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CHIPS Articles: Department of the Navy Electronic Business: A Revolution in Business Process Reengineering

Department of the Navy Electronic Business: A Revolution in Business Process Reengineering
By CHIPS Magazine - April-June 2001

Electronic Business (eB) is defined as the interchange and processing of information via electronic techniques for accomplishing transactions based on the application of commercial standards and practices. Further, an integral part of implementing eB is the application of process improvement or reengineering to significantly improve business processes. Process improvement or reengineering must be accomplished prior to incorporating technology solutions that facilitate the electronic exchange of business information.


The Department of the Navy (DON) has embraced eB as the singularly most important tool to modernize, streamline and reduce the cost of operations associated with our business processes and systems. It will directly and significantly improve service to the warfighter. Successful eBusiness implementation will require a cultural change in the way the DON thinks and operates. The DON's ultimate goal for eB is to integrate business process improvement efforts with Web enabling technologies and digital marketplace strategies to ultimately provide better support to the warfighters. To this end DON created the eBusiness Operations Office.

The DON CIO (Chief Information Officer) formally established a dedicated eBusiness Team in February 2000 to develop Departmental policy and strategies to integrate the many current ongoing efforts. Also, an eB Working Group (comprised of the Deputy DON CIO for eB and Security, OPNAV (N41), and ASN(RDA)-(Deputy for Acquisition & Business Management)) was established by and reports to the Revolution in Business Affairs Executive Committee. The eB Working Group Charter calls for facilitating the integration of current eBusiness initiatives and developing a roadmap for implementing an integrated business management process for the DON.

Current Status

The DON CIO eBusiness Team has many efforts underway. Specifically, the team manages eBusiness policy and strategies to include Enterprise Resource Planning (ERP), Smart Card Policy, web-enabling policy for the Department; compliance with the Clinger Cohen Act and its business process reengineering requirements; and the FY2000 Defense Appropriations Act (Section 8121 regarding information technology (IT) database and registration process. To date, the team has developed a DON eBusiness Strategic Plan, assisted in establishing the DON eBusiness Operations Office, and planned two eBusiness educational conferences to further communicate to both DON leadership and working levels the importance of an eB transformation to DON success.

At the direction of Mr. Charles Nemfakos,Deputy Under Secretary of the Navy, the DON CIO eB Team worked with stakeholders to create the DON eBusiness Operations Office. The eBusiness Operations Office charter, signed by the Secretary of the Navy in September 2000, charges the eBusiness Office to be the DON eB innovation cell as well as the DON consolidated card management program office. As an innovation cell, the office has evaluated over 300 "Internet-speed" pilot projects and is developing the pilot project investment portfolio strategy for the Department.

The DON CIO eB Team is also developing a balanced scorecard approach to measuring eB transformation progress. Balanced scorecards are carefully selected sets of metrics that measure key areas of business performance to indicate progress towards meeting goals and objectives and reaching the organization's vision. When deployed throughout an organization, the scorecard provides a proven way to translate strategy into daily activity.

The DON CIO is sponsoring two events to accelerate eB concepts and make clear how they can transform the business processes of the DON. First, DON CIO will sponsor an eBusiness Summit for the senior leadership of the Navy and Marine Corps to further inculcate the concept. The event is planned for summer/fall 2001 at Oracle headquarters near San Francisco, California.

Second, the DON CIO will sponsor an eBusiness Knowledge Fair in Washington, D.C., in August 2001. Focusing on the working levels, the theme of this event will be the integration of knowledge management with ebusiness. It will demonstrate the synergy between the two initiatives to create a more efficient and effective DON, and demonstrate how using the Internet and Navy Marine Corps Intranet (NMCI) will change the way the department does its business.

eBusiness Operations Office

In May 2000, Mr. Nemfakos forwarded a memo to the Secretary of the Navy outlining the need for and his vision of an eBusiness Operations Office within the DON. Having visibility at the department level, Mr. Nemfakos experienced firsthand, problems with the introduction of new initiatives, such as the purchase card and decentralizing management of functions such as centrally billed airline tickets. From a DON perspective, the current process did not provide for necessary management attention; or development of a cadre of expertise; lacked a consistency in approach; and did not delineate a clear understanding of who was responsible to solve problems.

Recognizing that Navy card programs (Purchase, Travel, Fleet, Air, Smart) and other electronic transaction programs (ATMs-at-Sea, PowerTrack) are all managed by separate organizations, Mr. Nemfakos believed central management would facilitate exploiting lessons learned and ensure these programs achieve their potential for savings and process improvement. Additionally, he recognized that rapidly emerging technologies were providing benefit in the commercial world and that the Navy needed to evaluate the market and garner similar benefits in the fight to reduce infrastructure cost.

In September, a few short months after the idea was conceived, the Secretary signed a charter establishing the DON eBusiness Operations Office at Naval Supply Systems Command (NAVSUP) headquarters in Mechanicsburg, Pennsylvania. NAVSUP was chosen to lead the program because it is an operational command, and it could provide the necessary capable individuals who are knowledgeable in business operations.

One of the key things that the eBusiness Operations Office is designed to do is to serve as a clearinghouse for fresh ebusiness ideas for Navy and business processes. The office relies heavily on key partnerships with industry to remain current with technology.

Mr. Nemfakos emphasized that it is important for activities and private industry to understand that the DON is adamant about changing its culture and the way it has structured business processes in the past.

Nemfakos said during a Defense Department news briefing, “We are not attempting to arrive at Pentagon central headquarters designed activity and then impose it on the world, but rather we want to gather the best ideas that are available. The business world is changing so fast that we do not have the time that we have traditionally taken to make advances and to implement ideas. The Gartner Group has stipulated—and they’re the gurus in the IT environment—that by 2023, 70 percent of all business relationships will be nontraditional.”

In addition to the clearinghouse aspect for ebusiness initiatives, the Operations Office will be responsible for benchmarking other government agency and commercial industry ebusiness efforts. The results of this research will be made available to all DON activities for use in pilot development and implementations. Another crucial responsibility of this office is the promulgation of DON ebusiness standards to ensure interoperability with the NMCI and Common Access Card initiatives.

Pilot Projects

One of the key capabilities of this new office is the ability to fund innovative ebusiness pilot projects throughout the DON. This presents a great opportunity to immediately initiate a project that has potential to improve the quality of work/life through process improvement, save money, or reduce infrastructure. One critical evaluation factor for proposed projects will be the capability to be completed quickly, generally within 90 days or less. Proposed pilots will also be judged for their potential impact to the largest segment possible within the DON.

Over the 90-day period, the requesting organization will work with the eBusiness Operations Office to clearly define the requirements and allow access to data and systems. Additionally, the organization will be working to position the pilot for implementation after the 90-day period.

The DON plans to invest $20 million for funding and consultative services for ebusiness pilots. In late October 2000, the eB Operations Office issued a data call asking for pilot project proposals. In less than 60 days of operation, the new created office received more than 300 proposals from Navy and Marine Corps activities. The DON anticipates launching about 50 pilots in the first year.

A few examples of the pilot proposals received are:
- Using radio frequency technology in shore and ship storerooms. Parts would be coded so instead of manual tracking of materiel received/issued, radio frequency would be used to automate this process.
- Web-enabling the process for making medical appointments for active duty and retirees and their families. This could be further expanded to allow a virtual conversation between physician and patient, allowing a physician to respond to a patient’s questions at a time that is convenient for both of them.
- Smart Web Move, which would allow Sailors and Marines to arrange for the shipment of household goods online, anywhere that a personal computer can be connected to the Internet.
- Web-enabling child care applications so that if a military member in San Diego is transferred to Norfolk, the member could apply to a military child care facility located in Norfolk to find out the status of the waiting list and obtain other pertinent information.

Rear Adm. Linda J. Bird, the first deputy command for eBusiness, said that even if a pilot doesn’t go into full operation across the department, the pilot could generate additional ideas and provide an avenue for new technology or for reengineering DON business processes.

Next Steps

The next step will be for the DON CIO and DON eBusiness Operations Office to work with functional area leaders and claimants to develop implementation plans based on the DON eB Strategic Plan. Critical to the success of this effort will be the identification of functional area leaders to take ownership of specific areas. The expectation is for implementation plans to be completed by the second quarter of FY01.

Following data collection and analyses by the eBusiness Working Group, guidance and assistance will be provided to the functional and command stakeholders to further ebusiness implementation across the DON. The working group will review initiatives across the department to identify ebusiness opportunities and synergies that cross functional areas.

eBusiness Operations Office charter lists the following as key responsibilities:
- eBusiness Innovation—become DON’s ebusiness catalyst for change.
- Conduct continuous market research and catalog industry and government ebusiness decisions.
- Become a clearinghouse for ebusiness best practices and serve as import/export agent identifying industry and government innovation and broadcast them DON-wide.
- Identify opportunities within the DON to implement new ebusiness solutions and facilitate the integration of existing similar initiatives.
- Provide consulting services for DON organizations implementing ebusiness solutions to include information assurance and architecture and interoperability standards.
- Support functional business owners in developing ebusiness implementation plans in support of the DON eBusiness Strategic Plan.
- Develop and administer a process to invest in pilot projects to foster the implementation of innovative ebusiness solutions department-wide.
- Card Management—manage all DON card programs. Consolidate card programs, where appropriate, and evolve to future technological solutions to create efficiencies and improve customer support.
- Develop a comprehensive, outcome-based metric collection and management program.
- Coordinate extensively with DON customers and serve as the department’s advocate for improved support from private sector financial institutions.

Edited from a DON CIO White Paper release, “Navy eBusiness in Full Swing” by Capt. Jeffrey Pottinger, SC, USN, special assistant to deputy commander, Navy eBusiness Operations Office, Naval Supply Systems Command; and “The Business of eBusiness in the Navy” by Michael Madden, assistant deputy commander for eBusiness and assistant deputy commander for Financial Management-Comptroller, Naval Supply Systems Command.

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