Two years ago, the Navy set out to reduce its information technology spending by 25 percent, mostly through efficiencies. Officials say they’ve been successful, but the overall budget picture hasn’t gotten any rosier since then. So the service will turn to IT for still more reductions.
According to Terry Halvorsen, the Navy Department’s chief information officer, the hunt for that initial round of IT savings is not just on track, the department is ahead of schedule in taking about $2 billion out of the roughly $8 billion it spends on information technology each year.
“I want to make it clear. We took $2 billion. It’s not that we’re trying to take to billion, we’re not going after $2 billion. Two billion dollars is gone from the budget,” he said. “I don’t care what budget you have, and we have a big one, but that even makes the charts in the Pentagon. It’s a big enough number, and we’re not going to stop there.”
Halvorsen said there will be another round of work to squeeze savings from IT, though Navy leaders are still working to identify the next savings target.
“But I can tell you it will have a ‘B’ with it. It’s another ‘B’ at least, and probably more,” he said Addressing an industry crowd at the AFCEA Northern Virginia chapter’s annual Navy IT Day in Tysons Corner, Va., Halvorsen said he was out to squash what he said are “myths” about the way DoD spends money on technology. He contends that for what it spends, the Navy Department gets upward of 99 percent reliability on its networks, and at an investment level that’s not unheard of for big organizations.
“When people want to use comparisons [with private business], I think it’s interesting that the current industry rate is between 4.5 and 5 percent of their budget spent on IT. Right now, we’re spending 4.5 percent of our budget on IT,” he said. “So I don’t think we’re excessively spending. Do we spend it all right? No, but I would suspect companies of our size have issues there, and we’re going to go after them hard. We are taking process improvement seriously.”
One of the areas the Navy has already begun to tackle is its spending on mobile devices and wireless service. Halvorsen said the service found major savings right away by launching a ruthless crackdown on what had been a highly decentralized process for buying mobile capabilities in Navy commands around the world.
“We’ve brought that down 20 percent. Very few companies have done that in 13 months. That’s aggressive,” he said. “It also means you’re going to break some stuff, and we’ve broken a few little things. That’s going to happen. The question is where do you break it, can you keep the risk low, and can you fix it quickly?”
But Halvorsen said the first trick to wringing savings out of IT in a military service is actually tracking down where the money is and how it’s being spent. Because of the way Congress appropriates money to DoD, that’s no small chore.
“How much is the IT budget line in the Department of the Navy? It’s a trick question. Zero. There is no IT budget line. It’s a compilation of all the other ways we fund,” he said. “We’ve got to fix some of that, and we are aggressively trying to fix that. If you want visibility, you’ve got to fix that, and there’s an opportunity to do it because of the crisis.”
In the meantime, Halvorsen said the Navy is taking steps to make its IT spend more transparent, both to its own leadership and to Congress. For starters, both the Marine Corps and the Navy have created a high-level approval process for IT spending that creates a checkpoint for any spending above $25,000. Through that process, he said both services have axed a lot of spending that would have otherwise happened.
He said his office and the Navy financial management community have also put a lot of work into redesigning the department’s financial systems so they’re better able to track IT expenditures.
“We’ve made 13 significant changes. One of the things that was happening is that last year, we spent 61 percent of our IT money in a category called ‘Other,'” he said. “You don’t want to be briefing (the secretary of the Navy) or anybody else in the business world and saying, ‘I spent this money on Other.’ It’s not a good place to be. That’s now down to 10 percent.”
The Navy has also created an IT dashboard system, visible to senior leaders and to lawmakers, to help it track the efficiency drive in five major categories, including data center consolidation, mobility spending and enterprise software licensing.
Halvorsen says the service is on track to hit its spending reduction targets in each category, though he’s less than impressed so far with progress on data center consolidation.
He has high hopes in the area of enterprise licensing however. Last year, the Navy consolidated all of its spending on Microsoft licenses under one single agreement with the software vendor. Two more such agreements with other large companies are expected later this year. And though he wouldn’t specify the software company, he said the Navy also is involved in helping to create the first enterprise software agreement that would serve the entire Department of Defense.
“You will see under the lead of [the Defense Information Systems Agency,] we’re going to go after a very big DoD-wide license. We’ve all worked the requirements, and I want you to think about that. I don’t know that you could get that many Fortune 500 companies to sign up together and say, ‘Yep, these requirements are right,’ and go after it,” he said. “It will give us an incredible amount of leverage in that space, and you’re going to see that.”
Each week, Defense Reporter Jared Serbu speaks one-on-one and in depth with the people responsible for managing the inner workings of the federal government's largest department, and those who know it best. Subscribe to the latest episode on PodcastOne or iTunes.