Why It’s Time to Upgrade the DOD’s Financial Management Systems

Anyone waiting for their next paycheck or for budget approval on their latest project will tell you that while financial systems may seem to sit in the background of defense functions, they are, in fact, the lifeblood of every mission. Today, as digital transformation takes hold across the  Defense Department, systems are becoming more interconnected, making it critical for the organization to tap modern, digital technologies that can improve financial management processes and keep pace with the speed of innovation.

“Financial management is a service delivery business, and the mission area grows as the businesses they serve continue to grow,” explains Jonathan Moak, former acting assistant secretary of the U.S. Army for Financial Management and Comptroller, who now serves as vice president of Strategy & Business Development at Salesforce. “While in the past they may have operated independently, things are now changing.”

Indeed, the government at large has determined it’s time to overhaul the DOD’s financial systems: Per the National Defense Strategy, the DOD has been tasked to reform its financial management Enterprise Resource Planning systems, or ERPs, to be more standardized and data-driven. But these changes are not simply to keep pace with modernization; they are also meant to address the ongoing challenges that accompany today’s highly customized systems.

“Over time, the DOD has implemented an array of customized technologies to meet financial management and asset management needs, and the reliance on that customization has led to technical and functional debt that raises the sustainment cost,” says Moak. “It also has the potential to introduce information security vulnerabilities.”

Moreover, as experienced and highly skilled IT staff reach retirement age, the DOD is finding it increasingly difficult to find personnel with the know-how necessary to maintain the aging systems, leading to major talent shortages.

“Ultimately, these on-premises, custom-code models just aren’t sustainable, it becomes too costly and difficult to maintain them in the long run,” says Moak.

The Advantages of Modern ERPs

To move toward more sustainable, cost-effective and user-friendly financial management ERP systems, the DOD will need to look to adopt commercial technologies, such as cloud computing, big data analytics and even artificial intelligence, at a more rapid pace.

“As technology’s rate of change accelerates, we must enable technology advancement by taking advantage of existing ‘out of the box’ cloud Software-as-a-Service and Low Code Platform-as-a-Service solutions,” he says. “The cloud-based systems are flexible. They reflect modern innovation, and they really start to help us untangle the legacy ERP FM and asset management systems.

Moak notes that this helps align these systems with the National Defense Strategy in a number of ways: stewardship of public trust or the taxpayer funds, sustainable auditability and improved insight into financial management transactions.

By tapping these cloud-based platforms, the DOD can make use of emerging technologies like AI and analytics to gain a number of benefits, including:

• Flexible and adaptable processes: Many of today’s systems are siloed, complex, costly to maintain and not flexible enough to adapt to new processes. With PaaS tools that can offer rapid application development, the DOD can quickly configure and develop the highly responsive and modern applications they need. And, according to Moak, IT managers can also design applications for specific needs without having to code every element, saving time and resources.
• Process transparency: Visibility into operations and assets isn’t just important for the DOD, it’s foundational when it comes to introducing more automated processes. But transactional systems don’t always offer full insight into process effectiveness. With as-a-service platforms, the DOD has access to the end-to-end support they need to gain visibility into their systems to better manage the people, processes and technology that make missions successful.
• Fewer silos, more integrated data: It’s no secret that big organizations like the DOD struggle with data sharing, meaning decision-makers often don’t have access to all information the organization holds. But cloud-based ERP systems, unlike their predecessors, are flexible, functional, and built to battle information silos by integrating information and creating a full picture of data that can measure up to modern mission demands.
• Data-driven decision making: Modern ERP systems also bring together financial data in a way that enables analytics, offering DOD leaders the opportunity to gain new insights into people and materials regardless of location, across functions and across time. This ultimately enables data-driven decision-making and increases mission readiness. Analytics can also measure and monitor performance and readiness in real-time

“Ultimately, these systems support the warfighter through faster and more efficient transactions and by better securing data on their activities,” explains Moak. “They allow for more authoritative, accurate and timely information for decision-making for senior leaders.”

The result, he explains, is a well-trained, informed and productive workforce that's excited about their work because the technology frees up time, enabling them to focus on higher-priority initiatives.

Starting the Financial Management Modernization Journey

While modernizing is important, it also requires careful planning, expertise and execution. This is especially true for organizations like the DOD, who’s financial management IT landscape is composed of over 340 financially relevant account and business systems and a workforce of around 54,000 civilian and military personnel across various disciplines. Not to mention that many feeder systems are currently undergoing planned migrations.

While financial management is certainly a challenge, it also presents the DOD with an unprecedented opportunity to transform their systems to not only meet upcoming functional and IT requirements, but to transition systems to ones that are more collaborative and integrated.

So how can DOD IT leaders get started? The first step, according to Moak, is to recognize that current systems aren’t working effectively — and to commit to cloud systems as a potential solution.

“The first step is admitting you have a problem,” says Moak. “Identify the problem and then decide to use cloud services as your strategy.”

To create an effective strategy, the DOD will need to call on expertise from both industry and government.

“When you're making the decision to move to a cloud service software or platform, there are some questions you should ask yourself: Why are cloud services important to my agency? What's the right mix of those cloud services and how can my agencies safely migrate to cloud platforms? You want to think about the answers to those questions before you get started because the decision to use cloud services is not the strategy,” says Moak. “That's just the first step.”

To take advantage of this, the DOD will need to call on expertise from both industry and government to create a solid, effective transformation strategy, because modernization is certainly not a one-size-fits-all approach.

“A successful cloud transformation really requires tactical planning of what to move and when, plus a look at long-term changes to culture and operating models, because you really can’t leave out the people aspect of that change,” says Moak. “It takes a lot to convince your staff that there's a need to change, and that you're going to give them the skills and prepare them for this future environment. So keeping them in mind and deploying rapid, user-friendly technologies that allow them to work most effectively is key.”

Learn more about how Salesforce can help to transform the DOD’ financial management systems.