Copyright 2004 Northrop Grumman Corporation 0 November 10, 2004 Evolving to Network Centric Operations: ERP- An Approach to Enterprise Integration Presentation

Copyright 2004 Northrop Grumman Corporation

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November 10, 2004

Evolving to Network Centric Operations: ERP-An Approach to Enterprise Integration

Evolving to Network Centric Operations: ERP-An Approach to Enterprise Integration

Presentation For

The American Society of Military Comptrollers, Washington, D.C. Chapter

By: Rob Fitzgerald Executive Director Defense Programs


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Agenda

• Overview of the Federal ERP Market

• ERP Defines

• Why Enterprise Integration?

• The GIG-ES Paradigm

• DoD ERP Initiatives

• Life-Cycle Challenges

• ERP/EI Tenets and Success Factors


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The Department of Defense

• More than $1 trillion in assets

• Approximately 3.3 million employees

• A budget of $417 billion for fiscal year 2005

• The largest single business organization on the planet

• Total number of Pentagon systems is conservatively estimated at over 4,000 including at least

— 542 accounting and finance systems, 143 acquisition systems, 210 planning and budgeting systems, 665 human-resource systems, 565 logistics systems, and at least 3 systems for inventorying all these systems.

— In FY04 DoD spent $19 billion just to maintain and upgrade all of these systems - $5 billion on modernization alone. Only a handful are interoperable, and many of them rely on manual reentry of data between systems rather than electronic integration.

• Three elaborate attempts to transform its financial and business management processes since 1986 together costing at least $35 billion by some estimates.


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Federal ERP Market


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Top Departments Using ERP ($ millions)% of

Agency FY04 FY09 Total

OSD 651 946 12%

Army 412 586 7%

Air Force 405 643 7%

Navy 370 488 7%

Health & Human Services 341 490 6%

Homeland Security 292 440 5%

Veterans Affairs 286 425 5%

Agriculture 216 235 5%

Treasury 201 237 3%

Energy 187 257 3%

Source: INPUT


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Federal ERP Competitive View

Company Market Share

Computer Sciences Corporation 15%

Northrop Grumman Corporation 12%

Lockheed Martin Corporation 8%

Oracle Corporation 8%

Accenture 7%

Science Applications Intl Corp (SAIC) 6%

General Dynamics 5%

Electronic Data Systems Corp (EDS) 3%

IBM Corporation 2%

Computer & Hi-Tech Management Inc 2%


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ERP Defined

The term "ERP" stands for Enterprise Resource Planning. As illustrated, ERPs are popularly considered to be modern, integrative, technology-based solutions that permit organizations to replace:

— Disparate, legacy applications and stove-piped data; and

— Associated organizational inefficiencies that arise from the use of the disparate data and applications.


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Significant Impact to DoD which will require: Adoption of new processes and practices Changing the way business and missions are

accomplished Working across current organizational lines A major change in Service culture

A tool for horizontal integration A commercial, off-the-shelf (COTS) software product

An ERP Application IS

ERP Integrates

MaterialsManagement

Finance

TrainingQualifications

Reporting Workflow

Maintenance

Supply

Logistics

InstallationMgmt.

ForceManagement

ForcePlanning

Acquisition

Readiness Mission PlanningRetrograde Quality Assurance

HR


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Enterprise Resource Planning Hype Cycle

Source: Gartner Research


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ERP Packages only Mitigate part of the risk A total solution must seamlessly

integrate many additional components with the ERP suite IAW architectural and other technical guidelines, and mission and business requirements including:

• Enterprise services• Other COTS• Modernized legacy

Use of an ERP package largely takes software development out of the enterprise implementation – all the other challenges are still there with

some increased due to characteristics inherent in the ERP package

System Software

ERP Package

• Reuse• New development• Interfaces• ROI• Life-Cycle

Management


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Consider The Following ERP Statistics• 10% of ERP implementations succeed with full functionality• Cost overruns average 178%• Schedule overruns average 230%• Implementation functionality averages 41% of what was desired• Other findings include

— Robins-Gioia Survey 51% of respondents viewed their ERP implementation as unsuccessful 46% characterized their organizations as not understanding how to use the

system to improve the way they conducted business— 2001 Conference Board Survey

34% of respondents were very satisfied with what the got 40% of the projects failed to achieve their business case within one year of

going live

Source: Institute for Data Research, ERP Considerations, Fall 2002


ERP Life Cycle Challenges

Managing major ERP upgrades and their costs

Controlling total life cycle costs for ERP projects spanning multiple business units and instances

Retaining your expert ERP resourcesCost

Maintaining or gaining a competitive advantage

Reacting quickly to new demands for ERP enhancements, e.g., new processes, information, KPIs

Measuring and improving business benefits: ROI, time to benefit

Situational awareness and organizational “transparency”

Value

Maintaining performance, availability and continuity

Managing more-complex infrastructures

Dealing with vendor or product uncertainty

Upgrade forces architecture change

Risk


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The Challenge: How to Achieve “Transparency”• DoD ERP COTS examples

— Navy 4 ERP pilots: aviation supply/maintenance, ship regional maintenance, working capital fund finance and aviation program

management (SAP) Inventory management (Lawson) NAVAIR MRP II (Western Data)

— Army Army Wholesale logistics Modernization (SAP) GCCS-A (SAP) Rock Island Arsenal MRP II (CINCOM) GFEBS (TBD)

— USAF ECSS (TBD) PSDS (TBD)

— TRANSCOM Military Sealift Command (Oracle Financials) DEAMS(TBD)

— DLA Business Systems Modernization (SAP)


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Why Enterprise Integration?

• DoD goals and mission mandate an enterprise approach

— The “warfighter” must be able to assess and adjust alternative courses of

action and obtain a global network response based upon integrated near

real-time data and information

— Managers and leaders must be able to maintain resource accountability in a

single picture and do cost-based resource and asset management

• COTS applications are the “preferred approach

— Accelerates incorporating commercial best practices and reduces the cost,

time, and risk of process change

• The Premise: DoD is the enterprise and the Services are the

operating operating “divisions”

• Enterprise Resource Planning (ERP) COTS applications are the

predominant commercial enterprise integration solution(s)


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Theory Meets Organizational Reality:Discontinuity in Integration Continuum

Cost of Integration (In Average Time to Achieve)

Bu

sin

es

s B

en

efi

t o

f In

teg

rati

on

1 yr. 2 yr. 3 yr. 4 yr. 5 yr. 6 yr.

Process Integration

DataTransport

ApplicationIntegration

Adaptive Integration

UbiquitousIntegration

DataIntegration1 X

10 X

50 X

100 X

Responsive/ Opportunistic Growth

Mass Customization

At this level, benefits are measured in strategic outcomes and success in new business models.

* Findings represent study and analysis of the results achieved by 17 large organizations. Given the size of the firms studied, the multiple for identifying benefits (X) equated to roughly $1 million.

Application integration

Process integration

Adaptive integration

Ra

ng

e o

f B

enef

its

Transformation Required

Source: OFT/Accenture Case Study


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GIG-ES/Net-Centric Operations Representative Profile

Bases, Camps, Posts, Stations

Other GlobalOther GlobalNetworksNetworks

Non DODEntities

Non DOD InformationInfrastructure Terrestrial

Components

Allied or CoalitionOperating Forces

Space to Terrestrial/TELEPORT

Net-Centric Information Environment(Data Sharing Strategy and Enterprise Services)

• User Assistance• Collaboration• Discovery• Messaging

• Information Assurance/ Security• Enterprise Services Management

• CIO Services• Mediation• Applications• Storage

Global Information Grid(GIG)

JTF & Components

JTF to Components

JTF toCoalition

Logical Networks to GIG Backbone

Client to Server/End System to PKI

DISN Service Delivery Node

JointInterconnection

Service

DOD Networks

Secure Enclave Service Delivery

Node

Application Server toDatabase Server

Application to Shared Data

Mgt System to Managed Systems

Mgt System to Int Managed Systems

Application to COE/NCES/GES

Info Servers to IDM

IDM to Distribution Infra


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GIG-ES: A New Paradigm

Users

Business Domains Warfighter Domains

Domain/ COI

Capabilities

ICOrg Spaces

National Intelligence Domain

Core Enterprise Services (CES)

Transformational Communications (TC) & Computing Infrastructure

ApplicationUser

AssistantStorage Messaging

ICSIS Community Space

IA/Security

IA/Security

ESM

IA/Security

ESM

IA/Security

ESMDiscovery

IA/Security

ESM

Collaboration

IA/Security

ESMEnterprise

ServiceManagement

(ESM)

Mediation

IA/Security

ESM

IA/Security

ESM

Technical Infrastructure

Domain

ESM

IA/Security

Levels of Services

Above Core Level

COI’s

Capability Integrator

Inst

alla

tion

&

Env

iron

men

t

Hum

an R

esou

rce

Man

agem

ent

Acq

uisi

tion

Stra

tegi

c P

lann

ing

& B

udge

t

Log

isti

cs

Acc

ount

ing

& F

inan

ce

Governance

COI’s

Capability Integrator

Com

man

d &

C

omm

and

Bat

tles

pace

Aw

aren

ess

For

ce A

pplic

atio

n

Pre

cisi

on L

ogis

tics

Pro

tect

ion

Governance


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ERP/EI Tenets• Champion process changes at the highest levels of COCOM,

Community of Interest, Domain, Service, and the DoD enterprise• Collaboration and Integration

— Use COI/Domain net-centric services to share vendor-neutral data mappings, systems interfaces, management metrics, collaboration and functionality to achieve and integrated and interoperable “solution”

— Minimize turning off functions in integrated ERP/applications packages solely to accommodate a stovepipe system or organization

— Install and ensure an enterprise multi-level, tiered information assurance and security solution

• Change Management— Adopt the business process imbedded in the commercial ERP/application package . . .

tailor only for mission and tactical operational advantage

• Compliance with DoD/OSD mandates for ERP/COTS procurements.


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Why Is Strong Consistent Leadership Needed?• DoD transformation and IT modernization is big business - approximately$19.9B/yr

• ERP implementations are growing and are the most complex IT undertaking in DoD history

• ERP/EI implementation has been difficult in large, complex organizations, but has succeeded through solid leadership

• ERP/COTS applications must drive business process change . . . else “paved cow paths”

• Existing functional and component structures drive stove-pipe systems solutions, impeding collaboration and an integrated DoD enterprise-wide capability

• Change is contentious, continuous, and painful

• Achieving a DoD enterprise-wide, service-oriented capability will be extremely difficult to achieve in the near-term. This could take 7 – 10 years.


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ERP/Enterprise Integration Success Factors

• ERP/EI is a business issue, NOT an IT issue

• Define mission and business functional requirements and architecture – FIRST

• Organizational change management (culture) is one of the most critical elements for enterprise success

• Consistent, long-term leadership/management direction with reasonable expectations

• Trade “best of breed” for commonality and and integrated solution

• Retraining and retention essential . . . systems level capabilities for key leaders/managers as well as users

• Maximize COTS with minimal customization

• Deliver a series of rapid successes providing enhanced functionality and capability


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Meeting JTF warfighter requirementsaround the clock, around the globe...

…through enterprise integration,interoperability, and end-to-end processes

The Goal - A Single Enterprise

Documents

Copyright 2004 Northrop Grumman Corporation 0 November 10, 2004 Evolving to Network Centric Operations: ERP- An Approach to Enterprise Integration Presentation