Pentagon’s business transformation effort moves forward

Details are emerging on how the Pentagon's newly formed agency for renovating business processes is structured and what its budget could look like in fiscal 2007.

The Defense Department's Business Transformation Agency consists of seven divisions, according to a memorandum issued Friday and published on the agency's recently launched Web site.

Six of the divisions are headed by executives tapped from within the military and from major private sector firms. Army Major Gen. Carlos "Butch" Pair, picked to serve as the agency's business systems acquisition executive late last October, is leading the seventh division.

The recently established agency moves dozens of the Pentagon's most extensive business modernization programs under a single roof and centralizes oversight of 18 departmentwide programs, including the Pentagon's e-mail system, the Defense Acquisition Management Information Retrieval program and the Defense Travel System. In his fiscal 2007 budget request, unveiled Monday, President Bush proposed $179 million for the business agency. If Congress enacts his request, BTA would get an additional $16.3 million for procurement programs and $140 million for research, development, test and evaluation programs.

Goals for Business Transformation Agency described in the budget proposal include the development of departmentwide business processes aligned with those in the private sector.

The agency reports to the Defense Business Systems Management Committee and is under the authority of Defense Undersecretary for Acquisition, Technology and Logistics Kenneth Krieg, according to the memo and budget documents.

Paul Brinkley, Defense deputy undersecretary for business transformation, and Thomas Modly, Defense deputy undersecretary for financial management, are serving as BTA's co-directors and are handling day-to-day management until a permanent director is found, the memo said.

Two of the six newly appointed division heads for the Business Transformation Agency have worked with or for Fortune 100 companies and four received graduate degrees in some form of business administration.

Modly, speaking at the Association of Government Accountants' National Leadership Conference Friday, said that the agency is making progress at reforming the Defense's business processes and will help achieve a clean financial audit by reducing the amount of time needed to process transactions.

The agency wants to be a "petri dish" where a "virus of change" can be grown and talent can be recruited with the goal of sending it out into the department, Modly said.

But one observer familiar with Defense's transformation plans was skeptical.

The Pentagon should avoid simply "rearranging the deck chairs on the Titanic," said Chris Lamb, a research fellow at the Institute for National Strategic Studies at National Defense University.

Lamb said he doesn't believe another stovepiped organization will address the source of the department's inefficient business practices. History and bureaucratic odds are against BTA because it will have little power to change the incentive structure that currently drives inefficiency, he said.

A shared services concept based on market principles would be a better choice for the Pentagon than consolidation of services and power in a new organization, Lamb said. He reached this conclusion after spending six months analyzing ways to improve Pentagon decision-making.

But Brinkley said the Pentagon is creating within the Business Transformation Agency a shared services organization for business process and systems modernization for departmentwide programs.

"This represents a significant difference from prior efforts at defense business transformation in that it is focused on breaking down organizational stovepipes, not perpetuating them," Brinkley said.

The Defense Department also launched two Web sites Monday intended to encourage the business transformation process.

The Defense Business Transformation site focuses on efforts spanning all areas of business transformation, including enterprise architecture and the enterprise transition plan, while the business agency's site includes information related to its mission and functions.

The seven divisions within the new agency are:

• The Defense Business Systems Acquisition Executive Office, which oversees the 18 departmentwide programs moved under the agency's oversight.

  This division is led by Army Maj. Gen. Carlos "Butch" Pair, the business systems acquisition executive, and has oversight of all enterprise-level acquisition programs.

• The Transformation Planning and Performance division is responsible for maintaining Defense's business enterprise architecture and the corresponding enterprise transition plan. It monitors the performance of departmentwide programs and holds them accountable for reaching documented milestones.

  Heading this division is David Fisher, who joined the Defense Department in 2005 as special assistant to the Pentagon's comptroller and Defense undersecretary, Tina Jonas. He formerly served as a managing director of an information technology services firm.

• The Transformation Priorities and Requirements division functions as the primary link to the principal staff assistants within Defense Secretary Donald Rumsfeld's office and other departmentwide organizations such as the U.S. Transportation Command, the Defense Logistics Agency, and the Defense Finance and Accounting Service.

  Leading the office is Radha Sekar, who joined the department in 2005 as the financial management transformation team director. Previously, she served in partner positions at two global consulting firms.

• The Investment Management division supports the investment management processes, overseeing departmentwide business systems investments.

  The division is led by Paul Ketrick, who was the deputy director of strategic planning and resources at the Pentagon's Program Analysis and Evaluation office.

• The Warfighter Support division identifies departmentwide business programs that affect warfighters, resolves problems, and monitors business process and system initiatives sponsored by the agency.

  Robert Love, a retired Marine Corps colonel, leads this division.

• The Information and Federation Strategy division manages the agency's information technology projects and integrates industry best practices.

  Leading the organization is Dave Scantling, a former chief executive of several technology and software firms.

• The Agency Operations division manages personnel, pay, planning, budgeting, infrastructure and management processes.

  Navy Capt. Michael Murphy heads the office. He worked for Hewlett-Packard Co. in the 2004-2005 academic year as a Defense Secretary Corporate Fellow.