General Fund Enterprise Business System “Leading Edge on Cost Management using New ERP’s”

1. General Fund Enterprise Business System“Leading Edge on Cost Management using New ERP’s” Workshop 77 3 June 2010

2. What is the General Fund Enterprise Business System? GFEBS is an … • Accounting system that– • Complies with statutory and regularity requirements for funds control and accounting • Includes real property and other asset data for accountability • Management information system that – • Records financial and various other transactions in a single system • Provides visibility of transactions in real time across the Army • Decision support system that – • Provides full cost data • Provides comparative, trend and other analytic data • Enables well-informed decisions to leverage available resources and to improve program and budget decisions 1

3. SAP Where We Are and … Where We Are Going GFEBS Solution Current Situation • Implements a single web-based system • Standardizes processes Army-wide • Implements standard data structures • Records transactions in real-time and provides real-time access to data • Integrates financial and non-financial/ performance data from functional areas • Applies commercial-off-the-shelf (COTS) Enterprise Resource Planning (ERP) • Complies with DoD’s Business Enterprise Architecture (BEA) • Involves maintaining many systems • Requires many costly interfaces • Requires entering data in several systems • Inhibits efficient sharing of data • Impedes producing comprehensive and accurate decision data • Hinders responding timely to questions • Requires time-consuming and costly reconciliations System View (SV) 1 2

4. Army Reserve Army National Guard Active Army Transactions in… Reports and analyses General Fund Enterprise Business System Overview GFEBS will process a million transactions a day and … … provide essential data to transform the Army to a cost culture 3 As of 31 Dec 2009

5. Approximately • 250 Users • Approximately • 1,400 Users • Approximately • 120 Users • Approximately • 3,700 Users Project Status (As of May 2010) • Received Milestone B approval – 14 Mar 08 • Successful Release 1.2 & “Go live” – 1 Oct 2008 • Fort Jackson, SC and 7 other locations • Favorable Operational Test Agency Limited User Test assessment – 12 Dec 08 • Successful Release 1.3 & “Go live” – 1 April 2009 • Forts Stewart, Benning and related organizations • Successful Milestone C Approval – 30 May 2009 • Successful Release 1.4 & “Go live” – 10 Oct 2009 • Successful “Mini Go live” – 1 Jan 2010 • MEDCOM Fort Benning and related organizations • Successful Wave 2 “Go live” – 1 Apr 2010 • Organizations at 9 Forts plus other organizations • Successful Release 1.4.1 – 19 Apr 2010 GFEBS software release delivery and Wave deployment are on schedule 4

6. GFEBS Has A Sizeable Footprint • End Users: 5,500 • (most common) • Accountant • Budget Analyst • Engineers • Health Specialist • IT Specialists • Legal Admin • Logistics Supervisor • Operations Analyst • Program Manager • Property Manager • Purchasing Agent • Quality Assurance Specialist • Resource Manager • Staff Assistant • Supply Technician • Sites: • Ft Jackson • Ft Stewart • Ft Benning • Ft Bragg • Ft Campbell • Ft Drum • Ft Gordon • Ft Knox • Ft McPherson • Ft Polk • Ft Rucker • Army National Guard, KY • DFAS-Indy & Rome • Commands: • IMCOM • TRADOC • FORSCOM • Accessions Command • MEDCOM • NETCOM • USARNG • DFAS • HQDA Full deployment by 2nd Quarter FY 2112 5

7. GFEBS Integrates DataFrom Across The Army Human Capital Command Readiness Subordinate level Subordinate level Subordinate level Corps Services & Infrastructure Division Brigade Materiel Battalion Company Institutional Generating Forces Operating Forces Organize and Train the Force TDA TOE ... provide and sustain dominant land forces … conduct prompt and sustained combat operations on land Includes performance and output data from across the “enterprise” 6 As of 23 Feb 2010

8. GFEBS Provides New Cost Management Capabilities • Brigade data may be for: • specific brigade • average Bde in command • average Bde across • the Army X X X Heavy Heavy X X Light Light X Stryker Stryker SUST SUST SUST SUST SUST SUST • ARFORGEN data may be for: • specific pool, e.g., Ready • specific function in pool • average Bde in pool Bde • Functional data may be for: • total cost for school • total cost for course • specific costs of • interest FCS Force Generation $ for Reset $ for Ready/Train $ for Available Training (Unit) Training (Ind) $ / Mile $ / Student Tng Day $ / Flying Hour $ / Course Day $ / Weapon System Base Support Personnel Equipment $ / Service Military - $ / Soldier $ / Brigade - New $ / Brigade Civilian - $ / FTE $ / Brigade - Conversion $ / Installation Contractor - $ / FTE Ratio: Spt $ / Brigade $ Flexible and responsive to Army information needs 7 As of 7 Jan 2010

9. Comparative, e.g. -- What did NTC rotations cost? Trend, e.g. -- What are property maintenance trends Army-wide and at xyz? Predictive, e.g. -- What are the costs for fielding another heavy BCT? Functional, e.g. -- What are the full costs for ‘Growing The Army’? Planning, Programming and Budget Formulation Current management practices Functional, non-financial processes Funds control Financial business operations Cost Management GFEBS Data Provide Opportunity For Analysis Many Types of Analysis Most Decision Processes GFEBS provide data and analytic tools Army needs to grow skilled analysts 8

10. Army Purpose Cost Management Managing Business Operations Efficiently & Effectively Through the Accurate Measurement & Thorough Understanding of the"Full Cost" of an Organization's Business Processes, Products & Services in Order to Provide the Best Value to Customers. 9

11. Ensure Strategic Objectives are Effectively Resourced Effectively & Efficiently Produce Outputs CG TRADOC CG AMC CG FORSCOM CG IMCOM ARFORGEN ARFORGEN Synch Board Program / Budget Construct Cost Management Construct Services &Infrastructure Human Capital Materiel Readiness Products/Services Organizations (Cost Centers) Resources (Labor, Equipment, Assets) Need to Understand What the Resources Buy – The Army Product X X X Heavy Stryker Light 10

12. Inputs Outputs Conversion “Work” Cost Measurement Must Reflect Management Processes Resource Managers Operational Managers Resources: Labor Material Equipment Supplies Contracts Assets Products Services: Courses Services Support Programs Tests Research Projects Training Events Work Performed by Organizations (Cost Centers) to Produce Products and Services for Customers 11 11

13. maturation over years What Does the Army Manage?“GFEBS Cost Model Needs to Support….” Full Cost Organizations Full Cost Product/Services Full Cost Customers Services: Food Services, Transportation, CIF, etc. IMCOM: Garrison - Tenants A monetary valuation of the economic goods and services of the organization – full burden cost flows Courses: Mission technique classes, combative training TRADOC: Ranger School - Division / BCT - MOS - FMS Units: Optempo, Mobilization, Events, Etc. FORSCOM: 3rd Army - 1st BCT - Mission Commander 6/2/2014 12 12

14. Cost Management Requires Changing the Culture • Cost and performance focused • Results driven - output & outcome • Performance objective – resource consumption optimization (efficiency & effectiveness) • Use what is necessary to obtain the objective Develop/Recruit Analysts Enhance Training Performance Focus Policy How To’s Process Improvement Integrated Business Designs ERP Applications e.g. (GFEBS, LMP, GCSS) Business Warehouses Executive Scorecards Enablers of Change “A Culture of Influence” “A Culture of Entitlement” Enabler #3 Budget-focused Spend rate driven – inputs Performance objective -99.9% obligated Free goods has infinite demands Enabler #2 Enabler #1 6/2/2014

15. GFEBS Technology Enables Cost Management Change Army Cost Framework Integrates Financial and Non-Financial Systems and Processes GFEBS will provide Multiple Cost Views for Decision Making at Every Level 6/2/2014

16. Changing Policy and Preparing Personnelin Conjunction with GFEBS Policy & Guidance Training (Operational & Resource Mgrs) Tools 6/2/2014

17. Will Take Time to Mature Into Cost Management Cost Management “What It Should Cost” Outcomes Cost Measurement “What It Actually Cost” Inputs & Outputs “What did we spend?” Input 16

18. Begin by Implementing Cost Accounting (Measurement) in GFEBS Expense Elements Organizations Products & Services DCPS ATAAPS WMT DIMHRS Payroll Business Process Cost Center Material WAWF FCM PCard Orders (Internal, Work) Supplies • Activity Types • Labor Pools • Equipment usage • Facility usage LMP GCSS-A Project WBS Element Equipment Depreciation 6/2/2014

19. Capturing Cost by Organization, Product/Service and Customer Cost of Installation Services Provided to Tenants BCT Cost by Resources Consumed 18

20. Integrating Cost Measurement and Analytics • - Cost Comparison • Benchmarking • - Forecasting • - Variance Analysis • Controlling • - Cost Planning • - Trend Analysis • Cash Flow • Operational • Cost Mgmt 19

21. GFEBS Is Transforming the ArmyToday and Tomorrow New system with analytic tools and capabilities New business processes Capitalizes on “best practices” embedded in ERP New management structures and data concepts New roles, skills and knowledge for end users Opportunity for individuals to develop skills with state-of-the-art ERP system and cost management techniques GFEBS will transform financial management and management practices in most functions 20 As of 25 August 2009