Cost culture brief for USA

AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY M Anvari Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari THE STRENGTH OF THE NATION Financial and Performance Assessment Financial and Performance Assessment Enterprise Wide Performance Results Enterprise Wide Performance Results Executive Comptroller Course Executive Comptroller Course Syracuse University Syracuse University Wednesday, June 15, 2016 Wednesday, June 15, 2016 10:30 AM-12:00 PM 10:30 AM-12:00 PM Mort Anvari Mort Anvari Director, Programs and Strategy Director, Programs and Strategy US Army, ASA(FM&C) US Army, ASA(FM&C) http://www.anvari.net/ http://www.anvari.net/ http://s1093575.instanturl.net/anvari.net/ http://s1093575.instanturl.net/anvari.net/ AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY Agenda Agenda M Anvari Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari THE STRENGTH OF THE NATION • • • • Evolution of Army Cost Management Cost Management Direction and Guidance Linking Outcomes to Costs – the Cost Management Framework Enterprise Cost Management Initiatives: – – • • Cost of Training Readiness (COTR) Installation Management Data Integrity Program (IMDIP) People are Our Most Important Resource - Cost Management Training What’s Hot for the Army Analytics in 2016? AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY M Anvari Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari THE STRENGTH OF THE NATION Evolution of Cost Management Evolution of Cost Management AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY M Anvari • Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari THE STRENGTH OF THE NATION • • • Historical & Current Situation Historical & Current Situation Costs are typically tracked vertically either by organization level and then by commodity (examples: Civilian labor at AMC HQ, Fuel at the 101st CAB, travel costs at ATEC) OR by key line of accounting o Fund (APPN, FY, Base/Supplemental); Command; SAG/APE; and MDEP The costs for “horizontal” Army processes are typically not tracked, particularly those that cross organizational boundaries, yet processes are how the Army accomplishes its primary Title 10 missions— training, equipping, recruiting, acquiring, maintaining, etc The full fielding of the General Fund Enterprise Business System (GFEBS) provides unprecedented capability to better determine Army costs Budget constraints place a greater emphasis on better informed decision making AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY M Anvari Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari THE STRENGTH OF THE NATION Cost Management DIRACTION AND GUIDANCE Cost Management DIRACTION AND GUIDANCE AMERICA’S ARMY Army Directive 2016-16 THE STRENGTH OF THE NATION AMERICA’S ARMY THE STRENGTH OF THE NATION Changing Management Behavior: M Anvari Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari Every Dollar Counts On 15 Apr 16, SecArmy directed: Army commanders and leaders at 2Star HQ level and above will:  Establish & track annual performance measures…focus on the highest level of readiness with the greatest efficiency;  Tie resources expenditures (costs) to outcomes and levels of readiness;  Identify and manage total costs;  Eliminate ‘use or lose’ funding practices;  Reward leaders & organizations who demonstrate exemplary stewardship & innovative ideas Can Can we we focus focus the the energy energy of of this this directive directive to to advance advance the the Army Army toward toward a a “cost “cost culture”?  culture”?  AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY THE STRENGTH OF THE NATION Strategic Environment M Anvari M Anvari Driving Change in Army FM Enterprise Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency AFMO Campaign Plan AFMO AFMO Objectives Objectives LOE LOE1: 1: Systems SystemsDomain Domain LOE LOE22:: Business BusinessProcesses Processes AFMO AFMO End End State State An An integrated integrated effective effective and and efficient efficient end-to-end end-to-end financial financial (1) (1) Achieve Achieve and and Sustain Sustain Auditability Auditability management management enterprise enterprise operation, operation, optimized optimized to to provide provide necessary necessary resources resources to to meet meet the the Army’s Army’s missions missions with with LOE LOE3: 3: Organizations Organizations (2) (2) Deliver Deliver FM FM Operations Operations Efficiently Efficiently and and proper proper stewardship stewardship and and accountability accountability of of resources resources and and Effectively Effectively providing providing accurate accurate and and timely timely financial financial information information and and analysis analysis for for actionable actionable decision decision making making that that will will receive receive LOE LOE4: 4: FM FMProfessional ProfessionalWorkforce Workforce (3) (3) Improve Improve and and Sustain Sustain Readiness Readiness in in FM FM LOE LOE55:: Internal InternalControls ControlsEnvironment Environment LOE LOE 6: 6: Army Cost Management LOE LOE7: 7: Strategic StrategicManagement Management aa favorable favorable Financial Financial Statement Statement clean clean audit audit opinion opinion Elements Elements (4) (4) Provide Provide Financial Financial Information Information and and Business Business Analytic Analytic Support Support for for Improved Improved Decision Decision Making Making &&Communications Communications AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY THE STRENGTH OF THE NATION Army Cost Management (CM) is working Army Cost Management (CM) is working M Anvari M Anvari People People l deel Mood ssss M e c roce PPro CCM M Leadership Leadership Commitment Commitment Training Training FM FM Workforce Workforce (AFMO) (AFMO) Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency Technology Technology Data Data Quality Quality (ERP (ERP Cost Cost Data, Data, Performance Performance Metrics) Metrics) Tools Tools & & Models Models ((Analytics, Analytics, BI BI)) Process Process Cost Cost Planning Planning (Cost (Cost Estimates, Estimates, … ) … ) Cost Cost Analysis Analysis (CBA, (CBA, AoA, AoA, ….) ….) Cost Cost Integration Integration to to Requirement, Requirement, Acquisition Acquisition & & Resource Resource Cost Cost Control Control (LSS, (LSS, AFBRT, AFBRT, … ) … ) Training Training CCM M M Ma attu urrit ityy M Mo odde ell CM CM Goal: Goal: Better Better Value Value for for Lower Lower Cost Cost • • • • • Stewardship Stewardship of of nation’s nation’s resources resources Cost Cost informed informed decision decision making making Data Data Quality Quality Continuous Continuous improvement improvement Accountability Accountability for for costs costs Cost Cost Analysis Analysis Tracking Tracking progress progress AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY M Anvari Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari THE STRENGTH OF THE NATION Army Financial Transparency Army Financial Transparency Challenges Challenges • • • • DOD DOD Audit Audit Readiness Readiness Visibility Visibility into into Cost Cost and and Spending Spending Meaningful Meaningful Business Business Analytics Analytics for for Decision Decision Making Making Financial Financial System System Interface Interface Errors Errors and and Rework Rework Opportunity Opportunity • Army Army Cost Cost Data Data Capture Capture Strategy Strategy and and CM CM Progress Progress • • • • • • Cost Cost Culture Culture and and Cost Cost Management Management (CM) (CM) Initiatives Initiatives Army Army General General Fund Fund Enterprise Enterprise Business Business System System (GFEBS) (GFEBS) Addressing Addressing Financial Financial Material Material Weaknesses Weaknesses LSS LSS Army Army Financial Financial Benefits Benefits Reporting Reporting and and Tracking Tracking (AFBRT) (AFBRT) Army Army CM CM Steering Steering Group Group Army Army Financial Financial Management Management Optimization Optimization (AFMO) (AFMO) AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY Cost Management Data Capture Strategy Cost Management Data Capture Strategy M Anvari  Improve data quality and cost data visualization tools for decision making  Improve data quality and cost data visualization tools for decision making Incorporate rigorous Cost Management in funding decision to reduce future cost risk  Incorporate rigorous Cost Management in funding decision to reduce future cost risk Plan for capture of execution data in support of CM and PPBE processes  Plan for capture of execution data in support of CM and PPBE processes Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari THE STRENGTH OF THE NATION Cost Management Steering Group (CMSG) CostPrioritized, Management Steering (CMSG) Aligned, andGroup Optimized Cost Data Prioritized, Aligned, andCapture Optimized Cost Data Capture Integrate Cost Management into PPBE and Core Integrate Cost Management End-to-End processes into PPBE and Core End-to-End processes 10 AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY High Level CM Training Strategy M Anvari High Level Strategy: • Train analysts and leaders in key decision making positions (What does “right” look like?) Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari THE STRENGTH OF THE NATION • Integrate Army CM policy into Army’s CM/RM Career Training Programs (What does “Army right” look like?) https://acm.army.mil •   Recognize CM Excellence: • • CM integrated in decision forums Cost Managed Organization 40 AMERICA’S ARMY Cost Management Training & Education THE STRENGTH OF THE NATION AMERICA’S ARMY Graduate Level Education M Anvari M Anvari THE STRENGTH OF THE NATION Army Training at the University of South Carolina at Army Financial Management School Principles of Cost Accounting & Mgmt TERP10 week Weeks understanding of SAP * Provide better understanding of Army interrelated ERP systems Intermediate Cost Accounting & Mgmt * Fundamentals of Cost Accounting * Practical Exercises 12 * Credits count towards USC MBA * Army sustainers gain an operational level Weeks * Cost Flow Methods * Analysis and Reporting * Practical Exercises * Complex Case Studies * Decision Support (GFEBS, GCSS-A, IPPS-A) Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency * Cost Terms * Cost Concepts Business Analytics Course Week 12 at Command General Staff College *Provides analytic training that never before existed within the Army * Leverages untapped capabilities within GFEBS/Business Intelligence environment *CPE credits for Making CDFM, and FM Certification Program CMCC Week Financial Based Decision TBD * CGSS willing to offer future elective * Cost Management and/or CBA focus *Class in Development with DASA-CE/OBT 12 * FM Professionals receive industry best practices in business/ finance * Fulfills Cost Benefit Analysis Training requirement for DoD Certification Program and CDFM at PDI Command Sponsored Certification CBA Training for Analysts CBA Training for Managers & locally offered Cost Management Basics Course weeks Execs hour * Analyst focused familiarization course *FM Certification Program hour * Management focused familiarization course *FM Certification Program * Certification Focused Training with using existing training: CBA Fam, LSS Green Belt, on-line DL, week in class local and CE trainers Day CBA Course 4.5 Days * Case based course leveraging HQDA lessons learned * HQDA certified trainers and CE trainers * Analytically focused methodologies https://acm.army.mil   41 AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY M Anvari Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari THE STRENGTH OF THE NATION What’s Hot for the Army Analytics in 2016? What’s Hot for the Army Analytics in 2016? 42 AMERICA’S ARMY Financial Management & AMERICA’S ARMY Financial Management & Performance Assessment (FPA) Opportunity Performance Assessment (FPA) Opportunity (Start in the Middle) THE STRENGTH OF THE NATION THE STRENGTH OF THE NATION M Anvari Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari tart in the Middle) AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY FPA Concept FPA Concept THE STRENGTH OF THE NATION M Anvari What questions are decision makers asking Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari Decision Makers Span of Control & Influence (SC&I) regarding resources & performance? C ustomer Reports Dash Boards Maturity Models What knowledge is required to make resources Analysis O & performance decisions? How organizations correlate resources to DECISIONS Which systems provide financial & KNOWLEDGE performance data? DATA SOURCES, FILE SYSTEMS, dB’s UNSTRUCTURED DATA Which processes generate the financial & performance data? P Correlate performance? INFORMATION ERP SYSTEMS I utput rocess nput S upplier 44 AMERICA’S ARMY Improve Financial Management Improve Financial Management and Performance Assessment (FPA) and Performance Assessment (FPA) THE STRENGTH OF THE NATION AMERICA’S ARMY THE STRENGTH OF THE NATION Strategic Strategic Alignment Alignment:: Concept Initiatives M Anvari Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari Timeline/Milestones • • • • Data Capture Strategy Development • FM and PM Correlation Cost of Training Cost of Recruiting Oct 2014 – Aug 2015 Financial Management & Performance Assessment (FPA) Model • • • SAG 432 Improve OP-5 project Build PM architecture SD SD 3, 3, SA SA 6, 6, FMC FMC 1, 1, 2, 2, 4 Implementation • • • Improve all SAG Design dashboards based on SAG FPA Implement FPA to support Resource Informed Decision Making (RIDM) Realization • • • • Integrate FPA into PPBE process CPI SAG OP-5 process Expand RIDM model to Enterprise Manage and evolve Cost of Logistics Readiness Sept 2015 – Dec 2015 Jan 2016 – Sept 2016 Sept 2016 – 2017 Goal: To develop a repeatable and scalable process to correlate financial resources to performance measures that align with readiness and effectively measure outcomes throughout the Army Enterprise that aligns with the overall Defense Strategy Initiatives: FM&C has actively been working Cost Management, Performance Management, Cost of Training and Cost of Recruiting initiatives to enable improved Resource Informed Decision Making across the Army Enterprise Next Steps: • Utilize the Justification Books to define Performance Criteria and Evaluation Summaries to set FPA measures, align with Title 10 Functions and E2E Processes • • • • • Complete a proof-of-concept project to improve the OP-5 report for SAG 432 for O&M Begin addressing Cost of Logistics Readiness Replicate best practices from SAG 432 project to all SAGs and all appropriation J-Books Develop a FPA architecture to design strategically relevant and aligned dashboards for Enterprise wide RIDM Integrate FPA into PPBE process, POM development and budget formulation process for optimized financial execution 45 AMERICA’S ARMY Financial and Performance Assessment (FPA) Financial and Performance Assessment (FPA) Align to Title 10 Functions Align to Title 10 Functions THE STRENGTH OF THE NATION AMERICA’S ARMY M Anvari M Anvari THE STRENGTH OF THE NATION TITLE 10 FUNCTIONS (1) Recruiting Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency (2) Organizing (3) Supplying (4) Equipping (5) Training (6) Servicing (7) Mobilizing (8) Demobilizing (9) Administering (10) Maintaining Which Title 10 function best describes the mission? (11) Construction-E Identify the span of control and influence your organization has on that function? (12) Construction-B What performance measures are needed to show the organization is meeting the Title 10 requirements? What data sources are available or need to be discovered that will reflect resource execution? Which process are utilized to deliver products and services that meet Title 10 deliverables ? 46 AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY Financial and Performance Assessment (FPA) Financial and Performance Assessment (FPA) Align to E2E Processes Align to E2E Processes ARMY End-to-End Processes M Anvari M Anvari THE STRENGTH OF THE NATION Procure-to-Pay (P2P) Order-to-Cash (O2C) Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency Budget-to-Report (B2R) Cost Management (CM) Acquire-to-Retire (A2R) Hire-to-Retire (H2R) Deploy-to-Redeploy/Retrograde (D2RR) Concept-to-Product (C2P) Environmental Liabilities (EL) Service Request-to-Resolution (SR2R) Plan-to-Stock (P2S) Market-to-Prospect (M2P) Identify Span of Control and Influence along an E2E process.? Prospect-to-Order (P2O) What decisions will be made that require information and financial resources? Service-to-Satisfaction (S2S) Proposal-to-Reward (P2R) What performance measures are needed and what BI is required for dashboards? What systems and data will provide the data for resource informed decision making? 47 AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY THE STRENGTH OF THE NATION FPA Branding FPA Branding Resource Informed Decision Making with Analytics, Insights, and Results M Anvari M Anvari FPA: providing methods, products and services that optimize the correlation of financial resources to performance measures to Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency FPA is an organization that is agile in financial and performance data analysis, integration strategies for enterprise insights, and reduce the Army’s PPBE decision risk over time The FPA directorate will provide Methodologies, Products & Services that: • • • • • Support Support subject subject matter matter experts experts to to understand understand the the domain domain of of the the problem problem to to help help navigate navigate the the analysis analysis Economic Economic analysis analysis & & PPBE PPBE Facilitate the understanding of existing or new data sources needed to derive useful information from data Provide consultation on developing themes on which data must be mined to provide direction to explore with analytics Enable the generation of questions under themes by which to apply analytics and gain insights Provide rapid results or manage an embedded and recurring capability for long-term requirements 48 AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY M Anvari FPA: Networked, Enterprise FPA: Networked, Enterprise Resource Informed Decision Making Resource Informed Decision Making Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari THE STRENGTH OF THE NATION 49 AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY M Anvari Land Forces Depot Maintenance Land Forces Depot Maintenance FPA Application FPA Application Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari THE STRENGTH OF THE NATION 50 AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY FPA: Data Analytics Priority Shift Diagram FPA: Data Analytics Priority Shift Diagram M Anvari Priority Shift Diagram Standardized Reporting Trend Analysis Data Visualization Priority Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari THE STRENGTH OF THE NATION Today Future 1 2 3 Data Visualization Simulations and Scenario Business Process Analytics Simulations Mathematical and Scenario Optimization Business Standardized Process Analytics Mathematical Optimization Reporting Trend Analysis 51 AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY Table of Acronyms Table of Acronyms M Anvari Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari THE STRENGTH OF THE NATION ABO Army Budget Office F&PM AC Active Component FCM Funds Control Module PCS Permanent Change of Station AG Adjutant General FFM Financial Flow Management POS Point of Service AR Army Reserve FIM Financial Information Management PPBE Programming, Planning, Budgeting, & Execution FM Financial Management AESIP Army Enterprise Systems Integration Program AFMIS Army Food Management Information System AFMO Army Financial Management Optimization AFMS Army Financial Management School AFQT Armed Forces Qualification Test APE Army Program Element APM Acquisition & Procurement Management APPN Appropriation AMRG Army Marketing Research Group ARNG Army National Guard ASVAB Armed Services Vocational Aptitude Battery FM&C Financial Management & Comptroller FMSOC Financial Management Support Operations Center FO Global Combat Support System-Army GFEBS General Fund Enterprise Business System GFM-DI HM HQDA HRM IDES IMCOM Budget Activity Group IMT BI Business Intelligence IPSS-A CE CM CMD  Base Operations Support LMP Global Force Management Data Initiative Healthcare Management DASA-FO Deputy Assistant Secretary of the Army for Financial Operations dB's Databases DFAC Dining Facility DFAS Defense Finance & Accounting Services DHP Defense Health Program DLA Resource Services Washington (Operating Agency22) Service Oriented Architecture Special Operations Forces Integrated Personnel and Pay System-Army SRB Selective Reenlistment Bonus Logistics Modernization Program Management Decision Package Deputy Asst Secretary of the Army for Financial Information Management Real Property Management RSW (OA22) SOF MDEP DASA-FIM Reserve Officers Training Corps RPM Initial Military Training Command Line of Effort MEDCOM Medical Command MEPCOM Military Entrance Processing Command MOS Resource Informed Decision Making ROTC Strategic Management System U.S Army Installation Management Command Manpower & Reserve Affairs Deputy Assistant Secretary of the Army for Cost & Economics Reserve Component RIDM SOA Integrated Disability Evaluation System M&RA Critical Skills Retention Bonus Results Based Management Span of Control & Influence Cost Management CSRB RC Program Optimization and Budget Evaluation SMS Human Resource Management Logistics & Supply Chain Management Customers, Outputs, Process, Inputs, Suppliers RBM Sub Activity Group LOE COPIS PROBE Office of the Judge Advocate General SC&I Headquarters Department of the Army LSCM Continental United States OTJAG SAG Cost & Economics CONUS DASA-CE Financial Operations GCSS-A BAG BOS Financial & Performance Management Military Occupation Specialties MP Military Police MPA Military Pay Army NGB National Guard Bureau O&M Operations & Maintenance OA Operating Agency OCS Officer Candidate School OBT Office of Business Transformation Defense Logistics Agency OLAP Online Analytical Processing DSS Decision Support System OMA Operation and Maintenance ERP Enterprise Resource Planning OPA Other Procurement Army ESB Enterprise Service Bus OPR Official Party Responsible ETL Extract, Transform, Load OSD Office of the Secretary of Defense STORES TF TRADOC TTHS UIC USACE USAFMCOM Subsistence Total Order and Receipt Electronic System Task Force Training & Doctrine Command Trainees, Transients, Holdees, & Students Unit Identification Code United States Army Corps of Engineers United States Army Financial Management Command USAREC United States Army Recruiting Command USASOC United States Army Special Operations Command USMA USMEPCOM United States Military Academy United States Military Entrance Processing Command 52 AMERICA’S ARMY THE STRENGTH OF THE NATION AMERICA’S ARMY THE STRENGTH OF THE NATION M Anvari Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari Key Takeaways • Cost Management = Good Stewardship • We are learning how to harness our data to work for us • Help create the demand for CM - how we inform Army decisions will change the culture 53 Army Cost Management & Financial Transparency Army Cost Management & Financial Transparency M Anvari M Anvari THE STRENGTH OF THE NATION AMERICA’S ARMY AMERICA’S ARMY THE STRENGTH OF THE NATION Big Data ! Big Data ! 54 ... NATION Perform Perform Cost Cost Framework DevelopCost & Maintain Planning Planning Cost Framework Determine Cost Perform Cost Perform Perform Cost Cost Accounting Perform Cost Perform Cost Analysis... Army Cost Cost Position Position (LCCE) (LCCE) Cost Cost Models Models // Tools Tools ** FORCES FORCES Costing Costing Model Model ** Capability Capability Costing Costing Tool Tool Cost Cost... Models Formulation Formulation // Justification: Justification: Cost Cost Factors Factors ** TRM/OSMIS TRM/OSMIS ** OPTEMPO OPTEMPO Cost Cost Factors Factors ** FORCES FORCES Costing Costing