Defense IRM:

Business Strategy Needed for Electronic Data Interchange Program

AIMD-94-17: Published: Dec 9, 1993. Publicly Released: Dec 17, 1993.

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Pursuant to a congressional request, GAO reviewed the Department of Defense's (DOD) management of its Electronic Data Interchange (EDI) program, focusing on: (1) estimated cost savings and business goals; and (2) components' implementation of EDI as part of the Corporate Information Management (CIM) initiative's business process reengineering efforts.

GAO found that: (1) DOD has initiated EDI to create standard, paperless business processes for automated exchange between DOD activities and industry; (2) DOD has estimated that the conversion of 16 key business forms into all-digital EDI procedures could result in $254 million in savings by 1996 and based budget cuts and personnel reductions on these estimated savings; (3) disagreements regarding the most effective way to implement EDI have hindered the development of a standard approach for electronic business and allowed disjointed application of EDI across DOD components; (4) one operational pilot project has demonstrated the benefits of electronic contracting, but it has not provided a suitable approach for departmentwide use; (5) DOD components' independent development of EDI projects has resulted in a proliferation of nonstandard systems that achieve local benefits but move DOD further from its goals for a standard departmentwide approach; and (6) DOD has not provided management structure and technical support to ensure effective incorporation of EDI into new departmentwide business practices.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: DOD has created the Joint Electronic Commerce Program Office, which is an Executive Agent shared by the Defense Logistics Agency and the Defense Information Systems Agency (DISA). EDI and other electronic commerce (EC) technologies are employed by three organizational elements to accomplish EC goals within each DOD business area plan. Business and Technology Integration will work with DOD components to implement EC technologies developed by DISA and integrate them into Logistics, Acquisition, Contracting, Continuous Acquisition and Life-Cycle Support, and Finance systems. Business Planning, Implementation, and Coordination will handle program management, POM/budget and administrative support. Strategic Business Development and Industry Alliances will manage the ECRC program, training, industry outreach, and the DOD World Wide Web pages.

    Recommendation: In order to improve EDI program management and realize the full benefits associated with EDI, the Secretary of Defense should direct Office of the Secretary of Defense principal staff assistants, in line with CIM principles, to develop business strategies for each functional business area in order to develop a standard approach for implementing EDI. These strategies should include functional objectives, policies, procedures, and managerial responsibility for linking EDI capabilities to business process improvements.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: DISA has telecommunications and standards responsibilities for EDI. As such, DISA is responsible for developing the technical architecture and technical infrastructure to support DOD's EC/EDI program. DISA is working with the components to develop EC architectures for supporting EC/EDI in DOD's various business areas. Additionally, the new Joint Electronic Commerce Program Office is conducting training programs and outreach to equip components and their trading partners with the necessary skills to implement the new program.

    Recommendation: In order to improve EDI program management and realize the full benefits associated with EDI, the Secretary of Defense should designate the Assistant Secretary of Defense for Command, Control, Communications, and Intelligence to develop communications policies and procedures to support a standard EDI approach. These policies and procedures should include: (1) an implementation plan for telecommunications to support a common approach for electronic business between DOD and industry; and (2) guidelines to assist components in acquiring EDI software, hardware, and telecommunications services; implementing a consistent EDI approach through the use of EDI standards; and realizing crosscutting business objectives.

    Agency Affected: Department of Defense

  3. Status: Closed - Not Implemented

    Comments: Since this recommendation, DOD has revamped its EC program by forming a new Joint Electronic Commerce Program Office headed up by both Defense Logisitics Agency (DLA) and DISA, with representatives of each military service and the Defense agencies. Implementation of the new program has been under way for just 6 months. Additionally, Congress has dropped the requirement that all agencies use the FACNET architecture and OMB is supporting a multitude of EC-based solutions being implemented in numerous agencies such as National Aeronautics and Space Administration, General Services Administration, DLA and Treasury. Accordingly, this recommendation will no longer be applicable.

    Recommendation: In order to improve EDI program management and realize the full benefits associated with EDI, the Secretary of Defense should direct the military service secretaries and DOD agency heads to defer acquisition of EDI products and services until the Assistant Secretary of Defense for Command, Control, Communications, and Intelligence determines that such acquisitions support departmentwide business objectives.

    Agency Affected: Department of Defense

 

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