automation of business systems

Walk This Way — DoD IG Reviews DCMA Contracting Officer Business Systems Deficiencies

The sufficiency and effectiveness of business systems is an essential element in the project management ecosystem.  Far beyond performance measurement of the actual effort, the sufficiency of the business systems to support the effort are essential in its success.  If the systems in place do not properly track and record the transactions behind the work being performed, the credibility of the data is called into question.  Furthermore, support and logistical systems, such as procurement, supply, and material management, contribute in a very real way, to work accomplishment.  If that spare part isn’t in-house on time, the work stops.

In catching up on reading this month, I found that the DoD Inspector General issued a report on October 1 showing that of 21 audits demonstrating business system deficiencies, contracting officer timeliness in meeting DFARS deadlines at various milestones existed in every case.  For example, in 17 of those cases Contracting Officers did not issue final determination letters within 30 days of the report as required by the DFARS.  In eight cases required withholds were not assessed.

For those of you who are unfamiliar with the six business systems assessed under DoD contractor project management, they consist of accounting, estimating, material management, purchasing, earned value management, and government property.  The greater the credibility and fidelity of these systems, the greater level of confidence that the government can have in ensuring that the data received in reporting on execution of public funds under these contracts.

To a certain extent the deadlines under the DFARS are so tightly scheduled that they fail to take into account normal delays in operations.  Forbid that the Contracting Officer may be on leave when the audit is received or is engaged in other detailed negotiations.  In recent years the contracting specialty within the government, like government in general, has been seriously understaffed, underfunded, and unsupported.  Given that oftentimes the best and the brightest soon leave government service for greener pastures in the private sector, what is often left are inexperienced and overworked (though mostly dedicated) personnel who do not have the skills or the time to engage in systems thinking in approaching noted deficiencies in these systems.

This pressure for staff reduction, even in areas that have been decimated by austerity politics, is significant.  In the report I could not help but shake my head when an Excel spreadsheet was identified as the “Contractor Business System Determination Timeline Tracking Tool.”  This reminds me of my initial assignment as a young Navy officer and my first assignment as a contract negotiator where I also performed collateral duties in building simple automated tools.  (This led to me being assigned later as the program manager of the first Navy contract and purchase order management system.) That very first system that I built, however, was tracking contract milestone deadlines.  It was done in VisiCalc and the year was 1984.

That a major procurement agency of the U.S. Department of Defense is still using a simple and ineffective spreadsheet tracking “tool” more than 30 years after my own experience is both depressing and alarming.  There is a long and winding history on why they would find themselves in this condition, but some additional training, which was the agency’s response to the IG, is not going to solve the problem.  In fact, such an approach is so ineffective it’s not even a Band-Aid.  It’s a bureaucratic function of answering the mail.

The reason why it won’t solve the problem is because there is no magic wand to get those additional contract negotiators and contracting officers in place.  The large intern program of recruiting young people from colleges to grow talent and provide people with a promising career track is long gone.  Interdisciplinary and cross-domain expertise required in today’s world to reflect the new realities when procuring products and services are not in the works.  In places where they are being attempted, outmoded personnel classification systems based on older concepts of division of labor stand in the way.

The list of systemic causes could go on, but in the end it’s not in the DCMA response because no one cares, and if they do care, they can’t do anything about it.  It’s not as if “BEST TALENT LEAVES DUE TO PUBLIC HOSTILITY TO PUBLIC SERVICE”  was a headline of any significance.  The Post under Bezos is not going to run that one anytime soon, though we’ve been living under it since 1981.  The old “thank you for your service” line for veterans has become a joke.  Those who use this line might as well say what that really means, which is: “I’m glad it was you and not me.”

The only realistic way to augment an organization in this state in order the break the cycle is to automate the system–and to do it in a way as to tie together the entire system.  When I run into my consulting friends and colleagues and they repeat the mantra: “software doesn’t matter, it’s all based on systems” I can only shake my head.  I have learned to be more tactful.

In today’s world software matters.  Try doing today what we used to do with slide rules, scientific calculators, and process charts absent software.  Compare organizations that use the old division-of-labor, “best of breed” tool concept against those who have integrated their systems and use data across domains effectively.  Now tell me again why “software doesn’t matter.”  Not only does it matter but “software” isn’t all the same.  Some “software” consists of individual apps that do one thing.  Some “software” is designed to address enterprise challenges.  Some “software” is designed not only to enterprise challenges, but also to address the maximization of value in enterprise data.

In the case of procurement and business systems assessment, the only path forward for the agency will be to apply data-driven measures to the underlying systems and tie those assessments into a systemic solution that includes the contracting officers, negotiators, administrators, contracting officer representatives, the auditors, analysts, and management.  One can see, just in writing one line, how much more complex are the requirements for the automated panacea to replace “Contractor Business System Determination Timeline Tracking Tool.”  Is there any question why the “tool” is ineffective?

If this were the 1990s, though the practice still persists, we would sit down, perform systems analysis, outline the systems and subsystem solutions, and then through various stages of project management, design the software system to reflect the actual system in place as if organizational change did not exist.  This is the process that has a 90% failure rate across government and industry.  The level of denial to this figure is so great that I run into IT managers and CIOs every day that fail to know it or, if they do, believe that it will apply to them–and these are brilliant people.  It is selection bias and optimism, with a little (or a lot) of narcissism, run amok.  The physics and math on this are so well documented that you might as well take your organization’s money and go to Vegas with it.  Your local bookie could give you better odds.

The key is risk handling (not the weasel word “management,” not “mitigation” since some risks must simply be accepted, and certainly not the unrealistic term “avoidance”), and the deployment of technology that provides at least a partial solution to the entire problem, augmented by incremental changes to incorporate each system into the overall solution. For example, DeLong and Froomkin’s seminal paper on what they called “The Next Economy” holds true today.  The lack of transparency in software technologies requires a process whereby the market is surveyed, vendors must go through a series of assessments and demonstration tests, and where the selected technology then goes through stage gates: proof-of-concept, pilot, and, eventually deployment.  Success at each level gets rewarded with proceeding to the next step.

Thus, ideally the process includes introducing into the underlying functionality the specific functionality required by the organization through Agile processes where releasable versions of the solution are delivered at the end of each sprint.  One need not be an Agile Cultist to do this.  In my previous post I referred to Neil Killick’s simple checklist for whether you are engaged in Agile.  It is the best and most succinct distillation of both the process and value inherent in Agile that I have found to date, with all of the “woo-woo” taken out.  For an agency as Byzantine as DCMA, this is really the only realistic and effective approach.

DCMA is an essential agency in DoD acquisition management, but it cannot do what it once did under a more favorable funding environment.  To be frank, it didn’t even do its job all that well when a more favorable condition was in place, though things were better.  But this is also a factor in why it finds itself in its current state.  It was punished for its transgressions, perhaps too much.  Several waves of personnel cuts, staff reductions, and domain and corporate knowledge loss on top of the general trend has created an agency in a condition of siege.  As with any organization under siege, backbiting and careerism for those few remaining is rewarded.  Iconoclasts and thought leaders stay for a while before being driven away.  They are seen as being too risky.

This does not create a condition for an agency ready to accept or quickly execute change through new technology.  What it does do is allow portions of the agency to engage in cargo cult change management.  That is, it has the appearance of change but keeps self-interest comfortable and change in its place.  Over time–several years–with the few remaining resources committed to this process, they will work the “change.”  Eventually, they may even get something tangible, though suboptimized to conform to rice bowls; preferably after management has their retirement plans secured.

Still, the reality is that DCMA must be made to do it’s job because it is in the best interests of the U.S. Department of Defense.  The panacea will not be found through “collaboration” with industry, which consists of the companies which DCMA is tasked with overseeing and regulating.  We all know how well deregulation and collaboration has worked in the financial derivatives, banking, mortgage, and stock markets.  Nor will it come from organic efforts within an understaffed and under-resourced agency that will be unable to leverage the best and latest technology solutions under the unforgiving math of organic IT failure rates.  Nor will deploying the long outmoded approach of deploying suboptimized “tools” to address a particular problem.  The proper solution is to leverage effective COTS solutions that facilitate the challenge of systems integration and thinking.

 

 

Doctor My Eyes — Excel is Not a Project Management Tool (and neither is PowerPoint)

This is not to disparage the utility of a good spreadsheet to take care of those transient requirements to take a bit of data from the reporting systems and to run some custom algorithms or trends to perform what-if or other one-off analysis.  Probably most of us do this occasionally.

What I am referring to is the condition in many organizations in which data that consists of information essential to business operations is kept and analyzed using spreadsheets or other flat delimited storage or text methods.  The issue here is the optimum use of information, which the use of Excel and PowerPoint does not achieve.  Before anyone thinks that this is a contrarian’s post that is critical of Microsoft products, one need only read the technical advantages of true relational database management systems that are managed by specialized language like MS SQL.  Each of these applications and products has their proper place.

I would prefer that this post would be unnecessary since the title should be considered self-evident at this point–it is very similar to a presentation I gave almost 20 years ago when still advising senior managers in the U.S. Department of Defense and the aerospace industry–but the facts tell us that it’s assertion not so self-evident.  For example, a survey of 262 financial executives by the Financial Executives Research Foundation and the staffing firm Robert Half in 2012 indicated that 64% of public and private companies in the U.S. still used spreadsheets and manual methods for their financial solutions.  In 2011 a study by the ERP company IFS found that “of more than 281 manufacturing executives, 75 percent of study respondents aged 35 and under report using desktop spreadsheet software like Microsoft Excel instead of their company’s ERP, customer relationship management (CRM), supply chain management (SCM) or other enterprise software” while “respondents aged 36 to 45, 58 percent said they would use desktop spreadsheet software instead of their company’s designated enterprise applications.”

There are certainly good reasons in each study that people sub-optimize in using their data.  First and foremost is the hassle and expense of the centralized IT office.  The same methods and organizations that secure data and are tasked with maintaining configuration control for the IT resources of an organization are the same ones that oftentimes tend to impede flexibility in the acquisition of needed digitized business process solutions.  Back in the 1980s as the PC began to displace the old mainframes run by the stodgy folks wearing white shirts, pen holders, and black glasses who had to be bribed, cajoled, and stroked in order to obtain processing time, access to archived data, or–heaven forbid–devise and run a program, a new world order was declared in which the centralized and non-responsive central IT office was declared dead forever.  Then digital crime raised its ugly head along with a cacophony of new products, some of which delivered on their promises, but most which did not.  Thus the need, once again, to bring some semblance of order to the chaos that incompatible and ineffective products (among other problems) wrought.  So IT has come full circle and we are back to highly bureaucratized IT organizations (or aggressive IT services companies) that in many cases will defend their turf ruthlessly, many times to the detriment of the interests of the organization.  Thus, people do what they have always done when inflexible rules get in the way–they find ways around them.  The most convenient way is to use the “legal” workaround, which is the spreadsheet, the Word document, or the PowerPoint presentation.  Along with being able to achieve what is needed without having to ask permission or miss a deadline, managers and employees oftentimes learn these basic applications first.  They are intuitive, readily available, and familiar.

The problem, of course, takes many forms.  The first is that manual methods are rife with errors.  In fact, study after study shows that almost 90% of spreadsheets contain errors.  In 2007 CIO Magazine published an article listing the eight worst spreadsheet errors of all time, highlighting the very real damage that relying on these methods have created to organizations and businesses.  And this was before the financial crisis revealed similarly large errors in the financial markets during the most recent housing bubble deflation and resulting Lesser Depression.

In providing project management solutions to my target verticals, the area most in need of remediation–and which presents the most immediate opportunity for return on investment, improving data and process credibility, and preventing fatal business errors–is in displacing those processes built around managing data using Excel, Word, and PowerPoint.  In identifying data that is most appropriate for moving to a relational database management solution, I have found that this data shares certain characteristics:

a.  The data is an element essential to decision-making and must therefore be credible.

b.  The data is an element essential to trend analysis, organizational history, or corporate knowledge.

c.  The methods and algorithms used in the data’s processing must be provide results that are repeatable and consistent.

d.  The various elements of data are interrelated and may originate from systems of record.

g.  The output from the processing of the data is essential to job of more than one person or one process.

h.  The time it takes to construct, maintain, update, adjust, and use the manual processing environment for the data greatly exceeds the marginal value of the effort that could be saved using more automated methods to achieve the same or greater results.  That is, replacing the manual and spreadsheet method of using the data results in greater productivity and either cost savings or work shifting to more productive tasks tied to project success.

As a localized tool or as an intermediate point of review for data residing in tables augmented by more robust automation, Excel has proven itself to be a workhorse.  For in-depth papers and extended communication Word is the appropriate medium and for presentations PowerPoint provides a good basis for simplified communication of an idea or set of ideas.  But for the processing and integration of enterprise data these applications are inappropriate–and can be quite damaging–to business operations.