After four consecutive years of financial system audits by outside accountants and its inspector general, the Defense Department still struggles with what the chief financial officer calls “fragmented business practices” that exacerbate material weaknesses.
Nevertheless, his Deputy Comptroller for Enterprise Data and Business Performance, Gregory Little, considers this the right time to be in DoD financial management. That’s because his staff are transitioning from their scorekeeper roles to ones of more strategic value-added business partners.
“And we call this vision [and] evolution the CFO of the future,” he said. “The CFO of the future, the financial manager of the future, is ultimately going to wear two hats. The first hat is still very traditional in nature, still focused on financial reporting, transactional processing. Hopefully, we’re going to automate that more using tools like Oracle, budget execution and internal controls and compliance. So think audit.”
As that happens, Little said on GovExec’s “Oracle One Federal” program Tuesday, financial managers will start taking their financial data and link it with other lines of business data including IT acquisition and real property, to make them more effective and efficient. An example of this effort is ADVANA — short for advancing analytics. DoD intends to use ADVANA as the single enterprise data analytics and visualization platform to transform DoD into a data-centric organization, according to a memorandum issued on May 5 by Deputy Secretary of Defense Kathleen Hicks.
“By continuing to increase the number of DoD systems providing data to ADVANA and improving data access and quality, the department is building a single source of truth to optimize information technology portfolio management, improve financial management, capture lost buying power, and provide enterprise-wide visibility that drives to action,” said the Defense Agency Financial Report for FY 2021.
Little said the Comptroller’s Office set up a cost framework for their lines of business, which are populated with authoritative data, the sources from which auditing information originates that are used to reconcile financial statements. Little expected that DoD’s Chief Data Officer David Spirk will soon issue a memo to assign data stewards across the department to help determine authoritative data, and those stewards will try to improve the quality of that information for greater confidence in financial management decision making.
Commercial and government sources are also used as benchmarks, which helps the Comptroller’s Office find both pockets of excellence, and ways in which they can improve or prioritize their enterprise software.
“Ultimately, though, where we want to be able to go is to be able to link our financial data with other lines of business data with our mission data, to be able to get better operational outcomes,” Little said. “And we sort of call this in the building, this linkage of the boardroom to the battlespace, or the battle sheet to the battlespace, which [are] kind of cool taglines that we use that get people pretty excited.”
That won’t be easy for perhaps the largest operating budget in the world; DoD’s portfolio has 256 business systems that are material just for auditing the department’s financial reporting and reconciliations. Overall, the department has 1,752 business systems, some of which were built in the 1960s and 1970s, making DoD’s one of the oldest working systems on Earth, called Mechanization of Contract Administration Services (MOCAS), Little said.
He and the Defense Contract Management Agency’s leadership want to modernize MOCAS, but the challenge is DoD’s non-standard data. That makes it difficult to create an open data architecture and application programming interfaces (APIs) to integrate different systems.
“So doing things at scale, like audit, being able to use techniques, data analytics techniques, [artificial intelligence] and [machine learning] is really challenging when you have a very fragmented foundation that we’re having in DoD,” he said.
Much of the work done in ADVANA to take advantage of AI and ML has been foundation setting, but the Comptroller’s Office can now at least start using robotics process automation for financial management. The office uses RPA to automate about 75% of unmatched transactions, by examining how they have been handled in the past and then telling the robot how to treat it. Other uses for AI and ML include stopping fraud, and budget formulation and execution recommendations.
“We’ve actually taken one of our supply classes — munitions — and based on the operational plan, we can predict what budget we need but more importantly, we can also look at the industrial base, determine does the industrial base have enough capacity, and actually give recommendations of how to adjudicate that,” Little said.
Before joining the comptroller’s office, Little was the solution architect for the Defense Agencies Initiative, an Oracle enterprise resource planning system, according to his official biography. And while such systems were assumed to be straightforward solutions for managing daily business activities, Little said it took more consideration to get the right outcomes, including auditing, for the dozens of organizations in the Defense Agencies Initiative.
“And the reason why I’m so proud of what the team has been able to accomplish there is that with such diverse missions, with over 90,000 users processing — millions of transactions every month, we’ve in essence been able to standardize the processes from time and labor, to procurement, to acquire, to retire, to cost accounting, to be able to give that automation and workflow capability, but more importantly, the information and data that we need at the OSD level, but also the directors that are running that organization,” he said.
He said it is important to have “realistic wins” and that with each week DoD gets a little better at automating financial management. Embracing AI and ML overnight will not happen but by first asking the questions of does the agency have the right data, how can analysts get their hands on it, and how to make it important for executives to know each week staff can get there?