Draft__EFI_Problem_Statement_(Redacted)_20161213.docx

United States Army Deputy Assistant Secretary of the Army (Financial Information Management)

Army Enhanced Financial Integration

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Problem Statement Signature

The undersigned concur that this requirement is valid and aligns to current strategies and mission object ives.

Functional Sponsor: Date:

Digitally signed by MORGAN.ANDREW.SCOTT .1050458020MORGAN ANDREW

· • DN:c=US, o;U.S.Government, ou=DoD, ou=PKI, SCOTT.1050458020 = GAN.ANDREW.5COTT1050458020

Date:2016.11.03 09:04:15 -04'00'

Andrew S. Morgan Deputy Ass istant Secretary of the Army (Financial Information Management)

Precertification Authority (PCA): Date:

Mr. Patrick J . Murphy Under Secretary of the Army

Executive Summary

Problem Statement The Army GFEBS user community has identified a list of business needs that fall into three identified capability gaps: Financial Compliance and Accountability, Financial Reporting and Business Intelligence (BI), End-to-End Business Operations and Data Integrity. These GFEBS system gaps jeopardize the Army’s ability to maintain financial compliance, achieve auditable financial statements, and reduce the Army’s ability to maximize a return on its Enterprise Resource Planning (ERP) investments. Furthermore, these gaps reduce the Army’s visibility across business processes and impede the transition to a cost management culture, preventing a uniform approach towards financial management. The current list of identified business needs can be found in Appendix A of this document and is based on the Functional community’s current priority, cost and schedule and is subject to change due to new statutory/regulatory mandates and functional priorities.

Problem Description As the Army aggressively implements its portfolio and OEP (Organization Execution Plan) strategy, new capability gaps and opportunities for improved business operations are identified by Financial Management Domain portfolio gap analyses, the operational and support communities and oversight bodies such as the General Fund Enterprise Business System (GFEBS) Functional Governance Board (FGB). These gaps relate to annual statutory and regulatory mandates for audit and financial compliance needed to achieve full Army auditability of its $149 billion dollar budget including robust business intelligence capabilities. Business intelligence capabilities are required to drive improvements in business operations in procurement, financial ledgers, status of funds reporting, payroll usage, and enterprise inefficiencies.

Problem Scope The scope of this problem statement includes enterprise capability gaps spanning the Army’s activities in the areas of financial, logistics and real-property management within GFEBS.

Problem Solution The Army’s Enhanced Financial Integration (EFI) solution will require updates be made to GFEBS, the Army’s Asset and Accounting management ERP. The Army fully implemented GFEBS in 2012 and has not fielded a follow on increment to address gaps within the system’s functionality. The EFI solution will not require an extensive analysis of alternatives. Given that the identified work efforts that fall under the capability gaps all relate to existing or manual processes associated with GFEBS, the analysis of alternatives will consist of evaluating the option of enhancing/updating GFEBS or continue with the status quo.

Implementing the EFI solution will enable the Army to meet mandatory auditability and regulatory directives. Additionally, EFI will allow the Army to realize quantifiable financial benefits along with numerous non quantifiable benefits, such as moving the Army closer to auditability, complying with mandated data standards, and conducting critical business process reengineering. Calculating the Return on Investment (ROI) of these benefits is difficult, given the complexity of the ever changing regulatory and statutory requirement. However, these updates are critical to the success of the Army’s financial management needs.

The Army’s goal is to move to auditability by 2017 and given that the EFI solution has major audit implications, the solution will need to be implemented quickly. Based on the work efforts currently identified, the functional community estimates that it will take approximately 27 months to implement the proposed solution. A notional schedule is depicted below. The schedule is dependent on the availability and support of the Program Management Office assigned.

FY FY 16 FY 17 FY 18

Quarter

Q1 Q2 Q3 Q4 Q1

Q2 Q3 Q4 Q1 Q2 Q3 Q4

Release 1Enhanced Financial Integration

(EFI)

Go-Live

Release 2

Release 3

Release 4

The EFI solution implements business improvements capabilities that:

a) Strengthen financial management standards across the Army enterprise

b) Maximize information management and data analytics technology

c) Improve operational efficiencies across financial management and real property business operations

Section 1: DOTMLPF-P Capabilities

Background The General Fund Enterprise Business System (GFEBS) is the Army’s enterprise solution which provides financial accounting, real property management, cost management functions and business intelligence capabilities for the Army’s General Fund. GFEBS is an ERP web-enabled financial, asset and accounting management system that leverages industry best practices to automate, integrate, and standardize processes and data across the Army enterprise. GFEBS’ primary objectives include complying with statutory and regulatory accounting requirements; standardizing financial and business processes; and ensuring capabilities exist to meet future audit needs.

GFEBS’ capabilities enable Army decision-makers and managers to manage and execute the Army’s budget. GFEBS Increment I achieved full deployment in July 2012 and is operational at HQDA, 29 Army Commands, Army Service Component Commands and Direct Reporting Units. It was fielded in over 200 locations across 71 countries. To date, GFEBS has retired 48 Army legacy accounting, financial, and asset management systems. Increment I sustainment was funded in POM FY16-20.

Over 36,000 active users across 200 global locations rely on GFEBS to execute approximately 200,0001 transactions daily. In FY14, GFEBS processed approximately 66 million transactions including over $111B in obligations. GFEBS supports year end activities by balancing proprietary and budgetary accounts. In addition, GFEBS has successfully passed and responded to various audits/data requests sponsored by Department of Defense Inspector General (DoDIG) and Army Audit Agency (AAA).

As the Army continues to build upon the original objectives2 of GFEBS, the focus of this problem statement is to introduce the Army’s Enhanced Financial Integration capabilities to GFEBS. These capabilities enable improved stewardship, consolidate enterprise financial reporting and business intelligence and increase cost effectiveness of financial management operations.

Additionally, these new capabilities will further allow the Army to reduce its Information Technology portfolio costs by retiring legacy systems.

1 Wiltsie, Douglas K. "ERP Vision Guide: The Army’s ERP Future." FederalTimes.com 19 May, 2014. Web. 5 February 2015 2 The GFEBS Program’s original objects were as follows: Financial Accounting System, Cost Accounting System, Management Support System, Plant, Property & Equipment System

The Problem The Army is unable to maximize its return on ERP investments due to capability gaps in financial compliance and accountability, financial reporting and business intelligence, end-to-end business operations and data integrity:

· Financial Compliance & Accountability (Stewardship): Greatly improve financial stewardship through stronger internal controls enabled by compliant business systems and improvements to asset accountability and auditability for the Army’s $135M3 Property, Plant and Equipment assets.

· Financial Reporting and Business Intelligence: Create linkage between resources to business outcomes with detailed visibility into cost drivers aligned with the Army’s Planning, Programming, Budgeting and Execution (PPB&E) process.

· End-to-End Business Operations and Data Integrity: Resolve gaps in the Army’s end-to- end business processes leading to significant increases in business efficiencies and data integrity throughout its business operations.

Problem Description and Context As the Army aggressively implements its portfolio and Organization Execution Plan strategy, capability gaps and opportunities for improved business operations continue to be identified by the Army’s Financial Information Management Division portfolio gap analyses, business community and oversight bodies such as the GFEBS Functional Governance Board (FGB). These oversight bodies have identified a portfolio of critical business needs that fall under capability gaps that dramatically reduce the Army’s ability to maximize return on its ERP investments, enable full cost management leading to significant cost visibility of major Army business processes, or achieve greater efficiencies. A sampling of the identified business needs are described below. However, the complete, current list of business needs can be found in Appendix A. The list is based on the Functional community’s current priority, cost and schedule and is subject to change. The proposed Enhanced Financial Integration solution addresses the following gaps:

Financial Compliance & Asset Accountability (Stewardship):

Financial Compliance - The 2010 National Defense Authorization Act (NDAA) mandated the Department of Defense (DoD) be audit ready on all financial statements, by the end of 20174. To comply with the 2010 NDAA requirement, the Army’s portfolio of business systems must implement standard business processes and data standards as published by the DoD Comptroller and various federal entities. Additionally, lack of compliance leads to reduced interoperability between business systems, inaccurate financial reporting, and risk of not enabling strong internal controls that lead to improved accountability and transparency in financial operations.

3 U.S. Department of Defense, Department of the Army, Army Annual Financial Report, 2014), 31 Table 11 4 “2010 NDAA,” Defense Finance and Accounting Service, accessed March 17th, 2015, http://www.dfas.mil/pressroom/Audit- Readiness/Audit-Readiness-Timeline.html

GFEBS is required to comply with many data standards, including the following:

Financial Data Standards - Currently, GFEBS is enhancing existing DoD Standard Financial Information Structure (SFIS) capabilities to achieve SFIS 10 compliance. SFIS 10 updates have required significant support from government and systems integrator resources across a nine- month time span, consuming a majority of GFEBS annual funding and resource capacity. Most importantly, SFIS updates will continue to be passed along from OSD, requiring additional customization to GFEBS.

Real Property Data Standards – The Real Property Information Model (RPIM), published annually, requires compliance from all DoD systems which maintain Real Property information. Similar to SFIS 10 updates, annual RPIM updates vary in complexity and overall impact to GFEBS. The Army must continue to account and plan for future mandatory RPIM updates in GFEBS in order to meet the DoD requirement of having mission- critical assets validated as audit-ready for existence and completeness.

Asset Accountability (Stewardship) - In addition to maintaining compliant business systems, the Army’s Enhanced Financial Integration solution will address current asset accountability shortfall by further enhancing integration with Real Property systems such as Real Estate Management Information System (REMIS), Rental Facility Management Information System (RFMIS) and Planning Resource Infrastructure Development and Evaluation (PRIDE). Currently, REMIS, RFMIS and PRIDE data is stagnant within GFEBS, which prevents accurate depreciation and comprehensive reporting. By establishing integration with REMIS, RFMIS and PRIDE, GFEBS enable the following activities:

· Depreciation according to DoD standards

· Comprehensive reporting

· Data integrity

Addressing the current gaps with real property assets and associated work management functions (plant maintenance and project systems) will increase the Army's ability to have strong internal controls over the real property inventory, allow for the capture of costs associated with facility sustainment and minor construction, and have proper processes and procedures in place to properly capture the inventory and financial impacts of real property assets.

Financial Reporting & Business Intelligence:

With GFEBS’ operations at over 200 sites and 36,000 active users, GFEBS processes 200,000 daily transactions and now contains over two years of data. This growth in transactional data required the establishment of a data warehouse Business Intelligence (BI) tool within GFEBS. The data warehousing tool provides the technical infrastructure to gather and store large sets of enterprise data, allowing the Army to optimize business processes and reporting needs to support Department wide reporting.

Currently, the existing GFEBS BI solution provides Army personnel (Army Resource Managers, Real Property Accountable Officers, etc.) with basic queries and/or reports to support day to day activities. However, the current GFEBS BI infrastructure is plagued by technical constraints, preventing Army leaders from making timely and informed decisions. The GFEBS BI solution requires enhancements to mitigate the following issues:

· Excessive query run times

· Excessive BI load and reload times

· Excessive backup times

· Risk of data loss

In addition, the Army recognizes a need for additional reporting capabilities to make more informed business decisions. Specific gaps in reporting capabilities include:

· Inability to support BI analytics from Army Commands prevents informed business decisions (e.g., costing analytics for Base Operations).

· Financial reporting at lower echelons related to real-time status of funds reporting.

· Data analytics needed to support real property analysis for financial auditability.

· Lack of centralized historical data to support Departmental requirements and inquiries (e.g. Joint Review Program)

· Detailed product and service costing information

Army’s Enhanced Financial Integration Solution will increase financial visibility and transparency across the Army by enhancing GFEBS’ BI capabilities, which will provide the following:

· Transparent financial data throughout the enterprise

· Consolidated authoritative financial data sources

· Linkage of resources to business outcomes

· Integration with Army and Defense-wide enterprise data analytic solutions

End-to-End Business Operations and Data Integrity While GEFBS has replaced the financial operations of 48 Army legacy systems, many legacy financial business processes are still in use today. This problem statement addresses those legacy processes and systems by re-engineering existing processes to fully leverage GFEBS ERP capabilities. Specifically, the Army’s strategy is to reduce the overall number of middleware systems by centralizing financial processing in GFEBS, which improves interoperability across the financial management domain. The Army’s Enhanced Financial Integration solution also eliminates manual processes by leveraging SAP capabilities to automate these transactions.

Several examples include:

· Intra-governmental Transactions: Currently, intra-governmental transactions require manual processing by DFAS, prior to submission to the Department of the Treasury. To streamline this process and maintain data integrity, the Army must extend GFEBS capabilities by implementing SAP’s Treasury Direct functionality which provides direct automated integration between GFEBS and Treasury for intra-governmental transaction processing.

· Travel Finance Integration: In 2011, GFEBS introduced a Mass Obligation Upload Tool to support the creation of travel obligations. While the upload tool is used throughout the Army, it does not allow change capabilities for existing obligations and the Army is unable to reconcile travel events (in Defense Travel System) to specific financial transactions, resulting in Unmatched Transactions (UMT). This manual process results in approximately 28,000 Travel UMTs which require 30 minutes to 1 hour per transaction to resolve.

· Contractual Obligation Posting: Currently, the design of the GFEBS Inbound Purchase Order (contract award) interface with the Standard Procurement System (SPS) is limited to GFEBS funded awards. This limitation causes inbound records to fail, requiring time- consuming manual efforts for research and the manual posting of the obligation/contract. Currently, GFEBS experiences over 1,300 SPS record failures per week and over 5,000 record failures during year-end close. SPS record failures require anywhere from 30 minutes to 3 hours of research and coordination between Resource Managers and Contracting Specialists to resolve. By enhancing the GFEBS-SPS interface, the Army will save time and money in error-research, reduce manual intervention and more accurately reflect the Army’s financial position.

· Currently, 57,000 cost centers are used to manage costs across the Army. With deployments and/or organizational changes, cost centers require frequent re-alignment to stay current. Currently the GFEBS end users responsible for cost center management do not have the ability to mass change various cost centers. Users are forced to manually update individual cost centers which involves significant processing time and is prone to manual errors.

DOTMLPF-P Analysis The capability gaps described above demonstrate that Army demands have outpaced GFEBS Increment I capabilities. This is the result of dramatically increased end user requirements, growth in transactional volume and additional DoD-imposed regulatory requirements.

Following is a description of the DOTMLPF-P constraints affecting existing financial management capabilities.

Table 1. DOTMLPF-P Constraints

· Adoption of standards can be slow due to availability of funding

· Processes span multiple organizational boundaries creating governance challenges

· GFEBS is currently deployed to over 200 locations world-wide

· Overlapping capabilities

· 5,000+ financial and personnel specialists produced integrated budget and manpower estimates and reconciliation annually creating opportunities for error

· HQDA personnel lack enterprise capabilities needed to maximize the use of modern analytical toolsets thus leading to the acquisition of contractor services

· 36,000 active users of GFEBS identify new capabilities as they become more comfortable with system

Section 2: Legal, Regulatory and Policy (LRP) Requirements

This problem statement addresses specific financial regulatory requirements and Army policy standards. Additionally, there are two overarching Acts that have been addressed in the original Full Operational Capability: (1) The Federal Financial Managers' Improvement Act (FFMIA) of 1996, and (2), the Chief Financial Officers (CFO) Act of 1990.

Table 2. Legal, Regulatory and Policy (LRP) Requirements

Regulatory Chief Financial Officers (CFO) Act of 1990, GFEBS improves the general and financial management practices of the Army’s environmental liabilities reporting.

Regulatory Requirement to assert to the Business Enterprise Architecture outlined in the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 Sec. 332

§§ 3541-3549.

Policy DoD Standard Financial Information Structure (SFIS) capabilities to achieve SFIS 9.0 compliance. (GFEBS is 97% compliant according to results from a 09/27/2012 DOD DCMO Audit)

Policy Real Property Information Model (RPIM) requirement for DoD systems to maintain Real Property information structure. (GFEBS is 100% compliant with RPIM 8.0)

Section 3: Performance Measures/Attributes

The focus of this problem statement is the use of business process reengineering (BPR) efforts to optimize current financial management business operations and to reach DoD strategic goal 5: Reform and Reshape the Defense Institution. In order to reach this goal, the EFI solution will work towards the following strategic objectives by tracking the performance indicators below.

Table 3. High Level Performance Measures

5.2 Improve financial processes, controls, and information via audit readiness.

5.2 (1) Percent of DoD mission- critical assets (Real Property, Military Equipment, General Equipment, Operating Materials and Supplies, and Inventory balances) validated as audit-ready for existence and completeness.

83.1%

5.2 Improve financial processes, controls, and information via audit readiness.

5.2 (2) Percent of DoDs general funds Statement of Budgetary Activity for material Components validated as audit-ready.

99%

Section 4: Enterprise Architecture Analysis

Representatives from the Office of the Deputy Assistant Secretary of the Army - Financial Integration Management (ODASA-FIM) conducted an enterprise architecture analysis in fiscal year 2015. The representatives analyzed the business needs/work efforts identified in Appendix A, that fall under the identified EFI capability gaps: Financial Compliance & Asset Accountability (Stewardship), Financial Reporting and Business Intelligence and Business Operations Efficiencies. All of the work efforts were sourced from the user community and were reviewed and approved by the FGB.

The team aligned each work effort with the GFEBS Program’s Operational Activities (OA) (sourced from the Army’s Single Army Financial Enterprise and/or the DFAS BlueBook) and the DoD DCMO’s End-to-End (E2E) business processes. The OA to E2E alignment required initial alignment of the OA’s to E2E process steps, with subsequent validation of process steps to overarching business processes.

In doing so, the ODASA-FIM representatives reviewed the current state and desired future state of the various EFI-related work efforts and determined the impacts of the requested changes on the current established processes. Table 4 shows the alignment of capability gaps to the DoD DCMO defined E2E processes.

Table 4. Enterprise Architecture Analysis

End-to-End Business Operations and Data Integrity

Record Collections Confirm and Follow-up on Payments

Execute Payments Schedule Payment for Disbursement Accounts Payable Reporting

Execute Disbursement Procure-to-Pay (P2P)

& Liabilities Budget-to-Report (B2R)

Financial Reporting & Business Intelligence

Financial Reporting Cost Monitoring/Reporting Revenue and Accounts Receivable Reporting Funds Control and Budgetary Reporting Accounts Payable Reporting Property, Plant, & Equipment Reporting Inventory Reporting

Reporting

Budget-to-Report

Section 5: Business Process Models to Support Business Process Re-engineering (BPR) Assertions

The ODASA-FIM team also reviewed the work efforts identified by the GFEBS user community and documented in Appendix A and when applicable, re-engineered the existing processes. The focus of the re-engineering efforts was to begin to optimize current financial management business operations. These work efforts span the Army’s financial management responsibilities and will require a thorough Blueprinting phase. The table below depicts the initial re- engineering effort conducted to support the High Level Business Outcomes.

Table 5. Business Process Re-engineering (BPR) Aligned to High Level Business Outcomes

GoArmyEd Integration & Composite Rate Pricing

Also moves the Army closer to fully leveraging the investment in GFEBS.

Legacy System Retirement Automation/Data Integrity

ENBOSS supports 205,000 Army Reserve soldiers located in 3,600 facilities worldwide providing integrated automated business applications for military construction, facilities operations and maintenance, real property/real estate, and environmental stewardship. ENBOSS combines the use of GOTS and COTS to provide a single portal of base operations tools for the Army Reserve.

ENBOSS is considered a system; that is, a combination of hardware and software solution with a user interface.

By integrating directly with Treasury IPAC GFEBS will increase data integrity and reduce IT costs by bypassing legacy IPAC systems.

Legacy System Retirement Automation/Data Integrity

GFEBS PIR: IPPS-A

Integration

-Reduction of query times -Increase data limitation -Decrease of load time

Section 6: DOTMLPF-P Implementation Plan, to Include Anticipated Return-on-Investment (RoI)

The Enhanced Financial Integration solution is required to continue to improve GFEBS and meet the user’s requirements. Implementing EFI will help close the gap in end-to-end business operations and data integrity, financial compliance and Asset accountability and financial reporting and business intelligence

DOTMLPF-P Analysis The team evaluated the proposed solutions identified to close the capability gaps and performed a DOTMLPF-P analysis. Below is a table that shows the DOTMLPF-P impacts of the “to-be” state.

Table 6. DOTMLPF-P Impacts, “To-Be” State

· Solution achieves compliance with Laws, Regulations and Policy

· Solution supports doctrinal goals of audit readiness

· 5,000+ financial specialists operate in an optimized financial management environment producing accurate and financial data for decision-making

· HQDA personnel leverage enterprise analytics needed to provide visibility into financial management operations

Return on Investment (ROI) The Army expects to realize its return on investment by automating various manual transactions, retiring legacy systems, and implementing newly developed standard SAP capabilities. Doing so will enable the Army to close the identified capability gaps in financial compliance and accountability, financial reporting and business intelligence (BI), end-to-end business operations, and data integrity.

Addressing the work efforts enclosed in Appendix A, will close the capability gaps identified in this problem statement. It will also allow the Army to not only realize quantifiable financial benefits but numerous non quantifiable benefits; such as moving the Army closer to auditability, complying with mandated data standards, and critical business process reengineering. The ODASA-FIM team used DASA-CE’s 8 step Cost Benefit Analysis to identify the benefits. The team found that the work efforts that resulted in non-quantifiable benefits reduced redundancy, moved the Army closer to organizational goals/objectives and eased the GFEBS user experience. These benefits are not easily measured, but are critical to the success of the Army’s financial management.

For the efforts that do produce quantifiable benefits, the team performed an economic assessment utilizing the DoD Economic Viability tool. The results indicated that the Army will realize a return on investment 4 years after Full Operational Capability (FOC). Below is a chart that depicts the costs versus the benefits of those work efforts that produce quantifiable benefits.

Table 7. Cost vs. Benefit

0,000, 0,000, 0,000, 000.0

000.0 000.0 000.0 000.0 000.0 $0.0 000.0 000.0

00)

00) Program Cost

Reduction of Status Quo 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 + $12

$10

$8

$6

$4

$2 ($2

($4

Implementation Plan The identified work efforts identified to date have many audit implications. In order for the Army to meet its goal of auditability by 2017, the solutions will need to be implemented quickly. The timeline is dependent upon the PMO assigned resource availability, system integrator development contract and funding.

Business Case Analysis The Army’s Enhanced Financial Integration solution does not require an extensive analysis of alternatives. Given that the identified work efforts that fall under the capability gaps all relate to existing or manual processes associated with GFEBS, the analysis of alternatives will consist of evaluating the option of enhancing/updating GFEBS or continue with the status quo.

Section 8: Link to Out-of-Cycle (OOC) Requests or Other Investment(s)

Not Applicable.

This problem statement will support a development/modernization request for the General Funds Enterprise Business System (GFEBS) in FY18 certification.

Appendix A

Currently Identified Business Need/Work Effort*

Resulting Capability Gap SMP/DoD Performance Measure Indicator