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CHIPS Articles: Message from the DON CIO, July-September 2011

Message from the DON CIO, July-September 2011
Changing the IT Business Model
By Terry Halvorsen - July-September 2011
The Department of the Navy must change the way it manages its business information technology (IT) systems. It is the reality of these fiscally constrained times; and frankly, it is the right thing to do as good stewards of taxpayer money.

As we examine and evaluate our business IT, we are going to follow the money — because where we spend the most money — is where we will find the biggest opportunities to save. Everything, short of our combat systems, is on the table.

Under Secretary of the Navy Robert Work directed the department to cut its IT budget by 25 percent over the next five years. We will not hit that target by doing the same things we do today more efficiently. A cut of this magnitude requires a fundamental shift in our IT business model. It will require taking risks and doing things that would have been considered too risky or too controversial in the past.

While this process will be a difficult one, it will ultimately move the department toward greater effectiveness and efficiency. We will not pursue anything that will negatively impact the department's ability to achieve its primary mission of protecting this nation in the name of being more efficient. But as we become more effective, the efficiencies will follow.

Today we are running more than 2,000 applications on the NMCI network, which includes multiple versions of the same software, and software that is used by a small number of people. We have 140 to 150 data centers in operation that are not optimally located. The result is an extremely complex and duplicative network structure, which generates greater purchase and manpower support costs, in addition to test, certification, operation and maintenance expenses. Some of the areas we are examining include the following.

Application Redundancy. The department has a number of applications that basically perform the same function, and some that are used by a small number of people. We must look at these applications and question whether a unique requirement is worth the cost of multiple applications performing the same function, or whether an application is worth keeping if it's not widely used. We are doing the math and considering what value we are actually getting for our investments. We will decide which applications are worth keeping and which will be eliminated.

Data Storage and Management. The trend in industry is to consolidate data centers to reduce costs; the department must do this as well. We are already making progress; we have closed seven data centers so far this year. We are considering current and future needs, as well as operational costs, when determining which data centers to close. We cannot afford to provide immediate access to all data so we must standardize and prioritize data. If we have fewer data centers with better connectivity, we can send high priority data faster. This is difficult to do now with data stored in different standards and in many data centers.

Enterprise licensing. We must require purchasing via enterprise licenses with no waivers granted. Allowing waivers led us to where we are today with multiple versions of software, including customized software. We cannot continue to customize off-the-shelf software at the rate we currently do because once we customize we are required to pay for testing and updating. We must centralize decision making to determine if and when customization will be allowed. In the future, this may mean changing a process rather than customizing software to fit that process.

Governance. We must improve governance across all IT functions, which will enable the department to act more like an enterprise. I am working with Marine Corps and Navy leadership to address this. Not everyone will like the result, which will be more centralized governance. However, this does not mean all execution will be at the department level; it means centralized governance through the two services.

Addressing these issues will reduce the complexity of the network and associated costs, which will allow the department to accomplish its mission more effectively and more efficiently. As we consider the options before us, we are asking industry for suggestions on how to achieve meaningful savings. Some changes under consideration include moving to commercially provided email, operating data centers in a public/private venture similar to how the military manages housing, and delivering common applications via cloud computing.

It is a balancing act. In moving to new business models, we must balance risk, total cost and the mission with an enterprise perspective. We also must get better at analyzing IT costs and taking risks in our business IT operations that will not impact the mission. Security is a key consideration in this process, but we need to understand the actual value we are getting for our security dollars. While it is necessary to meet requirements, we must understand the value of going beyond those requirements.

What level of security and at what cost? We must begin realizing savings in fiscal year 2013. Reducing the IT budget by 25 percent won't be easy. But it must be done, and it must be done smartly. We must act more like an enterprise to become more effective and efficient, which ultimately enables us to better support the Sailors and Marines working around the world to achieve our mission.

DON CIO Terry Halvorsen
DON CIO Terry Halvorsen
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