The Defense Department’s quest to be auditable in 2017 relies on using Enterprise Resource Planning systems, or ERPs, to perform tasks like accounting and supply chain management.
But according to a GAO report released last week, “To date, however, DOD’s ERP implementation has been impaired by delays, cost increases, failures in delivering the necessary functionality, and a lack of compliance with required standards.”
Asif Khan, director of Financial Management and Assurance Issues at the Government Accountability Office, has been looking at the ERPs at the Pentagon. He shares with In Depth with Francis Rose some highlights from his findings.
The pressure to meet this deadline is even more urgent now, after Defense Secretary Leon Panetta said he wanted the department to submit a big piece of its financial information — the statement of budgetary resources — by 2014.
“The focus is that much sharper on the Hill as well as DoD to see if these business-related ERPs will be able to help with auditability,” said Khan, who recently testified on the DoD’s use of ERPs before the House Armed Services Committee’s Defense Financial Management and Auditability Panel.
The GAO found six of the 10 ERPs that DoD identified as critical had “time slippages” of between two to 12 years, Khan said. And none of the programs had a master schedule.
A big hang-up for DoD is its collection of 2,000 legacy systems. These 10 ERPs are expected to replace more than 500 legacy systems. ERPs’ software capabilities address about 80 percent of the business needs, Khan said.
“It’s the 20 percent gap we’re dealing with,” he said.
Some of these hurdles can be overcome by customization, reengineering or adding on other systems, Khan said.
But the newer systems have not always been receptive to data from the legacy systems.
“Literally, they had to enter this data into the system manually, which is very expensive, error-prone and ultimately unsustainable,” Khan said.
DoD will have to find the “fine balance” between using the legacy systems, adding ERPs and reengineering, he added.