Aug 02 2007

Leap Forward

Carefully planned implementation and change management enable DOD's largest successful ERP.

For a number of years, the Defense Department has been working on transformational initiatives to upgrade and modernize organizational systems and data.

Some of the initiatives were limited to a single system, but more often the organizations found that to “transform” they had to address changes on an enterprisewide level, through enterprise resource planning systems. ERPs use multiple software and hardware components to integrate an organization’s business or operational data and processes into one unified system. That enterprisewide system then relies on a unified database and common processes rather than the disparate data and systems developed over the history of the organization. Those silo systems frequently include errant, outdated or duplicated data.

Implementing an ERP system that uses enterprisewide resources is daunting and requires not only complete transformation of the organization’s information technology systems and processes but also the way the organization operates.

That was the challenge the Defense Logistics Agency faced at the turn of this century. The agency’s senior leaders understood that to remain viable as DOD’s combat logistics support agency, DLA had to completely replace its legacy systems and entire mode of operation, both of which dated from the 1960s. The first step was to develop and implement an ERP system through its Business Systems Modernization program.

The agency completed fielding its ERP system in December 2006, bringing to a close a pioneering systems acquisition that applied a structured systems engineering approach in developing IT programs. BSM introduced commercial off-the-shelf software products that resulted in a core architecture for DLA’s enterprise business system approach to materiel, financial, procurement, customer relationship and product data management. BSM, which had more than 7,000 users managing more than 5.2 million DOD items of supply as of December, is also integrated with complementary DLA systems, including the Distribution Standard System and the DOD EMALL.

The Transformation

In 1999, DLA began re-engineering its business practices in response to changing warfighter needs. The first step required replacing the aging legacy systems with state-of-the-art COTS technologies configured to meet DOD’s unique needs.

Beyond upgrading its decades-old systems, DLA also wanted to improve customer support and provide better access to DLA’s portfolio of business systems and processes. The first step of this complex undertaking — implementing the ERP system — was taken at a time when DLA’s operations tempo was at the highest level in its history. From fiscal 2001 to 2005, sales and services doubled from almost $17 billion to nearly $35 billion per year, largely as a result of the global war on terror. DLA was not simply placing new software on top of existing systems but was changing and modernizing the business enterprise, including processes, IT architecture and infrastructure, through a phased-in and carefully orchestrated approach.

The BSM program resulted in the first successful end-to-end supply chain ERP system implemented within DOD. The complexity, size and operations tempo of the DOD business environment in which DLA operates makes this achievement significant.

Program Management

BSM was not created or implemented in a vacuum. From the start, DLA IT program managers and support staff partnered with the Office of the Secretary of Defense, the military services, the assistant secretary of Defense for networks, integration and interoperability, the deputy undersecretary of Defense for logistics and materiel readiness, and the Business Transformation Agency to ensure acquisition policies were followed and improved upon. The resulting DLA Incremental Acquisition Strategy for Information Technology/Enterprise Business System includes the following overarching concepts: repeatable and streamlined program management processes, flexible contracting, use of concept demonstrations, incremental implementation, and spiral extensions and enhancements.

DLA built on traditional program management processes, as defined by the Defense Acquisition Life Cycle, by tailoring those processes in partnership with DOD stakeholders. As an example, in conjunction with the Joint Interoperability Test Command, DLA conducted operational assessments as a risk reduction measure that granted the agency earned autonomy based on DLA’s proven program management processes, which were validated by the JITC assessments.

The first rollout of the ERP system went live as a limited concept demonstration environment in July 2002. BSM’s first release was with limited items and users; it was small enough to manage risk but broad enough to demonstrate a fully operational system. The concept demonstration phase lasted until August 2004 and included the conversion of approximately 170,000 items and 470 users into the ERP system.

After the concept demonstration phase, the agency implemented BSM Release 2.0 in August 2004 and enhanced 37 more functional areas in DLA's business operations. That release, combined with favorable results from the initial operational test and evaluation, led to beginning the initial live system deployment in January 2005 - the first of 19 monthly cutovers of supply items and users from the aging legacy systems. All initial functional requirements were operational by December 2005. DLA held its BSM operational and system architecture as static as possible during the last four years of its development. Monthly deployment releases continue in 2007 to further enhance BSM and help prepare it for extension of DLA's processes and technology to support the additional supply chain mission requirements aligned to DLA as a result of the 2005 Base Realignment and Closure decisions.

The Way Ahead

We are already extending the DLA business enterprise to remote locations where troops are deployed, so that we can immediately react to their needs and ensure the supply chain is extended to the point of customer demand. That moves traditional wholesale services all the way to the point of support, where the customer needs them. It also requires that DLA work on ways to provide seamless integration with customers’ systems to make it easy for them to communicate their requirements.

Working with strategic military and commercial partners, DLA can dedicate more of its resources to extending the national logistics enterprise. These efforts will result in enhanced support to the warfighter and the military services as well as reduced overall supply chain costs for DOD.