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CHIPS Articles: Navy Achieves Historic Milestone in ERP Cloud Migration

Navy Achieves Historic Milestone in ERP Cloud Migration
Delivering IT Modernization Results that Matter
By Sharon Anderson, CHIPS senior editor - October-December 2019
A dedicated, combined team of experts completed the Navy Enterprise Resource Planning (ERP) cloud migration to a commercial provider Aug. 19, 10 months ahead of the projected completion date, the Navy announced in a release Aug. 23. Nearly $70 billion flows into the U.S. economy annually through Navy ERP, which manages more than half the Navy’s finances.

The migration is a critical step in modernizing financial management capabilities in the Department of the Navy.

“The magnitude of this accomplishment is incredible,” said Secretary of the Navy Richard V. Spencer. “The Navy ERP tech refresh is our largest system cloud migration to date and will enhance the performance of our force.”

The technology refresh capped nearly three years of careful planning and intense preparation, involving tens of thousands of hours by experts from multiple disciplines.

"I am proud of the team efforts to accomplish this on an accelerated schedule, cutting the projected timeline nearly in half," Spencer said. "The team managed this through innovative approaches to problem solving and close collaboration with integration teams, network engineers and industry partners.”

ERP Snapshot

The Navy ERP program is managed by Program Executive Office for Enterprise Information Systems’ (PEO EIS) Navy Enterprise Business Solutions program management office. Naval Supply Systems Command’s (NAVSUP) Business Systems Center (BSC) develops and sustains Navy ERP in support of the program office.

Since its initial pilot in 1999, Navy ERP has consolidated and integrated its financial, supply chain, acquisition, and workforce management functions into a single, auditable system, which provides real-time data availability to six commands with 72,000 users executing more than 56 percent of the Navy’s Total Obligation Authority (TOA). It is the DON financial system of record with 77 interface partners, according to a Navy fact sheet.

Innovative Contracting, Tech Modernization, and Improved Financial Management and Business Practices

Assistant Secretary of the Navy for Research, Development and Acquisition James F. Geurts called the cloud migration and accompanying technology refresh the first step in a larger $100 million-dollar effort to modernize legacy systems and improve the DON’s cybersecurity posture. Geurts was joined by Assistant Secretary of the Navy (Financial Management and Comptroller) Thomas W. Harker in an August roundtable discussion with reporters at the Pentagon.

Not only did the tech refresh launch ERP’s move to the cloud, it also positions the department for further IT modernization efforts and business process reengineering.

Harker explained Navy ERP is the only modern general ledger system in the Navy; the others are COBOL-driven (Common Business-Oriented Language) or some other legacy application.

“Our financial transformation vision is to go down from nine financial systems down to one, and that will be the modern system, ERP. This technical refresh into the cloud gives us the capacity to bring on new customers, the other half of the Navy that is not on the ERP system, over the course of the next two years,” Harker explained.

To ensure adaptability and speed, the Navy leveraged innovative contracting procedures allowing the project to advance from a cold start in 45 days using a GSA contracting vehicle, Amazon Web Services’ GovCloud, and selecting small business partner, Advanced Solutions Incorporated, Geurts said.

“Quite frankly, we thought it would take us 20 months, but we really challenged the team to think differently, ‘Don’t do business as usual in how we award contracts, don’t do business as usual in how we cyber-check the contracts, don’t just go to a traditional partner, look for the performers,’” Geurts said. “And this was a key element of the overall business transformation plan we’re trying to do in the Department of Navy. As we rig for speed in the operational force, we’ve also got to rig for speed on the back office support element. Because if we don’t get the back office piece right, we will not be able to act with the urgency and the agility we need to support folks in the field.”

In part, the objective is aligned with the Defense Department mandate for DoD agencies to produce a verifiable audit; the need to do it now was precipitated by Secretary Spencer’s direction to bring all department financial services into ERP.

We could not do that unless we went to the cloud, Harker explained.

Previously, Navy ERP operated on a Systems, Applications, and Products (SAP) server-based Oracle platform. During the tech refresh, Navy ERP upgraded to the SAP HANA (high-performance analytic appliance) cloud-based platform.

“HANA didn’t exist at the time ERP was rolled out so we used an Oracle database. So now that SAP has a proprietary one you get better functionality. Also combining the technical refresh with the cloud gave us increased capacity, increased functionality, and for the audit process [verifiable data], because we do want to get all the general ledgers down to one,” Harker said.

Six Navy Working Capital Fund activities, Naval Air Systems Command, (NAVAIR); Naval Information Warfare Systems Command (NAVWAR); Naval Supply Systems Command (NAVSUP); Naval Sea Systems Command (NAVSEA); Office of Naval Research (ONR); and Strategic Systems Programs (SSP), have been using ERP services since about 2007, Geurts said.

The DON intends to bring in the remaining commands into ERP in phases.

“Currently, 50 percent of our General Fund activity is in ERP; we are going to convert the remainder into ERP, for example, the Marine Corps Sabre financial management system, and several more into ERP,” Harker said.

The first migration is to be completed in December.

A year from now all Navy Working Capital Fund activities will be in ERP — and all others remaining by 2022, Harker explained.

Immediate Impact

Navy ERP is now an entirely cloud-based system that leverages significantly faster in-memory data storage and processing, according to an earlier PEO EIS brief. The HANA platform allows faster computing speeds across large sets of data in memory column format. It enables a large number of accelerated/optimized transactions in real-time operational reporting. Data is available immediately for real-time processing, reporting and analytics.

“Part of this larger transformation is giving data availability in as real time as we need with a lot of resilience and reliability,” Geurts explained.

Previously, there were delay challenges with ERP in producing various reports, Harker explained.

“The immediate impact is that we have reports that were taking us six hours to run that now take 30 minutes. That’s a quantifiable metric… I anticipate incredible speed in things across the board, for example, entering contracts, entering invoices, and managing the whole budget and execution process will be much faster. The immediate impact on the logistics side, the same thing. A lot of our logistics data is in ERP and we will be able to get things out faster,” Harker said.

The HANA database platform enables a more robust data analytic capability. Previously, data analysis was a cumbersome process that had to be performed outside of the ERP environment.

“The transition from the Oracle database to the SAP HANA database gives us increased capacity for the system to work faster… The migration of the other general ledgers will increase our visibility into the data right now for us to go through financial reporting or any data analytics we have to do. Pulling data from nine systems, not all of which are configured the same, slice and dice [them], and put them all together presents challenges in data reporting and also creates challenges in doing any advanced data analytics around that data,” Harker explained.

The tech refresh included “a laundry list of system improvements” that were incremental changes requested by users. In many cases, changes that would make ERP easier to use.

The PEO EIS brief outlined several improvements: (1) Simplified Launchpad with role-based entry; (2) Self-service reporting and analysis in flexible and visually intuitive formats; and (3) Customizable screens to accelerate transactions.

“Any time you can improve transparency and ability for users to get real-time actual data that adds efficiencies across the board. If I can now understand much more quickly what my inventory is, what my financial status is, and my availability of those, then I can start making much more rapid decisions, which will translate to the flight line and on the pier to much better support over time. It will take us a little time to change our practices to leverage the speed, but if we can get rid of the inefficiencies that are taking people’s time… then we can improve customer support to those deployed and in overseas locations,” Geurts said.

IT Efficiencies / Lessons Learned

Geurts called the tech refresh one of the largest migrations to an ERP cloud-based system in North America. However, there are some other firsts helping the DON to achieve IT transformation, including going through a Defense Information System Agency (DISA) Control Access Point (CAP). CAPs enable two major functions: to provide mission partners with dedicated connectivity to approved Level 4 and 5 commercial cloud providers, and to protect the Defense Information Systems Network (DoDIN) from any attack that may originate from a cloud environment.

Using the CAP and DISA process allowed the program to speed the Authority to Operate accreditation.

“That sets up well to put those applications and data to where the cloud provider is coming from. It decouples the applications from the infrastructure and gives us a lot more flexibility as we go forward —whether it is JEDI or whatever cloud-based system we decide to ride on,” Geurts said.

“We are also using this as another good pathfinder to help accelerate those other cloud-based activities whether in the [shipboard] CANES (Consolidated Afloat Networks and Enterprise Services) program, and other PEO C4I efforts. It gives us flexibility, particularly where you have the Navy and Marine Corps in a force, where you have ashore and afloat activities, and understanding how to leverage the benefits of a cloud capability in an area where you don’t have a cloud. Those are some of the things we are working our way through,” Geurts said.

At the same time, the DON is making changes to the system and business processes, standardizing how those work — doing some reengineering work — optimizing resources so the DON only pays for one process and one system, Harker explained.

“The data we fused was all the financial data — all the data that was currently in the Navy ERP system. The way we are structured right now is the asset information in the ERP system is the Navy Working Capital Fund parts inventory and some of the parts data surrounding our ships and aircraft. We do not have a lot of our other equipment in our Navy ERP system,” Harker said. “So we have, what is referred to as multiple accountable systems of record. So, for example, a lot of our real property inventory is in iNFADS (Facilities Assets Data Store) which NAVSUP maintains. Are we going to migrate that data into the ERP system at some point? We hope to, but it is phased, based on risk, and right now, our goal is to get the general ledgers consolidated as our first step.”

Harker predicted further modernization and incrementally bringing in more DON activities into ERP will become easier facilitated by advanced technologies that are becoming available nearly daily.

“Lessons we have learned from this is how to migrate data fast and accurately. We did have challenges moving data from one to another but those are lessons that we can use in consolidating the remaining activities,” Harker said.

Secretary Geurts said the ERP cloud migration represented much more than moving from one technical architecture to another or one vendor to another.

“We are trying to use this to experiment as a way forward to continue to do business system transformation, which is more than just a technical piece… I think it is equally important to how we experiment in terms of how we do other elements of the business. And to me this is a pretty demanding experiment in can we come up with a better way to achieve this business system transformation than we have been able to do previously,” Geurts said.

“Making this larger step and making it in a way that is a little bit remarkable — which is where the Secretary wants us to get to — using modern tools, modern processes, be aggressive and experimenting with new approaches, yet being rigorous in engineering and cyber discipline. So that as you do this you can have assured mission performance and a great partnership with the technical and acquisition community, and in this case, the financial management community, working hand-in-hand to deliver results that matter,” Geurts said.

Harker agreed.

“It’s a success story that has laid the groundwork for future success. A lot of work ahead of us, but we have a good partnership going forward.

James F. Geurts, Assistant Secretary of the Navy for Research, Development and Acquisition
Thomas W. Harker, Assistant Secretary of the Navy (Financial Management and Comptroller)
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