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CHIPS Articles: Q&A with Eric Fanning

Q&A with Eric Fanning
Deputy Under Secretary of the Navy and Deputy Chief Management Officer, Office of the Under Secretary of the Navy
By CHIPS Magazine - July-September 2012
Previous to his position as Deputy Under Secretary of the Navy and Deputy Chief Management Officer, Mr. Fanning was deputy director of the Commission on the Prevention of Weapons of Mass Destruction Proliferation and Terrorism, which issued its report in December 2008. From 2001 to 2006, he was Senior Vice President for Strategic Development at Business Executives for National Security (BENS), a Washington, D.C.-based think tank. At BENS, he was in charge of international programs and all regional office operations in six cities across the country. During his time at BENS, he traveled to more than 30 countries, mostly in Africa, the Middle East and Europe, including multiple trips to Iraq and Afghanistan.

CHIPS: In a CHIPS interview with Under Secretary of the Navy Robert O. Work last September, the Under talked about the imperative for the department to achieve a 25 percent reduction in costs over five years in business information technology reform. Mr. Work said that you demand a business case analysis for essentially everything that is not a tactical or operational system in the budget process. Can you explain how a business case analysis is developed and then reviewed?

Fanning: In the simplest terms, a business case asks two questions: why and so what. Why are you doing this? What are you hoping to achieve? And so what? Why does that matter? Will you save money? Will you increase performance in some critical area that someone cares about? There is a tendency in the Pentagon to throw technology at a problem — especially the bright shiny new technology. My job is to ensure that before making an investment decision that we clearly understand the business problem and can clearly articulate how a particular investment will help achieve the business outcome that is needed.

We look at technology as an enabler, not a magic wand or an end unto itself. Instead of focusing on technology we focus first on what outcome the department is trying to accomplish and work backwards. First we look at policies, procedures and processes and see if they are inhibiting our ability to execute. It is not until then, after this analysis has been completed, do we determine if technology can help to enable that outcome.

CHIPS: Under Secretary Work also said that this austere budget environment is a time when good people and good ideas matter the most. Can you talk about some of the good ideas that have emerged since the Department of the Navy began its drive to cut business IT costs?

Fanning: Good ideas do matter. For example, perhaps the best idea we’ve had is to not to treat technology as a panacea for our business problems. Instead, we look at the business problems, deconstruct them to component parts, and enable solutions with technology only when necessary.

For example, in 2009 the Navy was handed the remnants of the Defense Integrated Military Human Resources System (DIMHRS) and told to try and implement it in the Navy. As we started down that road we requested an independent assessment on that effort and concluded that the Navy should stop inserting technology until we had defined what the business problems were.

We then spent a year deconstructing our business processes, baselining our cost of doing business and prioritizing the highest impact business problems. Because of this approach, today the Navy is able to target specific problems holistic to the personnel and pay business — taking into account policy, processes and execution — before throwing technology into the equation. This approach has resulted in the N1 (Deputy Chief of Naval Operations for Manpower, Personnel, Training and Education) being able to give back roughly $300 million to the Navy while modernizing its personnel and pay systems — in the right way.

CHIPS: Since there is no single budget line that says: DON business IT, Mr. Work said it was difficult to identify business IT spending within the department. Now more than a year into the efficiencies process, does the DON have a better handle on its business IT spending? Are you optimistic about the DON meeting its 25 percent reduction objective?

Fanning: Trying to single out IT spending is difficult exactly for the reason you cite: there is no separate line item that says IT. But it’s actually more complicated than that. We make a distinction between what we call commodity infrastructure IT (servers, desktops, data centers) and business IT systems enabling specific and specialized business processes.

We think it’s entirely appropriate to try and centrally manage commoditized resources; however, when a particular system is closely correlated to attaining business outcome you have to be much more careful. In an effort to lower IT spending an organization may inadvertently drive up total operating cost — maybe because they replaced the IT with labor or maybe because they incurred disproportionately high integration and implementation costs, making return on investment impossible to achieve. IT is only part of the total operating cost of a business and you have to look at the whole equation.

Having said that, we are confident that we will achieve the 25 percent savings in IT. I work closely with DON Chief Information Officer (CIO) Terry Halvorsen, who has the lead in this particular effort. He has already made enormous strides, giving added confidence to leadership that we will successfully achieve this goal.

CHIPS: Is there anything that you would like to add?

Fanning:In an increasingly austere fiscal environment it is critical that the Under Secretary be able to see and manage resources at the department level. Our investment in Enterprise Resource Planning systems has lacked focus in delivering business benefits. If leadership had better visibility into the business operations we could more effectively allocate resources, improve our cost efficiency and support auditability.

We have begun an Enterprise Resource Management effort to do just that. Rather than being system focused, this initiative is centered on establishing requirements and standards for data and processes — standards which are carefully and appropriately set for each specific echelon and function of the organization. The department is committed, with leadership driving this initiative from the top: defining goals, removing barriers and ensuring the execution is sufficiently resourced.

In our work, the Deputy Under Secretary of the Navy/Deputy Chief Management Officer views DON CIO as an integral partner in the successful management of the Navy. In my role as Deputy Chief Management Officer, I view the Navy as a business whose mission, among other things, is to provide personnel and material to the combatant commanders as efficiently and effectively as possible. That requires that my team, in concert with the functional business owners, to constantly look for ways to improve operations, take cost out of the system and think of new ways of doing things.

To be successful we need to completely understand how the business operates and also how much it costs. When we find opportunities to improve the business, we team with DON CIO to see how technology can best help enable the solution.

For more information about Department of the Navy IT cost-savings initiatives and policy, visit the DON CIO

Deputy Under Secretary of the Navy and Deputy Chief Management Officer Eric Fanning
Deputy Under Secretary of the Navy and Deputy Chief Management Officer Eric Fanning
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