DOD Business Systems Modernization

Why It's High Risk

The Department of Defense (DOD) is spending billions of dollars each year to acquire modern systems that are fundamental to achieving its business transformation goals. While the department’s capability and performance relative to business systems modernization has improved, significant challenges remain. The department has not fully defined and established a family of management controls that is vital to ensuring that it can effectively and efficiently manage an undertaking with the size, complexity, and significance of its business systems modernization, and minimize the associated risks.

^ Back to topWhat We Found

For decades, DOD has been challenged in modernizing its business systems environment. Since designating this area as high risk in 1995, GAO has made over 250 recommendations aimed at strengthening DOD’s institutional approach to modernization, and reducing the risks associated with key investments. For example, since 2001, GAO has provided a series of recommendations relative to

• developing and using a business enterprise architecture (BEA), modernization blueprint
• establishing effective investment management controls to guide and constrain DOD’s multi-billion dollar business systems environment, and
• ensuring that DOD follows best practices when acquiring information technology systems and services.

Further, since 2002, Congress has included provisions consistent with GAO’s recommendations in National Defense Authorization Acts.

To its credit, between 2005 and 2008 DOD made progress implementing key institutional modernization management controls in response to GAO recommendations and statutory provisions. For example:

• DOD continued to develop updates to its BEA that addressed important elements related to the National Defense Authorization Acts and practices that GAO had identified as missing, and
• DOD defined and began implementing improved investment controls, such as the Business Capability Lifecycle, which is intended to streamline business system capability definition, acquisition, and investment oversight processes, to guide and constrain its departmentwide systems modernizations.

However, notwithstanding this progress, more needs to be done. In May 2009, GAO reported that the pace of DOD’s efforts in defining and consistently implementing fundamental business systems modernization management controls (both institutional and program specific) had slowed compared with progress made in previous years, leaving much to be accomplished. In this regard, DOD still faces challenges in

• aligning its corporate BEA and its component organization architectures,
• leveraging the federated BEA (i.e., a family of coherent but distinct member architectures that conform to an overarching corporate or parent architecture) to avoid investments that provide similar but duplicative functionality in support of common DOD activities, and
• institutionalizing the business systems investment process at all levels of the organization.

Beyond this, ensuring that effective system acquisition management controls are implemented on each business system investment also remains a formidable challenge, as GAO’s recent reports on management weaknesses associated with individual programs have disclosed. In particular, GAO recently reported that DOD’s large-scale, software-intensive system acquisitions continue to fall short of cost, schedule, and performance expectations. Specifically, GAO reported in 2010 that six of nine enterprise resource planning systems had experienced schedule delays ranging from 2 to 12 years, and five had incurred cost increases ranging from $530 million to $2.4 billion. According to DOD, as of December 2009, it had invested approximately $5.8 billion to develop and implement these systems.

Relatedly, GAO’s work has continued to show program-specific weaknesses, including

• not economically justifying investments on the basis of reliable estimates of future costs and benefits;
• not pursuing investments within the context of an enterprise architecture; and
• not conducting key acquisition functions, such as earned value management, requirements management, risk management, test management, performance management, and contract management.

^ Back to topWhat Needs to Be Done

Until DOD fully defines and consistently implements the full range of business systems modernization management controls, it will not be able to adequately ensure that its business system investments are the right solutions for addressing its business needs, that its business system investments are being managed to produce expected capabilities efficiently and cost effectively, and that business stakeholders are satisfied. Specifically,

• the supporting component architectures for component organizations need to be further developed and aligned with the corporate architecture to provide a federated BEA
  Highlights of GAO-09-586 (PDF)
• business system investments need to be defined and implemented within the context of DOD’s federated architecture
  Highlights of GAO-08-972 (PDF)
• both the corporate and component investment management processes need to be better defined and institutionalized
  Highlights of GAO-09-586 (PDF)
• business system investments need to be managed with the kind of acquisition management rigor and discipline that is embodied in relevant guidance and best practices, so that each investment will deliver expected benefits and capabilities on time and within budget
  Highlights of GAO-11-53 (PDF) and GAO-09-518 (PDF)

Further, DOD needs to ensure that its business system programs and projects are managed with integrated institutional controls and that they consistently deliver promised benefits and capabilities on time and within budget.

^ Back to topKey Reports

Military Readiness

Information Technology

DOD Business Transformation

DOD Business Transformation

DOD Business Systems Modernization

DOD Business Systems Modernization

DOD Business Systems Modernization

DOD Business Systems Modernization

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