Shared Services – Changing for the Better Zack Gaddy Director Defense Finance and Accounting Service March 6, 2008 Integrity - Service - Innovation

Integrity - Service - Innovation Agenda DFAS Mission/Vision DFAS Profile Strategic Alignment Transformation Blueprint Managing DFAS Transformation People Structure Process Technology Information DFAS Future Support 2/17/2019 Integrity - Service - Innovation

Integrity - Service - Innovation DFAS Mission/Vision Mission: Direct, approve, and perform finance and accounting activities for DoD Our Customers Services Goals Army Air Force Navy Marine Corps Defense Agencies Military & Civilian Pay Commercial Pay Accounting Services Vision: Transforming with the Warfighter to remain the trusted financial partner for DoD Support DoD in Winning the Global War on Terror Lead transformation of finance and accounting functions throughout DoD Perform the DFAS Mission at Best Value for DoD Attain operational excellence in finance and accounting services Attract, develop, and retain a highly capable workforce with relevant skills and competencies 2/17/2019 Integrity - Service - Innovation

Integrity - Service - Innovation DFAS Profile Mission: Direct, approve, and perform finance and accounting activities for DoD OUR ORGANIZATION Japan United States Europe 12.5K employees 18 sites $1.63B in Costs OUR BUSINESS 57M general ledger accounts maintained 13.8M commercial invoices paid 5.9M people paid 2/17/2019 Integrity - Service - Innovation

Strategic Alignment with External Requirements President’s Management Agenda Improved Financial Performance Budget and Performance Integration Competitive Sourcing Expanding Electronic Government Strategic Management of Human Capital Quadrennial Defense Review / Department of Defense Win the Global War on Terror Continue Transforming Enterprise Management Improve Effectiveness and Efficiency Across the Board Focus on People – Military and Civilian DoD Comptroller’s Strategic Goals Drive DoD-wide business transformation through leadership of financial management process and systems improvements Provide DoD leadership with authoritative and timely financial information and analysis Ensure proper stewardship of DoD funds Build and ensure the proper execution of budgets to execute DoD’s mission DFAS Strategic Goals Support DoD in winning the Global War on Terror Lead transformation of finance and accounting functions throughout DoD Perform the DFAS mission at best value for DoD Attain operational excellence in finance and accounting services Attract, develop, and retain a highly capable workforce with relevant skills and competencies 2/17/2019 Integrity - Service - Innovation

DFAS Transformation Blueprint Vision: Transforming with the Warfighter to remain the trusted financial partner for DoD People Human Capital Strategy NSPS Information Business Intelligence Benchmarking Information Security Vision and Leadership Structure BRAC Centers of Excellence Technology ERP Systems Process HPO Lean 6 ERMP/BAM 2/17/2019 Integrity - Service - Innovation

People - Human Capital Strategy 2006 Transformation 2011 Transformation 2011 14K People <10K People 1:8 Supervisory Ratio 1:15+ Supervisory Ratio < > 30% Analytical Skill Sets 70% Technical Skill Sets 70% Analytical Skill Sets 30% Technical Skill Sets General Schedule Pay System Reactive Pro-Active Process-Oriented Results-Oriented 2/17/2019 Integrity - Service - Innovation

Integrity - Service - Innovation Structure - Present 12.5K People - 18 Sites - $1.63B Costs - Limestone Closed Sites Personnel Data: 23% DFAS Placement 23% PPP Placement 37% Retirement 13% Voluntary Separation 4% Reduction-in-Force Rome Cleveland & Bratenahl Rock Island Indianapolis Columbus Omaha Arlington Patuxent River Kansas City Denver San Diego Texarkana Japan Europe Pensacola NAS & Saufley Field 2/17/2019 Integrity - Service - Innovation

Integrity - Service - Innovation Structure - 2011 <10K People - 10 Sites - $1.31B Costs - Transportation Working Capital Fund Accounting ≥ 600 people Limestone Medical Accounting Special Ops Accounting ≥ 1,000 people Rome Cleveland & Bratenahl Retired and Annuitant Pay Garnishments ≥ 1,500 people Indianapolis Columbus Arlington Acquisition Accounting including Contract Pay ≥ 2,064 people Transformation/ BRAC Net Savings FY 2006 – 2011 $620 Million Texarkana Japan Security Assistance Accounting Debt and Claims ≥ 2,632 people Europe 2/17/2019 Integrity - Service - Innovation

Process - High Performing Organization Study Plan Implement Yield Strengthened customer support Increased efficiency Reduced costs Operations across numerous sites Related functions spanning multiple organizations Disparate, network-specific procedures Like processes spanning multiple authorities Consolidated operations across central sites Related functions under standard organization structure Standardized, streamlined procedures Repeatable end-to-end processes under single authority Accounting HPO currently under implementation (impacts ~7,000 personnel) Limestone Accounting Pilot HPO implementation (2nd Qtr FY08) Contract Pay Study completed (impacts ~500 personnel) 2/17/2019 Integrity - Service - Innovation

Process – Integrated Transformation of Processes Enterprise Risk Management Program Internal Controls Lean6 “Improve it!” (the process) Internal Controls “Check it & Fix it!” (the solution) Lean6 Process Excellence Continuous Risk Management Project Management Center of Excellence “Manage it!” (the initiative) Business Activity Monitoring “Check it!” (the transaction) BAM PMCoE 2/17/2019 Integrity - Service - Innovation

Process - Lean6 $5M ROI 5 Projects $17M ROI 14 Projects $22M ROI 2004 2005 2006 2007 Executive Council establishes Lean6 . First-wave of Black Belts trained Green Belt piloted $5M ROI 5 Projects Established Lean6 Program Management Office Black Belts = Corporate Assets Pilot: Financial Statement Improvements $17M ROI 14 Projects Conducted First EVSMA/ELD - Columbus Operations Second-wave of Black Belts trained Benchmarked training with industry $22M ROI 143 Projects Lean6 integrated with Enterprise Risk Management Program Corporate Governance established Corporate Project Plan established – links to Transformation Initiatives 2/17/2019 Integrity - Service - Innovation

Technology – ERP and System Initiatives Fiscal Year FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 BEIS – Business Enterprise Information Service DTS – Defense Travel Service SFIS – Standard Financial Information Structure CAMS ME – Capital Asset Management System Military Equipment EBS – Enterprise Business System LMP – Logistics Modernization Program SDI – Standard Disbursing Initiative GFEBS – General Fund Enterprise Business System Navy ERP – Navy Enterprise Resource Planning DIMHRS – Defense Integrated Military Human Resource System EFD – Enterprise Funds Distribution DAI – Defense Agencies Initiative DEAMS – Defense Enterprise Architecture Management System DCPDS – Defense Civilian Personnel Data System IGT – Intra-Governmental Transactions ECSS – Expeditionary Combat Support System Enterprise Resource Plan System Upgrade Planning 2/17/2019 Integrity - Service - Innovation

Integrity - Service - Innovation Information Business Intelligence Benchmarking Information Security 2/17/2019 Integrity - Service - Innovation

What Does the Future DFAS Look Like? 2006 2011 Workforce Staffing 13,475 People <10,000 People Workforce Composition 70% Technical 30 % Professional 1:8 Supervisory Ratio 30% Technical 70% Professional 1:15+ Supervisory Ratio Workforce Productivity 9,300 Transactions per person 13,600 Transactions per person Business Environment Manual Processes Large-scale rework Workforce with minimal analysis skills Legacy systems Overhead staffing and costs exceed industry benchmark Currently, 52 percent productivity increase and 317 millions in savings. Automation of business processes Less rework Workforce with mature financial analysis skills Migratory systems on-line Overhead staffing and costs match or exceed industry benchmark Providing Better Service, Faster and at Less Cost 2/17/2019 Integrity - Service - Innovation