1. © 2010 IBM Corporation Overview of the Case Study (UVA OM 1447) USAF - IBM Financial Management 9 September 2100

2. © 2010 IBM Corporation Scenario Air Force Financial Management The Air Force Financial Management community has contacted IBM after hearing about our success with large-scale transformation efforts. Presently, each of the approximately 100 Air Force Bases around the world has its own local Financial Services Office that provides pay and travel processing and customer support. Similar processes are performed at each location. Staffing and quality assurance are managed locally, and legacy systems have been modified over time in response to local preferences. Following a Presidential Directive, the Air Force Financial Management community is under pressure to significantly reduce manpower while continuing to deliver high-quality customer service to Airmen and their families.

3. © 2010 IBM Corporation Assistant Secretary for Financial Management & Comptroller (SAF/FM)  Air Force Secretariat charged with overseeing Air Force finances - the Secretary of the Air Force’s primary financial advisor.  Presidential appointee and equivalent to a 4-star in the military.  Serves as both the head of the financial management community, and also as the overall Air Force comptroller.  Functions include –Obtaining funding to support the entire Air Force mission, –Executing the Air Force budget –Providing cost and economic decision support –Delivering financial services to the hundreds of thousands of military, civilian, reservist and national guard personnel. The stated vision is to “maximize the combat effectiveness achieved with each dollar of taxpayer resources through continuous improvement in resource allocation, analysis, financial services, and execution.”

4. © 2010 IBM Corporation Air Force Installations The bulk of the service delivery model resided in 93 separate base-level Financial Services Offices (FSOs) at bases allocated around the world

5. © 2010 IBM Corporation Base Financial Service Offices (FSOs)  Personnel utilized this walk-in facility for pay inquiries and related financial services.  Functions performed were largely transactional in nature.  Services ranged from generic requests for information to customized service inquiries.  Staffed by Air Force personnel - trained within the Air Force FM career field and were not dedicated experts in any one process.  Workload and staffing varied from base to base and typically corresponded to the population of the base (i.e. higher volume).

6. © 2010 IBM Corporation Primary Customers FSO Customer Support (Back Office) Travel, Mil Pay and Related Data FSO Customer Service (Lobby) FSO Inquiry Channels Outside Support (If required) Active Duty Airmen Senior leaders/ Commanders Civilians Families/Retirees Reservists and National Guard Face to face interaction with customer Answer Customer Inquiries Assist with document prep Verify paperwork is complete Route work to customer support for processing FSO Accounting Liaison Office Defense Finance & Accounting Service (DFAS) Mil: Military Civ: Civilian TDY: Temporary Duty PCS: Permanent Change of Station Face To Face (65%) Phone (20%) Limited IT Systems (10%) Mail (5%) Misc 9.Casualty cases 10. Civ timecards 11. Debt mgmt Travel 5.TDY processing 6.Mil/Civ PCS 7.PCS In & Out- processing 8.Travel Audit Pay 1.Separation & retirement 2.Mil/Civ pay 3.Mil leave 4.Pay audit Process documents Processing time varied for each type of document or review. Often, paperwork was not submitted correctly and was routinely returned for rework. The customer could be required to visit several times prior to completion.

7. © 2010 IBM Corporation Pay Processes  Ensure all military and civilian personnel were paid accurately and in a timely manner. –This could include up to several dozen pay-related sub-processes; dependent upon the requirement of the customer as each entitlement required a separate and unique process to ensure proper payment.  Documents were completed and processed at the FSO and were frequently forwarded to other organizations for further processing.  Incorrect or delayed documents led to the disruption of pay and other entitlements.  Other pay-related processes included –Payment upon separation or retirement from the military or government service. –Pay documents pertaining to military or civilian leave (i.e., vacation hours). –Verification, review or auditing of pay related documents. Military & Civilian Pay Audit & Review Separation & Retirement Pay Military Leave

8. © 2010 IBM Corporation Travel Processes  Ensured military and civilian personnel received timely and accurate reimbursement for travel related expenses. FSO personnel processed all documents relating to military and civilian temporary duty (TDY). The percentage of vouchers returned for corrections or rework also varied.  Other processes included: –Pay and entitlements due a military member or civilian employee who made a permanent change of station (PCS) move. –PCS in & out processing for inbound & outbound base personnel –Reviews and audits pertaining to travel and expense documents. Military & Civilian TDY Audit & Review PCS In & Out Processing Military & Civilian PCS

9. © 2010 IBM Corporation Miscellaneous Processes  FSO personnel routinely performed other finance-related functions.  Upon the death of a military member, FSO personnel determined entitlements due to the next-of-kin. Within a few days, personnel prepared and (personally) delivered the entitlement to the deceased’s beneficiary.  FSO personnel also received, reviewed, and processed timecards for civilians located at their respective base and executed procedures related the voluntary and involuntary collection of debts. Document processing ranged from garnishing or holding pay to processing fines and forfeitures resulting from punitive action.  Personnel also advised military and civilian members on debt management issues. Casualty Cases Debt Management Civilian Timecards

10. © 2010 IBM Corporation Survey Results Customer Feedback:  “My questions and problems get fixed. However, it often takes a number of trips and FM is rarely proactive in providing me with status updates.”  “I have friends who work in the FSO, or I have developed a knowledge of who does what in the FSO and I use them directly without going to the counter.”  “FM personnel are not trained enough to handle problems.”  “ FM processes seem to work differently at every base I go to – even the same forms when filled out the same can have different results”  “When I PCS or TDY, I know my pay will be messed up.” Employee Feedback:  (From a supervisor) “I only have personnel for 2years, by the time they are fully trained, they are about to transfer to another base.”  “There is lack of training prior to coming to work at the FSO”  “We receive so many documents a month we are unable to let individuals know where they are in the process”  “Customers are not educated on how the FSOs do business”

11. © 2010 IBM Corporation Fiscally Constrained Environment  Following September 11 th 2001, President Bush recognized that the nation’s defenses would need to evolve to meet a rapidly-changing national security landscape. In 2002, the President’s Management Agenda (PMA) was released.  Initiatives included the establishment of a DOD Office of Force Transformation – designed to integrate transformation into the national security strategy  In 2005, the Office of the Secretary of Defense issued Program Budget Decision (PBD) 720 - directed the services to reduce manpower and resources.  The Air Force would be required to reduce their force by 40,000 Active Duty, Guard, Reserve and civilian full-time employees. In order to realize cost savings and efficiently shape the future of the financial management community, significant transformation would be necessary.