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CHIPS Articles: Measuring the Department of the Navy's eBusiness Transformation

Measuring the Department of the Navy's eBusiness Transformation
By Jeff Greene - October-December 2002
Many of us first learned about transformation and measuring change in our high school biology or physics classes. In the physics and biology laboratory, we had the experience of measuring transformation through visual cues using petri dishes or through tools such as thermometers and barometers. Measuring change is really no different in the business world: visual cues (e.g., management by walking around) and tools (e.g., metrics) are vital techniques used to ensure a company is successful in executing its strategy. Our focus on measuring change in the Department of the Navy (DON) is based both in law -- Clinger-Cohen Act of 1996, as well as good management practice. One specific target of change measurement is the eBusiness (eB) transformation, and the tools we use to measure it are as varied as the eB initiatives themselves. The reasons and need for measurement are compelling.

Information Technology (IT) spending in the Federal Government in 2002 will exceed $48 billion; it will be more than $52 billion in 2003.1 Most of this transformational spending is focused on Internet initiatives as over 22 thousand government Web sites contain over 35 million Web pages.2 The IT management responsibility for this budget exists at many levels within the Federal Government. Mr. Mark Forman, Associate Director for Information Technology and eGovernment at the Office of Management and Budget (OMB) resides at the top with Government-wide management accountability. Since the President's Management Agenda for Fiscal Year 2002 contains "Expanded Electronic Government" as one of five Government-wide initiatives, Mr. Forman has been specifically focused on this task.

Applying eBusiness solutions to expand eGovernment has four specific areas of emphasis: (1) service to individuals (making it easier for citizens to get service and interact with the Federal Government), (2) service to businesses (reducing the burden on businesses by using Internet protocols and consolidating the myriad of redundant reporting requirements), (3) intergovernmental transactions (making it easier for States to meet reporting requirements while enabling better performance measurement and results), and (4) internal efficiency and effectiveness (improving the performance and reducing the cost of Federal Government administration by using eBusiness best practices in areas such as supply chain management, financial management, and knowledge management).

Mr. Forman's effort at eGovernment transformation began in late 2001 by calling together representatives from all federal agencies, including the Department of Defense (DoD). This working group, named Quicksilver, identified 25 initiatives that have since been approved by the President's Management Council, all of which respond to the President's Management Agenda task for expanding eGovernment. As these initiatives mature, several will have direct and immediate impact on the DoD and DON such as: eGrants, eTravel, Integrated Acquisition, eRecords Management and eAuthentication. Significant progress on these initiatives is expected over the next 18 to 24 months.

As to transformation within the DON, eBusiness has been a watchword for several years. An eCommerce (eC) trailblazer, the DON has sought to create paperless commerce opportunities since the early 1990s. The DON's eB focus is more than just automating manual processes and eliminating paper transactions. eB will move the Department into an enterprise-wide electronic business environment and fundamentally change the way we operate by applying business process reengineering (BPR). But BPR and change are not good enough; our commitment to support the warfighter demand that we measure our progress to confirm that change is not being made for change's sake. Congress has taken action on this matter with the Government Performance and Results Act (GPRA) of 1993, directing agencies to monitor and report performance through measures tied to strategic goals. Specific to investments in IT, the Clinger-Cohen Act (CCA) of 1996 directs agencies to manage IT using mission performance measures.

There are many ways to perform this measurement tasking. One method gaining particular momentum in industry is the Balanced Scorecard methodology. Devised by David Norton and Robert Kaplan in the early 1990s, the Balanced Scorecard methodology accounts for weaknesses with many traditional financially-based metrics schemes, which measure what has happened but provide little as a leading indicator to provide insight into future direction.

As its name implies, the Balanced Scorecard seeks a balanced set of measures including those that are financial and nonfinancial, short- and long- term, leading and lagging, with external and internal performance perspectives. Most important, the Balanced Scorecard is very strongly tied to an organization's strategy; a significant component of the measurement effort is devoted to insuring the company's strategy is achieved rather than just short- term, tactically-oriented objectives.

The traditional balanced scorecard has four perspectives: financial, customer, internal processes, and learning and growth. Governmental scorecards commonly add a fifth perspective called "stakeholder" to recognize the significant role played by internal and external stakeholders in the public sector.

In 2001, the Department of the Navy Chief Information Officer (DON CIO) called together a team of personnel, with the aid of Patrick Patterson, a trained facilitator from Balance Scorecard For Government (BSC4GOV), to develop a DON eBusiness Balanced Scorecard. This scorecard is intended to apply across the DON and measure the Department's eBusiness transformation.

While the scorecard is still in a draft stage, a great deal of activity has been devoted to the effort. Through a series of interviews with senior executives in and outside of the DON, a draft set of potential eB objectives was crafted for each of the five perspectives. Beyond these potential objectives, several potential measures and alternative initiatives have been identified. The next steps in the Scorecard's development will be for the Department to: 1) select a single objective for each of the perspectives, 2) select specific measures for each chosen objective, and finally, 3) assign a champion for each perspective.

Assigning champions who are responsible for managing the achievement of Balanced Scorecard objectives is perhaps the most important key to the success of any Balanced Scorecard implementation. The ownership and regular involvement of a champion provides management oversight to the activity that is measured and enables the organization to take the final step in the execution of a Balanced Scorecard.

For further information about the balanced scorecard methodology, readers are encouraged to read "The Balanced Scorecard" and "The Strategy-Focused Organization," both by Robert Kaplan and David Norton.

Sources

1.The President's Budget, FY 2003

2.E-Government Strategy – Simplified Delivery of Services to Citizens, 27 Feb 2002, Office of Management and Budget, page 1, Mark Forman

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