Agencies need to put laser focus on business optimization

By Beth McGrath, director, Deloitte Consulting LLP
Former Deputy Chief Management Officer, Defense Department

The government is in a constant state of transformation. While the drivers of change are ever in flux, its current catalysts are shrinking resources from the relentless pressures to cut costs. While agencies’ focus will naturally turn inward to look for solutions, this is no time to play ‘small ball’ – agencies should be bold as they look to improve mission effectiveness and modernize operations.

Beth McGrath (photo courtesy of Deloitte)

The current fiscal environment requires different, more strategic, thinking about how to make budget decisions and achieve the mission within the fiscal targets that are provided without disrupting the mission.

Despite the obvious challenges posed by these circumstances, government leaders have opportunities to make gains by concentrating on priority mission functions, investing more in shared services, working to reduce duplication across organizations and fundamentally changing the way they execute their business. Such practices are the strength of leading Fortune 500 companies in leaner times when sustainment depends on decreasing operating expense to keep or build competitive advantage.

The tools needed to attain these objectives — to build an effective, optimized, business framework — are already well within government leaders’ reach. Instilling a “cost culture” and discipline of performance-based assessment, requiring an end-to-end perspective coupled with robust data analytics, enabling a more accommodating approach to cutting-edge technologies, among other valuable ideas, can make the task more attainable. Any or all can be employed to an organization’s advantage, and nearly every government organization has room to improve operations and increase efficiency in its business operations.

Let’s start with cost and data analytics. Developing a strong cost culture is critical to delivering value. Knowing what it costs to deliver business capabilities will allow leaders to assess the return on investment, leading to improved decision-making.

Opportunities to understand and refine the range and breadth of operations begin with getting a handle on the data. Agencies should first do the work to determine assets, resources, spending and budget direction, workforce composition and other mission-essential data sets. And after establishing access to data, to consider its other key attributes. Geospatial capabilities in the United States are extensive. More than 80 percent of all data now has a location component, but we’ve done little to exploit this opportunity to visualize or analyze it using location as a parameter.

GPS — a product of government innovation — is inevitably becoming an integral component of all vehicles, mobile phones and countless other devices. Data-driven decisions can be instrumental to federal agencies and the nation. They need to find the value and exploit the data.

Agencies are sitting on mountains of data, but it’s only useful if captured, managed and analyzed. Those efforts, for the most part, are lagging. It’s not that the value of actively processing available data streams isn’t recognized in Washington. In fact, the success of our Intelligence Community (IC) is testimony to the value the IC places on data collection and interpretation — to a powerful effect. Other federal organizations have room to grow and obtain these benefits, as well.

New approaches to data collection and analysis can drive the business case for IT innovation in the public sector. The U.S. Army rolled out a financial system that incorporates cost accounting and is more reliant on data to shape its budget. It provides the Army a level of predictive analytics that is crucial to both today’s operational needs and future budget-setting endeavors. The Transportation Security Administration (TSA) employs a risk-based security approach by using data intelligence to designate high and low-risk passengers before they enter a checkpoint.

Like many leaders with depth of experience in government, there’s one thing I can say with certainty: Filling the budgetary toolbox with all of these implementations is step one in building an optimized and effective business framework. But it is just the start. You must use them with discipline, engage your workforce in their application, study and share the results, learn from what works and what doesn’t – and then start that cycle over. A healthy practice of business optimization is never complete. Just as agencies’ missions endure and evolve, so must the business of managing and enabling them.

Institutionalize an End-To-End Business Process Perspective: All federal agencies execute their respective missions across both organizations and functions. Therefore, it is imperative that business processes are understood and executed in a holistic end-to-end view that cuts across these functional and organizational boundaries. This perspective facilitates the effective use of process improvement, investment decision making, and risk management techniques to guide ongoing business transformation.

Using an end-to-end business process perspective, helps in identification and elimination of system redundancies, creating interoperability, and achieving data transparency.

Beth McGrath is a director at Deloitte Consulting LLP, and the former deputy chief management officer and performance improvement officer at the Defense Department. In her current role at Deloitte, McGrath serves as an advisor to Deloitte’s federal government and commercial clients to provide strategies that enable them to innovate and improve their business operations.

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