Department of the Navy Office of the Assistant Secretary of the Navy Financial Management and Comptroller

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2. 2 Objective To outline the DON Financial Management Systems Vision To be used as a frame of reference for improved decision making To develop a basis for a meaningful transition plan To gauge need for new or improvements to systems To make funding decisions To provide a Converged Enterprise Resource Planning Update

3. 3 ASN(FM&C) Financial Management Vision Provide accurate, timely, and reliable financial information to decision makers Provide an automated environment to support the efficient production of auditable financial statements Support business process standardization Support the use of a �common language� (USSGL) Reduce disparate IT systems Enhance �Enterprise� integration Reduce long-term IT costs

4. 4 Overarching Guidance Chief Financial Officers Act Requires that financial statements be prepared and audited Requires implementing OFFM (JFMIP) certified COTS systems when replacing existing FM systems Federal Manager�s Financial Integrity Act Requires improving the accountability and effectiveness of federal programs and operations by establishing and reporting on management controls Revolution in Business Affairs Established COTS ERP as the cornerstone for DON enterprise management DON Functional Area Managers Rationalization of redundant/obsolete systems BMMP Enterprise Architecture

5. 5 Assumptions The FAM rationalization process, the BMMP architecture, and the Navy ERP implementation plan will all help drive the Financial Management Vision The Vision is not an implementation plan � it is a tool to be used when making decisions � a roadmap of where FM is headed. Outcome must be consistent with the goals of achieving a clean financial opinion Any new system implementation should be a OFFM (JFMIP) certified system A well integrated business solution tied together with the USSGL should support an acceptable financial solution Any savings generated by the retirement of legacy systems may be redirected to implement and support COTS products DFAS will manage a data repository to which DON FM data is sent for all levels of reporting and management

6. 6 FM Vision for Business Transformation DoD Business Enterprise Architecture� Framework Standardize business processes & provide data standards Requires systems portfolio management Converged ERP� Cornerstone Implement a modern, integrated COTS software product Reengineer business processes Functional Area Manager Process� Transition Tool Rationalize FM systems� portfolio management Standardize business processes DoD Financial Improvement Initiative� Integrating Plan Basis for DON Financial Improvement Plan Provide clean financial statements/unqualified audit opinions Guide system improvements

7. Financial ManagementTransition Plan

8. 8 Diagram shows all the system inputs and outputs to DFAS for creation of the financial statements. Each system box also includes the Commands that use the system.Diagram shows all the system inputs and outputs to DFAS for creation of the financial statements. Each system box also includes the Commands that use the system.

9. 9 Today�s Systems Environment Too many systems Redundant, stove-piped Poor integration, interoperability No standard data structures Limited visibility in budget Discrete elements of spending lacking Difficult to support technologically Difficult to audit

10. 10 What has been Happening? DON Systems Efforts Migrating to Converged ERP and other standard systems FAMs rationalizing systems� portfolio management Echelon IIs working toward 50% system reduction DON Comptrollers implementing FIP-related system changes

11. 11 What has been Happening? OSD Systems Efforts Enterprise Architecture and Transition Plan OSD Domains are developing system transition plans Domains conducting systems reviews and approvals Domains and PA&E are making budgetary decisions to reflect these plans (POM 06 Issue Papers) DoD Financial Improvement Initiative unfolding

12. 12 Initial Transition Plan! Facetious diagram making light of the fact the Navy didn�t really have any detail to its initial systems transition plan.Facetious diagram making light of the fact the Navy didn�t really have any detail to its initial systems transition plan.

13. 13 Transition Plan Strategy Show ERP as the cornerstone/end-state Notional time-phased transition to Navy ERP Use ERP deployment schedule as baseline Notional time-phased transition of supporting FM legacy systems Look at two approaches Systems view Command view

14. 14 Navy Systems Transition Summary Diagram depictsDiagram depicts

15. 15 STARS HCM

16. 16 STARS HCM

17. 17 STARS HCM Annual system cost = $XXXXXX Number of sites Number of users

18. 18 STARS FL

19. 19 STARS FL Annual system cost = $XXXXXX Number of sites Number of users Chart depicts the STARS FL sunset dates for existing systems.Chart depicts the STARS FL sunset dates for existing systems.

20. 20 Next Steps Identify all FM systems used, by activity Identify all feeder systems to FM systems Identify any current migration strategies Identify budgets for each system Plot these systems Analyze and share results Incorporate in FM Transition Plan

21. 21 Keys to Success Command participation A FM systems transition plan that goes beyond notional NDAA and BMMP restructure requires a Component transition plan Can incorporate in DON Financial Improvement Plan Keep DON FM Management informed Keep ERP Program Office informed

22. 22 Conclusion The DON IT footprint is enormous Development of Transition Plan is doable It is hard work and ever evolving It must result in reduce costs and improve FM There will be obstacles To getting consensus To determining financing mechanisms System decisions must not adversely affect an activity�s ability to perform its mission, however� IT economies and efficiencies are expected System migrations will be necessary

23. Converged Enterprise Resource PlanningUpdate

24. 24 Production Systems - Demonstrated Benefits Financial Management (SPAWAR � Cabrillo) 50% reduction in annual cost of Business Systems support Cut simplified acquisition requisition-to-order process time from 44 days to 44 minutes Regional Maintenance (NAVSEA/FFC � NEMAIS) Reduced average Total Repair Time by 16% from 96 to 81 days Elimination of job rejection notification delay from 20 days to immediate Program Management (NAVAIR � Sigma) 66% improvement in financial statement processing time Aviation Supply (NAVSUP/NAVAIR � SMART) One million+ inventory transactions with < �% error rate Reduced warehouse refusal rate from 3.5% to 0.5%

25. 25 Visual depiction of the existing Navy ERP pilots convergence into the Navy ERP.Visual depiction of the existing Navy ERP pilots convergence into the Navy ERP.

26. 26 One Program With One Mission Navy ERP Mission To reinvent and standardize Navy business processes for acquisition, financial and logistics operations Program�s Key Objectives Build an integrated financial system that complies with Business Enterprise Architecture (BEA) requirements for all Navy commands Optimize end-to-end value chains across functional and organizational boundaries Collapse the pilot programs to produce a single product for the Navy Maximize ROI through effective deployments and sequencing of functionality Pictures show a aircraft carrier deck full of airplanes, an amphibious vehicle in the water, an aircraft carrier out at sea, and a submarine.Pictures show a aircraft carrier deck full of airplanes, an amphibious vehicle in the water, an aircraft carrier out at sea, and a submarine.

27. 27 Business Reengineering Activities Use SAP as �entitlement� system for Navy Use DLA model but improve it DFAS involved in design effort Use SAP for Receipt / Acceptance process WAWF / WINS / EDI Standard USSGL throughout Navy Standardize definition and applicability of WIP Standard Rates for GF � cost and billing Re-engineered P-card process

28. 28 Use Investment Management program structures to represent major weapon systems (aircraft, ships, etc.) Simplifies project structures, reduces volume, provides program management view Use Resource-Related Billing with Characteristics and FM funds availability control Allows for multiple funding sources to be assigned to a single WBS billing element Optimizes WBS for project mgt instead of funding/billing Standardized order fulfillment Incorporated serial number tracking in processes Common plant supply solution for maritime and aviation I-level repair activities

29. 29 NAVSUP Business Process Reengineering Study SI�s / SAP validate (measure) relative grading of effort (process) in 22 level II Supply-related business areas Drafts presented, edited, and final product received November 04 Overall score: 5-6 (Clearly indicated reengineering well beyond Legacy replacement)

30. 30 Navy ERP Program Schedule (POM 06) Chart is a project timeline for the Navy ERP Program as laid out in the POM 06.Chart is a project timeline for the Navy ERP Program as laid out in the POM 06.

31. 31 What�s Next System configuration Documenting technical steps to configuration Business Process Procedures (BPPs) being developed End-user desk top guides and training Technical functional scripts being developed For approved RICE (Reports, Interfaces, Conversions, Enhancement) objects Testing scenarios being developed To demonstrate end-to-end functional capability Tie back to ORD and BEA Deployment activities have started at first site Kick-off meetings, begin planning

32. 32 BACKUP BACKUP

33. 33 Evolution of Navy ERP

34. 34 Scope Of Navy ERP Systems The Commercial Business Practices (CBP) originally recommended six ERP pilot programs be conducted to explore the possibility of implementing ERP solutions across the Navy: Today, the above four of the six original pilots are active. A U.S. Marine Corps Headquarters program covering USMC Logistics and the Pacific Fleet�s pilot for Shore Station Management are currently on hold until further notice. SIGMA -- Sigma integrates finance, project planning and budgeting, procurement, and workforce management into a single system using one set of master data. The system is now the financial system of record for the Command, and it affects more than 19,000 civilian, contractor and military users worldwide. Fifty-seven of 76 legacy systems, applications and manual processes in the areas of Workforce Management and Finance have been retired as the result of Sigma implementation. CABRILLO -- Cabrillo is a Navy Working Capital Fund pilot serving 3,500 users. Implementation has allowed more than 30 legacy business systems to be retired, with associated cost savings, at the SPAWAR Systems Center (SSC) San Diego. In one notable achievement, implementation of Cabrillo reduced the business cycle time for Electronic Catalog buying -- from requisition to purchase order -- from 44 days to 44 minutes. SMART -- The Supply Maintenance Aviation Re-engineering Team (SMART) program for E-2C Hawkeye aircraft and LM-2500 marine gas turbine engines combines maintenance, supply and financial operations into one seamless system. The solution replaces legacy supply, maintenance and financial management systems with a modern, responsive, accurate and integrated system. It improves parts management, provides total asset visibility, increases inventory modeling capability and facilitates data sharing. NEMAIS -- The Navy Enterprise Maintenance Automated Information System (NEMAIS) is a NAVSEA/Fleet partnership to optimize Intermediate level (I-Level) maintenance support for the warfighter. NEMAIS is in process of installing an ERP solution in all Shore Intermediate Maintenance Activities, Regional Maintenance Centers, Regional Support Groups and other I-Level activities including Ship Repair Facility (SRF) Japan. Using NEMAIS, a Pacific Fleet planner for the first time can plan work with only a few keystrokes by calling up and reusing data from similar work done previously in the Mid-Atlantic Region. The functionality of each of the four Navy ERP Pilots has been included in the Navy ERP Convergence effort.The Commercial Business Practices (CBP) originally recommended six ERP pilot programs be conducted to explore the possibility of implementing ERP solutions across the Navy: Today, the above four of the six original pilots are active. A U.S. Marine Corps Headquarters program covering USMC Logistics and the Pacific Fleet�s pilot for Shore Station Management are currently on hold until further notice. SIGMA -- Sigma integrates finance, project planning and budgeting, procurement, and workforce management into a single system using one set of master data. The system is now the financial system of record for the Command, and it affects more than 19,000 civilian, contractor and military users worldwide. Fifty-seven of 76 legacy systems, applications and manual processes in the areas of Workforce Management and Finance have been retired as the result of Sigma implementation. CABRILLO -- Cabrillo is a Navy Working Capital Fund pilot serving 3,500 users. Implementation has allowed more than 30 legacy business systems to be retired, with associated cost savings, at the SPAWAR Systems Center (SSC) San Diego. In one notable achievement, implementation of Cabrillo reduced the business cycle time for Electronic Catalog buying -- from requisition to purchase order -- from 44 days to 44 minutes. SMART -- The Supply Maintenance Aviation Re-engineering Team (SMART) program for E-2C Hawkeye aircraft and LM-2500 marine gas turbine engines combines maintenance, supply and financial operations into one seamless system. The solution replaces legacy supply, maintenance and financial management systems with a modern, responsive, accurate and integrated system. It improves parts management, provides total asset visibility, increases inventory modeling capability and facilitates data sharing. NEMAIS -- The Navy Enterprise Maintenance Automated Information System (NEMAIS) is a NAVSEA/Fleet partnership to optimize Intermediate level (I-Level) maintenance support for the warfighter. NEMAIS is in process of installing an ERP solution in all Shore Intermediate Maintenance Activities, Regional Maintenance Centers, Regional Support Groups and other I-Level activities including Ship Repair Facility (SRF) Japan. Using NEMAIS, a Pacific Fleet planner for the first time can plan work with only a few keystrokes by calling up and reusing data from similar work done previously in the Mid-Atlantic Region. The functionality of each of the four Navy ERP Pilots has been included in the Navy ERP Convergence effort.

35. 35 ERP can be used to: Operate and manage a major Echelon 2 acquisition command and Echelon 3 subordinate commands (PM, Workforce Management, FM, Procurement) Integrate Maintenance and Supply in performance of aviation and ship maintenance, provide visibility of resources across activities and optimize supply chain management Validate compliance with the CFO Act and provide significant reductions in legacy IT and data base systems with resultant cost reductions and data quality / timeliness benefits What The Pilots Proved

36. 36 Navy ERP Functional Scope

37. 37 Deployment Locations Echelon 1 and 2 Financials CNO (FMB/N8) Echelon 2 Financial Offices Aviation Value Chain NAVAIR HQ NAPRA/NAMRA TSD Orlando NATEC Naval Air Warfare Centers Fleet Fleet Forces Command HQ Aviation Intermediate Maintenance Depots Regional Maintenance Centers Measure Operational Control Centers Remote Calibration Labs Maritime Value Chain NAVSEA HQ NAVSEA Logistics Centers NAVSEA Warfare Centers Naval Submarine Support Facility New London SUBMEPP Portsmouth Supply Value Chain NAVSUP HQ Naval Inventory Control Point Fleet Industrial Support Centers Fleet Supply Activities C4I Value Chain SPAWAR HQ SPAWAR System Centers

38. System Requirements Review (SRR)System Functional Review (SFR)Operational Requirements Document (ORD)Review

39. 39 SRR/SFR Effort � Parts 1, 2 & 3

40. 40 The SRR/SFR will� Establish a system functional baseline for Template 1, Release 1.0 Demonstrate how Release 1.0 functionality will be sufficient to replace the Pilots Demonstrate how Release 1.0 is traceable to the ORD Requirements Demonstrate the system functional design provides sufficient detail to enable system technical design

41. 41 �Big Rock� Items Labor Processing FMO, DFAS, WFM, PM, Maritime VCM, Aviation VCM 16 issues, e.g., certification to DCPS, standard versus actual cost, cost transfers, cost approval, end-to-end review, and year-end processing Inventory Valuation � compliance with accounting standards GAO, FI, FMO, MM, SD, ARMY, DLA, SAP, OSD (C) 3 issues, calculation of moving average cost, capitalizing or expensing cost to repair a broken item, valuation of broken items� software customization issues

42. 42 Action Plan Each SFR/SRR gap is being reviewed by the ERP team in concert with pilots and value chain managers Tiger Teams established to address �Big Rocks� Mitigation plan for each item must be approved By VCMs/Senior Leadership/ERP PM And through the Configuration Management Board