Summaries for June 1, 2010

DEEP IN DOD, TRANSFORMATION OFFICE TOILS TO STREAMLINE BUSINESS
A mandate to eliminate tens of billions of dollars in waste so the money can be redirected to the mission; it sounds like a made-to-order mandate for the Pentagon's Business Transformation Agency. The mandate, coming from Defense Secretary Robert M. Gates last week, basically has every DOD component looking at ways to eliminate redundancy and unproductive overhead. The Pentagon buys unnecessary things sometimes. But it buys all things in a manner DOD is trying to update.   -> Read More

PENTAGON LEADERSHIP SEEKS TO CUT OFF THE TAIL WITH A CARVING KNIFE
A new "tooth to tail" rebalancing is getting underway at the Defense Department. And the tooth is supposed to be the winner. Money-saving efforts, like those of the Business Transformation Office, outlined in the interview above with Prashant Gaur, look to gain in last week's sweeping DOD cost cutting announced by Defense Secretary Robert Gates and Deputy Defense Secretary William Lynn. Make no mistake: In the annual back-and-forth on Pentagon budgets, this is a big deal.   -> Read More

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SCORECARD REPORT ON MULTIPLE CYBERSECURITY BILLS
At one time the government was said to have computer chaos. Now there's a touch of cyber security chaos going on. Here's a scorecard from FedInsider to help you sort things out.  -> Read More

COMPUTING COSTS GETTING A FRESH LOOK
No sooner had the Defense Department cost cutting initiative made its way into the news, the administration announced a similar, if less ambitious $25 billion plan for civilian agencies. Find ways to cut discretionary spending and -- here's the twist -- you get to keep half for other initiatives, and the rest goes to deficit reduction. Like it will at DOD, the cost cutting will bring fresh looks at IT and new impetus for three of the most-discussed computing trends these days in the government: cloud computing, virtualization and data center consolidation.  -> Read More

• Deep In DOD, Transformation Office Toils To Streamline Business

  Prashant Gaur

  A mandate to eliminate tens of billions of dollars in waste so the money can be redirected to the mission; it sounds like a made-to-order mandate for the Pentagon's Business Transformation Agency (BTA). The mandate, coming from Defense Secretary Robert M. Gates last week, basically has every DOD component looking at ways to eliminate redundancy and unproductive overhead.

  The Pentagon buys unnecessary things sometimes. But it buys all things in a manner DOD is trying to update. The BTA's missions and directorates sound complicated, but their goal is simple: To simplify and improve business processes in DOD so that finance, acquisition, logistics and IT systems work together in standard ways from common data. Efficiency is the virtue, but the benefit is to make DOD finances able to have a favorable audit by 2017, according to Prashant Gaur, the director of Enterprise Integration at the BTA. The ultimate goal is better and more streamlined support for the warfighters.

  Gaur is relatively new to DOD, having joined three years ago, shortly after the 2005 establishment of the BTA. A partner at PriceWaterhouseCoopers, he had had earlier federal services as deputy CIO at the IRS.

  Gaur is responsible for the business enterprise architecture for DOD, and setting the standards to which new or re-engineered enterprise resource planning (ERP) and other systems must adhere. He explains, data flows through multiple systems from, for example, the acquisition of a product to an agency's general ledger, with different steps performed along the way by multiple people such as those in logistics or finance. "We need to have a data flow that's seamless and transparent, across system to system boundaries," Gaur said. His shop has identified 15 end-to-end business processes for which it is setting data standards and performance metrics. An example of a process might be, the chain of events from procurement, through receipt of product, through payment. And the performance metric would be X percent matching among the contract order, what is received, for what dollars are disbursed -- all corresponding to the correct contract line item.

  To that end, Gaur said, in December the BTA will release Version 8 of the DOD Business Enterprise Architecture. An interim update, Version 7, came out in March. The more ambitious V.8 will set the standards necessary for an end-to-end view of business processes, and will guide the development of new business systems. This is important as DOD replaces old applications and, more importantly, tries to get a handle on improper payments and works towards that audit date. The DOD comptroller has generated a Financial Auditing Readiness Plan, and the BTA wants to make sure financial supporting systems align with the goals of the FARP.

  Meanwhile, Gaur and the Pentagon's Chief Management Officer (CMO) Beth McGrath are working on a program to bring standardization to business systems at the armed services, each of which has its own CMO. (CMOs were mandated back in the 2008 Defense Authorization legislation.)

  "We're working closely with them to get our arms around service business systems," Gaur said. "Most transactions occur at the service level. So we need standards to pull acquisition, logistics, and financial systems together." Integration is also happening at headquarters as BTA implements a standard financial system serving 13 DOD agencies -- starting with BTA itself and, this fiscal year, two of the other agencies. It will be a good demonstration testbed for a virtualized data center approach; there will not be 13 physical data centers for the 13 agencies.

  He said that at all levels in DOD, the BTA is working to align the relationship between the CIO and the CFO. "Financial goals and systems goals should harmonize," Gaur said. That's exactly the kind of harmony that will be needed as DOD reorients its spending and streamlines process to support modernization of combat capabilities and of the force structure.

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• Pentagon Leadership Seeks To Cut Off the Tail With a Carving Knife

  A new "tooth to tail" rebalancing is getting underway at the Defense Department. And the tooth is supposed to be the winner. The longstanding effort of the Business Transformation Office, outlined in the interview above with Prashant Gaur, looks to gain in last week's sweeping DOD cost cutting announced by Defense Secretary Robert Gates and Deputy Defense Secretary William Lynn. In the annual back-and-forth on Pentagon budgets, this is a fairly big deal, although beyond the specifics of where the cuts might fall is a longer term question of whether the program will have legs beyond Gates' tenure, because the cuts are scheduled to begin with fiscal 2012, still 16 months off.  After all, the bureaucracy in DOD is perfectly capable, collaborating with Congress, of playing 'possum' on programs.

  Gates has been laying the groundwork for some time.  His speech back on May 8 was a loud hint at what was to follow in early June.  At Ft. Leavenworth, Kansas, Gates said he wanted to shift billions out of overhead or unnecessary projects, and in ensuing weeks Lynn has followed up with similar remarks.  What we know is that the goal is $100 billion in savings over the next five years in three areas of spending:

  • Personnel and administrative costs, such as logistics, base operations, and Tricare medical spending.
  • Certain weapons systems, to be cut, reduced or streamlined.  The Pentagon has been battling Congress over items like the second engine for the F-35 Joint Strike Fighter and more C-17 transports.  It will not be a top-line reduction, but rather a reallocation towards support of 3 percent annual growth in accounts for warfighting operations.  But it implies and anticipates little if any real growth beyond inflation in the top line.
  • Pentagon and DOD agencies.  Like many of his predecessors, Gates is trying to streamline a headquarters' overhead that by some reckonings consumes 40 percent of the DOD's budget.

  In the short term, according to the Pentagon, each of the armed services -- including the Marine Corps as distinct from the Navy -- will have to find $2 billion in savings in 2012, while the Pentagon will find $1 billion.  Those plans are due to Gates' office at the end of July.  By 2016, the military branches must cut $10 billion, and the Pentagon $7 billion.  In his briefings, Lynn has emphasized that the services will keep the savings, but must show how they are being reapplied to combat support -- as Lynn put it more specifically, force structure and modernization.  On the other hand, he made it clear that DOD components won't get to their savings goals by streamlining along.  Some programs will get the ax.

  The specific guidance is in the hands of DOD leaders and will be signed this week. But here are some potential consequences I see:

  • IT spending could be trimmed.  IT is a component of every weapons and logistics system, so elimination of programs ends the IT that underpins it.  Some programs have long tails; even if Gates succeeds in ending C-17 production, for example, the support for the plane will go on for decades before the existing ones are retired.  But you can envision accelerated consolidation of DOD data centers and lines of business types of applications such as payrolls and acquisition.
  • Acquisition patterns might change.  DOD has been the biggest user of the General Services Administration's multiple awards schedules.  This might increase pressure on GSA to improve pricing and administrative effectiveness of its contracts. Thus in a weird way it might dovetail with some of the aims for GSA expressed by Administrator Martha Johnson. But it is also an opportunity for other governmentwide contract vehicles to make a play for business from a DOD that will be looking for savings. Moreover, the Gates initiative will give fresh impetus to go ahead and cancel troubled programs, as required under recent reform legislation.
  • Outsourcing and cloud computing could gain if contractors are able to show their services can save money.

  Again, it must be emphasized that the program to be outlined in more detail in coming days is not a reduction in the DOD budget, but a reallocation of static dollars. That means there will be winners. For example, companies selling products used as multiple copies by the armed services would potentially gain as the tooth gains at the expense of the tail. For less direct-to-the-front-lines products and services, such as modernization efforts in IT, real savings will have to be shown in advance, and contractors can expect to have their feet held to the fire on time and budget performance.

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• Scorecard Report On Multiple Cybersecurity Bills

  At one time the government was said to have computer chaos. Now there's a touch of cyber security chaos going on. Here's a scorecard from FedInsider to help you sort things out.

  Because of the Senate's busy schedule and limited floor time, it looked last month as if major cyber security legislation would be unlikely to pass both chambers of Congress and get to the president's desk during this legislative session. That picture changed somewhat in the last couple of weeks because both the House and Senate added cyber security provisions to their version of 2011 Defense Authorization.

  The problem is, both bills have something in them that is not entirely palatable to the White House.

  The House version, which passed at the end of May, creates a National Office of Cyberspace in the White House. The Obama administration chose its path last year, with a cyber security coordinator (the job held by Howard Schmidt). So would the president want the imposition of a new White House slot? That is unclear. The House is also moving ahead on a rewrite of the Federal Information Security Management Act, to update how cyber security is reported and handled. That's where the government moves to what has become the mantra for cyber, continuous monitoring of networks for threats. As we reported in the last issue of FedInsider, agencies are voluntarily moving to establish continuous monitoring of their networks, not because of impending legislation but because it is good cyber security practice.

  Although these provisions are part of Defense Authorization, two cyber security bills remain in the House. 

  • HR 5247, sponsored by Rep. Jim Langevin (D-R.I.) has been referred to the House Select Committee on Intelligence.  It establishes the Director of the National Cyberspace Office, a Senate-confirmed position. It is the "principal office for coordinating issues relating to achieving an assured, reliable, secure, and survivable information infrastructure and related capabilities for the Federal Government." It's a potentially powerful position because it would have the authority to approve or disapprove of each agency's budget for cyber security and have strong oversight of agencies' cyber plans and policies.
  • HR 4900, sponsored by Rep. Diane Watson (D-Calif.) also creates a National Office for Cyberspace, and goes a step further to establish a Federal Cyber Security Practice Board within the national office for developing specific cyber policies. This bill also creates a specific framework for agency cyber security to supersede FISMA that uses risk assessment and "maintenance of a security operations capability on an automated and continuous basis." It also funds experiments in integrating commercial cyber security products.

  The Senate cyber add-on to Defense Authorization takes a slightly different tack. It authorizes $10 million in supplemental funding for pilot programs involving the telecommunications industry at both the Defense and Homeland Security departments. Plus, it fast-tracks acquisition of cyber security tools.

  There's a separate bill in the Senate too, from Sens. Joseph Lieberman (I-Conn.) and Susan Collins (R-Maine). It gives the president the power to issue a declaration of an imminent cyber threat to private sector infrastructure, but puts responsibility for remediation at the National Center for Cyber Security and Communications at DHS. This is something the administration has said it doesn't favor, and it is likely to draw opposition from the private sector. One is tempted to make an analogy to the Gulf of Mexico oil spill, where the clamor for a federal takeover is loud. The government has no real capability for closing off deep water oil well heads. It does, however, have considerable expertise in cyber security. Whether this exceeds capability existing in the private sector, though, is debatable.

  If the Defense Authorization bills are reconciled, will Congress go ahead with the separate bills? Most likely is that the detailed provisions not in the authorization legislation would be reconstituted in bill rewrites.

  Analysts think all of the provisions floating in Congress can be reconciled, but that takes time. The Senate is far behind schedule in budget work for 2011 (expect continuing resolutions for the start of the coming fiscal). But keep your scorecard handy.

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• Computing Costs Getting A Fresh Look

  No sooner had the Defense Department cost cutting initiative made its way into the news (Story 2, above), the administration announced a similar, if less ambitious $25 billion plan for civilian agencies. Find ways to cut discretionary spending and -- here's the twist -- you get to keep half for other initiatives, and the rest goes to deficit reduction.

  Like it will at DOD, the cost cutting will bring fresh looks at IT and new impetus for three of the most-discussed computing trends these days in the government: cloud computing, virtualization and data center consolidation. The cloud is simply a shared facility that provides computing power, applications, or infrastructure -- or a combination of any of them -- on demand. Virtualization is the streamlining of servers by using specialized software to enable two or more logical environments to operate in a single physical one. It is the enabling technology of server consolidation. And data center consolidation is also enabled in part by virtualization, and in part by the fact that computing capability is getting smaller, networking faster.

  Although they are differing initiatives, cloud computing, virtualization and data center consolidation are all strategies with the potential to reduce infrastructure costs that bedevil so many IT budgets by squeezing out money for new applications development.

  Pradeep Sindhu is a co-founder, vice chairman and chief technology officer of Juniper Networks. He was in town earlier this week to receive a ComputerWorld award. He told me the infrastructure operating costs of enterprise networks are threatening to overwhelm their owners. "The fundamental issue of the networking industry has to do with economics," he said. For carriers and internet service providers, the operational costs of their networks threaten to surpass their revenues. For enterprise networks, such as those of the federal government, "there are no revenues from the network, just benefits. And the costs are starting to outweigh the benefits."

  Sindhu said the principal way to reduce operating costs of the network is to automate many of the functions that now are done manually, from provisioning users to maintaining the cyber security vigil.

  Software costs are also rising. Sindhu said that the balkanization among competing network appliance vendors keeps the cost of network-based applications higher than they should be. Juniper's "New Network" initiative will, he said, try to establish open application programming interfaces for network appliances, such as routers and switches made by Juniper and its competitors, such that a more universal market for the tools used to monitor and control networks will produce less expensive products.

  Virtualization is not a cut-and-dried exercise in getting rid of servers and reaching cost nirvana, according to Dan Keidel, founder of Ravello Analytics in Waconia, Minn. His company has a tool for helping CIOs plan their data center and server strategies. He pointed out that server consolidation and amortization practices -- in which a machine might be kept for four years -- often neglect to take into account the cost of software licenses for messaging, database, storage and other applications directly under the control of the IT shop. Adding a server might give, say, 30 percent more capacity, but double the cost of software priced by the processor or core. Sometimes the numbers mitigate towards buying a replacement server at more dollars sooner because that outlay will be more than offset by avoided software costs.

  The math can get complicated, and there are too many variables to describe here, but consolidation, virtualization and data center upgrades take a lot more reckoning than even many experienced CIOs realize, Keidel said. And, he said, it's possible for high software licenses costs to chase an organization into the cloud.

  There is no easy solution to infrastructure costs, but they will be under pressure in coming years as federal discretionary belt-tightening takes hold.

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