FORT BELVOIR, Va. –
Editor’s Note: This article is the second of three chronicling Business Systems Modernization, the journey DLA took to replace its signature management technology.
After problem-solving from September 1997 to February 2000, the Defense Logistics Agency stalled in its efforts to replace the Standard Automated Materiel Management System. Analysis by DLA’s Business Systems Modernization Steering Group and its transition partner, KPMG, led to the realization that merely replacing the agency’s signature technology wouldn’t solve the myriad problems plaguing it. The agency responded by expanding the scope of its reform.
Adopting the phrase “a strategy for 21st century logistics,” the BSMSG sought a new way for the agency to conduct business. Its first step was to hire a systems integrator that would take over from KPMG and add muscle to DLA’s problem-solving. In addition to introducing new automation, the integrator would help the steering group revise job positions and shift the agency from a business-centered to a customer-centered focus.
Andersen Consulting had a long history of leading commercial companies through transformations. Its chief executive officer thought his firm particularly suited for DLA’s business and assembled experts who knew the agency’s organization and operation. This team submitted a proposal May 5, 2000, and won the contract Aug. 10, 2000.
In the interim between submission and selection, DLA held “kickoff” meetings and confirmed facts and assumptions. The rising costs of SAMMS convinced most employees that change was necessary. While the Defense Information Systems Agency maintained SAMMS at its data center in Ohio, DLA paid the bill, which totaled almost $542 million in 2000 and was estimated to rise to as much as $700 million before a replacement could be found. The key assumption was the efficiency to be gained by running the Federal Logistics Information System and SAMMS’s replacement off the same database. Another assumption dealt with audit. The possibility that BSM could help DLA conform to accepted financial practices interested Defense Department officials who wanted the agency to show greater fiscal transparency. A final assumption was converted into fact when DLA gave the BSMSG permanent status as a sub-directorate called Business Modernization.
Business Systems Modernization accelerated in August 2000. Not only did Andersen Consulting replace KPMG that month, but the agency also chose Systems Applications and Products as its enterprise resource planning system and Manugistics as its advanced planning and scheduling system. The following month, DLA and Andersen Consulting defined BSM’s end state as reducing order-to-delivery times from 140 to 5 days, increasing order-fill completeness from 90% to 97%, closing 90% of customer requests in 24 hours and increasing customer satisfaction from 3.5 out of 5 to 4.5.
Two developments risked progress after a new president took office in 2001. The first occurred with a push to outsource work. Called A-76 after the Office of Management and Budget circular regulating the process, the reform conflicted with BSM because BSM was changing the baseline used to evaluate commercial-government competitions. Resolution occurred when the agency won permission to defer A-76 until after implementation.
The second risk was 9/11. Navy Vice Admiral Keith W. Lippert, the agency’s 14th director, had to decide whether BSM should be paused due to the expected increase in operations. He chose continuation because he believed a new system would benefit customers in the long run. With the director’s support, the agency’s sixth attempt to shift from SAMMS resulted in a plan for organizational, operational and labor change. How that plan would be implemented is the subject of the next article.