools that we all use somebody's going to fill it. And what I mean, if I don't take and provide a particular IT tool, a radio, a computer, a wireless network, to a certain organization within, say, Afghanistan in a very short period of time to meet their needs with the availability of those things off the commercial network they will buy their own, they will install it themselves. These young men and women are just like the kids here. They know they can buy a router and a switch. They know they can buy a wireless network and a bunch of cards and build their own network. If you don't provide them the right tools quickly and a vacuum appears they will fill that vacuum out of their discretionary funds.

Mr. Prow: Interesting. Has the evolution of technology affected the evolution of war fighting?

Lt. Gen. Boutelle: I would say absolutely. Two things, one is when you make IT pervasive as it is today and information pervasive as it is today you tend to flatten your hierarchy of management much as is happening in the commercial world. Let's face it. Today in the commercial world as well as in the Army if a young soldier or sailor or airman decides to launch an e-mail message to his boss or to his wife back in the United States it goes at the speed of light minus switching time and that information flow is so quick and the ramifications of it flow very quickly. No longer do you have the point where you have someone at the bottom part of the architecture or the hierarchy who has to manually put something on a piece of paper and send it through maybe his boss and his boss's boss and his boss's boss and over a period of time get a decision. It's near instantaneous so you flatten the management hierarchy.

What that's caused us to do in the Army is relook at how many levels we have. The Army basically has four major levels of hierarchy. We have brigades, divisions, corps, and army. We're in the process of removing one of those levels and in that process when you move a level you start parsing out and sharing those management responsibilities. So when we finish this process we will have three levels. We know that. We know we're going to have brigades; we've already announced that. Divisions, corps, and armies, at the end of the day only two of those will continue and you'll parse those functions. And you can do that because of the information technologies.

Mr. Lawrence: How long will it take to resolve which two of the three?

Lt. Gen. Boutelle: I think that'll probably resolve within 12 to 18 months. We've already decided that the lowest level, the brigade, will still survive, but what we've done is we've enhanced that brigade with IT technologies to allow it to be able to operate within other services, in other words take an Army brigade and nest it in a Marine division. We can do that as we're building IT services in. So the brigades the brigade is our basic fighting unit today as we evolve, as we're building today, where in the past it would have been a division but we're going to make those brigades very autonomous and independent and we are able to do that with a lot of command and control communications, satellite systems, IP-based networks.

Mr. Lawrence: We've heard you speak about the importance of reading and understanding the Chief of Staff and the Secretary of the Army's paper, "Serving a Nation at War: A Campaign-Quality Army With Joint and Expeditionary Capabilities." Could you summarize the key messages one should take away from this paper?

Lt. Gen. Boutelle: The key message in that is we need to make a dramatic change in the structure of our Army. The Army is primarily and has been designed for many years to fight on the East German plain-North German plain against the Soviet Pact or in the Korean Peninsula and it's a very structured Army. We knew the battle space, we knew the ground, we knew the cities and the mountains, we knew exactly where we were going, and we knew what we thought we were going to do when we got there. In today's contemporary environment with the war on terrorism and the radical fundamentalist groups that we're going face they are a nonnation state. They don't belong to a nation. They don't wear a uniform. They move back and forth between countries and they move globally. To be able to address that threat appropriately you need to have small mobile organizations that can quickly move around the world and perform whatever mission we assign to them.

So the Chief's and Secretary's paper says look, the brigade will become our combat fighting unit. We're going to call them brigade combat teams. There will be many of them. We're going to increase the number of them. We're going to enable them by satellite-based networks because so many of the places that we have found the al Qaeda and other organizations are in nation states that have failed or Third World nations where there is no infrastructure. So to enable those organizations takes lots of satellite capability, lots of IT capability, a heavy reliance on intelligence, and providing that to those organizations. So I think the Chief and Secretary's paper is you've got to dramatically change this Army and you need to do it now.

Mr. Lawrence: What does it mean to the individual soldier?

Lt. Gen. Boutelle: There's a couple of pieces in there. One piece of the Chief's paper says look, we're going to be a campaign-quality Army and we're going to be joint. The Chief would like us to have home station operation centers and project force out of the United States and in doing that he will stabilize the force. Right now and in the past we've moved people about every three years, sometimes more often. Do we need to do that if we're going to be a force-projection Army?

A young man or woman can come in the Army and really spend three, four, five, six, even up to seven years at the same place, have his family buy a home there, settle into that community and use that environment. And if he gets promoted move him around that post, camp, or station. There's no good reason in today's environment to move him automatically every three years just because the clock ticks off three years. When the Chief says I want your families in the same place let's have them in a home station. Let's have a good quality of life there and spend some resources on making that a very powerful quality of life and project force out of that place when we need to.

Mr. Lawrence: The paper talks about a lot of big change and I'm curious. It doesn't really talk about how long it will take to achieve this point, the change?

Lt. Gen. Boutelle: Good question. The 3rd Infantry Division, which returned from Iraq this spring, which is the division that actually went into Baghdad, will be radically changed by the end of this year. It will not have three maneuver brigades. It will have four maneuver brigades. It will have the new IT system, the new satellite system, the new voice-over IP systems, all the new networking, all the new Red Switch and CIPR and IPR and all those types of things. We have started delivering that last week. Soldiers are already training on it. We will completely outfit that division, turn it around, and have it ready to deploy again after the first of the year. We will do three more divisions in calendar year '05, the 101st Airborne Division, the 10th Infantry Division, and the 4th Infantry Division, all before the end of calendar year '05.

Mr. Prow: General, we often hear of the concept of network-centric operations. Now, what is N-CO and how does it apply to the Army?

Lt. Gen. Boutelle: Network-centric operations which we are trying to achieve I think is an end state, and I'm not sure quite what the end state is, but we have tremendous amounts of information that we generate and that we store. The question is how do you get that information readily to all the decision makers, be that decision maker at the lowest level or somewhere back at a depot on a sustaining base in the continental United States.

Most of us are primarily circuit-based and have been circuit-based for many years; that is, a data stream flows from point A to point B. Network-centric operations presume that you can make that data centrally stored, you may cache it elsewhere, and it's available to everyone. And as we do that we start to get the synergism that has been promised to us for so long. The tools that will make that happen are really the web services, a combination of XML and SOAP and UDDI, lots of the web services protocols that will start to allow us to leverage these terabytes and in some cases petabytes of information we have stored.

Mr. Prow: On that topic can you also describe LandWarNet and how it will impact the business of war fighting within the Army?

Lt. Gen. Boutelle: Yeah, Chuck, LandWarNet is an attempt we've made with the TRADOC commander, General Kevin Byrnes, and Headquarters, Department of the Army, to try and bound and define what these networks are. I mean, most of us grew up that have been around for a few years where we had a separate network at the low end and it really wasn't a network. It was a voice capability at the lowest level. It was a tactical voice capability on tactical radios. And as you moved up in our infrastructure you got into what we call mobile subscriber equipment. Yes, you had a network, primarily circuit-based. It was locked on mountain tops; it was not mobile. And then when you got back in the United States you got into other circuit-based networks that tie together depots, the corporate world, the Army corporate world, and the other services. You've merged these now together with TCIP becoming the de facto standard. And now you've merged the lowest level to the highest level to the sustaining base in the continental United States with a TCIP backbone. It's a router-based network and we've all joined that network.

But as we've merged these into a single network we had to name them. And so what we're saying is LandWarNet for the Army is the network that goes from the lowest soldier all the way back to our sustaining bases and depots be they in Europe, in the Pacific, or back in the United States. It's the network plus the applications that ride on that network.

Mr. Lawrence: As you talked about this discussion of technology I hear a story of change and you talked about how change flattens the Army. And I'm curious. What's happening to in the civilian world what are called middle-level managers, people who were trained for a certainty in the world and now it's all changing? How's their life changing?

Lt. Gen. Boutelle: I think dramatically and to some people it probably is a terrible awakening because that information does flow so quickly. But it's a double-edged sword. On one side it flows very quickly. On the other side if we're not careful we leave out the middle-management level where they are there to make decisions and make recommendations and in some cases it'll flow directly from the bottom of the organization to the top of the organization without much massaging, staffing, and thought process in it. And so the good side is the information flows very quickly. On the other side in some cases you tend to lose the influence and the richness that is added by the staff. So as you trim down and eliminate some of that staff we're trying to be very careful to keep a very strong group of people in there that still add the richness to that raw information and data as it comes forward for decision making.

Mr. Lawrence: That's an interesting point, especially about the staffing. What is knowledge management and how is the Army using it? We'll ask General Steven Boutelle, CIO of the Army, to take us through this 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 Lieutenant General Steven Boutelle, Chief Information Officer and G-6, Department of the Army. Joining us in our conversation is Chuck Prow.

Mr. Prow: General Boutelle, we know that systems interoperability, particularly in the joint arena, is key for you. What are some of the ways that your office seeks to promote coordination within the Army and across the services?

Lt. Gen. Boutelle: Great question, Chuck, and that, as you know, has been a continuing issue and although we do have interoperability issues I think sometimes we don't give ourselves credit for all the things we should.

Interoperability applies at many different levels. One is just at the communications level or radio level. Will one radio talk to another? And so you have to solve that problem first to make sure they both talk to each other be it on the same spectrum, same frequency, and so you solve that one first.

Then you move to the next level and say what do I want to pass between the two systems and you'd have to talk about the application. What application am I going to have on one side versus the application on the other side? Are they designed to talk to each other? Are you trying to make a logistic system talk to an intelligence system? Obviously they probably will not interoperate. So you have to map and architect what those systems are.

And if you assume the applications are designed to talk to each other then you have to take it to the next level and say what messaging am I using. Am I using the same type of messaging across the network? Is one of them operating at a VMF bit-oriented message and the other in a character-oriented?

So then when you line up and get that correct then you say what's in the message. And when you define what's in the message you may both be operating on character-oriented message or bit-oriented message but then you need to get down to the data element level and align the data elements to make sure that you're passing data that you want to pass to the other application.

And once you get the data passing back and forth the next step in interoperability is how do you display it. In other words are you displaying it on a graphic screen? Have you come to an agreement on the symbology? Is it mil standard 2525B that I'm on and you're on FM 101-5? So you've got five or six different areas.

We do pretty good, pretty good, at the radio level, not perfect, of being able to talk to each other or, say, one satellite system to the other. We do pretty good when you get down to some of the other levels. And where we usually run into issues is taking the applications over time and say what is it that we really want to do. What are you really trying to do from one end to the other? And yet we tend to throw it all into one basket and say we're not interoperable and try to solve all of those things when many of those things are already solved and we need to get down at the application level and say what is the thread of information we're trying to pass and what are we trying to do when we get there.

Mr. Prow: We understand that Information Technology Enterprise Solutions is one of the Army's recent efforts to centralize IT programs. How is ITES benefiting the Army?

Lt. Gen. Boutelle: As you probably know, ITES1 is run by a program executive officer, EIS, Enterprise Information Services. Mr. Kevin Carroll runs that program and ITES1 is primarily a services- or support-based contract. I think we've awarded so far probably about $157 million worth of work off that contract but it provides services, everything from wide area network services to LAN services, IT support, programming/database support, services type contract; very powerful, allows anyone in the Army to come to a single place to get those types of services.

Mr. Prow: How will ITES2 be different from the current ITES?

Lt. Gen. Boutelle: We're running out of overhead on ITES1. We've almost awarded all the dollars we're allowed to award against that. ITES2, we will increase the amount of overhead in that or the top end, how much money we can put against that contract, significantly.

Mr. Lawrence: Let me skip subjects here and talk about knowledge management. Could you describe the Army's vision for knowledge management?

Lt. Gen. Boutelle: I'd be glad to, Paul. First of all we all are collecting tremendous amounts of data. You've got tremendous amounts of data and information and documents probably on your computer and on your hard drive today and over time that becomes not only megabytes and gigabytes but pretty soon terabytes and petabytes and, believe it or not, we can talk in petabytes in information we have in storage today and that information is pretty much static unless you have ways to access it and sort it and provide it to the right person at the right time.

That's the process we'll working right now, a combination of two things, all the information, and that information can be in the form of video, imagery, documents, messaging, translations of information that we've got around the world, open sourcing. How do you take all that information and how do you access the piece you want for one thing, to be able to make a decision in a rapid time in order to action something and have some successful event take place? When we get into Army knowledge management it is really taking data and being able to massage that data and facilitate that data to get it to the right person someplace globally to make a decision.

Several ways you can do that. One is you can just do searches on it like you do on Google or Yahoo! or Excite or something else with a search engine. What you really need to be doing right now and what we're beginning to do and what the Department of Defense has directed, which I think is absolutely the correct way to do it, is employ a lot of the XML standards to sort that information for content and intent and as we start to convert that to XML then you will start to really get the power that we're all after in this knowledge-based world.

Mr. Lawrence: Tell us about tracking progress as you move towards those goals.

Lt. Gen. Boutelle: One is to be able to convert tremendous amounts of information into those protocols, into XML and those family of protocols, and that's going to be one part of it. The second piece is just start to apply that to the many, many, many hundreds, if not thousands, of systems that we have across the Army. Look, it's pretty easy to fix one system or mod one system or build one new system. But when you get a large organization like the Army, the Navy, the Air Force, the Marines, we have tens of thousands of applications and so we need to parse those applications and decide which we want to attack first.

We do have a requirement now that all new systems coming on board will use an XML back plane as part of that and we broke it out by domains. We have war-fighting domains, we have business domains, we have domain owners, and we are now assigning those domain owners responsibilities to modify those systems to operate within the XML environment. The larger environment is what we call the NCES environment, which is a Network-Centric Enterprise Services environment, which really the DISA organization is administering.

Mr. Lawrence: Let's take it down a level lower to the individual soldier. Could you tell us about Army Knowledge Online and how it affects their lives?

Lt. Gen. Boutelle: AKO or Army Knowledge Online, which is the largest portal in the Department of Defense, has several pieces to it. It has an unclassified portion which we operate, what we call the NIPRNet or the unclassified for day to day operations within the Army. It has a piece of it, the CIPR, which is the secret side, which is primarily used by our intelligence community, our war-fighter community, and our operations people, and then there's another side of it that are the websites open to the public.

For the individual soldier and family we have a tremendous amount of things that are going on. First of all, for any deployed soldier we offer the opportunity for him to provide guest passwords and access and collaboration sites to his family and kids. So a deployed soldier today can go to one of the many Internet cafes we have throughout the region in South America or other places and actually exchange e-mail and messaging and pictures and other things of their family and their kids and different events that take place within the family. That's on the personal side.

On the professional side if you go on Army Knowledge Online like I do every morning and I boot that system it provides me instant messaging to the people I work with around the world but it also provides me role-based things. Today when I boot on it's got a series of stoplights and said your physical is green but you didn't take your flu shot so it's amber or red. Go take your flu shot, you need a dental checkup, those types of things. So it is tied to many databases and systems throughout the nation.

Effective in October we'll really be role-based. Not only will it tell me that I need to take my physical or I haven't taken my flu shot but when you log into the system it'll be role-based. It will not only know about my physical and my flu shot but it will know what my role is in the Army and present information to me that's based upon who I am, what my age is, what my specialty is, what part of the world I work in, what my organization is, and start to provide role-based information for that individual. If he's up for promotion it should come up and tell him, okay, you have an opportunity for promotion here. You need to do these types of things to get ready for it.

Some of those are available today but we're going to pure role-based shortly. That gives us two things. It focuses information on the individual but it also makes sure that he or she does not have access to information that she does not need or is sensitive information that she should not have access to.

Mr. Prow: On the subject of knowledge management can you describe the Army's Battle Command Knowledge System and how this evolving knowledge management system will affect the Army's ability to fight wars?

Lt. Gen. Boutelle: The BCKS or the Battle Command Knowledge System is one of our very, very powerful stories. It's grown out of a couple young soldiers who decided that probably the big Army was not receptive and adaptive enough to do what they wanted to do, and they referred to it when I talked to them. They said we built the website companycommander.com, which was the original website, as if a bunch of company commanders were sitting around on somebody's front porch talking about how they operate every day and what works and what doesn't work as a company commander. And these young soldiers decided that a great thing to do would be put it on a website and they found that there was such a demand for sharing of information from company commanders in Korea and Alaska and Hawaii and South America and Europe it was an overwhelming success, exponential growth.

But they thought that because they did it on their own with their own servers that that was the only way to do it. And we worked with them for many years and we've now rolled that into a bigger program and that bigger program is BCKS. It does reside on Army Knowledge Online. It is now in the dot-mil domain. We're extremely pleased. We not only have the companycommander.com on the mil domain now. We've expanded that to platoon sergeants and battalions so that information is shared.

And when you start sharing that information and hopefully tacit information you have very, very powerful results. And so the young soldier who has an IED problem and a solution in Afghanistan when he was a company commander is now sharing that with a young soldier who's in Fort Riley and about to go to Afghanistan or Iraq. And so we're seeing all the sharing and collaboration of information; very, very powerful, very useful in our business.

Mr. Lawrence: Fascinating, especially the sharing part. Are military IT programs different from IT programs for civilian agencies? We'll ask General Steven Boutelle of the US Army for his perspective when The Business of Government Hour continues.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence and today's conversation is with Lieutenant General Steven Boutelle, Chief Information Officer and G-6, Department of the Army. Joining us in our conversation is Chuck Prow.

Mr. Prow: General Boutelle, you are considered a pioneer in the area of tactical communications. Can you explain the importance of tactical communications to our listeners and what innovations you expect to see that will positively affect the Army?

Lt. Gen. Boutelle: Great question, Chuck. The tactical communications world is a little bit different. In previous times prior to 1989 tactical communication was pretty much tethered to infrastructure within Europe, within Germany, where we thought we might have to fight a war with the Warsaw Pact.

Tactical communications today in a fight against a group of terrorists that have no alignment to a particular state or nation requires you to go into many of these fallen states or Third World countries or very poor countries, Afghanistan probably the third poorest country in the world. There is no infrastructure. There's no electricity. There's no potable water. There are no places to buy batteries for your radios. You have to bring it with you. There are no telephone systems, no cell systems, although they are starting to evolve cell systems in the bigger cities like Kabul, but you have to bring it all with you.

So when you bring it all with you and you have no electricity to plug into you get into the tactical world very quickly. And that is I have to be able to talk to someone either across the street, on the next mountaintop, or in the next valley and the way you do that are usually systems that are not readily available in the commercial market. They must be able to withstand the tremendous temperatures and weather environments that we operate in and that drives you to the tactical arena, usually it at the lowest level of FM voice and usually secure FM voice, and you move up for longer distances to what we call tactical UHF satellite.

That whole world of tactical arena is only somewhat applicable to the commercial world and usually pretty much customized to the work we do although we're seeing much more use of things like the 802.11 protocols b and g and some of the other protocols. We're starting to see a little bit of inroads to the commercial protocols. That's primarily the tactical world and it's really a stand-alone, sustaining, power it yourself, carry it on your back, or carry it in a vehicle if you can get a vehicle into a type of type of communications.

Mr. Prow: Information technology has and will continue to play a vital role in current operations around the world. What can industry to improve IT for the benefit of the Army and its evolution into overseas conflicts?

Lt. Gen. Boutelle: A couple things we need to think about. One, at the higher level, and this is really across the entire network, is information assurance piece. Let's face it. We're out there and we are an information-based Army and we are an information-based Department of Defense and federal government and that's a strength but it is also a weakness. And so tremendous amounts of resources and effort are being put into things like firewalls and anti-virus packages and packages that will push the IAVA updates across the battlefield to every computer. That's one piece that we really need industry's help on and it's a continuing thing. We can secure all of our networks today but the enemy has a vote be that a script kiddie or a local hacker or maybe a determined enemy on the 'net. So even though we secure our nets today that enemy will continue to try to attack and have better techniques and better tools in the future so you must continue to improve those information assurance things.

And the other piece is we need to push the envelope. When you're pushing people out in strange places in the world in a mobile and harsh environment the commercial product as it stands probably will not do the job. Much of the mobile computing came early in the armed forces. We were running mobile computers in helicopters and airplanes and tanks significantly before we had it probably in our house or were carrying out PDAs around. So as we continue to push that envelope we find higher demand for more bandwidth, to have higher resolution imagery, to see unmanned aerial vehicle streaming video. Those types of things will continue to push the industry on providing protocols and standards to give us those products in a timely manner.

Mr. Lawrence: Let's take a step back and think about IT projects in general. How would you compare and contrast, say, creating technology solutions in the military versus civilian agencies and the federal government?

Lt. Gen. Boutelle: In the military today, unlike 20 years ago, we don't create a lot of IT solutions. There was a time when the Army held and we still hold many patents but we actually created devices, we created radios, we created things. Now we rely heavily and we leverage the commercial community to do that. So I think you'll find that across the federal government that the Army by law is very much restricted and bounded by some things we do. We fight and win the nation's wars and so we focus primarily outside the continental United States.

Now, the National Guard under Title 32 does have a role within the different states and that's pretty much codified. So we focus outside. The National Guard focuses inside unless we activate and mobilize them and bring them with us. And the Reserve, of course, is part of the active Army in direct support.

So we really focus a little different, each federal agency, be it the Department of Homeland Security, the FBI, the CIA, really, which enclaves they focus in. The FBI is very centric to the United States. The CIA is outside the United States. The Army and the armed forces focus outside the United States. We have some role in certain occasions within the United States.

Mr. Prow: How do you see the Army's CIO/G-6 evolving in the years ahead?

Lt. Gen. Boutelle: The CIO role, as you know, has become increasingly more active in the last few years. A lot of that is because of the Klinger-Cohen Act. The Klinger-Cohen Act gives each agency very strong roles for the CIO, the chief information officer, to perform and that's codified in law. But I would suggest, and some of my CIO counterparts and brethren may not appreciate it, that at the turn of the century we had a vice president for electricity as we brought electricity into manufacturing plants. And so the CIO today will probably be here for 10, 20, 30 years but as IT becomes the common backbone of everything we do that will be an evolving role. I have no idea what that role will be 20 years from now but it will be significantly different today when we are initially bringing on IT services versus getting into knowledge management and where that goes. It may be more of a knowledge management officer than a CIO.

Mr. Prow: More generally where do you see the Army's movement over the next five to ten years?

Lt. Gen. Boutelle: I think the Army's movement is really networking the force to the lowest level. We can provide the transport network anywhere we want to today by brute force and resourcing. The issue we still have to solve and we have on the books and we're working on it very hard, and I believe it'll be solved in the next three to five years, is networking in the soldier at the lowest level or the special forces operator. That's the hard part. He needs a lot more bandwidth and he needs it in places where there is no infrastructure on this globe. That's the hard part, that's what we're working on, and battery technologies support it. It takes a tremendous amount of battery technology and lots and lots of batteries to support just about anything we do so power technologies to support those things in getting that large bandwidth out to the individual soldier or special operator.

Mr. Lawrence: You've spent the bulk of your career serving our country. What advice would you give to a young person interested in a career in public service?

Lt. Gen. Boutelle: I think the first thing I would do is it's like any other thing you want to do. If you want to get into something be good at what you do. You can take that niche, whatever niche you decide you have an interest in, and become the expert in that niche be it IP services, XML, whatever that may be. It's significantly different.

When I look across our population that we have in the Army, civilian and military and contractor, all three, I find a seam there age 30-35. If you're under 30 or 35 you probably grew up with IT technology, maybe just as a tool around the house. If you're over 30-35, if you've taken an interest in it or it was part of your job, you may become very good at it. If you're not into that business you need to make a concerted effort to learn some of these basic technologies about the web and IT services.

Great opportunities to do great things. It's very fast-moving. There are opportunities when you deal within the Department of Defense to get access very quickly to high-end systems, technological systems, systems used globally, technologies that are far beyond what you might be able to do in the public sector.

So I would suggest that a lot of this force is self-schooling, a lot of reading, a lot of time visiting different organizations and how they do business, but there are great opportunities in the civilian sector, in the Department of Army civilian sector, and also in the military sector in these technologies. It's in demand. It is something the Army needs and it is something our nation needs to empower those war fighters to do the things that are important for our nation in the future.

Mr. Lawrence: Well, that'll have to be our last question for this morning. Chuck and I want to thank you very much for joining us, General.

Lt. Gen. Boutelle: Thank you, Chuck. Thank you, Paul. It's been a pleasure.

Mr. Lawrence: Thank you. This has been The Business of Government Hour featuring a conversation with Lieutenant General Steve Boutelle, Chief Information Officer and G-6 of the US Department of Army. Be sure and visit us on the web at businessofgovernment.org. There you can learn more about our programs and research into new approaches to improving government effectiveness and you can also get a transcript of today's fascinating conversation. Once again that's businessofgovernment.org.

This is Paul Lawrence. Thank you for listening.

Arlington, Virginia

Tuesday, February 11, 2003

Mr. Lawrence: Welcome to The Business of Government Hour. I'm Paul Lawrence, the co-chairman of The IBM Endowment for The Business Government. We created the endowment in 1998 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about the endowment by visiting us on the web at www.businessofgovernment.org.

The Business of Government Hour features a conversation about management with a government executive who is changing the way government does business. Our conversation this morning is with Linda Combs. Linda is the Chief Financial Officer at the Environmental Protection Agency.

Good morning, Linda.

Ms. Combs: Good morning.

Mr. Lawrence: In joining us in our conversation is Morgan Kinghorn. Good morning, Morgan.

Mr. King: Good morning, Paul.

Mr. Lawrence: Linda, perhaps you could start by giving an overview of the EPA, tell us about its mission and its types of programs.

Ms. Combs: The EPA's mission is to protect the environment and human health. We have just under 18,000 employees working in many locations across the country. We have ten regional offices as well as laboratories and field offices. And, of course, a large number of our talented people, about half, are located in Washington, D.C. We have many, many talented folks that work in EPA. We have scientists, engineers, attorneys and given the work that we do, science is very important to the core mission of our agency.

Our mission, of course, is to protect the environment and human health. We have generalists as well as environmental protection folks of many different scientific backgrounds, biologists, zoologists, ecologists, toxicologists, right along with the financial expertise we have in my own office. But, we have a very dedicated group of people that work at the EPA and I think that one of the statements that I have heard that capsulizes that is that I know that there are people currently working at EPA that first came in in 1970 when EPA first opened its doors. So, there are a number of dedicated and talented folks that work at EPA.

Mr. Lawrence: In terms of the Chief Financial Officer, that is quite large at EPA, very diverse programs as you mentioned. What are your responsibilities as CFO at the EPA?

Ms. Combs: We have in the CFO Office about 350 of those dedicated people that I spoke about a moment ago. We have many of our folks in the Washington, D.C. area in the CFO Office but we also have some field offices in Cincinnati, Research Triangle Park in Las Vegas. And, of course, our people are primarily accountants and financial specialists, budge and program analysts but we have environmental scientists in our CFO Office as well as writers, policy specialists, and system specialists as well as economists.

Our responsibilities are broad enough to require a very wide range of skills to get our jobs done. As the agency's senior financial manager, my job as CFO is basically to provide executive oversight for all of the aspects of the EPA's annual budget which is approximately $8 billion dollars a year. We are also responsible for the agency's strategic planning efforts in accordance with the Government Performance and Results Act. We have an integrity and accountability function as well as an auditing function in auditing tracking function in our office as well. We have financial computer systems that we're responsible for as well as accounting. Of course, we're the office that pays people. So, payroll is very important part of what we do in the OCFO Office.

We have an integrated budget in performance system. And, we have a web based financial reporting system that is our financial data warehouse. But, in addition to all of that, to keep up with our April $1 billion dollar budget, we do budget formulation, execution, analysis and reporting within EPA's integrated planning and budget and accountability system.

So, we basically have oversight for all the financial operations, all the financial statements and reporting and we have budget formulation as well as execution responsibilities.

One of the responsibilities that I feel is very important for any CFO to participate in and I take that responsibility very seriously as I work with the chief financial officers counsel. I think it is important to have EPA at the table in promoting the things that are important to EPA. But, I also think it is important for CFO's to provide a leadership role across government and we have responsibility in our own office for the President's Management Agenda as many CFO's across government do.

We actually have three of the five areas in our own responsibility. I am very, very happy and one of those reasons I bring that up is we were actually the second agency to earn all green scores in financial, excuse me, in all of the progress areas related to the President's Management Agenda.

So, the President's Management Agenda has served a number of purposes. It's brought CFO's across government together but it's brought people in our own EPA environment together as well around five specific agenda items that is important to each and every manager and that are also important in a CFO Office.

Mr. Lawrence: So, then you're obviously involved in having to write down the appropriations processes and you're involved with them before. Do you see any difference in that process so far in terms of any of the detail or the structure or the craziness?

Ms. Combs: Well, I think one of the differences is that the process seems to be stretched out. This year particularly we are still, of course, in a continuing resolution as we speak. We have a long group retracted period of time. We work on three years budgets at a time. We are currently awaiting our 03 final conference. We currently have just presented the President's 04 budget. And, we have already started some preplanning for the 05 effort.

So, I would say the biggest difference Morgan is probably our -- my impression that the process has become much more protracted. And, that just causes all of us to have a lot of input in how we do our daily jobs in thinking over a span of several years at one time. Part of that's good but a lot of that is some uncertainty that interjected there as well.

Mr. Lawrence: Morgan hinted at your different experiences. Can you tell us about your career prior to coming to the EPA?

Ms. Combs: Sure. I was the Assistant Secretary for the Treasury for Management from 1989 through 1991. I was Acting Associated Administrator for Management at the Department of Veterans Affairs before that. And, Deputy Under Secretary for Management at the Department of Education in the early and mid-eighties. Prior to my Federal career, I was Advisor to the Governor of North Carolina, and an elected Board Member for the Board of Education in Winston Salem for South County, North Carolina. I was Manager of National Direct Student Loan Programs for Wachovia Corporation. Also, in North Carolina. And, in my very, very, very early career, I was an Administrator and class room teacher in the Winston Salem for South County schools in North Carolina.

My husband and I have over the last ten years managed our own entrepreneurial business. So I have seen large, large organizations and have had responsibility for very large organizations as well as small entrepreneurial activities and have wonderful successes and wonderful memories with all of those.

Mr. Lawrence: If I counted correctly, you've had positions in education, Veteran's Affairs and Treasury. And, I'm curious if you can contrast the differences in management styles at those three places.

Ms. Combs: One of the things that I always like to think of are the similarities. The similarities which is not what you asked me about, Paul, but I'll get there.

Mr. Lawrence: It's the opposite.

Ms. Combs: The similarities reflect a lot around dedicated people. And each and every one of those responsibilities because each and every one of those encompassed management areas, I have found such dedicated and talented individuals that work in the Federal Government. I am always, always so impressed with the caliber of people that the Federal Government is able to attract. And, how committed and dedicated those individuals are.

So, the differences I would say relate to the missions of those organizations. The Veteran's Affairs had a very discrete and determined mission. The Treasury Department was broader and much more over arching and encompassing because of the number of bureaus and number of large bureaus within Treasury. Education had a very discrete mission. And, here now at EPA it's one of the regulatory agencies and it, too, has a very different mission.

So, I'm saying the differences rely more in mission. The similarities lie in people.

Mr. Lawrence: That's a good stopping point. Rejoin us in a few minutes when we continue our discussion with Linda Combs of the EPA. How has the EPA created a results based management. We'll ask Linda with The Business of Government Hour returns.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence. And, today's conversation is with Linda Combs. Linda is the Chief Financial Officer at the Environmental Protection Agency. And, joining us in our conversation is Morgan Kinghorn. Well, Linda, one of the things that you talked about in the last segment when you were describing your responsibilities, you mentioned that you were a member of the Federal CFO Council. Could you give us an overview of the kind of work that the Council does?

Ms. Combs: Sure, Paul. The CFO Council itself is a group of CFO's, any CFO that is in the 22 or 24 Cabinet level agencies and we work collaboratively to improve financial management across the U.S. Government. The Council was first established under the provisions of the CFO Act of 1990 in order to facilitate and coordinate the activities of agencies and its members across the U.S. Government.

Since I was one of the first CFO's in Government after the CFO Act became law in 1990 when I was at Treasury, I got a first hand experience there at what this Council could do as well as what the management council across government could and should do relative to more cross cutting issues. It's a special experience for me now to come back and years later as EPA CFO to see how that position and the Council itself has grown over time.

The CFO Council itself has a number of projects right now. One of the projects that I co-chair at this time is a project to look at financial metrics across government. There are things like cash balances, various metrics that we are identifying that would be a small number of metrics that one could look at and if bubbled up through all of the 22 Cabinet level agencies, would create a picture in and of itself what the Federal Government looks like. All the reconciling on a timely basis and various financial metrics functions that business constantly looks at. We think it's important as CFO's to step up to the plate and say we ought to be looking at those things not just in our own individual agencies and departments, we ought to have a representation that could span across government so that these could be looked at on a Government wide basis as well.

Mr. Lawrence: As you know, the CFO Act was passed nearly 13 years ago, 13 years ago this December and you're alluded to the fact there's been a lot change in the CFO community. One of the things folks have talked about since is how the CFOs' sort of partner with the rest of their agencies and colleagues to improve financial and budgetary management within the agency. How did you proceed to do that since you've come back into this kind of position?

Ms. Combs: I think the biggest issue that we face is probably how well we gather, how well we manage and integrate information about costs and pare that up with results to our programs. I think this is a cost cutting issue that many agencies and departments are dealing with a little bit differently now than when I left 11 or 12 years ago.

At EPA, we have looked very closely at budget and performance integration. And, fortunately we are looked to as a leader in this area. We've had our goals and objectives for planning, budgeting, and financial reporting for several years. And, are constantly working to improve those.

That's one of the areas of the President's Management Agenda that I spoke about earlier. And, because we had an early start on this and we are recognized as one of the leaders in Government in this area. We recently earned recognition as one of the seven finalist for the President's Quality Award in Budget Performance Integration. So, we're leaders in Budget Performance Integration, we still have a ways to go in looking at costs information, activity based costing as it's associated with results management in our programs. And, I think it's real, real important as my role as CFO to bring to the table and to bring to the managers of these program areas better business tools with which to operate. I consider that one of my prime responsibilities as CFO is to have a full deployment of business intelligence tools so that mangers can make the best use of these new capabilities that they will have on their desktop. And, whether it's a dashboard approach or different kinds of approaches that help them manage their programs better with better costing information as well as what are the results that they are getting for there programs. That's what I think one of my major roles as CFO is.

Mr. Lawrence: One of the issues that has really existed really probably after that last couple of years, is in the drive to look at performance. Some of the stakeholders, whether it's the Congress or external stakeholders have never seen that interested in looking at results. And, I know that's changed generally and I think it's probably changed in your environment. Can you give us a sense of maybe the last ten years when you moved to go up to appropriations on OMB? I'm sure people are really asking about results including the people who are investing in your programs. Has that changed?

Ms. Combs: I think that has changed. I think when we talk about at EPA our goals being cleaner air, purer water, better protected land, and how that protects the environment and human health as our major mission, it's very difficult sometimes to translate our immediate results to showing long term human health and protection for U.S. citizens. But healthy communities and eco systems is a very, very important element of what we do. And, we have to continue to strive to find better ways to display the results that we are getting for the dollars that we put into our programs. We are looking at better effectiveness measures. We're looking at the way our strategic plan and the geperal (phonetic) results all fold in hand in hand. So, we're really trying to look at this whole area in a broader more encompassing way in order to show to our stakeholders, whether it's Congress, OMB or certainly the American people that here's what you're getting for your dollars. This is important to human health and here's why.

When I talked earlier about science being an important aspect of what we do and how that's a foundation of what we do that makes science even more integral and important to us. It is helping us to show these results.

Mr. Lawrence: What kind of time frame do you use when you talk to people about results? For example, in the examples you gave, you talked about scientific goals which might take decades to achieve yet it sounds like people to you and want to know results on a much shorter interval. How do you translate those conversations into the real thing?

Ms. Combs: That is very difficult. You know, one of the things that we're -- we have previously looked in Government and this is not just true for EPA, it goes for education, some of the other departments that I have been involved in as well. We've been looking at outputs. Now, we're being -- we're hoping to move toward more outcome based knowledge in everything we do. And, you're exactly right, Paul, that that's hard when it's going to take a long time to show environmental results or health results but we happen to think that if we continue to measure some what I would call medium output measures that are leading toward our further outcome based objectives and goals. And, we put these in our strategic plan. We feel like we're much better off today than we would have been without doing that. But, it is going to take a matter of years. But, this is not anything that we're going to be able to look just tomorrow. We're going to have to think longer term and be able to show some short to medium term results that build into our longer term output.

Mr. Lawrence: That's a good stopping point for this segment. Please come with us in a few minutes as we continue talking about management with Linda Combs of the EPA. How's the EPA doing with the financial management portion of the President's Management Agenda? We'll ask Linda from her prospective when The Business of Government Hour returns.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence and today's conversation is with Linda Combs. Linda is the chief financial officer at the Environmental Protection Agency. And joining us in our conversation is Morgan Kinghorn.

Well, Linda, can you tell us more about the Managing for Improved Results Steering Group at the EPA?

Ms. Combs: Sure. This group was managed from my office at the initial request of the deputy administrator and it brought together people from all of the agency's offices to think about very practical ways that we could make some real improvements in the way EPA managed its overall programs that the agency could implement right away. The group made some genuinely useful recommendations and it gave some longer-term approaches as well that we could also adopt.

One of the most important recommendations for immediate action was to take a look at our annual performance, goals and measures, and see if we could devise a more rational set of categories. Time I think the agencies can find measures of success over as we establish and maximize our priorities and measures and as priorities change. The longer-term recommendations that came from the steering group focus on enhancements to our overall strategic plan with greater emphasis on the outcomes of EPA's work, reinforcing accountability for specific performance objectives, and building the agency's capacity to indeed manage for results and how those results are costed out, how they're calculated, and how they're determined.

Mr. Kinghorn: You mentioned that you were one of a very select number of agencies that all green on progress for the President's management agenda. Could you share with us some of your activities related to the financial performance piece of that and what are the timetables for these initiatives and what do you expect to get out of them?

Ms. Combs: Sure. We have as our prime objective under the financial management arena continuing to get clean-audit opinions. I think everybody in financial management, private or public sector, would say that that is one of the bellwethers that you must have in order to say that you are fully performing in the financial arena. We have automated our financial statements. That's been a big help to us. And in terms of the financial management scorecard itself we have sat down with OMB each and every quarter over the last year and we'll continue to do so to further define and further refine which specific elements we're going to be responsible for.

And we've laid out our own timetable about moving from our legacy financial systems and making sure that our financial systems meet each and every standard, new or old, for the government financial systems. I mentioned a while ago the reporting tools and how important those are for managers but they're very important for us as well in the financial arena to be able to use this business-intelligent software and these new kinds of reporting tools for managing program results but also to support our financial goals as well.

Mr. Kinghorn: Well, if you look at your budget probably 45 percent of it's allocated in a variety of programs for grants to states, tribes, and other EPA partners, everything from construction grants to Superfund to cooperative agreements. And harking back to what we were talking about on performance, this is tough to measure the success. It's an indirect application. I mean, you give grant money, heaven knows what you get for it. What are some of the things you're looking at as an agency that devotes that much of your budget to other forms of financing in terms of performance?

Ms. Combs: This does go to our discussion on some of the difficulties involved in actually measuring environmental outcomes. The significant portion of the EPA's budget that directly supports state, tribal, and environmental programs does indeed create some important environmental results across the country but it does continue to be a challenge for us to carve out which of those results can be attributed to state efforts and tribal efforts and which can be derived from the actual grant money that EPA gives as opposed to other specific resources. And for those reasons we think partnerships are very, very important.

It's important to emphasize, I think, that we have a very special relationship with our state and tribal partners and that we maintain very close working relationships with state governments and state agencies across the country. We enjoy that close working and growing relationship with the Environmental Council of the States. ECOS is an organization of state environmental commissioners and we consult with them regularly, we've consulted with them on our strategic plans and our annual reports under GPRA, and we continue to take steps to involve those representatives and our state and tribal representatives in our agency planning discussions every year.

The states don't work for EPA but we will continue to hope that they will work with us. We're certainly aware that right now states have some very difficult situations that they're dealing with in terms of their financial situations and we think it's very important that this partnership be closer than ever because we need to know what their difficulties are, understand what their difficulties are, and make that relationship work even better in the times in which we are dealing right now.

We feel like it's important for our office where we deal with accountability as well as strategic planning to further define the regional performance contributions along with our agency goals and see what those obvious connections are that can be made between our states and our tribal partners. We think an important element here could be to develop a set of measures to look across the regions and see how we are being most helpful to our state and tribal partners as well as seeing where we feel like we could end up being more effective as well.

Mr. Kinghorn: EPA has a structure to manage the finances, I think, of your grants, your cooperative agreements, and general contracts delegated to RTP, to Cincinnati, and Las Vegas, which really seems to advance what other agencies are just thinking about doing. Has that structure served you well in terms of specialization in each of those locations, particularly at RTP, which is also closely linked to some of the core programs of EPA?

Ms. Combs: And I have a special place in my heart for RTP since I'm from North Carolina but we certainly think it has. I think, too, in terms of the way we're looking at special provisions that may need to be made as we look toward better protection of the homeland and of homeland security this diversity that we have, I think, makes itself even more important in today's environment.

And one of the things, too, I would offer in terms of not just our own internal structure related to where grants and payments are processed but we have also a very important financing operation that we feel very good about at EPA that's managed out of my own office. It's the Environmental Finance Advisory Board. It's a federally-chartered advisory committee that's composed of independent financing experts from public and private sector organizations who are interested in lowering the environmental cost and increasing investment in environmental facilities and infrastructure and services across the nation. So they produce policy and technical reports that actually leverage better public and private resources.

And as I spoke earlier about the need for better partnerships and closer alignments as we have the situation in this day and time, our environmental finance centers, which are located at various universities around the country, also provide some financial outreach to our regulated community. And these networks and these partnerships as well as information on our own website help communities and environmental programs across the nation in ways that we could not do alone with our own internal financing effort. And they're staffed with a number of volunteers basically, people who dedicate their time and energy, particularly for the Environmental Finance Advisory Board. Those are volunteers, people who spend their own time, effort, and energy in their own local communities. They're just excellent people to have access to.

Mr. Lawrence: That's a good stopping point. We've got to go to a break. Rejoin us in a few minutes as we continue talking about management with Linda Combs of the EPA. What role will EPA have in homeland security? We'll ask Linda for her thoughts when The Business of Government Hour returns.

Announcer: How can we strengthen the relationship between performance and public service? A recent endowment report makes the case for performance management by confronting conventional attitudes. For a copy of the report, "Performance Management: A Start Where You Are, Use What You Have Guide," by author Chris Wye visit our website at businessofgovernment.org or call us at 703-741-1077.

(Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence and today's conversation is with Linda Combs. Linda is the chief financial officer at the Environmental Protection Agency and joining us in our conversation is Morgan Kinghorn.

Mr. Kinghorn: Linda how do you define and measure financial management success at the EPA?

Ms. Combs: Well, Morgan, when I see that green score for progress in financial management on the executive branch management scorecard I think that'll be a splendid indicator of our success. But I must tell you we won't sit on our hands after that. I've dedicated myself to moving financial management at EPA to what I call beyond green. One of my more important personal and professional goals when I came to the CFO Office at EPA was to basically say we're going to have the most respected CFO Office in the federal government. We're well on our way to achieving that and we're not just doing that to win accolades of recognition from OMB or from the public or from any of our constituents.

But if we are the most respected CFO Office in government that means a lot of positive things for our organization. Number one, it means that we do our business efficiently. If we do our business efficiently there are actually lots of rewards that come back to us. We're able to get back for paying our bills on time, for example, some rebates that we would not have access to otherwise. And just last year EPA because we do our business efficiently we got over a million dollars in rebates. Ninety-three percent of the rebates that we could possibly collect we're collecting those because we do our business more efficiently. So part of the success for our efforts at EPA in financial management come directly through the other program offices and maintaining those positive relationships with other program offices at EPA and ensuring that we're doing the right thing to manage our programs better is a particular dimension that I am very proud of now and would like to continue to be proud of.

There are lots of challenges that continue to come our way. One of the things that we have looked at since I've been at EPA is maintaining talented people with the skills and abilities it's going to take to work in the CFO Office of EPA in the 21st century. We've done a lot of work in that arena already and in the coming year we're going to keep looking and working toward acquiring the kind of talent we need to do our job well.

Mr. Kinghorn: The issues that you suggested that you have been successful, I mean, systems help, data warehouses help, but it is people and in terms of future financial managers I know that the market seems to be getting stronger now. People are coming back into government. If you look at the information from Harvard schools and Syracuse a very high percentage relatively compared to past years of people is coming into the federal government. They used to go into state or nonprofits. Have you seen that happen and are you trying to recruit them in to continue to replenish the talent that you have that has led to the successes but to continue that in the future?

Ms. Combs: Yes, we certainly are. This pipeline for future financial managers I think has to start with a recruiting effort in the federal government the likes of which we've never seen before and in my opinion now is a perfect time to do it. The federal government couldn't be in a better position to take advantage of talented MBAs coming out of schools whether it's Harvard or many of my schools that I'm aware of in North Carolina and reaching out to those schools and saying here's who we are and here is what we do is part of what I'm about.

I continue to talk to people as much as possible about the most interesting opportunities that are available in working in a CFO office. The expanse of opportunities that people deal with in federal government positions is not to be found by MBAs going into the private sector for their first five or ten years in business. Having come from a banking background myself I know that to be true and if we are going to optimize on the skills that are necessary for financial managers in particular to come into the federal government now is our time to do it.

And I think it behooves all of us, particularly CFOs, in the federal government to take on this mantle of opportunity and work with the Office of Personnel Management in making absolutely certain that we work with every hiring authority that we currently have available to us as well as creating additional ones because young people are indeed interested in working for something that is greater than their themselves. That's what the federal government opportunities give to them. Where else in the federal government could I when I was at Education and managing then a multibillion-dollar budget at age 35, have the opportunity to do that? Certainly not in the private sector. So I see our opportunity now as a great one if we can take advantage of it and capitalize on it quickly.

Mr. Lawrence: Homeland security's on everyone's mind these days. What role will EPA play in homeland security?

Ms. Combs: Well, we certainly don't know what lies ahead for this country but we certainly can be certain of one thing at EPA, that EPA is going to step up and take part in any task that's presented for us to do. Most recently our EPA people have had some leadership roles in recovering debris from the Columbia disaster, certainly a sad task that none of us anticipated but we certainly are proud that we have the talented and right kind of people and the right kinds of places to be able to immediately mobilize and do the kinds of things that were required there.

Governor Whitman and our senior executives for emergency response are in close contact with Governor Ridge and our other colleagues at the Department of Homeland Security and I think as the Department of Homeland Security comes together over the next few months we'll continue to work closely with them to address whatever needs that the EPA is equipped to fill. I think obviously we're still under a continuing resolution for '03 but whatever resources have to be taken I think that's where our office comes in in being able to fulfill its mission of supporting other areas within EPA itself.

Most people do not readily recognize, I think, the hazards people that we have in our emergency response team and how vital and critical their role is. But it takes something, I think, like, unfortunately, the Columbia disaster for people to realize hazardous chemicals there, call the EPA, and often a disaster has taken place before EPA is recognized as needing to have a role right there. But I think as homeland security itself gets underway our role will become even clearer and more focused and more prominent.

Mr. Lawrence: We have time for one more question so I'd like to ask you to reflect on your career and perhaps give us a perspective about the kind of advice you'd give to perhaps a young person considering a career in public service.

Ms. Combs: I've had a number of opportunities, I think, over the years to talk to young people about their careers and particularly about public service. I think sometimes we don't initially recognize the fact that many people who come into public service believe that public service is a public trust and it's an honor and a privilege to serve your fellow Americans and to uphold that public trust.

As I mentioned earlier, particularly young people and people changing careers want to do something that's bigger than themselves. Yes, that sounds like a job for idealists but there are idealists in every single profession whether it's a scientific professional, whether it's a financial profession. Those people I think over the years of their career have an opportunity to realize that the job that they could do for the federal government would play a large role in making life better for Americans and for the rest of the world as well.

The broad, encompassing jobs that I mentioned earlier, whether it's a fiduciary role or whether it's a scientific role, those broad and encompassing roles can be found in federal service. And combined with the public trust and the experience that people bring to the table some of the best minds that we find anywhere are in the federal government. And with the privilege and honor of serving I think that I would and will continue to advise young people considering a career in public service certainly to consider the federal government.

Mr. Lawrence: Well, Linda, I'm afraid we're out of time this morning. Morgan and I want to thank you for fitting us into your busy schedule.

Ms. Combs: Thank you.

Mr. Lawrence: This has been The Business of Government Hour featuring a conversation with Linda Combs. Linda's the chief financial officer at the Environment Protection Agency. Be sure and visit us on the web at businessofgovernment.org where you can learn more about our programs and get a transcript of today's conversation. Once again, that's businessofgovernment.org.

This is Paul Lawrence. Thank you for listening.

Arlington, Virginia

Friday, December 21, 2001

Mr. Lawrence: Welcome to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and the Co-Chair of The Endowment for The Business of Government. We created the Endowment in 1998 to encourage discussion and research into new approaches to improving government effectiveness. Find out more about the Endowment by visiting us on the web at endowment@pwcglobal.com.

The Business of Government Hour features a conversation about management with a government executive who's changing the way government does business. Our conversation this morning is with Mayi Canales, deputy chief information officer of the United States Department of Treasury. Good morning, Mayi.

Ms. Canales: Good morning, Paul. I'm very happy to be here this morning.

Mr. Lawrence: And joining us in our conversation is Jay Tansing, a PwC consultant. Good morning, Jay.

Mr. Tansing: Good morning, Paul.

Mr. Lawrence: Well, Mayi, let's start by finding out more about the Department of the Treasury, its overall mission and some of the specific agencies within it.

Ms. Canales: Treasury is actually one of the most diverse agencies in government. We do everything from promote prosperous and stable American and world economies to taxation to producing coins and currency to safeguarding financial systems to law enforcement and trade to protecting the President. We have 14 bureaus and we run the gamut of operations.

Mr. Lawrence: And let's find out about your role as the deputy chief information officer. What do you do?

Ms. Canales: I get involved in a little bit of everything. As the Treasury deputy CIO I help the CIO oversee strategic planning, capital investments, manage the direction of information technology enterprise solutions. I sit on the Treasury CIO Council and on the Treasury CXO Council, which is actually the human resource, the financial, the procurement, and the information officers all together meeting to address programmatic issues across Treasury. I serve on federal boards and committees, which I think you'll hear about a little bit later as we converse but I get involved in everything Treasury does.

Mr. Lawrence: How many folks are in the Office of the CIO?

Ms. Canales: Well, we have about 220 government employees and twice that in contractors. I think we have almost 500 contractor staff.

Mr. Lawrence: And what types of skills do they have? I imagined they're all technologists.

Ms. Canales: Some of them are policy-oriented. Many of them are technology-oriented but more and more in the government as we buy solutions from companies like PricewaterhouseCoopers what we're looking for in the government are program managers who understand IT issues but more have the management skills to make large-scale IT programs successful.

Mr. Lawrence: Mayi, let's spend some time talking about your career.

Ms. Canales: I started my life in the private sector, designing missile systems in the Navy as a consultant and went from there, after the Challenger accident with NASA I went to work as a consultant for NASA designing a quality assurance program to try to prevent any future Shuttle accidents which I'm proud to say so far so good.

And then from there, I met someone who took me kicking and screaming into government life, but I have to tell you that I have enjoyed it thoroughly. I have met hardworking, talented people and I'm having a blast. I started with the Department of Veterans Affairs in their headquarters in what became the Office of the CIO. It wasn't called chief information officer back then but doing the strategic planning, the financing, nationwide solutions, and now I'm with Treasury and am the chief information officer and still having a blast.

Mr. Lawrence: You mentioned that you worked in the private sector before joining public service. How did those experiences impact or prepare you for your career as a public servant?

Ms. Canales: I think it just made me very resourceful. As a consultant one day you're working with NASA, one day you're in Army, one day you're in Marines, one day you're Navy, and you get to know all about government, which is interesting because you think internally people would get to know more about government, but what I found is that people get to know their agency and their mission very well but it's hard for them to get to know other agencies and other missions.

I think as e-government grows that will change a little bit because we have to get to know each other but the private sector just made me very resourceful. I got to know all the parts of government. I got very good at presentation skills and exposure, I think, just exposure.

Mr. Lawrence: How would you contrast the cultures? Some would have us believe that the public sector and the private sector are very close and very similar. Others would say that they're very different. How do you see it?

Ms. Canales: Well, I think that in the private sector as you get to huge companies, they actually aren't that different from government. The issues are the same. They have massive cogs that you have to turn to get anything done. That's historically what people say about government. How do you get anything done? But in the past two years where I've been with Treasury and the Federal CIO Council with the partnerships we've created we've done incredible things.

E-government has really moved quite a bit in the past two years. We've got FirstGov out there, the government online portal. We've got committees out there looking at processes across government, so I'd say large companies are very much like the government.

The smaller companies, they go in and they're like pinch-hitters. They go in and they attack a certain thing and then they go somewhere else and you're just exposed to little pieces and parts. You have a specialty item, so those are very different.

Mr. Lawrence: What drew you to public service and what keeps you here?

Ms. Canales: What drew me to public service was a very nice now passed away but a retired general who needed some help. The Department of Veterans Affairs was doing some nationwide networking and mail implementations and things like that, and he just didn't have anybody onboard to manage those contracts who understood the issues, who understood what a router did and how it connected to other things and what the heck a wide area network was and how people talked to each other.

So he brought me onboard and said just stay with me for three years and get this done and don't worry; it will be good for your career. And it was. I mean, I've had a wonderful time. I've done great things and right now I'm staying because I'm having a great time and I believe in what we're trying to do with e-government. With the new administration and Mark Foreman (?), who's come in to do e-government for us across the board in the federal government, I really believe in what we're doing. I think it's the right thing to do.

Mr. Lawrence: What are the skills that a CIO needs? I mean, you've moved between being a business leader and a technologist. Could you break the job apart into a couple of those categories?

Ms. Canales: Actually, you said the key word there. The technology background that I have, technology degrees, helps a great deal. I mean, I know what people are talking about. I know when somebody's trying to sell me something I don't really want. But what helps me a lot, I think, is my business degrees and the business background, understanding what government's trying to do, because if you think about it technology is there to support business and if we don't understand our business and our mission and what we're trying to do the technology doesn't make any sense so I think it's the business skills.

But I've found that the most successful people in life are people who take the time to listen; they're honest, they're fair, and they just treat everyone with respect and dignity. And in the higher levels that's what's most important.

Mr. Lawrence: Do you think those skills of a good leader are going to change as more and more of life becomes technology-enabled?

Ms. Canales: I don't know that they will need different skills. They'll have to understand how to read e-mail and send things electronically and approve things on a screen versus with a pen and paper. But I think, still, anybody who's a good enough leader to run a nationwide corporation or an agency that has impact around the world is going to understand those things.

I think the skills are still going to be important that they understand their business, they have whatever the business or mission, like with Treasury, a strong economic background is a good thing, but I think still just being able to listen to your managers that you have working for you who are actually responsible for getting things done and treating people fairly with respect and dignity I still think are the strongest things a good leader is going to have.

Mr. Lawrence: What are the management challenges of working with such a highly- specialized team as you have? They all probably have advanced degrees and they're all probably trained in these kinds of things.

Ms. Canales: No ego because they all know far more than I do. And I think the challenge comes when you have to make those tough decisions when the room can't agree and you need to make a call about which way to go on something and not everybody's going to be happy because as you change things, for instance, with e-government the talent or the task is not the technology, really.

I mean, it's combining processes, like, say, trade, commerce, Agriculture, Treasury, Transportation, Justice. We all have pieces and parts of that. If we combine that into one process imagine the culture change across those agencies. People's jobs are affected. Not that people would lose jobs but their jobs might change.

People don't like that. They don't want to change. They're very comfortable for the most part. People hate change. The change management or, I should say, the management of change, the facilitation, the people skills, are the critical things we need today.

Mr. Lawrence: How about the challenges of managing or dealing with a workforce that is, as you indicated a couple of questions ago, has a high component of nongovernmental employees?

Ms. Canales: Frankly, I hire companies like you. A company like PricewaterhouseCoopers is familiar with the issues, you have the technical talent, you can swap in a networking talent person one day and a web talent person the other day, which I cannot do in government very easily.

Mr. Lawrence: A lot of people don't think it has as many benefits as you describe and they say well, some jobs are inherently governmental and we ought not do that. Do you feel any of that tension or see that?

Ms. Canales: I think some jobs probably are inherently governmental. There are policy decisions, massive funding efforts, and, yes, somebody in government will always have the case that we truly are not interested in where that money goes. And in the private sector even an honest broker you're allowed to own stocks and things that I'm not allowed to own.

For instance, I don't own any Microsoft stock so that I can make Microsoft decisions without any impact to myself financially. You are allowed to have those things and personally you may have drivers that I don't have. So there are some things that I think need to stay inherently governmental but I need advice. And if I bring in advice from companies like PricewaterhouseCoopers or Bozo- Allen or other companies that are in the business of doing that I'm going to get across-the-board advice.

I use companies like GIGA (phonetic) and Gartner and Metta. They do research for me. They tell me what best practice models are out there. I can't depend on one honest broker, obviously, but I think definitely we need that more and more.

Mr. Lawrence: That's a good stopping point. It's time for a break. Rejoin us after the break as we continue our conversation with Mayi Canales of the Department of Treasury.

Are you aware of the latest goings on in e-government? Well, you'll find out about it from her when The Business of Government Hour continues. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and this morning's conversation is with Mayi Canales, deputy chief information officer at the United States Department of Treasury. Joining us in our conversations is Jay Tansing, a PwC consultant.

Well, Mayi, in our first segment you talked about your role with the CIO Council. Could you tell us about the Council and what it is it does?

Ms. Canales: Well, we're on the federal and Treasury CIO Council so I'll start with Federal. The new political appointee, Mark Foreman, who is the OMB Director for IT and e-government that we're working with federally, chairs the Federal CIO Council and my boss, actually the CIO of Treasury, Jim Flyzik, is the vice chair of the Federal CIO Council. We've reorganized recently to meet the demands of the new e-government movement on the President's management agenda.

We've structured into three standing committees, workforce and human capital, which are some of the key issues in government and, I think, in the private sector as well best practices where we have the models and looking at what people have done in industry or other governments that might be useful to us as we do things. And then we have government-wide architecture and infrastructure looking at the underlying standards and tools that we all need to interoperate or talk to each other across governments, local, state, and federal, not just federal.

Then myself and Craig Luigart, the CIO of Education, used to be the e-government committee. Well, everything is e-government now so what we're doing is we're coordinating for the e-government committees that are out there. We're trying to coordinate with the CFOs and CIOs and procurement people federally. We have what's called the Quad Council that we meet with. We coordinate with the state and local government. We provide the program management for Mark so that we all have performance metrics, business cases, business skills, access to somebody doing research for us, white papers as we look at models and things like that, so we provide all the underlying structures for Mark to kind of get e-government moving.

The Treasury CIO Council is really quite similar. We function as a board of directors for Treasury managing the enterprise solutions, what we're going to do together, how we want to spend our money, what are the underlying frameworks that we all have to live with, for instance, architecture.

Mr. Lawrence: Now do these councils really do their work? You mentioned coordinating, which is sometimes persuasive and not managing or directive. How do they get work done?

Ms. Canales: Well, in the Treasury CIO Council really we don't mandate. We look at what has the most value for us and it really is a business decision and we agree on certain business decisions like portal technology for one. We wanted to have a framework that makes sense across Treasury so we could do communities of practice like procurement, where we have may one agency or bureau taking the lead on enterprise procurement. Well, that means all the procurement people need to function as one procurement shop, so a community of practice or an interchange of information that's secure and reliable and makes them look and function as one community is something that made sense to us.

Records management, we were all looking at workflow, document management, records management. Only one bureau, the Mint, had done anything at all with document management. So rather than build 14 solutions we decided well, this is a good enterprise endeavor so we're doing that together. Our architecture, of course, is an enterprise endeavor, things like secure transactions, PKI technology, public key infrastructure, where we use that to authenticate and provide secure transmission of electronic files. We're doing that together. In fact we're doing that federally together.

But on the federal level it's a little bit different. We had a task force look at different e-government initiatives and what we should do federally and we had, I think, about 100 submitted from the different agencies. We interviewed all the key agency leaders, CIOs, deputy CIOs, deputy secretaries. I don't think they interviewed any secretaries. I'm not sure but they interviewed key people in all the departments, and we picked what was most important.

Many similar things fell out like travel, records management, architecture, PKI for secure transmissions, and then other things fell out, business processes that crossed many agencies like trade, grants, wage and tax systems that we deal with all the businesses on. But on the federal effort the key thing was citizen-focused, result- oriented. So we tried to pick things that citizens really wanted and had been asking for through the years and things that helped us in dealing with reducing the paperwork burden on businesses and states and local government, things that made life easier.

Mr. Lawrence: Are there barriers to coordination?

Ms. Canales: Definitely. The culture barrier, which I think we talked about a little bit earlier today, where it's going to be a change, things that happen across many agencies where each agency had its own little portion. Agriculture might be looking at just the farming issues associated with trade or things coming into the country associated with food. Transportation is concerned with the transport vehicles coming into the country. Customs is concerned with the law-enforcement side of imports. INS is concerned with the people coming into the country.

So we all had our own little systems that dealt with just those pieces. Now we're going to have a system that deals with the whole thing and that system is the easy part. It's getting all those people to work together as one seamless process that's the hard part.

What if you're applying for a student loan online, you have all the information there, and then you happen to be downtown one day and you walk into the Department of Education? You should be able to get the same service even if your loan was from the Department of Veterans Affairs because it really was a GI student loan. People don't really know where it comes from. They don't really care. Government needs to adapt to that. That's the hard part. That's the barrier.

Mr. Lawrence: E-government is a large part of what you're doing in your role on the federal and the Treasury CIO councils, and FirstGov is one of the big e-government initiatives. Can you tell us a little bit about what the involvement is in this project, and how will you measure its success?

Ms. Canales: FirstGov is for the first time a single entry into all government services. At first we started with just informational components but now as we progress we're moving more into transactions like student loans online, passports on line, grants on line. Not that agencies didn't have those pieces and parts by themselves, but this gives is more of a federal look and feel and all the components are in one place.

So if you look at FirstGov as the entry into government it's going to play a vital role. It may provide all of the tools and standards, the security. It may provide the architecture for us to the search engines. It will play a vital role in everything we do in the e-government arena across government.

I think as we grow in FirstGov, too, at first it was just federal. Then we started doing searches on states and the next link will be local. So it really is trying to tie all the levels of government together. I think the success will be measured by its popularity, how many people use it, citizens, businesses, how many people are coming in through FirstGov and finding what they need through FirstGov.

Mr. Lawrence: Let me ask you to take a step back and give us your definition of e-gov. I know you've described the transactions, and I've imagined doing them while you're doing it. Is that what e-government is all about?

Ms. Canales: Actually, that's the last piece of e-government. I think e-government is probably as little about the technology as about anything else. E-government is providing government in various forms to citizens and businesses, providing what they want from government in an easy way, whether it's online, which is most people think of e-government, a Web page, but if you think about it you should be able to walk in, fax, call, go online, do whatever.

E-government is providing government as a business process, in other words providing loans as a business process, providing trade as a business process, providing grants and assistance to agencies or other entities in business process, looking at that service as a whole. That's what I think e-government is.

Mr. Lawrence: What are the challenges of rolling that vision out while also dealing with the needs for privacy and security? One imagines filling out the loan as you've described, giving information or perhaps having information about me already resident at the place where the loan is being asked for. So how are you going to pull those together?

Ms. Canales: I know we will do all the tools and standards for security and privacy across government as one of the e-government initiatives. I have to say I have my favorite anecdote. People will hand their credit card to a complete stranger in a restaurant. That complete stranger who usually is not anybody you'd known on a regular basis just walks off with your credit card for 20 minutes, leaves it lying around where complete strangers can get it, and then comes back after a while and you sign for it.

People think of online security as being such a mysterious thing because it is online. I think what it is that scares people is that there is so much access to information. It's not just your credit card. It's everything about you and everything about everyone around you.

What we need to provide is a sense of comfort to people that shows this is the risk factor you're taking, and it should be minimal. Nobody is going to guarantee complete risk-free anything whether you're paying with your credit card in a store or whether you're going online to Southwest Airlines buying an online ticket. They can tell you this is the security we provide and we need to in government provide that, and the technology is out there to provide it whether it be biometrics, whether it be smart cards, or whether it be public key infrastructure with certificates.

Spain is looking at a solution where people go to the post office or to their mint, which does their currency and coins and identifies themselves, prove that they are who they are and they get a certificate, and the certificate works when they go online and buy government services. We just need to do something similar. It's not rocket science. So we need to find similar ways of doing that but the technology exists.

Mr. Lawrence: That's a good stopping point because it's time for a break. Rejoin us in our conversation with Mayi Canales from the Department of Treasury. This is The Business of Government Hour.

SPEAKER: How can your agency cultivate a culture of innovation? Find out by downloading the Endowment's new report "Understanding Innovation: What Inspires It, What Makes It Successful," by Jonathan Walters at endowment@pwcglobal.com. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers. This morning's conversation is with Mayi Canales, deputy chief information officer at the United States Department of the Treasury. Joining us in our conversation is Jay Tansing, a PwC consultant.

Mayi, we ended the last segment talking about e-government and I was left with a couple more questions. Where are we, the US federal government, relative to the rest of the world in e-government?

Ms. Canales: I think the US is just starting when you think about e-government. What's happened in the past few years is agencies as they respond to the need to put their services online have created, like, Treasury Online and Agriculture Online and Justice Online. So we have recreated government online with the existing building stovepipe, so now we have stovepipes online. Yes, it's fun. So now what we need to do is take those stovepipes and make e-government and business processes online.

So I think in this country that's an incredible challenge. If you look at a country like the UK that has really, really come a long way or Australia or Spain is just starting they just make the decisions to do these things, and their government is one country which is sometimes smaller than Texas and so they can get their hands around it easier. They're organized differently than we are.

For instance, all their health care services are in one place. They might be at the local and at the equivalent to our federal level but they're under one ministry. So we have it where not only are we huge, but then our health care is in five different places, our grants are in ten different places, our trade crosses 40 different entities, so we have that issue as well.

Mr. Lawrence: Where do you think e-government is generally in its life cycle?

Ms. Canales: In this country I'd say we're in the very, very early stages of planning and design because I think we actually have to take a step backwards in some cases and deal with the fact that we have all of these online services which don't talk to each other, maybe are not doing things when you look at whole process, and are not accounting for pieces and parts of that process. So I think we actually have to take a step backwards and look at some of those things, start sharing some of these tools and advances that we've made, and then maybe start doing away with some of the things we have out there and replacing.

Mr. Lawrence: Mayi, the Klinger-Cohen Act of 1996 changed the landscape of IT in government. Can you talk a little bit how this act has been implemented and its impact on Treasury?

Ms. Canales: Sure. The Klinger-Cohen Act, as you know, created CIOs, chief information officers, for which I am forever grateful because I love my job but I think some of the things that it made us look at are IT as investments. IT used to be we're getting the big end of year money dump, how many PCs can we buy, and there was no sense of what those PCs would support or standards or how we were going to fit them into our business processes.

So IT is now made an investment. We have a capital investment review board at Treasury as all the other agencies do. We have councils that function as board of directors like the Treasury CIO Council and the Treasury CXO Council which I mentioned earlier that has the CFOs, the financial, the procurement, and the HR people working together to identify all the administrative issues.

I think that the Klinger-Cohen Act made us look at performance metrics, how do we know if we're successful. Trade is my favorite example because yes, we have all these great systems that are online but guess what. The truck is still sitting for four hours on the border. Success ought to be getting that truck through the border as it drives up, everything cleared and secure.

Mr. Lawrence: The president's management agenda focused on e-government technology and many of the issues we've already talked about. How does the president's management agenda impact Treasury or affect Treasury? How does it roll out?

Ms. Canales: Treasury is very involved in four initiatives specifically for the president's management agenda, at least the e-gov portion, which is what I'm familiar with. We are directly managing the Easy-Tax initiative, which has to do with online tax filing and reporting. We are directly managing the unified and simplified wage and tax reporting with Social Security as a very strong partner to deal with the businesses that have to do all those forms for wage and tax reporting.

We are directly involved with Commerce as the managing partner. We're the strong partner in streamlining the trade process and we're also the managing partner on the wireless initiative, which provides interoperability or the ability to communicate across local, state, and federal entities for public safety.

Mr. Lawrence: What does it mean to be the managing partner for an initiative?

Ms. Canales: "Managing partner" is another word for lead but it's not just that you take the lead on an initiative because we are creating what we call program management offices. Those program management offices are not just the managing partner, in other words Treasury creating this management group and making decisions. They're staffed by, say, for the wireless initiative people from FEMA, people from Justice, people from Homeland Security. They are helping us make the decisions. They're helping us with the investments.

It means that we're pooling our money if we're playing nice together, which I hope we will, so it just means that we are creating the entities, the tools, the support structure for these other people to join in and be very strong decision makers in the overall effort.

Mr. Lawrence: How long is that supposed to take?

Ms. Canales: The 23 initiatives that we have defined right now for e-government under the president's management agenda are 18- to 24-month initiatives, doable initiatives. But as we're working on those we're going to be looking at the future, next steps, so maybe we'll do additional things with wireless. Maybe wireless will be done in 24 months and we'll move on and do case management. Who know?

Mr. Lawrence: How does the office of the CIO use performance-based management to promote effectiveness of agency operations? And how are the performance standards established and evaluated?

Ms. Canales: We have for investments performance standards that are related to the mission or critical business need of the investment. Like I mentioned trade, the truck coming across the border would be a metric. Waiting lines at the border would be a metric. So our metrics are changing to be related to whatever business we're supporting.

On performance-based contracts we're making some progress there. We've defined incentive-based contracts which are you come over, you help us do this, and we'll pay you out of the savings. For instance, we have one with several companies where we're looking at telecommunications. I'm going to pull numbers out of the top of my head but say I spend $200 million a year on telecommunications services nationwide. Well, say a company can come in and say you know what, you can do that more efficiently. You can do that for $100 million a year. I'll come in. I'll define the efficiencies, you only pay me if I save you money. That is the easiest form of performance-based contracting there is.

But on other contracts where we buy a solution or a service we're taking away the metrics which used to be, at least in the IT world, very IT-oriented, like, the system must be up 99.9 percent of the time with a turnover within five minutes should anything go down to the fact that agents out in the field in Alcohol, Tobacco, and Firearms, ATF, have access to their information immediately.

For instance, like, wearable technology is a solution. They have access to case information on an investigation that they're doing. Immediately online all the time they can plug stuff in so another agent across the country has the same information on a related case. That's a measure. So those are the types of metrics we're looking at.

Mr. Lawrence: What are the challenges to implementing performance-based contracting or even performance-based management? It seems too logical and clear as you described it.

Ms. Canales: The challenges are contracting challenges mostly. We need to redefine contracting in government. It used to be very specific where you would bring pieces and parts in and deliver them and set them up and hopefully they would work but now we're not doing that any more. I'm trying not to own any pieces and parts.

But contracting has had the biggest hurdle to jump here trying to define a contract where you guys are my partner, I'm opening up my books to you, you guys know how much money I have, which is forbidden in the government world. Show the books? Forget it. That way they would know what you're spending.

But if I'm buying a service from you how can you do it appropriately if you don't know what my budget is and what I have and where I need to streamline? So that's been the biggest hurdle is the contracting rules and regulations are not exactly created that way and we're trying to find innovative contracting methods and incentive-based contracting like what I described is one that has worked for us.

Mr. Lawrence: Accountability is also a big issue. How do you drive accountability into the IT investments that Treasury makes?

Ms. Canales: It's interesting because you go up on the Hill and you testify and you see the CIO testifying about modernization for Customs or INS and that's about as accountable as you can get. But I think what's interesting is that the IT people are now testifying on the business processes and what you're doing for the business and you're saying these are the things that I'm going to improve and this is the end state that you will see two years from now and I'm going to deliver this. Every year you will see these features.

We no longer say it's going to take me five years and you'll get this gray box at the end of five years. We're going to say it's a five-year effort. You will see these improvements in year one, these improvements in year two, these improvements in year three, and we're measured on that. We have scorecards. At Treasury every CIO employee has a scorecard that is directly related to the goals and strategies of Treasury for that year.

Mr. Lawrence: How has having such a scorecard affected performance and also even the culture?

Ms. Canales: Well, it's been interesting. At first they hated it, of course, because, like, my God, you're measuring me. You want to know if I'm doing my job. You don't trust me. But it's interesting. It's created a sense of I'm doing this to improve financial stability around the world. You see the link. Here is the goal, stabilize the economic markets around the world and then improve financial systems within Treasury, create the following mechanisms, IT employee working on this, this, and this. It directly relates to that. It really gives them a sense of being there for the mission of the agency.

So it's been a couple of years to get to that sense, but I think they now understand why they do the things, which made no sense in the past.

Mr. Lawrence: That's a good stopping point. We got to go to a break at this segment. Rejoin us in a few minutes as we continue our discussion with Mayi Canales at the US Department of the Treasury. In the next segment we'll ask her to pull out her crystal ball and tell us about the future of technology in government. This is The Business of Government Hour. (Intermission)

Mr. Lawrence: Welcome back to The Business of Government Hour. I'm Paul Lawrence, a partner at PricewaterhouseCoopers, and today's conversation is with Mayi Canales, deputy chief information officer at the US Department of the Treasury. Joining us in our conversation is Jay Tansing, a PwC consultant.

Mayi, in our conversation so far you've been talking about technology and the different things that might happen. So I'm curious. How will technology affect federal employees in the way they do their jobs?

Ms. Canales: I think you'll see a lot more of being able to do your job anywhere anytime type employees. Unfortunately, I am now accessible 24 by 7 with e-mail, phone, paging, and it's all in one little box. I can do my whole job from a little wearable device but it's interesting.

I think that we now are not limited to our offices. We can work from home, agents can work from the field, and you have access to everything you normally have access to your desktop, and I think that's the biggest change I see.

Mr. Lawrence: Will it affect how the government is managed. For example, old models or hierarchical structures or ratio of managers to employees 1 to 7 or whatever that was, and now with technology how will that change?

Ms. Canales: I think it will make it easier for managers. A lot of what took so much time in the past was the paperwork, signing memos and routing them around and some person physically walking this memo around because it had to get out that day. Now I send a memo out and I send it to six people and I can either structure it so it gets approved serially or all at one time and I can say give me your input and it's all there electronically and I get all their input at the same time and I can make decisions right away and get it out right away. So I think as far as workflow it's made our lives so much easier.

I think you'll see lot more in government of, as I mentioned earlier, program managers where they're managing solutions and services and not managing people. So I think you'll see a lot of that type of change.

Mr. Lawrence: How about in terms of the technology and its impact on citizens?

Ms. Canales: I think you know anybody who has kids or has watched kids in grade school, in college, in high school nowadays, they don't wait in line for anything. They do everything online. I'm even that way and I'm in my mid-forties. So I think, as this next generation grows up government better be responsive and provide government in lots of mechanisms online, offline, buildings, phone, fax. I think government needs to adapt to that and provide the services based on what our citizens want. I think our citizens of the future are online citizens, and I see governance going online.

Mr. Lawrence: Are there any interesting new technologies on the horizon that you're looking at that you think will play an important role in Treasury's overall activities in the future?

Ms. Canales: Yes, I think wearable devices are going to play a critical role which is wireless technology but for solutions where agents can wear devices that allow them to (1) get access to information, (2) see things that you see these virtual components where another agent is in another area and they can actually see that other agent and what that agent is seeing and what's he's dealing with and things like that.

I think in health care, which is not a Treasury mission, technology is going to play a huge role, people with wearable devices that tell them go to the hospital because in the next five minutes you're going to have a heart attack. Imagine the life saving that that will have. So I think wearable devices and wireless technology are the hot things coming up.

Mr. Lawrence: How far away do you think that is?

Ms. Canales: It's here. It's here. It's not all over the place but it's like DVD players. They're under 100 bucks now and they used to be 1,000. So you'll see them more and more.

Mr. Lawrence: We hear a lot about the difficulties that the federal government is having in recruiting and retaining employees, especially technology workers. Can you describe the Treasury's Information Technology Work Force Improvement Program?

Ms. Canales: Yes. We actually have several features but I think the one thing I'd like to mention up front is that in the old way of thinking people used to take a job and they'd stay with that company or with the government 30 years until the day they retired. In the private sector you guys have adapted very well to the fact that sometimes you get somebody in three years and then they get bored and go away.

In the government we are just learning that. It's okay to come and work for the government three years and then go somewhere else. That keeps you getting new blood. You don't need everybody staying for 30 years, which is a new mentality in the government.

I stick out like a sore thumb because I have never had the same job for three years ever in my entire life. I get bored and I move on or I might stay with one company but I work Navy one day, NASA another day, and health care another day. What Treasury is trying to do to address some of those issues is creating program managers and project managers.

We've got two interesting programs that I'd like to mention, the executive potential program and the management potential program. The executive potential program is for what are called GS-14s and 15s, which are one level down from the top, the Senior Executive Service, and it trains them and it sends them to different facets of government and private sector and opens them up to things like what happens on the Hill, what happens in OMB, what happens in other agencies, how does the private sector deal with this. It gives them team building and facilitation skills and business classes. So we've got that. It's an 18-month program, and it sets them up for Senior Executive Service.

Then we've got the management potential program, which is the next level down. I believe it goes to GS-13s and 12s. I'm not sure of the grades but it does the same thing. It prepares them to be senior IT managers in the government, and it opens the up to program management skills, team- building skills. Performance-based contracting is one of the things we're teaching them in there. So it's interesting. We're trying to build a succession ladder.

Mr. Lawrence: Are those retention tools? Normally when we talk about acquiring IT workers people think about just recruiting but I'm curious about retention because I'm imagining by the time people are in Treasury and they develop these specialized skills they have other opportunities perhaps in the private sector but also in other parts of government.

Ms. Canales: Right. I'm not as worried about retention because I think if you're providing a place where somebody is growing and happy that will happen. But what I've found is that even when people leave and go somewhere else, especially if they go to the private sector, generally their skills are coming back to help Treasury anyway.

When I was a CIO for one of the health care networks in the Midwest I lost three people I could say to Cisco. Sure enough, within a year those people were back helping Cisco identify ways to improve the health care network that I was in. So I got them back anyway because they liked to stay in the area, that's what they know, and they had better jobs. They were happier but they were still helping me, so that was fine.

But even if they leave and they go to another agency it's still for the good of government or for the good of whatever technology. So I'm not as concerned about the retention factor as I am about the factor of giving people what they need to do their jobs and making them happy at work and making them feel like they are well- respected and cherished employees.

Mr. Lawrence: I know there was talk on the Hill of having ways whereby I think technology workers could move across the sectors to get more training. You've done that in your career but I'd be curious about how you think that might work.

Ms. Canales: With the federal CIO council work force program we do have mentoring initiatives where we share workers at the different levels. They'll come and they'll do a year; they'll come and they'll do three months. It depends on the initiative they want to work on but we share them. I've personally had four or five in the two years I've been at Treasury, four or five people that have come over in mentoring programs and worked with us, and I have two people currently out on mentoring programs in different agencies right now.

Mr. Lawrence: What were the lessons learned?

Ms. Canales: They love it. They come back and they have all sorts of new ideas and did you know they did this or guess what, I showed them what we did with this. And they'll be working with something, something budget-related especially, which tends to cross our agencies now, and they say I know who to call over there and they call somebody especially when you send somebody on a detail. In fact I have a third. I just remembered I have somebody on a detail at OMB, and he's learned all of our budget contacts, I know who to call who can answer that, and it really excites them. They like it.

Mr. Lawrence: What advice would you give for a young perhaps who's perhaps interested as a career maybe a CIO?

Ms. Canales: Actually, I would say a technology background is great but when you get your masters or you go on for your advanced degrees get a business degree, focus on business, even get something you like. Like, if you're interested in finance or health care or something like that get a health administration degree or a political science degree or a finance administration degree. Focus on an area that you like and learn the business.

Mr. Lawrence: How about in terms of the types of experiences that they should be having, should they be trying to work on very technical projects or large groups of people? What would be the most relevant experience?

Ms. Canales: I think it depends on what they like to do but it helped me as I was growing up in technology to be very technical at first and to understand what the issues really are because when engineers come to me I understand their pain, I hear their pain, and that means a lot to them. I may say no but I understand what they're talking about and that means more to them than I can say.

Mr. Lawrence: Our final question, what's your vision of the office of the CIO for the next ten years at Treasury?

Ms. Canales: I think it will be an investment management firm. I believe that we're going to be doing investment management, making decisions about where to spend money, how to streamline things, not just at Treasury but across government because Jim likes to talk about the government blob. My boss, he likes to say government as we do these business processes across you're going to see a blob of government that's focused on trade and a blob of government that's focused on grants and you shouldn't in the future to be able to tell where people work.

Mr. Lawrence: That's a good stopping point, Mayi, because I'm afraid we're out of time. Jay and I want to thank you very much for joining us this morning.

Ms. Canales: I enjoyed it thoroughly. Thank you.

Mr. Lawrence: Did you have a website that you wanted to mention?

Ms. Canales: Yes, actually I was going to plug FirstGov so people can see what we're doing across government, www.FirstGov.gov, and I think that on there it tells you the new things coming up with e-government.

Mr. Lawrence: Great. This has been The Business of Government Hour featuring a conversation with Mayi Canales, deputy chief information officer of the US Department of the Treasury. Be sure and visit us on the Web at endowment@pwcglobal.com. There you can learn more about our programs and research and you can also get a transcript of today's fascinating conversation. Again, that's endowment@pwcglobal.com. This is Paul Lawrence. See you next week.