The Defense Finance and Accounting Service Story ASMC April 13, 2005 Zack E. Gaddy Director, Defense Finance and Accounting Service 7/20/2019 Integrity - Service - Innovation

Integrity - Service - Innovation Topics DFAS… Where we are Where we’re going My closing thoughts 7/20/2019 Integrity - Service - Innovation

DFAS at a Glance -- Our Mission, Vision & Values Mission: Provide responsive, professional finance & accounting services for the people who defend America. Vision: Best value to our customers World-class provider of finance & accounting services Trusted, innovative financial partner One organization, one identity Employer of choice, providing a progressive & professional work environment Values: Integrity, Service, Innovation 7/20/2019 Integrity - Service - Innovation

DFAS at a Glance - Magnitude of Annual Operations Process 104M pay transactions to 5.9M military, civilians, retirees and annuitants Make 6.9M travel payments Pay 12.6M commercial invoices Process 127.3M general ledger postings Manage military and health benefits funds ($234B) Make an average of $455B in disbursements to pay recipients Manage $13.5B in foreign military sales (reimbursed by foreign governments) Account for 282 active DoD appropriations Updated with FY 2004 figures on 9 Nov 04 World’s Largest Finance and Accounting Operation 7/20/2019 Integrity - Service - Innovation

DFAS at a Glance - The State of DFAS Today Total Work Force This is a chart that is used by our senior executives all the time to show the health and performance of our agency. It shows our value and efficiency improving as our employee satisfaction and customer satisfaction grows. 324 87 7/20/2019 Integrity - Service - Innovation

Our Strategic Challenge Our customers expect: Accurate and timely payment of personnel Accurate and timely payment of vendors and contractors Auditable financial statements Business intelligence that enables better decision-making Lower costs of products and services Customers deserve a financial service partner who enhances their readiness & mission capability Is there anything we can add on systems (the Enterprise Architecture, perhaps?). It would be nice to have the tools correlate with the strategy listed on the previous chart. 7/20/2019 Integrity - Service - Innovation

Our Strategic Challenge Challenges Stressed military pay systems Manual processes used to pay vendors Numerous barriers to achieving unqualified audit opinion Disparate systems continuing static financial data Demographics and skill sets of DFAS work force BRAC and NSPS will affect DFAS Strategic targets to meet the challenges Pay service members what they are entitled to on the scheduled pay date Expand e-commerce for Commercial Pay Support DoD’s objective of auditable financial statements Develop a corporate capability to deliver unique business intelligence Recruit, train and retain a work force needed to develop & implement the DFAS strategy Despite making great strides in the last few years there is still a lot of room to improve. We face a varietry of challenges. Aging systems <Insert story about COBAL programming> So far only a handful have been successful. DFAS has accomplished this four times running. While eCommerce is success story for Commercial Pay Services, it is also the biggest opportunity. While we pay 95% of invoices electronically we only receive less then 50% of them electronically. We also need to strengthen our core capabilities of providing business intelligence and financial resource information to decision makers in time and in a manner that lets them take advantage of that information to make better decisions about their resources. Most fundamentally, we need to dramatically improve our human resources. Success depends on the ability to retain, train and recruit the right people with the right skills. To meet the challenges facing DFAS, we are taking a good look at our strategy to make sure it is forward-thinking to provide a clear vision of what we need to become while being practical enough to guide or operational decisions and shorter range planning. While the strategy looks down the road, we’ve identified five specific, achievable strategic targets that we must achieve. These targets get to the core of our mission. <discuss importance of these targets and the challenge associated with achieving them> 7/20/2019 Integrity - Service - Innovation

Transformation Approaches Business Case Analyses Competitive Sourcing Lean6 Portfolio Management Business Management Modernization Program DoD Financial Management Work Force Development Working Group Achieving our strategy and delivering on the five strategic targets will take a complete team effort and our team has a number of tools we rely on to help make it all happen. First, we are taking Transformation very seriously. We know we have to do things differently tomorrow if we are going to solve the problems we have today. So we have created process that coordinates and evaluates transformation initiatives to ensure they support the DFAS strategy based on business case analyses that are being conducted for every DFAS function. Also helping us perform better is DFAS commitment to deploying Lean6 throughout the agency. Lean6 combines the Six Sigma and Lean Thinking. <Insert personal story regarding Lean6 and brake assembly line> Serving our customers better also requires making the right investments. To help make sure we are funding the right projects at the right amount, we are using Portfolio Management to inventory all of our initiatives, evaluate them against standard criteria and make sound fact-based judgements about about priorities. Another tool that has been around DFAS for a few years now is our Balanced Scorecard which is used to track our progress toward achieving specific goals on measures that are true indicators of how well we serve the customer and achieve our mission. The Balanced Scorecard starts at the highest level to see how the agency is succeeding as a whole and cascades down to the individual level so each person can see how they contribute. 7/20/2019 Integrity - Service - Innovation

Transformation Results Completed A-76 Competitions & Studies Function Year Type Competition Result Study Recommendation/ Status Studied FTE On board FTE as of 12/31/04 Facilities, Logistics & Admin FY95 A-76 In-House   279 94 DeCA Vendor Pay FY96 240 28 DeCA Accounting FY97 84 49 Transportation Accounting 89 33 Depot Maintenance Accounting 133 69 Retired & Annuitant Pay FY98 Contract 650 21 (CGA) Security Assistance Accounting FY00 460 214 Vendor Pay FY03 BCA HPO/Study in progress 1,754 1,727 TSO Recommendation pending 1,530 1,281 Contract Services HPO/Developing plan 31 53 + contractors Disbursing 622 564 Air Force Accounting FY04 1,641 1,302 Navy Accounting 1,468 Army Accounting 2,696 2,229 Defense Agency Accounting 617 802 Cancelled A-76 Competitions Out-of-Service Debt Cancelled 494 222 Civilian Pay 505 273 7/20/2019 Integrity - Service - Innovation

DFAS Transformation Objective Current State Future State • Customer Focused Value Driven Efficient Transact Process Build Own Build & Operate System Process Transactions Respond to Customers Establish transformation outcomes and business strategy Implement collaborative process that leverages transformation efforts across DFAS Generate results based on best value to the customer Leverage operational excellence Develop client partnerships Deliver business solutions Become customer of system capabilities (DEAMS, DIMHRS, etc.) Integrate Leverage Analyze Partner 7/20/2019 Integrity - Service - Innovation

Integrity - Service - Innovation Closing Thoughts External forces push us forward President’s Management Agenda BRAC Systems modernization NSPS Operational mission needs Internal drive to excel Accountable & agile Dedicated & professional work ethic Transformation is about finding the “big leap” forward that allows you to accomplish what you can’t even imagine today. Achieving our strategy and delivering on the five strategic targets will take a complete team effort and our team has a number of tools we rely on to help make it all happen. First, we are taking Transformation very seriously. We know we have to do things differently tomorrow if we are going to solve the problems we have today. So we have created process that coordinates and evaluates transformation initiatives to ensure they support the DFAS strategy based on business case analyses that are being conducted for every DFAS function. Also helping us perform better is DFAS commitment to deploying Lean6 throughout the agency. Lean6 combines the Six Sigma and Lean Thinking. <Insert personal story regarding Lean6 and brake assembly line> Serving our customers better also requires making the right investments. To help make sure we are funding the right projects at the right amount, we are using Portfolio Management to inventory all of our initiatives, evaluate them against standard criteria and make sound fact-based judgements about about priorities. Another tool that has been around DFAS for a few years now is our Balanced Scorecard which is used to track our progress toward achieving specific goals on measures that are true indicators of how well we serve the customer and achieve our mission. The Balanced Scorecard starts at the highest level to see how the agency is succeeding as a whole and cascades down to the individual level so each person can see how they contribute. 7/20/2019 Integrity - Service - Innovation