Navy ERP: Where We've Been – Where We're Going
Ms Beverly Veit Office of the Assistant Secretary of the Navy (Financial Management and Comptroller), Office of Financial Operations, Systems Team Lead PDI
June 2010
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What is ERP? Integrated Business Management System Financial and Acquisition (1.0)
Wholesale and Retail Supply (1.1)
• Financial Management: General Fund & Navy WCF • Procurement • Work Force Management • Program/Project Management
Modernizes & Standardizes Business Operations • Common processes and data support real time information exchange across the Navy • Navy ERP will enable DoN to have auditable financial statements for the first time
Provides Management Visibility Across the Enterprise • Single entry, single source data, single view of organizational status • Asset visibility allows better management of inventories • Currently, ~27% of the Navy’s TOA is managed within Navy ERP, with a target of 50% for the POR at FOC and 100% for the Financial Extension
• Planning • Allowancing • Procurement
• Repair of Repairables • Order Fulfillment
Increases Effectiveness & Efficiency
• The Navy is currently turning off legacy systems and eliminating their maintenance expense • Navy ERP implements streamlined processes, standardized across DON to ensure mission support
Utilizing commercial off-the-shelf product and business process reengineering, the ACAT1 Program Office is comprised of subject-matter experts, industry partners, and its customer commands
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Navy ERP Strategy A two phase deployment (by functionality) resulting in one integrated solution Financial and Acquisition (1.0) – Designed to give an Echelon II or III command a full suite of tools to perform their financial & acquisition functions – Functionality grouped into four categories: • Financial Management: General Fund & Navy Working Capital Fund • Procurement • Work Force Management • Program/Project Management
Wholesale and Retail Supply (1.1)
PARTNESHIP
– Designed to support the Navy’s Single Supply Solution. Program of record for repairables and consumables – NAVICP will be the single Inventory Manager for NWCF, setting allowances and aligning budgets with dollars – Functionality falls into five end-to-end supply chain management processes: • Planning • Allowancing • Procurement • Repair of Repairables • Order Fulfillment
Potential Future Capabilities:
Financial Extension, Maintenance, Reporting, Contracting, Material Equipment Valuation, Foreign Military Sales (FMS), Manufacturing Planning & Control, Material Tracking 3
Program of Record – Deployments
4 Navy FMC
Program Functionality Finance (NWCF)
Finance (General Fund) Budgeting
Billing
Billing
Budgeting
Business Warehouse
Cost Revenue & Planning
Retail Supply
Plant Supply (Core)
Inventory Mgmt
Environmental Health & Safety (EH&S)
Order Fulfillment Supply & Demand Processing
Warehouse Mgmt
DFAS Interfaces
Credit Card
Supply Forecasting
Direct Cite
DFAS Interfaces
Warehouse Mgmt
Physical Inventory Serial No. Tracking (End User Only) DLMS/MILSTRIP
Travel (DTS)
Travel (DTS)
Regional HAZMAT
Inventory Mgmt
Echelon I Fin Accounting Fixed Assets
Echelon III Fin Reporting
External Procurement
External Procurement
General Fund Accounting
Fixed Assets
Cost Planning
MISIL (Foreign Military Sales)
Managerial Accounting
Period End Close
NWCF Accounting
Portals (Basic Log In)
Period End Close
Credit Card
Project Mgmt
Automated Identification Technology
Wholesale Allowance
Organization Mgmt
Supply & Demand Planning
Personnel Admin
Supply Outfitting Carcass Tracking Order Fulfillment
Personnel Development Time Management Training & Events Mgmt Business Warehouse
Supplier Relationship Mgt
Acquisition
Supply Forecasting Inventory Mgmt
Activity Based Costing
Packaging Handling Storage & Transportation
Awards
Provisioning Consignment
Project Mgmt
Repairables Management
Echelon II & III Financial Reporting
Environmental Health & Safety (EH&S)
Deployment Order:
WFM
Budget Exhibits (52) Status of Funds Reporting Engineering Change Management Production Planning Standard Procurement System EVM
Funds Allocation Prototype 1.0 - Ech. II/III Financial & Acquisition 1.1 - Wholesale & Retail Supply
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Interfaces
PROCUREMENT
Navy: 30 OSD/BTA: 8 WORKFORCE DLA: 3 MGMT. DFAS: 10 Treasury: 1
Navy: 30 OSD/BTA: 8 DLA: 3 DFAS: 9 Treasury: 1
Deployment Order: 1.0 - Financial & Acquisition 1.1 - Wholesale & Retail Supply
ADS APVM-EUD CCR DAAS DCAS
1.0 Financial Acquisition
MASTER DATA
DONIBIS DONCADS MISIL MPCS NALCOMIS NES OPINS PBIS RAPS TFMMS UICP CDF-NG CDMD-OA CFMS CPEN eRMS FACTS G02APU ICAPS ITIMP NALCOMIS-OIMA NDMS OTS PARTS Readiness Suite REMAD SLDP TIER 2 TRIDENT LDS
DoD INTERFACES
DCD DCPS DDRS DTS FRB FRS IPAC myInvoice PPVM-EUD SPS STARS-HCM WAWF
1.1 Supply Chain Management
PROGRAM/ PROJECT MGMT.
SUPPLY CHAIN MGMT.
1.1 Supply Chain Management
FINANCIAL MGMT.
1.0 Financial Acquisition
NAVY INTERFACES
WEBCMET FLIS RMDC SABRS STARS-FL
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Daily Life in Navy ERP The ten most utilized Navy ERP transaction codes (grouped by business process) with weekly access/usage ranking –
A transaction code is a command that tells the system location of a task. Each function in SAP has a transaction code associated with it, which provides a shortcut to a specific function in SAP. One Touch Support (OTS) is a web-based system that provides customer on-line requisitioning, technical screening, asset visibility, shipment status, requisition status information, and support request management At the time of gathering (April 2010) Navy ERP had ~34,000 users
– –
Weekly Ranking
Transaction Code
Transaction Description
Requests Per Wk (in '000s)
Response Time (seconds)
4
ME51N
Create Purchase Requisition
242
1.06
7
ME52N
Change Purchase Requisition
101
1.24
1
ME53N
Display Purchase Requisition
607
0.6
13
ME21N
Create Purchase Order
11
0.41
10
ME22N
Change Purchase Order
44
0.4
3
ME23N
Display Purchase Order
323
0.37
8
MIGO
Goods Movement
60
0.49
12
VA01
Create Sales Order
19
0.89
6
VA02
Change Sales Order
113
0.68
14
VA05
List of Sales Orders
2
4.01
9
One Touch
Customer Portal
60
4.01
2
CAT2
Enter Timesheet
374
0.68
11
PA20
Display HR Master Data
20
0.64
5
CJ20N
Project Builder
217
0.78
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Program Updates SPAWAR (Oct ‘09) – – –
Operating at Full Operational Tempo (FOT) since 16 Dec 09 Reported FY10 1st and 2nd quarter financial statements out of Navy ERP Converted data subjected to a financial validation by a combined DFAS/FMO team • See next slide for details
–
Steady improvement on the Post FOT Business Performance and Health metrics presented to the Navy ERP Senior Integration (NESIB) Board monthly • 16 of 20 metrics are above threshold • Factors affecting the remaining 4 metrics: Manual Processing On-going data conversion and catch-up issues Business Process Changes User Education
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FMO/DFAS Validation/Reconciliation Effort The FMO/DFAS Conversion Validation Team analyzed data from 4 Legacy systems used by 6 SPAWAR activities: – – – –
Standard Accounting and Reporting System Headquarters Claimant Module (STARS HCM) (used by SPAWAR HQ) Standard Accounting and Reporting System Field Level (STARS FL) (used by GF field sites) Defense Industrial Financial Management System (DIFMS) (used by SSC LANT) Cabrillo (used by SSC PAC)
On 31 Dec 09, the FMO/DFAS validation team completed the review of 20,195 General Ledger (G/L) accounts, across 568 Trial balances, for 14 appropriations, for 6 SPAWAR Business Areas. –
Overall, 99% of the G/L accounts tied out to legacy systems or the variances were reconciled/explained. • Initially, 75% (15,244) of the G/L balances were consistent between the legacy systems and Navy ERP. • Of the remaining 4,951 G/L accounts containing variances, 24% (4,819) of the G/L accounts were reconciled and explained. • 1% (132) of the G/L accounts either needed corrective actions post Full Operational Tempo (FOT) or were deemed immaterial based on the materiality threshold. • Since this review all but 4 corrective actions have been completed. 9
Program Updates (cont’d) Single Supply Solution Implementation (Mar ‘10) – – –
– – –
–
Material Group 1 in stabilization period. Anticipating achievement of FOT May 2010. Phased Deployment (see next slide for details) Over 54 million data objects loaded and converted with 100% accuracy • Data converted for each material group is being validated financially by a combined FMO/DFAS team. Replaces many legacy AIS (UICP, U2, R-Supply, Ashore) Does NOT replace afloat logistic systems. NTCSS Suite (R-Supply Force/Unit, NALCOMIS, OMMS-NG, MFOM) to remain in place. Financial Compliance Assessment performed by FMO/DFAS team which involved mapping test cases to DoD Blue Book Requirements and reviewing/analyzing collected evidence • Of the 500 selected requirements, 31 were deemed out of scope, 451 (96.2%) were deemed compliant, 9 were viewed as partially compliant and 9 were rated as noncompliant • Items that were partially or non-compliant related to IUID and serial number tracking requirements (and are not expected to be fully compliant until 2014/2015) Defect Resolution/Regression a continual process • FMO/DFAS will continue to provide validation support throughout the defect resolution (testing) efforts
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Navy ERP 1.1 and NAVICP Phased Deployment
2010
2010
2011
March FEBRUARY 2011 JUNE 2012 6 mos
6 mos
Material Group 2 NAVICP 40%
NAVICP Mechanicsburg Material Group 1 NAVICP 20%
NAVICP Mechanicsburg SS/L1/DSSP HM&E Ships Propulsion HMI&E Deck & Auxiliary
NAVICP Philadelphia SH3/CH53 Sea King/Sea Stallion Common Avionics E2/C2 Hawkeye/Greyhound
Regional Rollout Fleet Industrial Supply Centers
Material Group 3 NAVICP 40%
Communications/Surveillance Air Traffic Control GPETE/RADIAC Fire Control Integrated Self Defense FMS Support
NAVICP Mechanicsburg
NAVICP Philadelphia
NAVICP Philadelphia
SH60 Seahawk C130 Hercules TA4J/T2C Goshawk/Buckeye AV8B Harrier II F/A18 Hornet P3 Orion AH1/UH1 FMS Support
EA6 - Prowler Aviation Support Equipment V22 - Osprey CH46 Sea Knight Engines Kits
Nuclear Propulsion Strategic Weapons Systems Carrier Planned Equipment Replacement Program End Items
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Program Updates (cont’d) •
Planning Phase
•
Analysis Phase •
•
Readiness & Transition •
•
Final Prep
•
Go-Live Phase •
NAVSEA – General Fund “Go Live” 1-Oct-10. On track and in the Command Readiness phase of deployment. • Cutover Plan and production load schedule on track • Primarily Master Data being converted in conjunction with Go Live. Full transactional data conversion will take place at a later date (TBD) – Conversion processes being tested during mocks – Mock 4 file load success rate > 95%
• Business Validation plans and Business Transition Planning complete •
6 ECPS Identified
– Working Capital Fund deployment planned 1-Oct-11. On track and in the Planning phase of deployment • Business Process workshops complete (working groups scheduled monthly) • Full Master and Transaction Data Conversion will be executed in conjunction with Go -Live – Mock 1 Conversion in process and on schedule
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Financial Extension What is the Financial Extension? –
–
The Financial Extension intends to deploy Navy ERP to 11 additional commands (currently excludes BUMED, MSC, and Marine Corp) adding ~78,000 users resulting in the execution of approximately 100% of the Navy’s TOA in Navy ERP and the retirement of 17 legacy systems It will enable business transactions to be executed between commands using standardized processes in a real time environment, with a robust audit trail, resulting in more efficient processing of invoices and payments
What is the strategy? – – – –
Establish a proper Governance structure to drive the business transformation by leveraging enterprise tools and business understandings. Establish a forum for Financial Extension organizations to address concerns and/or requirements Write the book of standard financial management practices under Navy ERP FMO will provide guidance and ensure compliance with standard templates
Way Ahead – – –
Implement an understood environment in shortest possible time Standardize a set of implementation procedures and business processes for the Enterprise using the Navy ERP system Test processes for auditability on an ongoing basis
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Navy ERP Enterprise End to End Standard Business Processes Navy ERP Enterprise Standard E2E Business Process Development (FMO/DCMO) as of June 09 Internal Entitlement Processes • Electronic Invoice Processing (completed) • Manual Invoice Processing (completed) • Purchase Card Process (in process) • F110 Process • Create Purchase Request/Purchase Order • MILSTRIP Process • Direct Cite Process • Preponderance of Funds Process • Reimbursable Funding Process
Navy ERP
FIP
Procure Procure to to Pay Pay •Execute Requisition •Source Goods & Services • Manage Contract •Execute Purchase •Perform Receipt, Acceptance & Return •Process Invoice & Match •Execute Disbursement (Entitlement)
Concept Concept to to Product Product (R&D) (R&D) •Recognize Problem •Define Capability •Develop Product Concept •Initiate Planning & Obtain Commitment •Initiate Product Development • Introduce Product
BTA
Acquire Acquire to to Retire Retire •Concept to Product •Procure to Pay •Placement into Service • Manage Asset • Dispose of Asset
Service Service Request Request to to Resolution Resolution •Identify Requirement • Fund Requirement • Source Service •Schedule Service • Diagnosis •Final Requirement • Perform Service •Close & Post Record • Create Bill •Return to Inventory or Use
Incorporate ‘Exception’ processes and identify internal controls within existing documentation
Budget Budget to to Report Report
Hire Hire to to Retire Retire
• Perform Planning •Perform Program Development • Perform Budget Planning & Formulation • Distribute Budget • Manage Budget • Perform Reporting
Market Market to to Prospect Prospect • • Establish Marketing Plan • • Target Audiences • • Plan & Define Marketing • Campaigns •Execute Marketing Campaigns • •Measure & Evaluates Marketing Campaign Performance
• Manage Organization • Acquire Human Resources • Develop Human Resources • Assign Human Resources • Maintain Human Resources •Separate or Retire Human Resources
Prospect Prospect to to Order Order Forecast Sales Generate Leads Negotiate Order Manage Accounts Service & Support Customer
Test and validate standard processes are being used
Plan PlantotoStock StockInventory Mgmt
Order Order to to Cash Cash • Manage Customers • Accept Orders •Prioritization of Orders • Fulfill Orders •Perform Distribution •Manage Receivables •Manage Cash Collection
Deployment Deployment to to Retrograde/ Retrograde/ Redeployment Redeployment • Planning •Organization Notification •Deployment Preparation • Movement • Reception •Theater Support •Retrograde/Redeployment •Reset
Conduct Continuous Process Improvement efforts for existing documentation
Environmental Environmental Liability Liability
• • • •
Create Inventory Plan •Identify Sites/Assets with Environmental Determine Source Liability Receive and Accept • Develop EL Cost Estimates Receive, Accept and •Perform Environmental Cleanup, Warehouse Inventory Closure, or Disposal Action • Distribute and Pre- Position Inventory • Report Environmental Liabilities • Perform Inventory Management • Dispose of Inventory
Service Service to to Satisfaction Satisfaction •Identify Requirements •Establish Service Capability • Provide Service •Measure Customer Satisfaction & Improve
Cost Cost Management Management •Establish Cost Accounting Procedures •Develop Cost Methodology • Perform Cost Assignment • Perform Period End Close • Develop Reports
Proposal Proposal to to Reward Reward (Grants) (Grants) •Identification & Prioritization •Execution & Review of Grant Application •Review & Award of Application • Execute Grant •Perform Management & Administration
The Financial Management Office, ERP Standards Team works with the Command Business Offices, Navy ERP Program Office, and other interface partners to prepare the end to end business process documentation. A comprehensive list of each High-Level end to end process along with their respective sub-processes are being documented for each of the business process areas (Navy ERP section shown above). 14
A Change to the Reporting Approach •
Currently - Data Push – SAP and Legacy Reports • Structured reports delivered at specific times • There are MANY homegrown shadow reporting systems/databases in the commands that combine reports to get required data
•
Future – Data Pull – Business Intelligence and “Flexible Analysis” • The use of near real-time (~24 hours) data sets that can be downloaded, • Then filtered, sorted, or formatted for specific use with a variety of Microsoft tools
• • • •
ABAP WARS Extracts SAP Standard SAP Business Warehouse • 12,500 users role mapped, ~ 150 log in each week • 5 new classes required
•
BusinessObjects / Crystal Reports • Data Conversion • Contract reconciliation • Ad-hoc Reporting • Hooks to legacy data sources
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ECPs - Overview ECP – Engineering Change Proposal – Required for all system related changes that modify existing or propose new requirements/functionality within Navy ERP (E.g. Adding fields, new interfaces/reports, process changes relating to new FMR’s etc) – All ECPs pass through a tiered level review/approval process commencing with the Process Council Working Group and ending with the NESIB (Navy Enterprise Senior Integration Board)
The Process Council Working Groups – Functionally based groups (Financial, Acquisition, Program Mgt, Supply Chain, Workforce Mgt) chaired by a Lead Action Officer (LAO) created to provide oversight of business process re-engineering conducted under the Navy ERP program and approval of the resultant new business processes. – They are expected to conduct routine reviews, oversights, decisions, and interactions in regards to adjusting Navy “requirements” to fit within the existing methods by Navy ERP.
ECPS approved by the Working Groups are – Submitted by LAO to Navy ERP Program Office for a ROM (Range of Magnitude) and – Presented at the monthly RWIPT meeting for review/approval
RWIPT – Requirements Working Integrated Process Team – Comprised of SYSCOM Business Office Leads, LAOs, Navy ERP Business Release Manager – Prioritize and identify funding options for Navy ERP ECPs to be recommended to the NESIB and the ASN RD&A for approval
NESIB – Navy Enterprise Senior Integration Board – Comprised of Senior Executives that meet monthly to review the Navy ERP program health – RWIPT approved ECPs are presented by either the LAO/SME for final approval Requirement discussed w/ Business Office /FMO. SME drafts ECP
Process Council Working Group Reviews and Votes
Approved ECPS submitted to Navy ERP PO for ROM
ECP Presented to R-WIPT for prioritization and identification of funding
ECP presented to NESIB by LAO or SME for final approval
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Lessons Learned from SAP Defense Customers – Common Challenges Implementing ERP1 Executive Sponsorship and Governance - Alignment and Continuity of Leadership
Data Management – “The Right Data” - Proper Cleansing and Migration Strategy & Execution Project Scope Definition and Maintenance Achieving the Right Balance – Configuration versus Customization Engage End Users – An Integrated, Multi-Discipline Approach – All Project Aspects Think “End-to-End”
Strong Expectation Management 1
Information from SAP Customer Surveys. Used with permission. 17
Summary Navy ERP is the Cornerstone of our FM framework for DON Business Transformation – Standard business processes – System of record for both General Fund and Working Capital Fund financial accounting and funds control – USSGL,SFIS, and BEA compliant – Enables significant reduction in the number of legacy systems requiring support – Enables, but does not guarantee, audit readiness
Navy ERP will provide increased efficiency and improved quality of information to support decision making. FMO is fully committed to support Navy ERP as the target solution for achieving a vision of improved, integrated, and compliant financial management. We are working with DFAS, BTA, the DCMO, FMB, the Navy ERP Program Office, and Commands to ensure a successful roll out.
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FMO Key Points of Contact OASN (FM&C) FMO Financial Systems & Transition Planning Beverly Veit 202-685-6703
[email protected] FMO Support Lead Stephen Baumgartner 571-449-0465
[email protected]
FMO NAVSUP Lead Danny Chae 202-685-6729
[email protected] FMO NAVSEA Lead Jim Depodesta 202-685-6734
[email protected]
Navy ERP Finance Team Lead Nancy Wieck 410-919-1577
[email protected]
FMO SPAWAR Lead (Acting) Jon Jameson 202-685-6736
ERP Command POCs FMO SSP and ONR Lead Sherri Jordan 202-685-6718
[email protected]
DFAS Lead Carl Inman 216-571-7892
[email protected]
[email protected]
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BACKUP
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Benefits of ERP Without ERP
Navy ERP
General Ledger
• Different General Ledgers for General and Working Capital Funds and across commands • Budgetary and Proprietary General Ledger accounts not in balance
• Standard General Ledger for General and Working Capital Fund used by all commands • Budgetary and Proprietary General Ledger accounts self balancing
Management Reporting
• Up to 30 days to get financial status • Multiple systems for financial reporting – projects, labor, cost, budgetary and proprietary
• Near Real-time reporting • Single System for financial reporting for all financial status
Annual Close
• Blackout period at the end of the FY required for annual close and start up of new year’s business • Manual process for return of available funding for “Unfilled Customer Orders”
• Can begin new year’s business on first day of new FY, so no blackout period required • Automated Year End processing for return of available funds for “Unfilled Customer Orders” complying FMR guidance
Vendor Pay
• Vendor Pay transactions entitled in STARS-One Bill Pay system separate from accounting system of record resulting in mismatched data
• “Book of Record” and entitlement system in one integrated system (Navy ERP-entitled) for Vendor Pay – significantly reduces unmatched disbursements
Funds Control
• Multiple systems for funds control and accounting at various echelons • Manual and/or semi-automated “Funds Availability Check”
• Single System for Funds Control and Accounting for all Commands enables more efficient and expedient allocation and execution of funds • System Funds Availability Controls ensure funds authorized are not exceeded, preventing Anti-Deficiency Act violations
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Benefits of ERP Without ERP
Navy ERP
Total Force
• Commands must access various systems to see all of their personnel • No enterprise system that includes the organizational hierarchy
• Provides comprehensive view of workforce Enables total force (Civilian, and Military and Contractor-support as appropriate) visibility within a single system, and includes the organizational hierarchy
Training Records
• Individual Commands' Training offices would have to prepare their own spreadsheets to send to Office of Civilian Resources (OCHR) to satisfy the OPM requirement
• Automatically sends course completion updates for upload to Defense Civilian Personnel Data System (DCPDS) to fulfill OPM requirements to maintain training records
Awards
• Manual Awards Process takes hundreds of hours yearly preparing SF-52 (Request for Personnel Action)
• Recommendation and approval of awards is documented within Navy ERP, and the process culminates in automated outbound file to OCHR for upload into DCPDS without additional SF52s by regional HROs
Internal Control Labor
• Human intervention required for compliance with FMR Vol. 8, Chapter 2, paragraph 0204, requiring Certification of Time records being transferred to Defense Civilian Payroll System (DCPS)
• System enforces compliance with FMR requirement, only records that are certified are transferred to Defense Civilian Payroll System (DCPS) for payroll processing • Reduces rework by having certification in advance of processing
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Benefits of ERP
Without ERP
Navy ERP
Data Transparency
• Lack of Data Transparency across commands for shared contracts, invoice pre-validation and processing, funds availability/execution and project management
• Single System for shared contracts, invoice pre-validation and processing, and funds availability/execution across all Commands enables validation of funds availability prior to contract obligations, invoice pre-validation, and invoice payment • System ensure funds authorized are not exceeded • Provides visibility for joint project management across organizations
Workflow
• Funding documents are manual routed
• Funding documents are electronically routed
Auditability
• Limited system-enforced internal controls
• System audit trail captures history of changes • System controls enforce fiduciary responsibility
Project Mgt: Financial Controls
• No hard stop on project spending
• Hard controls on labor and materials, and if desired, on projects/portions of project • Managers have near real-time tracking of expenses to prevent overspending
Project Mgt: Financial Reporting
• Project planning, funding, and execution performed in disparate systems/tools • Data entered manually into various tools for comparing plan-vs-actual
• Planning, funding, and execution data available in one system for reporting plan-vs-actual -- no gathering data from various sources, no manually inputting data, and improved data accuracy
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Navy ERP Terminology FORMER TERM
NEW TERM
Allocation
Budget Transfer
Commitment
Purchase Requisition
Obligation
Purchase Order
Outgoing Funding Document
Purchase Requisition/Order
Incoming Funding Document
Sales Order
Appn/BFY/BLI/PE
Fund
Project Unit
Functional Area
RFM
Fund Center/Cost Center
Receiving Activity
Vendor
Sending Activity
Customer
Document Approval Process
Workflow
Labor Rates
Activity Types
General Ledger Expense & Revenue Accounts
Cost Elements (CO)/ Commitment Item (MM)
Individual Task
Work Breakdown Structure (WBS)/Network Activity (NWA)
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