A Vision Too Grand

When the Defense Department first began publicizing its Corporate Information Management (CIM) plan in 1989, top military brass, congressional leaders and even the press were almost unanimous in their praise.

Certainly the goals of CIM were difficult to criticize, for the change management program promised to streamline computer operations and cut red tape out of one of the world's largest and most bureaucratic organizations. The word "corporate" in the project's name suggested a key goal: to bring tightly organized, business-style management to DoD's sprawling operations.

CIM promised savings of more than $70 billion over seven years, enough money to fund modernization of defense computer systems and help bolster military readiness. The savings would come out of administrative and logistical operations, through such initiatives as the consolidation of data centers, the merging of redundant payroll, procurement and other systems and the reduction of inventories through better management of supply chains.

Savings generated would pay for installation of an information technology infrastructure capable of fighting the modern war. So CIM would be helping not only the pencil-pushers in the bureaucracy but also the young soldiers in the field. It would, in the process, spare the military the embarrassment of again having to admit, as it did in the Persian Gulf War, that it couldn't communicate effectively or tell from hour to hour where its tanks were located. Using CIM, the military would truly become the proverbial lean, mean fighting machine, effectively equipped and able to respond and deploy to any spot in the world within 24 hours.

What's more, CIM was in the very capable hands of Paul Strassmann, the information technology guru who had almost single-handedly overhauled the business processes at Xerox Corp. Strassmann had come in specifically to design this DoD program and implement it over a seven-year period. As Hank Philcox, then chief information officer at the Internal Revenue Service and chief architect of the agency's $8 billion Tax Modernization System, a major reengineering effort, says, "If anyone could get it done, Paul Strassmann could."

Nearly seven years later, however, CIM is no longer the darling of the change management groupies in Washington. It has had some successes: Its business process reengineering (BPR) efforts, for instance, have been labeled by many as the best in government. But it has achieved few of the objectives it promised, and now some experts question whether CIM has a future.

"I think that the Department of Defense tried to do too much at one time without putting the policies in place to accomplish their goals," says Mickey McDermott, assistant director of the General Accounting Office. "Even today, there's very little policy on how to achieve the goals of CIM. Overall, the concept was good, but the implementation was faulty."

A 1994 investigative report by Sen. William Cohen, R-Maine, now the chairman of the Senate Governmental Affairs Committee, emphatically defined CIM's modernization effort as a complete failure. Further, it said that grossly inflated promises of budget savings would soon come back to haunt DoD. "Because defense budgets were based on the phantom savings to be derived from this program," the report concluded, "difficult decisions will have to be made in the future on whether to increase defense spending or cut critical defense programs and military readiness."

Strassmann himself is disappointed with the result. "Many of the pieces of the program are proceeding," he says. "The problem is that those are now isolated details. The overreaching vision of using CIM as a way of funding modernization of the information infrastructure has not been there. CIM was worth about $120 million a month of net savings. If you get behind that rate, then there's no money left to reinvest. So it all just becomes a cost-cutting exercise."

What went wrong?

Promises and Rivalries

From the beginning, Strassmann was an enthusiastic leader in the effort to overhaul the way the military dealt with information. It was a challenge he not only welcomed but felt uniquely qualified to undertake. After all, this one-time commando for his native Czechoslovakia during World War II had been a top executive at General Foods, Kraft and Xerox. In the latter job, he was responsible for all strategic investments, acquisitions and product plans for the company's worldwide electronics businesses.

Shortly after Strassmann retired, Deputy Secretary of Defense Donald Atwood asked him to come over to DoD. Atwood and Strassmann had both worked as consultants to General Motors in the aftermath of that company's acquisition of EDS.

Atwood knew that defense budgets would head south in the post-Cold War era. As one response, he formulated the CIM initiative, believing it could change business practices in ways that would help the military effectively carry out its war-readiness mission at a time of declining resources. The program was put under the direction of Duane Andrews, then assistant secretary for Command, Control, Communications and Intelligence (C3I), the office that provides technology support to the services. Atwood asked Strassmann to design the details of CIM and implement the program.

"The underlying idea of CIM was that we would take down the bureaucracy faster than the downsizing of the military," explains Strassmann, now a consultant in New Canaan, Conn. "Everything else was subordinate to that."

The CIM strategy was to accomplish that goal with a variety of means, including the following:

  • Business process reengineering. The goal here was to design new, more efficient processes for doing work. Often the old processes were dependent on applications of information technology carried out by retrained workers.
  • Migration. This step involved analyzing legacy computer systems and moving the most effective ones to help support the new processes.
  • Data standardization. Each service had its own data formats and systems for common functions, like personnel records. Data standardization would not only remove redundancy but also make it easier for the services to share information.
  • Just-in-time procurement. DoD's archaic procurement system built up billions of dollars' worth of obsolete equipment inventories. Strassmann wanted to cut these inventories, put limits on future purchases and develop a shorter acquisition lead times, so that necessary equipment would be obtained only when it was tied to a particular mission.

The Bush Administration made CIM one of nine big information technology programs on its "presidential priority list." The project received equally strong support from Sen. Sam Nunn, D-Ga., then chairman of the Senate Armed Services Committee, and other congressional leaders. CIM, in fact, received $1 billion annually in its early years to conduct process analysis, determine best practices and design and plan the implementation.

By the end of 1992, with the Soviet Union broken apart and the Pentagon budget continuing to decline, the CIM idea seemed more critical than ever. But little was known about the specifics of the plan, which was due to be released in 1993, and few could guess how defense organizations would react to the changes it would propose.

Only one thing was certain: It wouldn't be easy to impose a common vision on the four armed services, whose rivalries are legend. As one retired Marine officer says, "Each service thinks they're the toughest or the best. And nobody from the Army or the Air Force, and even the Navy really, has any place coming in and telling [the Marines] how to do our job. I mean, what the hell do they know about our business?"

From the beginning, the services' parochialism served to undermine CIM. "It was probably a very high deterrent," says McDermott. "Everybody wants to keep their own systems, for one. Plus, the services really control the money and the Office of the Secretary of Defense had no real authority to make people put the CIM tenets in place. All they really could do was try to encourage people to go in that direction."

Strassmann tried to address the problem of the services' competitive cultures through a slow and deliberate pace of change. "Many of the ideas were introduced slowly so that we could create the institution, and then after the culture is there and it's accepted and there are small examples of success to point to, then the rollout would begin," Strassmann says.

Unfortunately, according to McDermott, Strassmann's hands were tied from the beginning. Because the program was placed under the direction of C3I, it was perceived by program heads as addressing technology issues rather than functional ones. So instead of applying technology to new, improved processes, for example, many offices simply applied new technology (often migrated from one area to another) to the same old processes. Strassmann was viewed as a technologist while he was really trying to promote change in functional operations, a task for which, McDermott claims, "he didn't have the power to do what he needed to do."

Then in November 1992, President Bush lost his reelection bid, an event that had seemed highly unlikely to the Pentagon brass a year before. CIM advocates like Defense Department Secretary Richard Cheney lost their jobs but Strassmann agreed to stay on. "I was very committed to CIM," he states. "In fact, I had just signed a three-year lease on my apartment in Crystal City," near the Pentagon.

Nevertheless, it became apparent to Strassmann that the commitment would not be reciprocated by the new administration. He thought the Clinton transition team was more interested in DoD social issues than with preparing the military for future challenges. "Let me just be charitable," he says. "They didn't have a clue. They said, 'The world is peaceful and we really don't need this and don't need that.' Unfortunately, the world is not a more peaceful world, as we have seen."

Just before Clinton's inauguration on Jan. 20, 1993, Strassmann abruptly resigned as director of defense information. Without saying much to anyone, he paid off his lease and went home. With that, many believed, so too went all hope of a successful CIM implementation.

"I just handed in my chips, that's all," he says. "I just felt I would not get support in the new administration and under those circumstances, it was the only honorable thing to do."

The Aftermath

As it turned out, the CIM program was suspended for the first 10 months of 1993. Eventually, the program was revived, but with a smaller scope and a projected savings of just $26 billion over seven years. Strassmann's responsibilities were simply transferred to Cynthia Kendall, now the deputy assistant secretary of Defense for information management. Clinton later appointed Lt. Gen. Emmett Paige Jr., to the post of assistant secretary of Defense for C3I.

In the summer of 1994, a comprehensive, strategic plan was finally unveiled, listing six goals. These included reinventing and reengineering DoD's processes; tying DoD organizations together through common, shared data; minimizing duplication and enhancing information systems; implementing a flexible, worldwide information infrastructure; and applying CIM to integrate department-wide operations.

Under Paige and Kendall, CIM has completed 148 BPR projects and has made more than 1,300 recommendations for improvement. Some of the recent success stories:

  • The Marine Corps has reduced its original software code by 80 percent and instead now uses mostly defense-wide code. Funds once used to maintain and update original code are being used to buy boots for Marines in the field.
  • The assistant secretary of Defense for health affairs and the service surgeons general have adopted private-sector best practices to reduce the order-to-ship time for medical supplies from weeks to hours. Services now use one common management system called the Defense Medical Logistic Standard Support System, which reduces overall wholesale inventory by 60 percent and hospital inventory by 65 percent. Savings of $3 billion are projected over 12 years.
  • A cooperative business process reengineering effort undertaken by the Pentagon and the Department of Veterans Affairs has promoted the sharing of benefits and medical information, helping to reduce processing time for VA death benefits from six months to six hours.
  • Under the direction of the Defense Information Systems Agency, 194 military data centers are being consolidated into 16 mega-centers. The project will be finished by the end of 1996, a year ahead of schedule, Kendall says.

Still, CIM has been flooded with criticism. The General Accounting Office began reporting on the lack of an overall vision for the program even before Strassmann left. The House Armed Services Committee was so fed up with CIM's performance that in 1994 it agreed to reduce the Pentagon's $9.8 billion information technology budget by $680 million. The Senate didn't go along, however, and the budget request was fully funded. Most recently, GAO labeled CIM a "high risk program" that could potentially cost the government billions of dollars without clear returns. "Defense has identified several opportunities to streamline or reengineer . . . but few have been implemented," said the accounting office in a report issued last July. "As a result, Defense continues to spend about $3 billion annually with little demonstrable benefit. Few redundant systems have been eliminated and significant savings have not yet materialized."

CIM's plan has met with harsh criticism within the Pentagon as well. The most high-profile example was the military services' strong protest of the Bush Administration's decision to consolidate information technology purchases and central computer design activities under DISA. Reaction was so intense, in fact, that Gen. Paige agreed to rescind the directive. Today, only the data centers are under DISA's control.

"Certainly, there was concern about moving the data centers or the other functions from the services to DISA because they lost control of them. And that's the main issue," says Kendall. "I think whenever you're dealing with change management, it's scary. People are scared of the unknown. In hindsight, with respect to the data centers, given the dollar savings it turned out to be a good thing. But at the time you're making the transition it's very emotional."

Lessons Learned

CIM provides a series of lessons for those attempting to implement enterprise-wide change management programs-both in and out of the Pentagon. Managers familiar with the program say CIM demonstrates the need for top leadership commitment and involvement from the beginning, the flexibility to compromise and adjust a plan when an aspect of it is not working, and ongoing economic analysis to demonstrate to critics what an investment is reaping.

Perhaps the most important lesson CIM provides is to never underestimate the massive complexity of instituting change within the context of the government. "What they were trying to do was absolutely the right thing," says Philcox. "But when you're cutting so many different organizational boundaries, you've got to get those people who are in positions of power on board as part of the team. Unfortunately, you're asking them to reengineer processes that may significantly reduce their own power base and maybe even eliminate their job. And very few people can live with that kind of outcome, so that's a major problem with efforts like this."

Michael Yoemans, director of functional process improvement within the Office of the Secretary of Defense for C3I, says CIM is in transition and has been judged too quickly and harshly. He says the biggest challenge the program had to overcome was the initial high expectations that Pentagon officials created by advertising huge cost savings.

"You have to be really careful not to set up a program in such a way that it becomes a target," he says. "You have to carefully couch your expectations, so that you're not spending all your time explaining to GAO why you haven't shown all of these savings right away."

Another problem that needs to be recognized, Yoemans says, is inadequate understanding of the complexities that are involved in consolidating and reengineering different computer systems within an organization as big as DoD. "Streamlining and changing business practices can be very complicated," he explains. "For instance, if we wanted to take all the payroll systems and get them all down to one, it sounds pretty simple. Payroll's payroll, right? But when you look inside an organization's payroll system, you see interfaces to their labor distribution, project management, personnel and so forth. It's like one internal organ in a body. You can't just rip it out and expect for everything to be all right. You have to reattach the organ. So instead of it being just one system, it's actually an entire infrastructure with many tentacles."

What Next?

Kendall says many of the CIM improvements are now being institutionalized, and thus will be considered as part of future budget formulations.

McDermott, on the other hand, notes that while "the goals of CIM can be achieved, I don't think CIM as it was implemented can be achieved."

He suggests that the program should first be given to an office with more authority-perhaps a deputy secretary of Defense-who can define the program in functional terms. Clear and concrete policies need to be put in place about techniques and timetables for implementation, McDermott says, and better tracking systems are needed to follow how the money is being used and what results are being achieved. Finally, service rivalries need to be recognized and planned for.

Ironically, downsizing and smaller budgets may have primed the services to come together and make an honest attempt at implementing CIM's goals. "When CIM was first put in place, I don't think they were ready for change, but I think they're starting," says McDermott. "We're starting to see a different trend and a different way of thinking over there."

DoD, it's worth noting, took a big risk by attempting the large-scale change that the Corporate Information Management program entailed. In spite of mistakes made and difficulties faced, "it's essential that we continue moving forward," Kendall says. "We will continue to identify more opportunities, either through consolidation and outsourcing, to improve the way we do business. That must never stop."

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