1. Frank A. DiStasio 19-20 March 2012
Cost Management Certificate Course (CMCC) Naval Postgraduate School CMCC 12-5 Week 3 Cost Management and U.S. Army Section II: General Fund Enterprise Business System
Frank A. DiStasio
19-20 March 2012
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2. © DISTASIO ASSOCIATES, LTD
Course Outline
Section I: Cost Management
Why cost management?
Focus
Concept of Operation
Analysis
Exercise
Section II: Cost Management and GFEBS
Development
Implementation
Section III: Using Cost Management
Cost culture
Cost controlling
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3. General Fund Enterprise Business System (GFEBS)
OSD approved
in May 2005
Goals:
Provide decision support information to sustain Army warfighting capability
Provide analytic data and tools to support the Army enterprise
Reduce the cost of business operations
Improve accountability and stewardship
To sustain warfighting capability in era of persistent conflict, Army
Adopted ARFORGEN process, i.e., Cyclical Readiness Model
Because Soldiers and equipment are NOT free goods, Army moving from culture of consumption/spend any amount to achieve outcomes to cost-management to sustain warfighting capability—GFEBS is essential
Institutional Adaptation – align functions and fiscal authorities in order to most effectively and efficiently generate trained and ready forces within available resources and preserve the All Volunteer Force
Eliminates re-entering, over-processing and then reconciling same/similar data among multiple systems – available in real-time to all authorized users
Enables unqualified audit opinion on annual financial statements with respect to Army General Funds– gives credibility to future budget proposals
“The primary GFEBS objectives are to improve performance, standardize business processes, ensure capability exists to meet future needs, and provide the Army’s decision makers with relevant, reliable, and timely information. GFEBS will require significant integration with other systems to support installation or activity level, major command, and departmental accounting, finance, cost and reporting operations. With more than 79,000 end-users across the world – GFEBS will be one of the world’s largest enterprise financial systems.”
Source: GFEBS Concept Design Document (CDD)
Enable decision-makers across the Army to –
Better capitalize on the resources we have
Better determine and justify the resources we need
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As of 5 Jan 2010 3 3 3

4. Secretary And Chief Of Staff Of The Army Testimony
2011
“… we must give our people the essential tools that will enable them to carry out their cost management responsibilities. Toward this end, we have fielded the General Fund Enterprise Business System (GFEBS) to more than 11,000 users at 14 major installations. As reported by the Government Accountability Office, GFEBS development is on schedule and on budget. Much more than an accounting system, GFEBS is the Army’s new business system. It gives managers a greatly improved capability to manage the cost, schedule and performance of their programs and, at the same time, is the centerpiece in our progress toward full auditability of our financial statements.”
The Honorable John M. McHugh, Secretary Of The Army and
General Martin E. Dempsey, Chief Of Staff United States Army,
March 2011, Army Posture Statement
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5. GFEBS integrates data from across the Army
Why Continuing Leadership Emphasis? Well-Informed Decisions Begin With Good Data
Situation:
Army leaders and managers need to make well-informed and timely decisions
Most decisions impact across many functions and organizations
Well-informed decisions require relevant, accurate and timely analyses that integrate data from many functional areas
Requirement:
Move to modern systems that include open, horizontally integrated data to enable better informed decisions; including:
General Fund Enterprise Business System (GFEBS)
Logistics Modernization Program (LMP)
Global Combat Support System-Army (GCSS-A)
Integrated Personnel & Pay System (IPPS-A)
GFEBS integrates data from across the Army
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6. Where We Are and … Where We Are Going
GFEBS Solution
Involves maintaining many systems
Requires many costly interfaces
Requires entering data in several systems
Inhibits efficient sharing of data
Impedes producing comprehensive and accurate decision data
Hinders responding timely to questions
Requires time-consuming and costly reconciliations
Current Situation
System View (SV) 1
SAP
Implements a single web-based system
Standardizes processes Armywide
Implements standard data structures
Records transactions in real-time and provides real-time access to data
Integrates financial and non-financial/ performance data from functional areas
Applies commercial-off-the-shelf (COTS) Enterprise Resource Planning (ERP)
Complies with DoD’s Business Enterprise Architecture (BEA)
Within the current system:
The high rework rate and redundant data entry required by the financial processes are driving overall costs skyward.
Time and effort are stolen from our personnel by double and sometimes triple-tasking.
Just as a weapon system can become dated and outmoded, so has the Army’s financial management system. There is a need to implement the newest technologies and clean out the kinks of the older system in order to increase the Army’s efficiency and to enable a 21st century Army.
GFEBS will ultimately replace 80% of the currently overlapping and redundant functionality of the Army’s financial portfolio, which you saw in the original SV-8 diagram.
With GFEBS, users will have full visibility of the Army’s financial system thus allowing improved financial, asset and real property management.
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As of 31 Dec 2009 6 6

7. Technical Characteristics Of The Army’s GFEBS Solution
Commercial Off-the-Shelf (COTS)
Configure and not custom-building software
Provides ‘best practices’ inherent in software
Enables system updates and enhancements without re-writing code
Enterprise Resource Planning (ERP) Systems
Integrates and optimizes business processes across the enterprise
Includes most business processes for an optimized solution
Enables sharing of common data among all business processes
SAP product
The most widely used ERP solution in the world
Customers include DLA, Navy, NASA, IRS, Wal-Mart and Daimler AG
Benefits Include --
Complies with over 1,100 accounting and real property requirements
Enables transformation to a cost culture
Capitalizing on COTS and ERP benefits requires
accepting business process changes
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8. General Fund Enterprise Business System Objectives
Financial Accounting system:
Records financial transactions in single system Army-wide
Complies with statutory & regularity requirements for funds control and accounting
Includes real property and other asset data for accountability
Cost accounting system:
Allocates or assigns cost data and provides full cost
Relates costs to outcomes/outputs/ services and performance
Enables cost-benefit, comparative, and other cost analyses
Enables cost planning & control
Management support system:
Provides visibility of transactions in real time across the Army
Provides access to continuing data
Enables analyses
Supports well-informed decisions to:
Leverage available resources
Improve program & budget decisions
A very significant change from “simple” legacy systems and
the lack of standard and integrated business practices
Financial accounting system: complies with General Ledger and statutory requirements for producing auditable financial statements – largely for external use
Cost accounting system: capitalizes on financial accounting system but focuses on cost – full cost vs obligations -- of outcome/ output/ service – largely for internal management and control
Decision support system: capitalizes on cost accounting data and integration of outcome/ output/ service data from many functional areas to provide decision makers – at HQDA and at the operational level across the Army – with relevant, accurate and timely analyses – largely for internal management and control
Estimate of progress:
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As of 28 April 2011 8

9. Transaction Illustration Simultaneously Updates Related Records
Transactions Entered
Purchase Request
FI - None
FM - Commitment
CO - None
Purchase Order
FM - Obligation
Goods Receipt
FI - Expense/AP
FM - Expenditure
CO - Expense
Payment
FI - AP/Cash
FM - Disbursement
Simultaneous Updates
FI – Financial Acct. & Mgmt.
FM – Funds Acct. & Mgmt.
CO – Cost Acct. & Mgmt.
MM – Materials Mgmt.
and Procurement
PPE – Property, Plant &
Equipment [PM, PS, RE, AA]
SD – Sales & Reimbursables
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10. Financial Accounting Compliance Statistics
95% “Substantially Compliant”
Designation from AAA
91% SFIS Compliant
Determined by DCMO Audit
RPIR Compliant
with BEA 8.0
RIPM Compliance
OSD Evaluation Pending
98% Full Compliance
Self-Assertion
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11. Cost Accounting Capability Includes
Implements a standard cost structure for collecting full and comparable data from across the Army
Includes cost planning, cost analysis and cost control capabilities for use as cost data become available
Enables cost reporting, reviews and analysis across the Army
Supports cost management training to develop skilled analysts and to capitalize on cost management capability
Provides data and tools to enable the Army to institutionalize a “Cost Culture”
edit
Cost Management applies across the organization
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12. Cost Accounting Capability Enables Cost Management
Brigade data may be for:
specific brigade
average Bde in command
average Bde across
the Army
Personnel
Military -
$ / Soldier
Civilian
$ / FTE
Contractor
Base Support
$ / Service
$ / Brigade
$ / Installation
Training (Ind)
$ / Student Tng Day
$ / Course Day
Training (Unit)
$ / Mile
$ / Flying Hour
$ / Weapon System
Equipment
New
Conversion
Ratio: Spt $ / Brigade $
Force Generation
$ for Reset
$ for Ready/Train
$ for Available
Heavy X
Light
Stryker
SUST
Bde
ARFORGEN data may be for:
specific pool, e.g., Ready
specific function in pool
average Bde in pool
Functional data may be for:
total cost for school
total cost for course
specific costs of
interest
Introduction to concept of COST data versus simple expenditure data
Cost of BDE to the Army is the sum of expenditures across the Army–
Individual training -- typically TRADOC
Unit training -- typically FORSCOM, USAREUR, ARNG, etc.
Base Support – typically IMCOM
Equipment – typically AMC
Personnel – from centrally management MilPer
Flexible and responsive
to Army information needs
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As of 7 Jan 2010 12 12

13. Management Reports Cost Management Report PP&E Reporter
Unit Cost Report
Cost By Budget and Plan Report
Cost By Cum
Cost by Non-Cum
Cost By Partners Cum
Cost By Partners Non-Cum
Cost By Actual
Cost By Real Property
PP&E Reporter
Real Property Inventory Report
Usage of My Objects
Usage of My Objects (%)
Vacancy by Usage Type
Portfolio by Regional Location
Lease-In by Regional Location
Owned Real Estate by Regional Location
Occupancy Report
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14. Deployment Schedule By Command And Wave
10/30/2009
Wave 1
1 Apr 2009
Wave 2
1 Apr 2010
Wave 3
1 Oct 2010
Wave 4
1 Jan 2011
Wave 5
1 Apr 2011
Wave 6
1 Jul 2011
Wave 7
1 Oct 2011
Wave 8a
1 Apr 2012
Wave 8b
1 Jul 2012
HQDA/OA22
FORSCOM
TRADOC
USAAC
AMC
EUSA
SMDC
USARNO
USARSO
USARCENT
USARPAC
USAREUR
USARAF
USAASC
ARCYBER
ATEC
USMA
USARC
MDW
CIDC
MEDCOM
NETCOM
IMCOM
ARNG
AFRICOM
EUCOM
SOUTHCOM
JIEDDO
10%
100% 5%
20%
80%
90%
95%
100% 5%
20%
80%
90%
100%
100%
0.5% 1% 2%
10%
20%
100%
100% 2%
98%
100%
100%
100%
30%
100%
90%
100% 5%
100%
100%
10%
20%
50%
100% 5%
10%
100%
100%
100% 1% 2%
50%
100%
90%
100%
100% 1%
10%
40%
60%
80%
90%
98%
100% 1%
10%
40%
45%
78%
90%
98%
100% 5%
10%
30%
40%
80%
85%
92%
100% 1% 5% 7%
10%
100%
We are at 86%
of all users
100%
100% 14
100%
100%

15. Wave 7 Go-Live And Cumulative Deployment Data
4,200 additional end users
39,050 end users cumulative
10,280 additional civilian employees for payroll
168,232 cumulative civilian employees for payroll
343 additional Funds Centers – cumulative: 1,506
12,120 additional Cost Centers – cumulative: 51,152
22 additional locations
180 total locations
6 additional commands went fully operational
FORSCOM, TRADOC, USARPAC, USARC, CIDC and USSOUTHCOM
13 commands were fully operational: OA22, Accession Command, EUSA, USARNO, USARSO, USAREUR, USARAF, ARCYBER, USMA, MDW ARNG AFRICOM and EUCOM
$ 24.5 billion allotted (as of 2nd Quarter FY12)
Wave 6 (cumulative)
1,163 Funds Centers cumulative
39,032 Cost Centers cumulative\
157,952 civilian employees for payroll
Wave 7 (cumulative)
1,506 Funds Centers cumulative
51,152 Cost Centers cumulative
168,232 civilian employees for payroll
Wave 7 added:
343 Funds Centers created
12,120 Cost Centers created
10,280 civilian employees for payroll
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16. End Users -- Most Are NOT From Resource Management Office
Most common positions of nearly 40,000
Accountant
Budget Analyst
Engineer & Scientist
Health Specialist
IT Specialists
Legal Admin
Logistics Supervisor
Operations Analyst
Technician
Program Manager
Property Manager
Purchasing Agent
Quality Assurance Specialist
Resource Manager
Staff Assistant
Supply
NOTE: As of Wave 7 October 2011
GFEBS is a transaction based system and
the preponderance of transactions begin in operational organizations 16
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17. Implementation Is Not The End Of Development
O&S examples
Establishing internal “help desk” capability at commands
E.g.,OA-22, ARNG, MEDCOM, FORSCOM and DFAS
Redesigning Purchase Request workflow and MIPR process
Refining and enhancing initial functionality
Public works: Day-in-the-life ‘end-to-end’ cases
Project systems: developing for acquisition processes
Business Intelligence:
Improving current reports
Splitting cumulative and non-cumulative
Adding new reporting capability, e.g., “Cost By” reports
Future new capabilities
Procure to Pay (P2P)
Sensitive Activities
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18. General Fund Enterprise Business System Is Transforming the Army
New system with analytic tools and capabilities
New business processes
Capitalizes on “best practices” embedded in ERP
New management structures and data concepts
Single Instance of entering and then sharing data
New roles, skills and knowledge for end users
Opportunity for individuals to develop skills with state-of-the-art ERP system and cost management techniques
Complies with statutory and regularity financial accounting requirements
GFEBS is transforming financial management and
management practices in most functions with
the new cost management capability
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19. GFEBS And Army Audit Readiness
Secretary of Defense Panetta:
“… I've directed the department to cut in half the time it will take to achieve audit readiness for the Statement of Budgetary Resources so that by 2014 we will have the ability to conduct a full-budget audit.
We owe it to the taxpayers to be transparent and accountable for how we spend their dollars.”
Audit readiness
re-enforces the case for the GFEBS solution 19
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20. Achieve Audit Readiness By 2014 Assertion And ERP Deployment Timeline
We are here
Notes:
GFEBS waves correspond to deployment at specific sites.
“Assert” means Army is ready to be audited in that area.
Exams are evaluations by independent public accounting firms. 20
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21. GFEBS And Army Cost Management Concept of Operations
Capture and Valuate Data in GFEBS (CO module)
The cost accounting features of GFEBS
captures cost and related performance data,
and supports cost management
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22. General Fund Enterprise Business System Leadership
LTG Joseph E. Martz
Military Deputy for Budget,
Assistant Secretary of the Army
(Financial Management & Comptroller)
Robert M. Speer
Principal Deputy
Assistant Secretary of the Army
(Financial Management & Comptroller)
A collaborative team of ASA (FM&C) and PEO-EIS
Ms. Kristyn E. Jones
Director,
Financial Information Management
Mr. Roger A. Pillar
Director, Functional Program
LTC Stephen Lockridge
Director, Deployment & Transformation
Mr. Doug Wiltsie
Program Executive Officer for
Enterprise Information Systems
COL Patrick W. Burden
GFEBS Project Manager
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As of 12 September 2011 22 22