<DOC>
[108th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:92653.wais]
FEDERAL INFORMATION SYSTEMS INTEGRATION AND CONSOLIDATION: MAXIMIZING
TECHNOLOGY INVESTMENT ACROSS AGENCY BOUNDARIES
=======================================================================
HEARING
before the
SUBCOMMITTEE ON TECHNOLOGY, INFORMATION
POLICY, INTERGOVERNMENTAL RELATIONS AND
THE CENSUS
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTH CONGRESS
FIRST SESSION
__________
JULY 15, 2003
__________
Serial No. 108-122
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpo.gov/congress/house
http://www.house.gov/reform
______
92-653 U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 2003
____________________________________________________________________________
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COMMITTEE ON GOVERNMENT REFORM
TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania WM. LACY CLAY, Missouri
CHRIS CANNON, Utah DIANE E. WATSON, California
ADAM H. PUTNAM, Florida STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee LINDA T. SANCHEZ, California
JOHN SULLIVAN, Oklahoma C.A. ``DUTCH'' RUPPERSBERGER,
NATHAN DEAL, Georgia Maryland
CANDICE S. MILLER, Michigan ELEANOR HOLMES NORTON, District of
TIM MURPHY, Pennsylvania Columbia
MICHAEL R. TURNER, Ohio JIM COOPER, Tennessee
JOHN R. CARTER, Texas CHRIS BELL, Texas
WILLIAM J. JANKLOW, South Dakota ------
MARSHA BLACKBURN, Tennessee BERNARD SANDERS, Vermont
(Independent)
Peter Sirh, Staff Director
Melissa Wojciak, Deputy Staff Director
Rob Borden, Parliamentarian
Teresa Austin, Chief Clerk
Philip M. Schiliro, Minority Staff Director
Subcommittee on Technology, Information Policy, Intergovernmental
Relations and the Census
ADAM H. PUTNAM, Florida, Chairman
CANDICE S. MILLER, Michigan WM. LACY CLAY, Missouri
DOUG OSE, California DIANE E. WATSON, California
TIM MURPHY, Pennsylvania STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio
Ex Officio
TOM DAVIS, Virginia HENRY A. WAXMAN, California
Bob Dix, Staff Director
Scott Klein, Professional Staff Member
Ursula Wojciechowski, Clerk
David McMillen, Minority Professional Staff Member
C O N T E N T S
----------
Page
Hearing held on July 15, 2003.................................... 1
Statement of:
Conway, Craig A., president and chief executive officer,
Peoplesoft, Inc.; Kevin Fitzgerald, senior vice president,
Oracle Corp.; S. Daniel Johnson, executive vice president,
Bearingpoint, Inc.; and Paul M. Cofoni, president, Federal
sector, Computer Sciences Corp............................. 31
Forman, Mark A., Administrator of E-Government and
Information Technology, Office of Management and Budget.... 13
Letters, statements, etc., submitted for the record by:
Cofoni, Paul M., president, Federal sector, Computer Sciences
Corp., prepared statement of............................... 124
Conway, Craig A., president and chief executive officer,
Peoplesoft, Inc., prepared statement of.................... 34
Fitzgerald, Kevin, senior vice president, Oracle Corp.,
prepared statement of...................................... 95
Forman, Mark A., Administrator of E-Government and
Information Technology, Office of Management and Budget,
prepared statement of...................................... 16
Johnson, S. Daniel, executive vice president, Bearingpoint,
Inc., prepared statement of................................ 112
Miller, Hon. Candice S., a Representative in Congress from
the State of Michigan, prepared statement of............... 9
Putnam, Hon. Adam H., a Representative in Congress from the
State of Florida, prepared statement of.................... 4
FEDERAL INFORMATION SYSTEMS INTEGRATION AND CONSOLIDATION: MAXIMIZING
TECHNOLOGY INVESTMENT ACROSS AGENCY BOUNDARIES
----------
TUESDAY, JULY 15, 2003
House of Representatives,
Subcommittee on Technology, Information Policy,
Intergovernmental Relations and the Census,
Committee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m. in
room 2154, Rayburn House Office Building, Hon. Adam Putnam
(chairman of the subcommittee) presiding.
Present: Representatives Putnam, Miller, and Clay.
Staff present: Bob Dix, staff director; John Hambel, senior
counsel; Scott Klein and Lori Martin, professional staff
members; Ursula Wojciechowski, clerk; Suzanne Lightman, fellow;
Jamie Harper and Erik Glavich, legislative assistants; Chris
Koves and Richard McAdams, interns; David McMillen, minority
professional staff member; and Jean Gosa, minority assistant
clerk.
Mr. Putnam. The Subcommittee on Technology, Information
Policy, Intergovernmental Relations and the Census will come to
order. Good morning, everyone, and welcome to today's hearing
on Federal Information Systems Integration and Consolidation:
Maximizing Technology Investment Across Agency Boundaries.
This hearing is a continuation of the aggressive oversight
by this subcommittee to ensure that the Federal Government is
taking full advantage of the efficiencies created through E-
Government and improving the way the Federal Government manages
its IT investments.
Let me take one moment to reaffirm the purpose of this
subcommittee. We don't hold hearings just for the sake of
holding hearings. With the help of OMB and the private sector
and a number of CIOs and IGs, we are developing quite a body of
evidence pointing to efficiencies that can be derived from
better use of IT investment, and we will continue to pursue
that aggressive oversight and continue to expect results. The
recurring theme has been that what we face is not a technology
problem, it is a cultural problem, changing the culture of the
executive branch as well, frankly, as some aspects of the
legislative branch, and we will continue to demand results
through further aggressive oversight.
Despite its distinction as the largest buyer of information
technology in the world, the Federal Government has a tradition
of purchasing and maintaining tens of thousands of stove-piped
systems that operate separately from other agencies and are not
interoperable with other systems. Simply getting a handle on
what systems exist and agreeing to a unified plan to coordinate
this disparate IT environment is a monumental task.
One of the primary ways the Federal Government is improving
its productivity and results from IT investments is by
improving agency IT reporting mechanisms through the Office of
Management and Budget. To secure funding for future IT
purchases, agencies must now provide OMB with a business case
that links new IT investments to performance improvement.
Agency IT budget requests also must synchronize with the so-
called Federal Enterprise Architecture, the governmentwide
modernization blueprint of the Government's future IT
structure.
It is clear that the ongoing development of the Federal
enterprise architecture has proven to be a powerful tool for
OMB to identify key gaps and redundant efforts, and is being
used to determine the most effective investment of IT, not to
mention to help address our massive cybersecurity challenge.
Agencies also must develop their own agency enterprise
architectures describing exactly how that IT spending will
transform and modernize around the needs of citizens.
In carrying out those duties and in preparing their budget
submissions, agencies utilize an IT planning framework
developed by the Federal CIO Council known as the Business
Reference Model [BRM]. The BRM describes the Federal
Government's lines of business independent of the agencies that
actually perform those functions.
By describing the Federal Government around common
functional lines of business across Government instead of the
traditional stove-piped agency-by-agency viewpoint, the process
forces agency collaboration to leverage technology, and
technology purchases, across various agencies, by function, in
order to eliminate redundant spending. By recognizing
opportunities for integration and consolidation, OMB has, in
effect, created a process that determines our next wave of
cross-agency E-Government initiatives to join the list of 24
projects already being pursued.
The purpose of today's hearing is to examine the progress
being made by the Federal Government to modernize agency
information technology management around those lines of
business that cross agency boundaries. Several common internal
lines of business were identified during this year's budget
process deserving of immediate attention for potential
consolidation. They include integration and consolidation of
systems in the following areas: financial management, human
resources, monetary benefits, criminal investigations, data and
statistics, and public health monitoring.
In addition to reviewing the status of these identified
areas, I would also be interested in the recommendations of our
witnesses today on how this effort coincides with two other
issues: cybersecurity and software procurement.
First, it seems clear that integrating and consolidating
our IT around these business lines could concurrently provide
an opportunity to better secure our IT systems in a far less
expensive manner than patching up old systems and processes.
Second, I am encouraged by the additional cost savings we might
derive by connecting today's topic to the large discounts I
believe we can secure through economies of scale, such as
through the recently announced SmartBuy software licensing
initiative.
It is becoming more evident everyday that these various
pieces of IT spending must be considered as a package. Sticking
to an architecture and eliminating redundancies by looking
across boundary lines is a process that addresses our
cybersecurity challenges and fosters savings opportunities.
Conversely, an IT framework based on unique solutions only
further exacerbates our cybersecurity challenges and increases
software costs.
The subcommittee particularly looks forward to hearing
advice from some of our Nation's leading software and
integrator companies on making the Federal Government operate
its common cross-agency systems more efficiently, lessons
learned from their previous clients pursuing enterprise-wide IT
integration, and how to best derive taxpayer savings by more
productively managing these major cross-agency investments.
As always, today's hearing can be viewed live through
WebCast by going to reform.house.gov and clicking on the link
under Live Committee Broadcast.
It is always a pleasure to be joined by the ranking member
of this subcommittee, the distinguished gentleman from
Missouri, Mr. Clay, and I recognize him at this time for his
opening remarks.
[The prepared statement of Hon. Adam H. Putnam follows:]
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[GRAPHIC] [TIFF OMITTED] T2653.002
Mr. Clay. Thank you, Mr. Chairman, and I thank the
witnesses for taking their time to be with us today. I look
forward to this discussion today.
The use of technology in the Federal Government has a
checkered past. The Federal Government was well ahead of both
businesses and State and local government in embracing
technology. The census began using punch cards in the 1890
census, and housed one of the first computers ever built.
Indeed, it was research and human capital from the Federal
budget that seeded many of today's information technology
giants like IBM.
The Federal Government invested heavily in computers for
science and data management. At the same time, businesses and
universities were beginning to understand that the computer
revolution was about more than the data processing division
that kept the books and cut the checks, and computer companies
began to realize that they were selling more than just
hardware. Those organizations learned 20 years ago what the
Federal Government is still struggling to grasp: the revolution
is about information, not technology.
As a result, many of the system modernization projects
undertaken by the Federal Government flopped badly. GAO can
line a room with reports of programs like Tax System
Modernization and similar projects at the FAA, the Weather
Service, and the Medicare system. Many of those reports
documented expenditures of tens or hundreds of millions of
dollars in systems that did not work. One of the refrains that
echoed throughout those reports was that no system
modernization will work unless the agency fundamentally
rethinks its business processes.
I am pleased to see that OMB has taken up that charge and
is not linking technology funding with agency business
processes. That is exactly the kind of leadership Congress had
in mind when it assigned the responsibility for the information
management to OMB in the Paperwork Reduction Act of 1980.
I look forward to the discussion of how this is going to be
done through the budget process. I would ask, however, that our
witnesses do so without the reliance on jargon and acronyms. If
we have a discussion of how the BRM is a foundation of the FEA
to describe the LOBs, then I am going to get lost, and I
suspect most of the room will be lost.
Mr. Putnam. Thank you, Mr. Clay.
At this time I will recognize the vice chairman of the
subcommittee, the gentlelady from Michigan, Ms. Miller.
Ms. Miller. Thank you, Mr. Chairman, very much. I certainly
appreciate your holding this hearing today, and learning all
these acronyms as a freshman Member of Congress has been part
of the whole living experience, I will tell you.
Improving the efficiency and the effectiveness of the
Federal Government's technology investment certainly is an
important topic, and I am certainly looking forward to the
testimony of all the witnesses today. Throughout my career as a
public servant, I have always placed a very high value on
customer service, and we who serve the people must realize that
the money that we spend is not our own money, it is the money
of the American people who have worked very hard to earn it;
therefore, every step must be taken to ensure that this money
is spent in the most effective way possible.
Too often, unfortunately, the Government does not do enough
in this regard. Government waste is viewed as common practice,
and this, of course, is unacceptable. The focus of today's
hearing is to examine the measures taken by Federal agencies to
reduce waste associated with Government IT investments, and
with all the criticisms made about Government's IT initiatives,
I am very pleased to say that OMB is an exception to this rule.
OMB has been very proactive in implementing an interagency
technology integration plan that shows an awful lot of promise,
and I am very hopeful that these successes can be a model for
other agencies still not in compliance with Federal standards.
I have always felt that customer service should not be a
novel concept for government, any level of government.
Governmental officials, from elected officials at any level, to
career government workers, to all of those that participate in
the everyday functions of government should always search for
better and more efficient ways of doing things. Improving the
functions of Government is a team effort, and everyone on the
team has to play a very active role in ensuring that not any of
the hard-earned money of this Nation's citizens is wasted.
Actually, after my election to Congress, I was very honored
to be named as a vice chair of this subcommittee because I
believe that active measures must be taken to improve the
Government's return on investment in technology spending. The
development of the Federal enterprise architecture and OMB's
focus to integrate like processes as an interagency level I
think, again, are very promising. With cross-agency
cooperation, the Federal Government could save taxpayers about
$3 billion. This saving actually equates to about 5 percent of
all the Federal Government's IT estimated expenditures for
fiscal year 2004. These are certainly substantial savings by
any measure. These savings, though, can only be realized if
everyone in Government is dedicated to improving the
efficiency.
The Federal enterprise architecture has identified six
areas in need of improvement, and we are certainly not going to
stop our efforts on this subcommittee until everyone in the
Government, from CIOs on down, work wholeheartedly with OMB.
These six areas of concern are identified as business lines for
a reason: they are vital to the everyday business functions of
the Government and do not need to be done separately by each
agency. By integrating these business lines across agencies,
billions of dollars can be saved. I certainly support reducing
the funding of any program that has its own unique system and
encourages the outdated stove-pipe model that has been referred
to by the chairman as well.
As Members of Congress, we need to support Mr. Forman in
the attempts by OMB to improve IT investments. Each program
must fit the plan of the Federal Government, or else its
funding should be restricted. The integration and consolidation
plan of the OMB shows tremendous potential, and I am certainly
hopeful that this subcommittee can learn where our Government
is in its implemen-
tation and what the future will bring.
Again, I am looking forward to all the testimony of the
witnesses today. Thank you all for coming.
And thank you, Mr. Chairman.
[The prepared statement of Hon. Candice S. Miller follows:]
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Mr. Putnam. Thank you, Ms. Miller.
At this time we will proceed to our first panel. As is the
custom with the committee, we swear in our witnesses. So, Mr.
Forman, if you would please rise and raise your right hand.
[Witness sworn.]
Mr. Putnam. Note for the record the witness responded in
the affirmative.
At this time I would like to introduce Mr. Forman. Mark
Forman was appointed by President Bush to be Administrator for
the Office of E-Government and Information Technology in April
of this year. He is effectively our Nation's Chief Information
Officer, charged with managing more than $58 billion in Federal
IT investments, and is the chief architect of the President's
E-Gov Initiative. Mr. Forman also oversees executive branch
CIOs and directs the activities of the Federal CIO Council.
It is always a pleasure to have you at our subcommittees.
You are a most frequent guest, and you are recognized for your
opening statement.
STATEMENT OF MARK A. FORMAN, ADMINISTRATOR OF E-GOVERNMENT AND
INFORMATION TECHNOLOGY, OFFICE OF MANAGEMENT AND BUDGET
Mr. Forman. Thank you, Mr. Chairman, members of the
committee. Thank you for the very generous comments, as well,
and your support. We are managing through a big change in the
Federal Government, and your leadership here is critical to the
success of modernizing the Federal Government, so I appreciate
the supportive comments very much.
On March 13th of this year, I testified that there were six
long-standing IT management problems, and a lot of that
resulted in duplicative IT investments for the Federal
Government. Our policy is very clear here: we support shared
use of information technology to stop redundant IT purchases,
and we also believe the best practices in private industry
create several opportunities for saving. I want to talk a
little bit more off the cuff about these opportunities.
These are opportunities to perform mission-critical
operations more effectively. At the heart of this is how
effectively can we move people to where they are needed, money
to where they are needed, better alignment and responsiveness
of the information, exactly as Mr. Clay said, and the question
comes down to how fast can the Federal Government move. So the
opportunity is there, the technology makes it possible, but in
order to do this, the traditional silo-based model that
Government has had for decades has to change.
There are also opportunities to more effectively, more
rapidly deploy these major IT systems. There are operational
cost reductions in the billions and there are IT investment
cost reduction in the billions. The numbers that you see in my
testimony and that we have been working on in the reports are
the billions of savings that are potentially possible through
just the IT side. There are many more billions also on the
operational side that are possible to be saved.
Now, we are living through a time of convergence. There are
convergences between business processes and operations that are
made possible by today's technology. It means the organization
structure has to change; it means the business processes have
to change. But there is no question this is largely driven by
the new technologies that are available.
I want to make clear our approach here is not
centralization. The approach is all about the ability of
organizations to more effectively use information, make a
decision, allocate people, monetary resources where needed. So
we should look for ways to make Government work faster. We
should measure improvements of cycle time, as well as reduction
of cost. We should measure improvement and results as well as
reduction of cost. And it takes an enterprised view to do that.
That is why the architecture is so important.
So I will try not to use terms like the business reference
model and the Federal enterprise architecture, but when I was
working the staff in the Senate, one of the chairman of the
committee I worked on lambasted me and a colleague on the issue
of business process re-engineering. He said, I don't know why
they call it re-engineering; it was never engineered in the
first place. And that is the scenario we are operating in: it
was never architected in the first place. But if we are going
to move to a faster, more responsive Government, we need the
architecture, we need to understand what are the business
processes, what are the organizations, what are those
technologies, and how does it all relate together to drive
better results.
We chose to focus on about six lines of business or
functions of the Federal Government. We know from our analysis
last year about a third of the lines of business of the Federal
Government have a lot of IT redundancy. We know that, last
year's view, 10 of the agencies out of the 25 cabinet-level
agencies and departments do the same line of business, same
function. It doesn't mean they have to do it in their own silo,
it means they can operate together in today's technical
environment. But that requires a change in organization
structure and approach and business processes, so we decided to
pick six.
And some of these are the back office or administrative
function: human resources, management, financial management.
Some are very much at the forefront of a couple areas that are
very important for homeland security: case management for
criminal justice purposes and law enforcement, and public
health monitoring systems. And then a couple are some common
lines of business that have been chronic problems for many
years: how we manage monetary benefits, because that is such a
large portion of the operations of the Federal Government; and
how we manage data and statistics, because we have known for
decades that we have somewhere around 70 statistical agencies.
They share their work, they operate as a competency. They are
often different processes that could be brought to bear. So we
picked the six.
What we found out through the study is that leadership
emerged in a couple areas: public health, architect, is
probably one of the most important ones. We knew, after the
anthrax scares in late 2001, that we simply didn't have the
public health information systems that would allow the Federal
Government to understand the elements of the health
organizations out in the field, at the county level, the
hospitals, and how they would let somebody in Washington know.
And what happened is the 18 different agencies all sent their
own information structures out to the field. But there is only
one person at the end of those information systems in that
county health department or in that hospital, and we run the
risk not architecting this well, not organizing this well, that
we would have 18 different systems with 18 different single
looks at an event, and no comprehensive view that in fact this
was tied together as an event that ought to be dealt with
either for counter-terrorism purposes or disaster response or
public health purposes. It has to get tied together; otherwise,
I can promise you, 5 years from now somebody will have the
additional information system needed just to pull that all
together.
So it needs to be architected well from the beginning.
There probably need to be only a couple, not 18 or 20,
different systems. And that is the point of this architecture
work. Having leadership means that we can pool those
organizations together without each having their own
information system into an architecture. It requires a lot of
different type of work and Government issues. That is a case
study.
In financial management and human resources information
system, the leadership so far has not quite yet emerged in the
agency level. The traditional buying behavior is such that we
can't take a corporate approach, and we haven't been able to,
and we are just striving to that now. I believe it will emerge.
And here, too, many times it is so easy for the agencies to say
Congress expects us each to have our own financial system or
our own human resources information system, and we can't do
that real enterprise financial management or human capital
management. That is why it is so important that Congress and
the executive branch work together here.
The last two areas we hit the limits to change, and so I
don't think we are going to be able to get as far as I would
like this year. There are some opportunities that are laid out,
and those are valid, and significant cost-savings opportunities
will emerge from those. But in terms of where we would put our
eggs, we know there are essentially three buckets: ones where
they are critically important to us and agency leadership has
emerged; ones where there are huge cost savings and enterprise
opportunities, and we need to foster that understanding and
movement; and ones where the movement to change is probably
worth more than the benefit we will get out of it, and we look
for other cost savings and efficiencies.
With that, I will conclude. Thank you.
[The prepared statement of Mr. Forman follows:]
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Mr. Putnam. Could you, just in summary, put the two back
into each of those baskets, your great-opportunity-but-more-
leadership-needed-basket and your-costs-don't-justify-the-
benefits-because-of-the-resistance basket?
Mr. Forman. I think in the public health architecture and
the criminal law enforcement systems or case management systems
we have seen terrific leadership out of the Justice Department
in the case of case management systems and out of Health and
Human Services in the case of public health architecture.
Financial management and human resource management we have
counsels operating, and so that is an area where we need to
foster leadership. It is a new way for them to operate. Data
and statistics and monetary benefits we identified through the
study opportunities which could be exercised, but not to the
level of re-architecting how the Federal Government goes about
its work in those areas.
Mr. Putnam. Thank you very much for your statement.
At this time I will recognize the vice chair of the
subcommittee, Ms. Miller, for the first round of questions.
Ms. Miller. Thank you, Mr. Chairman.
You know, just sitting on this subcommittee, we are always
using the phrase the stovepipes, the stovepipes. In fact, I
think if we took the word stovepipes out of our vocabulary,
that would reduce what we are up here talking about.
Are you finding that there is greater awareness amongst all
the different agencies about the stove-piping effect and how it
is handicapping your ability to move forward here? I mean, is
everybody really cognizant? Do you feel that the agencies are
cognizant of the problem that they are all facing?
Mr. Forman. Obviously it is dealt with differently by
different levels of the organization. I will tell you I
continue to be impressed by many people, generally at the
working level or first level of supervision, who know that they
have been living in a silo, if you will, in just their realm of
the world, and meet together. There are huge strands of either
official or unofficial groups that get together. For example,
there is a group of folks that just are regulatory writer
process experts. They may represent different types of
expertise, environmental versus transportation regulations, but
they get together to talk about how to improve the quality of
the regulatory process. And I think to the extent that we can
leverage their understanding and the business practices that
allow them to leverage their knowledge, we are fairly
successful.
I would say there is another group of folks, though, that
grew up and were successful within their organization
structures, and they are used to the processes operating within
their organization. The technology today says that no longer
makes sense; that there are many opportunities now where the
organization doesn't drive the decisionmaking, but we need to
let the information drive the decisionmaking. And that means
they have to operate with information that sits outside of
their normal organization. That could be information about
human resources.
Now, matched up with that information, you have to have the
ability to exercise those assets, those resources, people, for
example; and we simply don't have that capability yet. That is
the business process integration that you will hear a lot of
people in large commercial companies talk about, and sometimes
you will hear us talk about it at OMB. That is going to require
architecting those business processes. And, quite frankly, they
understand that and I think some of them are a little worried,
that is threatening to them. And at the working level I
continue to be impressed they want access to those, they want
those new processes, because they see that is a better way to
get their job done.
Ms. Miller. Well, that is, I guess, the old saw wherever
you are, right? People say why are you doing it this way; well,
I have always done it that way. And obviously that is not
always the correct answer. So I know you all do have that
challenge as well.
I am just trying to understand. You are talking about a
business plan, and I looked at some of your lines of business
here and perhaps I could have a better understanding if you
just sort of took me through. Like financial management would
seem to be sort of a no-brainer. What kind of challenges are
you finding throughout the different agencies? I mean,
financial management, to me, would seem to be something that
the different agencies could glom onto very quickly to
eliminate the stove-piping effect. Perhaps you could just sort
of take me through that a little bit so I understand why
doesn't that happen very expediently.
Mr. Forman. Sure. I think the situation that we are working
through now, bringing back to the fact that financial
management is one of the five management agenda items for the
President, so we put pressure on the agencies to improve their
financial management, Congress put pressure on the agencies to
improve their financial management. Generally, this committee
has been at the forefront of a cross-agency approach, but I
think it is fair to say there are many appropriation
subcommittees and authorizing committees that also put pressure
on their agencies to improve financial management. Generally,
the money gets tied to that.
So the agencies buy their own financial management system
to generate responses to their authorize as appropriators,
inspectors general, GAO, but it is based on a point solution,
fixing the problems that they see. And they never see the fact
that their problem cuts across the agencies. I think this
committee sees that, I think the Senate Governmental Affairs
Committee sees that, perhaps the Budget Committees see that.
But they don't get the same pressure or funding alignment to do
this jointly, and that is the change that we are trying to
bring to bear.
So the difficulty for a CFO at a department is being
responsive to their oversight and, by the same token, making
sure that the cross-agency solution allows them to be
responsive, which we believe it does; and that is a training
and education, finding a leader and agents for change that we
are working through now.
Ms. Miller. I appreciate that. You know, I am a person that
has done budgets for years and years and years in my
background, so my mind, I think, is somehow trained to think
numerically, so I am looking at this financial management. But
I suppose on the political side of my brain, if you look at
some of the different IT problems that you have identified
again in your line of business with criminal investigations, of
course we all watched the horrific conditions with the D.C.
sniper. And I guess my question is going to is there a way that
the Federal Government could work better with the State and
locals as well to share some of this? As you are doing your
architecture, are you taking into consideration how you need to
partner the information that we are gathering to assist in
these kinds of things, whether it is a D.C. sniper or homeland
security? Should the Federal Government be setting out some
standards that could filter down?
Mr. Forman. Yes. I think absolutely that is the case in
certainly the two lines of business that are leading here, with
the strong leadership and the public health architecture. There
is no question. A lot of the modernization of county health
agencies and the public health infrastructure in the States is
going to come out of that money, and having that well
architected at the front end means that we take a good approach
to work with a much more integrated organization at the county
level and in hospitals. So there is a very strong working
relationship there.
I think criminal justice case management systems is very
similar. A lot of the States have adopted integrated case
management systems; a lot of that has been funded out of the
Justice grants programs, and the architecture framework that is
being used really provides for that. And I think the attorney
general has been very clear; his leadership here is extremely
important; he has been outspoken in the importance of that. I
think similar from Secretary Thompson; he has been outspoken in
that. And to get that leadership and to make it both cut across
the policy side, the IT side, you know, the organizational side
is really important, and we are seeing it in those two areas.
Ms. Miller. And just my final question, Mr. Chairman.
As I look at your line of businesses here as you have
identified your priorities and those types of things, could you
sort of give us a quick status report on actually where you are
with the implementing and some of the challenges that you have,
a timeframe as you have laid it out in your own business plan?
Mr. Forman. Well, four of the areas need a business case.
Basically, we had literally hundreds of business cases for
redundant investment, so we know there are a lot of good ideas
there. Study methodology we used with force and agreement on
what is the good idea and where should somebody not buy their
own unique project because they can leverage economies of scale
or where there is an opportunity to do an integrated process.
That means we have to form the team to pull that together. We
are fairly far along on that in public health architecture and
criminal investigations, case management systems.
We need to get the leadership working in human resources
management and financial management, so we are working with the
chief human capital officers counsel. OPM is providing strong
leadership there. We are working with the CFO counsel, Linda
Springer, the Controller for the Federal Government is
providing strong leadership there. But we need some champions
to emerge within the agencies that are actually going to make
that happen.
In monetary benefits, the opportunities were referred to
Social Security Administration, and they are figuring how to
work that into their next round of business case submissions.
And in data and statistics, the Census Bureau, as one of the
heavy demanders of software licensing, has taken that
initiative, and they are working to pull together the team to
adopt a similar approach to the SmartBuy approach.
Ms. Miller. Thank you, Mr. Chairman.
Mr. Putnam. You are very welcome, Ms. Miller.
I recognize the ranking member, Mr. Clay.
Mr. Clay. Thank you, Mr. Chairman.
Mr. Forman, earlier this year we heard testimony from GAO
about how DOD has over 1,200 different financial management
systems and was spending millions of dollars developing new
systems that don't work. DOD has designated $18 billion for
business systems in 2003 and, according to GAO, that
expenditure is at risk. Recently, DOD canceled one of these
projects after spending $126 million over 7 years. And that is
not an isolated example. According to GAO, there are at least
three other projects that are also investments going bad. Would
the project you are testifying on today address these problems
at DOD?
Mr. Forman. I think within the financial management arena
there is an awful lot of opportunity for synergy, so absolutely
in the financial management arena we should see some
opportunities. I will tell you there are a few things that are
unusual. I won't say they are wrong, just because of the pure
scale of the Defense Department. A hundred million dollars for
an architecture study is a lot of money, and there are lessons
learned and priorities that have to be made in the options that
came out of that study. But there are also a lot of insights
that we can use across the Federal Government in terms of
architecting better financial management processes. There are
concepts and solutions that I think Linda Springer has in
general financial management with the Federal Government. I am
sure she has testified on that before the committee. And so to
get the cross pollination of that. We hope to have good working
relationships continue as we move forward with the business
case for integrating the core financials.
Mr. Clay. Let me add in your testimony you identify several
hundreds of millions of dollars in projects that will be
reviewed. Are these potential savings from buying the same
software for all agencies instead of separately, or are they
situations where some agencies will be told to stop and go back
to the drawing board?
Mr. Forman. The first part is certainly a huge opportunity
for us, and how this will actually come out of the business
case analysis I can't predict. What I would say, though, is
that there is a slightly different opportunity than the second
one that you characterized. It is a question of how many times
do we want to buy the same innovation, when the technology
allows us to leverage economies of scale. So can we take 5 or
10 different initiatives where 5 or 10 different agencies were
coming up or trying to come up with an innovative approach, and
take the 2 or 3, or we already have the innovative approach and
just leverage economies of scale through perhaps a cross-
servicing model or a standard blueprint, if you will, for the
architecture? Those opportunities clearly are there; that has
come out of the study work we are doing. Now comes the details
of how do we get to take advantage of those opportunities. But
it probably will mean some agencies will not continue on with
their same approach to figuring out or reinventing the wheel
that have been typical for the Federal Government.
Mr. Clay. OK. Well, given that these projects are already
in the 2004 budget request, what will happen to the funds for
those projects that are stopped?
Mr. Forman. There are different approaches that have to be
considered, and ideally I would like to say that they wouldn't
be spent. Obviously one of the opportunities here is that we
get a total cost reduction, and so the whole point of the
business case process is to lay that all out; and that will be
done in September, before the beginning of the fiscal year.
Mr. Clay. OK. Last week we had the National Archives and
Records Administration here. It is my understanding that
legislation has been introduced that would transfer the
operations of the National Personnel Records Center from the
Archives to the Department of Veterans Affairs. Now, that
Record Center is in my district, and according to the GAO, the
Archives has made great strides in improving the management of
that Center. It doesn't make sense to me to take the Center out
of the hands of an agency whose primary function is records
management and give it to an agency whose primary function is
delivering services. Has administration taken a position in
this transfer of function? Were you aware of it?
Mr. Forman. I am not familiar with that issue. And what I
would like to do is get back to you on it.
Mr. Clay. Would you please? Thank you, Mr. Forman. Thank
you for your answers.
Mr. Putnam. Thank you, sir.
Mr. Forman, you mentioned in your testimony that a third of
the business lines that you looked at were redundant.
Mr. Forman. The IT investments.
Mr. Putnam. Give us some examples of those that were not,
so that we know what we are working with that are in pretty
good shape.
Mr. Forman. OK. I would ask that I get back to the
committee on that. I am more familiar with the ones that were
redundant, versus the ones that were not.
I think perhaps one of the lesser ones would probably be
air traffic control, where we might see the Defense Department
and the FAA.
Mr. Putnam. That is adequate. I just want everybody to have
a sense of, you know, being able to divide what is and what is
not.
For the last several months, this subcommittee has heard a
lot of testimony from you on the enterprise architecture and on
the management initiative that will get our arms around this
almost $60 billion in IT investment, and we are not going to
approve any new IT investments in agencies that are not part of
the business case. And from our standpoint, we have now voted
on several of the 13 appropriations bills. Have we voted on any
new IT investments that don't make a business case?
Mr. Forman. Well, buried in the budgets may or may not be.
So many of the IT investments are not explicitly appropriated.
In fact, the vast majority are not. A lot are funded out of
working capital funds. And your approving a budget is not the
same as approving that IT investment, per se. And, similarly,
the fact that an agency gets a budget is not the same as having
the authority to move forward. We have been trying to make that
clear to the agencies. Second is a lot are funded out of the
salaries and expenses line, and sometimes that is scrubbed and
sometimes it is not, and the standards are different.
Within that, we know that there are still systems that are
considered at risk; they haven't made the business case fully.
They are mission-critical, they are important, but, you know,
likely what will happen is they will have cost overruns of
schedule slips unless they have the business case. And I think
it is fair to say, traditionally in the budget process and
financial management, approving the funding and how the funding
is actually allocated increasingly has been driven by results
more. So thereto on the IT side I think it is fair to say you
are approving the funding for the purposes, whatever that may
be, that ultimately a portion of which may be used on the IT
investment. It is still incumbent on OMB under the Clinger-
Cohen Act, under the E-Gov Act of 2002 to hold the agencies
accountable for delivering results. We all understand what it
is to be spent on; we now have to make sure that it delivers
the results that were purported.
Mr. Putnam. Well, we expect you to fill that role, but to
the extent that we can be helpful as well and hold our
colleagues accountable to Clinger-Cohen and E-Gov, and that we
don't continue to fund these programs, we certainly look for
your input on that as well.
You identified an estimated $3 billion in savings if we
consolidate four of the six business areas that you laid out.
Do you have any ballpark estimate of what the potential in
savings is if we get good at this, another five or six?
Mr. Forman. Or if we were to go after the full third. I
don't, actually, and the reason is you know that there is
redundancy, but until you do the analysis you don't know which
one you want to keep versus which ones to turn off. There is no
question there will be savings. There is no question, I think,
based on commercial practice and experience, that the savings
will number in the billions. There are many examples of other
companies that are a fraction of the size of any Federal
agency, and they are always able to save a billion or multi-
billion dollars from this. So I think it is fair to scale those
to the Federal agencies and hold us accountable for doing the
analysis, doing the work to maximize those savings.
At the same time I think there are performance
improvements. One of the things that has most impressed me
about the e-business approach is that it costs less, agencies
or organizations become simpler, and they become faster and
more responsive, more agile is the business term of art today.
So it is one of these scenarios where you spend less to get
more; and that has to be the framework here, it has to be.
Mr. Putnam. One of the things I am looking forward to
hearing from the second panel that I would ask you to comment
on are the ancillary benefits on the personnel side through the
consolidation of these systems. What types of savings
monetarily, but also what is the complexity saving? You know,
what is the simplicity factor on training costs on that many
fewer systems and that many fewer new ways of doing things
across agency lines, what types of savings can we expect there
on the personnel side?
Mr. Forman. Generally, I am not familiar with the
statistics there. There is no question in my mind that there
are savings from the simplification and training. Out of the
savings analyses that have been done, it is hard to
differentiate between how much of the training cost reduction
was due to standardization versus just using a browser, you
know, using the Internet, basically, as the user interface,
which tends to be designed different from the old IT system, so
it is easier for most people to use; and that too has generated
a lot of training cost reduction.
Mr. Putnam. We tend to be very critical where there are
shortfalls, but the carrot that we have offered these agencies
is that savings derived from E-Government will be kept by the
agencies. Have any agencies benefited from that so far, and has
it proven a powerful incentive? Is it working?
Mr. Forman. I have seen, in the realm of the 24 E-
Government initiatives, that there have been savings. I think
perhaps the best example that this committee has looked at was
in the geospatial or geographic information systems arena, and
not too long after those hearings, the geodata.gov Web site was
released, as was the open GIS consortium portal. The ability to
reuse information, to reuse different tools has created quite a
bit of savings opportunity. We will continue on that way, but
as a result now we do see some agencies that are saying, geez,
we don't have to buy this tool or that data, because we can get
access to that portal. We see many more at the local government
level, which generated reduction in grants requirements, so the
ability to use grants for other purposes.
In the realm of the six lines of business that we looked
at, obviously the biggest savings are going to come in the
financial management and human resources information systems,
because those are areas where we spend literally billions of
dollars every year for fundamentally common business purposes.
The two that have agency leadership, cost savings are
important, but the primary issue is the ability to better
perform the mission.
Mr. Putnam. We have talked a little bit about the
cybersecurity implications of eliminating stovepipes. On the
one hand you could achieve some cost savings by eliminating the
stovepipes and not having to go back and do as much patch
management, but on the other hand sometimes redundancy is not
such a bad thing. You know, we have a lot of redundant systems
on the space shuttle, we have a lot of redundant systems in
other types of technology where you want backup. What are the
cybersecurity consequences of consolidating these systems?
Mr. Forman. I think you are absolutely right that you want
to architect the redundancy, and you do that for disaster
recovery, for some elements of cybersecurity. I think the other
reason you want to architect this is to build in the
appropriate cybersecurity. Again, I think some of the six,
perhaps public health information networks are most important,
clearly covered by the health care privacy laws, but also
important for just the ability to speed by which Government can
respond and understand these threats. So cybersecurity is very
important for the public health architecture that is being
built.
Having multiple redundant systems in multiple places
creates a security difficulty, so you want to architect it so
you have the redundancy, but you want to constrain the number
of redundant elements because the redundancy makes it harder to
protect, and usually that is when you hit two or three
versions. Beyond two or three, you have limited the value of
the redundancy and you are into a cybersecurity difficulty.
Mr. Putnam. Thank you very much, Mr. Forman. My time has
expired.
Are there final questions from the panel? I have been
informed we are going to have a vote between 11:15 and 11:30,
so we want to quickly get to our second panel.
Mr. Forman, if there are additional questions, we will
submit them to you and ask that you reply in writing for the
record. As always, we appreciate your insight. And we will
excuse you, Mr. Forman, and seat the second panel as quickly as
possible.
Mr. Forman. Thank you.
Mr. Putnam. The committee will stand in recess for a minute
and a half.
[Recess.]
Mr. Putnam. We will reconvene our hearing and seat the
second panel. I appreciate your cooperation in helping us to
move as quickly as possible. I apologize for this; that is sort
of the nature of the beast in this town.
At this time I will ask the members of the second panel to
please stand and raise your right hands for the oath.
[Witnesses sworn.]
Mr. Putnam. Note for the record that the four witnesses
responded in the affirmative. We will move directly to their
testimony, beginning with Mr. Conway.
Craig Conway is president and chief executive officer of
PeopleSoft, one of the world's leading providers of business
enterprise software. In 2001, Mr. Conway was named one of
Business Week's top 25 corporate managers. Also in 2001,
Forbes.com named PeopleSoft to its list of five over-achieving
companies. He is credited for leading PeopleSoft's efforts on
developing its pure Internet architecture product, the
foundation of what I am told is the industry's only suite of
pure Internet enterprise applications. Conway is also credited
with forming his own internal processes at PeopleSoft to
streamline operations and reduce costs. He spent 8 years as an
executive vice president at Oracle and, in fact, rumor has it
that Mr. Conway's former employer seems to like what he has
done at PeopleSoft.
Mr. Conway, we thank you for flying in from California to
join us on this important topic. Welcome. You are recognized
for 5 minutes.
STATEMENTS OF CRAIG A. CONWAY, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, PEOPLESOFT, INC.; KEVIN FITZGERALD, SENIOR VICE
PRESIDENT, ORACLE CORP.; S. DANIEL JOHNSON, EXECUTIVE VICE
PRESIDENT, BEARINGPOINT, INC.; AND PAUL M. COFONI, PRESIDENT,
FEDERAL SECTOR, COMPUTER SCIENCES CORP.
Mr. Conway. Good morning. Thank you for giving me the
opportunity to address the House Government Reform Subcommittee
on Technology, Information Policy, International Relations and
the Census.
I have been asked to share my observations about Federal
information systems, particularly their integration between
agencies, and I would like to start by observing, first of all,
that there are really only two reasons to deploy technology:
first, to automate a repetitive organizational process and,
second, to do something that was not possible to do before.
The Federal Government has always been a good candidate for
information technology because it deals with massive amounts of
administrative repetitive processes. However, the Federal
Government has not historically been as successful in deploying
information technology as the private sector. There are a
variety of reasons for this. First, scale. The sheer size of
the data that the Federal Government deals with has
historically required very large, very complex, and very costly
systems. Second, customization. The Federal Government has
historically preferred to change or customize information
technology rather than use commercial off-the-shelf software.
Three, skilled people. The types of highly skilled people
required to implement these large, highly complex, highly
customized solutions are hard to find and even harder to retain
because their value in the market is greater in the private
sector. And, four, procurement. The process the Federal
Government has used to procure information technology was self-
defeating; it would take at least 18 months to define the
system requirements, another 18 months to solicit bids and make
an award, another 6 months to handle the vendor protests. By
that time, 3 or 4 years had gone by and the technology had
changed.
For all of these reasons, the success of the Federal
Government utilizing information technology has lagged the
commercial sector.
All of that, however, has begun to change. Today, in fact,
the most dramatic examples of information technology improving
business process has been in the public sector. Why? Again, a
variety of reasons. First of all, the Internet. The Internet
has provided a readily available, infinitely scalable
architecture. Remember, massive scale used to be a challenge to
the Federal Government. But Internet technology is infinitely
scalable and easily expanded. Two, best practices. The Federal
Government today embraces best practices and is much less
willing to change or customize commercial off-the-shelf
solutions, and that has reduced the complexity and it has
reduced the time and the expense of these Federal systems.
Three, quality people. As the complexity of the Federal systems
has been reduced, the caliber of people required to use them
has become more realistic to attract, and the Federal
Government has done a better job of attracting and retaining
quality people, including some very senior talent from the
commercial sector. And, four, the procurement process. The
procurement process has also improved over time. In fact, today
the Government can weigh the tradeoffs between market cost,
vender viability, and experience in a manner similar to the
commercial market.
The results of these four changes in the public sector have
been profound. E-Government initiatives today have been among
the most impressive uses of information technology in the last
10 years. In many State governments, citizens now renew their
driver's licenses and pay their parking fines and register
their vehicles on line. In universities today, students apply
for admission on line; they apply for financial aid on line;
they enroll in classes on line.
PeopleSoft has participated in these and other impressive
E-Government initiatives. The U.S. Mint, Department of Treasury
have online financial systems from PeopleSoft. Department of
Agriculture, and Coast Guard have online HR systems from
PeopleSoft. The Army's continuing education program, called
eArmyU, is from PeopleSoft.
PeopleSoft today is a major supplier. We are a supplier to
13 of the 15 cabinet level agencies; 15 States run on
PeopleSoft; 650 universities run on PeopleSoft; almost 5,000
commercial companies run on PeopleSoft.
But I would like to conclude my remarks looking to the
immediate future. Online E-Government initiatives have become a
reality at Federal agencies, State agencies, and universities.
It has been a quantum leap in the use of information technology
in the last few years, but it is really just getting started.
The value of information technology in the Federal
Government could be exponentially higher if it were deployed
across agencies, because today, to some extent, individual
agencies are reinventing the same business processes. How many
different HR systems do you need to deploy to the Federal
Government? How many different ways are there to pay Federal
workers? How many different benefit plans really apply? Would
it not be more beneficial to have a single HR system that could
support different agencies rather than different HR systems in
different agencies? Would it not be more beneficial to have a
single financial system that can support different agencies and
immediately, immediately consolidate budget results?
The products exist today to do that. In fact, the
Department of Defense today is deploying a cross-agency system
called DIMHRS. DIMHRS will consolidate 79 different HR systems,
79 different HR systems across the Army, Navy, and Air Force
into a single payroll and benefit system. PeopleSoft is working
with DIMHRS, with Quicksilver, and with the line of business
applications that you heard previously.
Cross-agency deployment of information technology does
represent an enormous leap in efficiency for the Federal
Government. It is realistic; it is practical; it is affordable.
It is not a limitation of technology; it is a matter of people.
People have to agree on a common system, agree on
specifications. People need to handle the change management
issues. And we all appreciate the challenges of getting people
to cooperate across agencies, but the benefit to the Federal
Government would be profound and immediate.
Let me end by saying we are just starting to glimpse the
profound benefits of these online information systems as they
integrate and consolidate across agencies, but also as they
integrate and consolidate into the private sector. And
ultimately they will integrate and consolidate actually between
countries.
Thank you very much.
[The prepared statement of Mr. Conway follows:]
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Mr. Putnam. Thank you very much, Mr. Conway.
I will now introduce our second panelist, Mr. Fitzgerald.
Kevin Fitzgerald is senior vice president of Oracle's
Government, Education & Healthcare group. He has more than 25
years experience and is currently responsible for all Oracle
activities in the Federal, State, and local markets. Under his
leadership, Oracle's focus has been on providing local, State,
and Federal Governments with a secure integrated infrastructure
to better share information. He also has held key management
positions with Siebel, Crossworlds Software, Netscape, NBI, and
IBM.
For the record, we invited Mr. Ellison, Oracle's chairman
and CEO, to join the panel today, and I understand his schedule
did not permit. But we are very pleased that Mr. Fitzgerald was
able to join us, representing Oracle.
Welcome to the subcommittee. You are recognized.
Mr. Fitzgerald. Chairman Putnam, thank you very much,
Ranking Member Clay and members of the subcommittee. I
appreciate the opportunity to take Mr. Ellison's place here
today and appear before the committee.
Oracle began as a project within the intelligence community
to better manage its vast quantities of information simply and
securely. In the 26 years since that time, we have provided
similar information management solutions to many of the world's
largest business enterprises, and hundreds of departments and
agencies in Federal, State, and local governments. We are
extremely proud of our partnership with the Federal Government,
and central to that partnership is working with Mark Forman and
his team at the Office of Management and Budget to achieve a
successful implementation of the Federal enterprise
architecture.
When fully implemented, the Federal Government will be far
more effective in achieving its policies and administrative
goals. Many of the concepts articulated by Mr. Forman today are
very familiar to us and are integral to our own e-business
suite of applications which we provide to businesses and
governments around the world.
An enterprise approach represents a paradigm shift in
information management. To better understand this
transformation, it is important to see how businesses and
government have traditionally bought and utilized information
management software in the automation wave of the last decade,
and even to some degree today organizations traditionally have
bought software to automate a specific operational challenge,
such as managing customer information or processing financial
reports. These departmental automation age projects have
created hundreds of disparate systems within the government
organizations, with each system usually having its own base of
information. This makes it virtually impossible for senior
managers of a large agency to know whether or not organizations
within the agency are achieving missions effectively and
efficiently.
Faced with this dilemma, some enterprises attempt to stitch
these individual systems together. Of course, the cost of
stitching and managing patchwork systems is enormous.
Fundamentally, from a business sense, you haven't really solved
the problem, and it is no surprise that business and government
spend a disproportionate share of their IT budgets on
maintenance-related costs. Frankly, any effort to implement
this approach for the Federal enterprise would be a massive
investment and result in failure. The fundamental lesson is
clear: no business or government agency can fully maximize its
IT investments if its information infrastructure is not
designed with the entire enterprise in mind.
We applied that lesson in developing our e-business suite
and in the tradition of the Wright brothers, we took our own
creation out for a test flight to show our customers how an
enterprise approach automates business processes. It also
transforms those processes across an entire organization like
Oracle Corp. Our results were extraordinary. Since we
implemented our own software, Oracle has saved more than a
billion dollars, and we sustained our profitability during a
major economic downturn.
The Federal enterprise architecture won't happen overnight,
and it can best be achieved in a modular approach, with each
software component pre-designed to integrate and collaborate
with each other, making for one suite of applications. We are
currently applying this modular approach in several key
Government agencies, including the Department of Transportation
and the Department of Homeland Security's Transportation
Security Administration.
Again, automation, in and of itself, does not solve the
basic problem of information fragmentation. An effective
enterprise architecture has to solve information fragmentation
on three levels: first, information has to be easy to access;
second, information has to be easy to share across agencies;
and, third, information has to be secure.
When we started our e-business enterprise, our customer
information was scattered across our entire company; and the
same problem exists in the Federal Government. While mutual
functions among agencies will help eliminate redundancies and
reduce costs, a simple data model can make these agencies both
cost and mission-effective.
We know there was information about the September 11
plotters scattered our law enforcement intelligence systems,
but there was no way to bring that information together in the
real time. A unified data model containing information on
suspected terrorists is better than 100 disconnected data bases
scattered all over our Government. Having access to the same
data helps to generate the next solution against fragmentation:
standardized data models. So that information means the same
thing to all that are using it. Ironically, by automating
individual tasks, some enterprises inadvertently create
barriers for information sharing. An effective enterprise
architecture breaks down the barriers of the automation age.
For example, as Mark Forman mentioned, the Center for
Disease Control launched the Public Health Care Information
Network, a long-term commitment to modernizing, streamlining,
and integrating our fragmented public health reporting
infrastructure. For this network to work, a common data
standard and accepted definitions for patients' diseases are
needed for information to flow seamlessly from radiologists to
practitioner to insurance companies to Medicare or Medicaid.
These industry-developed standards were incorporated by Oracle
in our products to both secure and provide portability
according to the intent of Congress in its HIPAA legislation.
Last, an enterprise approach to building an information
infrastructure in government requires an enterprise approach to
information security. Many organizations private and public are
hesitant about sharing data that will be potentially exposed to
insecure systems. These concerns are legitimate since not every
Federal agency makes information assurance a factor when buying
commercial software.
Oracle is one of a number of software companies that has
its software tested against internationally recognized
information assurance standards such as the Common Criteria.
Firms that are certified or become a criteria build security
into their software as a process rather than bolting it on
through a barrage of software patches.
In January 2000, a committee within the National Security
Agency proposed Federal agencies with information systems
involved in national security can only purchase commercial
software that has been independently evaluated as being secure.
The Defense Department has developed regulations consistent
with this policy, which Congress endorsed last year.
Mr. Chairman, I understand you recently expressed an
interest in looking at the Defense Department regulations and
exploring the potential effectiveness of applying this approach
throughout the Federal Government. We believe that kind of
review is needed. An enterprise approach to security by the
Federal Government, collectively the single largest buyer of
commercial, off-the-shelf software products, can change the
software marketplace for the better overnight.
Mark Forman has often said that the major obstacle to
achieving the Federal enterprise architecture is cultural, not
technological, and I agree. There has to be a commitment
throughout the enterprise to succeed. Everyone from software
companies to congressional committee chairmen should get behind
the OMB team to ensure the Federal enterprise architecture is
achieved with maximum mission and financial benefits.
In the end, as complicated as technology appears to be,
what we are here to do is so simple and fundamental: how can
Government better manage and use information in these
challenging times. Oracle was founded to help the intelligence
community meet this fundamental challenge, and we look forward
to continuing that partnership with successes that will be felt
throughout the Government enterprise.
Mr. Chairman, thank you for the opportunity to participate
with you this morning.
[The prepared statement of Mr. Fitzgerald follows:]
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Mr. Putnam. Thank you very much, Mr. Fitzgerald.
Our next witness is S. Daniel Johnson. Mr. Johnson is
executive vice president for public services for BearingPoint,
one of the world's largest consulting and systems integration
firms in the world, with 16,000 employees in 39 countries. Mr.
Johnson oversees BearingPoint's enterprise integration
technology and performance improvement services to the Federal,
State, and local levels. He has served as head of
BearingPoint's Public Services practice since 1997, during
which time revenues have grown more than three-fold.
I understand BearingPoint has business alliances with both
PeopleSoft and Oracle, so Mr. Johnson's perspective from the
viewpoints of systems integration, regardless of software or
hardware, will be helpful to the subcommittee.
We thank you for being here, and would ask, to the greatest
extent possible, that our remaining witnesses stick to our 5
minute rule. Welcome.
Mr. Johnson. Yes, sir.
Mr. Chairman and members of the subcommittee, thank you for
this opportunity to share some of BearingPoint's views on the
topic of Federal information systems integration and
consolidation.
BearingPoint, formerly known as KPMG Consulting, is one of
the world's largest systems integration and management
consulting firms. We do employ over some 16,000 people
worldwide, we fulfill the needs of over 2,500 clients, and we
have revenues approaching $3 billion. Three years ago we
separated completely from KPMG LLP, the tax and audit firm, and
in February 2001 we were the first of the Big Five accounting
firms to become a publicly held corporation. Just last October
we changed our name to BearingPoint.
I lead BearingPoint's Public Services business unit, the
largest of our four groups, and am responsible for over 3500
practitioners providing systems integration services to the
Department of Defense and its military services, as well as all
the civilian executive agencies.
Today I would like to comment briefly on the framework that
has been created for the management of Government IT programs,
some E-Government trends that we are observing in the
marketplace, and areas where we see opportunity for
improvement.
Since the promulgation of the administration's E-Government
strategy, significant progress has been made to establish an
information technology management framework that will simplify
Government service delivery and unify redundant IT systems. The
stated vision requires the transformation of existing delivery
models within and among agencies to drive significantly higher
performance and productivity.
BearingPoint is supporting several cross-agency initiatives
that challenge the status quo and redefine how fast Government
can work on behalf of its citizens. Our observation of the
market suggests that E-Government transformation is progressing
along three paths. First, there are far-reaching initiatives,
sponsored by the President's Management Council, to implement
certain Web-based financial applications across the Federal
Government. These include the Quicksilver initiatives and
implementing the build once/use many philosophy.
Second, there are Web-based applications that have been
provided effectively in one agency and are now being extended
to several other agencies. An example of this path is the
General Services Administration recognizing the value of the
Department of Defense Central Contractor Registry System and
incorporating it as a module in their Integrated Acquisition
Environment program.
Third, other successful Web-based applications currently
being implemented within one agency that may provide the
impetus for the next generation of initiatives. An example of
this path is the innovative approach for implementing its core
financial system at the Department of Health and Human Services
to share best practices and economies across its component
organizations.
Whether the initiative is sponsored by PMC or an outgrowth
from a current initiative, it supports the strategic objective
to leverage technology in order to improve Government
performance. Still, we see opportunities for improvement. For
instance, we believe there is an opportunity to improve the
management framework by better and more closely linking the
capital planning and acquisition process to ensure that the
procured solution fully supports agency performance goals as
they were articulated in their project business case.
There is also an opportunity to drive further consolidation
among common lines of business, as has been previously
discussed. Emerging new initiatives covering financial
management, human resources, monetary benefits, criminal
investigations, data and statistics, and public health
monitoring.
Also, as we move ahead, agencies must adopt the new
management framework and use it to drive a holistic view of
Government that puts the citizen at the center of the service
delivery process. Congress can further facilitate a holistic
view of Government by taking a unified cross-agency view in the
funding and conceptualization of programs. Agencies can support
this view by realizing that while technology has changed the
art of the possible, the new processes and desired behavior. To
do so, we will need to stick with the new direction, reinforce
it, and consistently promote and reward managers that
demonstrate leadership and accept accountability for results.
Mr. Chairman, again, thank you for holding this important
hearing today. We look forward to working closely with you and
the rest of the subcommittee in any way you deem appropriate.
[The prepared statement of Mr. Johnson follows:]
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Mr. Putnam. Thank you very much, Mr. Johnson.
At this time we will introduce Paul Cofoni. Mr. Cofoni is
the Federal Sector president of Computer Sciences Corp., where
he has held key leadership positions for the past 13 years.
Prior to joining CSC, Mr. Cofoni had a 17-year career with
General Dynamics, where he served in several leadership
positions, including vice president of IT services. Prior to
General Dynamics, from 1970 to 1974, he served as an officer in
the U.S. Army.
CSC is one of the Federal Government's largest systems
integrators, with contracts in nearly every agency in the
Federal Government, totaling $4 billion annually. CSC is an
acknowledged leader in their systems integrations efforts, as a
prime contractor for IRS modernization, FBI's trilogy, and
EPA's IT solutions integration.
Welcome to the subcommittee. You are recognized.
Mr. Cofoni. Thank you, Mr. Chairman and members of the
subcommittee.
I would like to share with you just a few lessons learned
from several of the programs you have mentioned, and a special
reference to the Army Logistics Modernization Program and the
IRS Modernization Program. Both of these programs are extremely
complex undertakings, on a scale really unmatched in the
private industry. And both involve significant transformation
of both business organization process as well as technology.
We have found that commercial and government transformation
practices have much in common, and the modernization enterprise
architecture is essential in setting the foundation for
transformation activities. The enterprise architecture links
the business strategy to the key elements of change in
transformation; those are organization, process, technology,
data, and applications. And this really becomes the baseline
framework for transformation. We recommend that a business-
centric approach to enterprise architecture, thinking in those
broad terms, process first, ahead of technology, in fact,
setting architectural standards.
Among the many lessons we have learned, I would like to
highlight four. First, while a business line architecture and a
discipline implementation process serves as a road map for
change to ensure the end-state vision, change must be driven
from the top of the organization, and this requires strong
leadership. All parties must be aligned from top down and
across the organization or across organizations.
Second, system interoperability is critical, but, as you
know, it is not just a technical problem. Significant
organizational process changes will be the key to program
success for transformations. For example, the Army Logistics
Legacy Systems were based on 25-year-old technology crossing
20-some data bases with 25-year-old processes. Simply adopting
newer technology to that problem set wouldn't make a
difference. Technology alone, without the business and
organizational changes that a company can take advantage of new
technology is the key. And here, in the case of the Army
Logistics Modernization program, together in partnership with
the U.S. Army and the Army Material Command, we have in fact
changed the processes and the organizational structure; we have
adopted the best practices of industry as embodied in the
commercial, off-the-shelf software. And that system went into
production, I am proud to say, last week.
Third, defining a data and information model is a critical
component, but, again, it is often more management decision
than a technical issue. With today's technology, the
consolidation of data to a single data base environment with
realtime availability of data is there, it is here today, and
it provides significant benefits. The key to an integrated data
base is the organizational commitment to create data only once,
at its point of origin, and to use it many times in a shared
technology environment. Again, a business decision.
And the last point is, as has been said several times
already this morning, security and privity of data in new
technology environments is critical. This, again, must be a
part of a business-oriented approach that adapts to a constant
stream of new threats. But the security architecture must be
linked to the enterprise architecture, and decisions on
security tradeoffs must be made from a business point of view.
A theme I keep repeating is enterprise architecture must
first be business-focused. Modernization really is a mission
and business-led function with support from IT organizations.
The transformation must come from the top and be driven down
through the organization. And in talking about business lines
or businesses, the architectures are, again, a framework, but
leadership must be the champion to make the organization adhere
to those architectures. So in thinking about business lines and
business line architectures, it will take an innovative, out-
of-the-box thinking and collaboration between OMB, Congress,
Federal agencies, and in many cases State and local
governments; and leadership must emerge to do that.
Commercial companies have been using this sort of shared
service approach for decades, and in the last decade have
really swung way over. Our own company uses a shared service
approach that takes advantage of these same sort of synergies.
CSC has been supporting government transformation for years,
and hopes that we will continue our contributing role in
government transformation.
Thank you very much, Mr. Chairman.
[The prepared statement of Mr. Cofoni follows:]
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Mr. Putnam. Thank you very much, sir.
And we appreciate all of the witnesses' testimony. I will,
again, using the ladies first rule, begin with Ms. Miller.
You are recognized.
Ms. Miller. Thank you, Mr. Chairman.
Mr. Cofoni, I might start with you. It is my understanding
that you are the prime contractor with the IRS.
Mr. Cofoni. That is correct.
Ms. Miller. Well, if you want to run for Congress, you can
run against the IRS. I mean, it has to be the most hated agency
in all of the Federal structure. I am just interested if you
could tell us a little bit, discuss some of the different
challenges that you faced, some of the things that we should be
aware of so that we don't repeat those kinds of problems as we
start to integrate some of these agencies. That had to be an
unbelievably daunting task.
Mr. Cofoni. At the IRS we have been working for some 4
years, and the first really 2\1/2\ years were focused on the
topics I spoke about earlier: defining architecture, setting
the plan, setting the road map, building organizational
alignment for change. And in the last year and a half we have
really begun to start reaping some of the benefits by
implementing the applications that ride on top of that
infrastructure.
The complexities at the IRS, really it is the most complex
organization I have ever seen in terms of scale, complexity. It
is a challenge for everyone who works there and all of us that
are fortunate enough to serve there as contractors and system
integrators. Because of the scale and complexity, and because
of the enormous amount of oversight at the IRS and the fact
that one error can affect millions of people in a negative way,
the intense focus on quality at the IRS, those three
components, complexity, scale, and intense focus on quality,
tend to have an effect of slowing our progress. So while we are
making progress, we don't feel we are making it as fast as we
would like to. However, we understand the elements of
complexity in scale and quality that are prerequisites, and
they are more important, really, than schedule.
So I would share with you that those are the issues as far
as the IRS. We have, fortunately, been able to start delivering
results there, and the pace of delivery we expect to pick up
over the next few years.
Ms. Miller. Did you design the Telefile and all of that
type of thing?
Mr. Cofoni. No. Telefile is a system that was defined some
time ago. We have delivered a new system for the call center, a
brand new call center technology system; refund fact-a-filing.
Six million citizens were able to access the IRS this year and
inquire as to the whereabouts of their refund, status of their
refund that we implemented. And just yesterday we went live on
that same technology with an application that allows citizens
who are eligible for the advance child care tax credit to
inquire as to the status of their tax credit check that they
will be getting.
Ms. Miller. Thank you. I just think that is so interesting,
as all of you have mentioned in your testimony. The largest
room is always a room for improvement. There is certainly a lot
of room for improvement, and opportunity, I suppose, should be
more the operative phrase, for the Federal Government to really
look at technology and the kinds of things that we can do from
a customer service standpoint, whether that is filing with the
IRS or what have you.
And I appreciated Mr. Conway's statement. You mentioned
some of the different States where you can actually renew your
driver's license on line and some of those things. In a former
life I was a Michigan Secretary of State where I did all the
motor vehicle. We were the first one to do E-Government and
driver's licenses and that on line, and it has been a
tremendous help. But it is very difficult to get people
actually to do that; they want to come in and actually see you
to transact business. So that is just a generational culture, I
suppose, that we all have to get over.
But as we were doing some of the design work in our State,
we looked at best practices particularly with the Big Three in
Michigan, of course, and how they were doing some of their IT;
and often times they would bring in from the outside, as many
of you mentioned here how difficult it is for the Federal
Government to attract and then retain the different IT
geniuses, really; they are so marketable out there today. We
tried to think about I don't know if I want to use the term
privatizing, but really outsourcing an awful lot of our project
management and bringing them in for specific kinds of things
and then letting them go off again rather than growing the
government. And, again, we always looked to the Big Three as
really the innovative incubators of all those kinds of things
in our State.
Do you have any feeling as you looked at some of these
different lines of business, if you have had an opportunity to
review what Mr. Forman has laid out for the Federal Government,
whether or not, I won't use the term privatizing, but
outsourcing some of these kinds of things, if that is something
we should be looking at closely? I guess I will throw that out
generally.
Mr. Fitzgerald. I mean the answer, I think, is
categorically yes, again, using scale as one barometer and
cross-functioning. Many of the processes which the Federal
Government could outsource are being done in business and other
governments, and can be hosted very economically by companies
at considerable operational cost to the Government. So I think
in the future we are going to see much more opportunity for
those situations to arise. And, again, it is a matter of scale
and a matter of the technology being there, now to do it.
Mr. Conway. There are three major contributors to the
length and cost of the implementation of these systems. One is
standardizing the business process. You know, automating
something that can't be standardized is hard. The second thing
is resisting the temptation to customize. When you go to an
agency and you ask them how they would like to automate
something, the natural reaction is exactly the way I am doing
it today, instead of taking a fresh look and seeing if there is
a more efficient way to do it. Then the third trap for length
and cost is change management, getting people to adopt a new
way of doing something. You mentioned the DMV. You know, hard
to imagine people are all that happy about going to a State
facility and waiting in a long line to renew their driver's
license, when they can do it 7 days a week, 24 hours a day, by
dialing in on their home computer; but yet there is a change
management process. There is a change management process for
the users and the people that provide the systems.
So the direct answer to your question is you can turn to
people that know best practices and ask for their guidance, and
I think that is the business that BearingPoint and CSC and
Accenture and their competitors are in, advising on best
practices.
Ms. Miller. Just one other question, then. Talking about
best practices, I often found it difficult, I suppose because
it is counterintuitive when you are dealing from a public
standpoint, with the private sector with a particular vendor of
having the vendor actually tell you. I mean, I would say, well,
these are all of our priorities, we have 300 priorities,
waiting for the person to say, well, you can't have 300
priorities, you can only have 3.
I know many of you do business with the Federal Government.
Do you feel that you are adequately advising the Federal
Government, the different agencies that you are dealing with,
that some of the things that they are asking you for just
really aren't the best practices, even though it may negatively
impact your bottom line?
Mr. Fitzgerald. I think the comment that Craig just made,
and I agree with wholeheartedly, we continually advise
Government managers not to change already automated work
processes which are found in software but, rather, modify your
business process. The benefit to that in terms of the
maintenance of that software and that function for the
Government moving forward is phenomenal; it is extraordinary.
So by taking the time to have those discussions up front,
rather than just saying, sure, we will do it your way, I think
saves everybody money up front in putting a project in and
saves the Government considerable cost during the maintenance
of that system.
Mr. Cofoni. I would add, as a system integrator, we
recognize our primary role is to be the trusted advisor and to
bring challenging thoughts to the table, provocative new ways
of thinking about old problems. And we generally find in
government that there is good receptivity to those ideas, and
then the issues always become a matter of driving those kinds
of new thinking down through the organization and dealing with
the years of doing it a different way is just bringing change
about in an organization so it is not a different problem or a
new problem.
But we do bring that to the table; we view that as the
first core confidency we bring to an engagement.
Mr. Johnson. I would just like to add that I think one of
the core characteristics of successful implementations of
large-scale systems of these types within the Federal
Government is a strong public-private partnership between the
Government and the integrator and the solution provider,
because there are always going to be very difficult decisions
to be made of the type that you described earlier, where people
want to continue to do things the way they have in the past;
and often times if we are talking about an agency
implementation, we are talking about a number of components of
those agencies which have always done things the way they have
done them with different systems. So it has to be a very strong
partnership at the top that can (a) make those decisions and
then (b) push those decisions down through the organization to
ensure that they get implemented.
Ms. Miller. Thank you very much.
Mr. Chairman.
Mr. Putnam. Thank you, Ms. Miller.
Mr. Clay.
Mr. Clay. Thank you, Mr. Chairman.
I would be interested to hear how each of the panelists
responds to this question. Recently we discovered in the
Government Reform Committee that the Department of Defense was
selling chemical and biological protection suits on the
Internet for $2 to $3. At the same time, the agency was
purchasing these same suits for $200 to $300. The suits for
sale were new, not expired, in the original packing. Clearly,
there is no link between the process for declaring inventory
excess and the procurement process. How difficult is this
problem to solve? This discovery was reported to the committee
over a year ago. Should we expect the agency to have solved the
problem by now?
And each of you can give it a shot.
Mr. Johnson. Well, I will take a crack at just the overall
issue of assets in inventory in the Federal Government and
their disposition. And I think the general feeling is there is
a tremendous value within the Federal Government that is not
being taken advantage of in terms of accountability and
disposition. And if one were to look at rules and laws for
disposition, there probably is some advantages that could be
made in changing some of those to make it work to the advantage
of the entity who has control of that such that if they can
dispose appropriately with a proper return, that they can keep
the funding, rather than the argument one might get is it costs
me more to find out what I have than it does to dispose of it.
Mr. Fitzgerald. I agree wholeheartedly, because you hear
that comment time and again; it is easier for me to basically
sell off the assets than really try and figure out what I have.
And anyone who has made a trip up to Assistant Secretary
Zatheim's office in DOD to see the plan for the financial
system and asset management of DOD recognizes the monumental
issues involved with this. My comment, I guess, would be that
it doesn't appear to be a problem that will be solved in the
near term, but that there is obviously a very large-scale
attempt to make the system a rational system.
Mr. Conway. Huge issue; phenomenal benefit, potential
benefit. Great care study is the county of Los Angeles General
Service, this is the county GSA, if you will, tried to get
their arms around supplier relationship management and asset
management automated the system, was able to reduce inventory
by more than 50 percent within a year and closed half their
warehouses in 12 months. Now, this is a large county. But can
you imagine what the benefits would be of getting that type of
visibility across Federal agencies to be able to match need and
demand and supplier and inventory more efficiently? It is a
phenomenal opportunity.
Mr. Clay. It is a matter of being more efficient.
Did you want to add?
Mr. Cofoni. Well, I would only add that we have just last
week implemented for the first part of the Army Material
Command a new logistics system which will begin to solve those
types of problems. This logistics system inventories for the
Army Material Command all materials, parts, supplies, and even
some weapon system platforms around the world, and it
integrates all the warehouses and the inventories at all of the
warehouses and brings them together in one place.
Mr. Clay. Let me ask you. The Office of Management and
Budget has identified six lines of business that it will focus
on in the 2004 budget. Which of these six do you believe will
have the greatest return not in terms of dollars, but in terms
of agency performance? Anyone can take a crack at it.
Mr. Fitzgerald. One we are involved in is the Public Health
Information Network, a very vital system for reducing the cost
for health care in this country by using information and
automating those functions from the time of diagnosis to the
time that a reimbursement is given. Tremendous leverage in
opportunity there. We see that as affecting everybody from the
local to State to county and Federal, obviously, agencies, so
it cuts across the entire country in a very vital area. Again,
we are heavily involved in that and see it as a great
opportunity.
Mr. Conway. I think it is hard to say; they are all
tremendous areas of opportunity. The two that PeopleSoft are
involved in is the human resource management and financial
management. I am sure those will be the most successful.
Mr. Cofoni. I would say, just a point of view, the two that
strike me as having the greatest benefit to the public in terms
of major effect would be in the criminal investigation and in
the health data monitoring area.
Mr. Clay. Final question. Going back to our experience with
the oversight of DOD, we have found it extremely difficult to
get the forces within the Department to work together. One of
the reasons there are over 1,200 financial management systems
in the Department is that every service insists on having its
own set. Given that it is difficult to get agencies within a
department to coordinate, how is OMB going to get agencies
across departments to use identical systems?
Mr. Johnson. I will take a crack at that one. Just some
personal experience. We are heavily involved in the current
convergences in the Department of the Navy, and there is in
fact an initiative right now to reduce from well over 200
financial systems to concentrate on one converged system within
the Department of the Navy. There are similar instances going
on in the Department of the Army, and I think the Air Force is
just watching to see what is going to happen. But there are
initiatives that are moving in that direction, to do exactly
what you just said, within the Defense Department; it just
takes time.
Mr. Clay. They are moving in that direction?
Mr. Johnson. Yes, sir.
Mr. Clay. All right.
Thank you all for your answers, and thank you, Mr.
Chairman.
Mr. Putnam. Thank you, sir.
You know, it just boggles your mind to think about how we
got into this mess. Two hundred different financial systems
just in the Navy, and the Air Force is going to watch and see
what happens. I mean, I have heard estimates as high as over
50,000 legacy systems in the Department of the Navy alone. Does
that seem high to you?
Mr. Johnson. Could be.
Mr. Putnam. It could be?
We have our work cut out for us, Mr. Clay.
Mr. Cofoni, you laid out sort of a four-point test, the
bottom line of which was that business focus is the key. And
Mr. Forman divided them up into three baskets; he divided his
six and said we have good strong leadership, good commitment at
the top on the public health component and the case management
component, so-so commitment on HR and financial, and we are
just not going to get anywhere on the data statistics and the
payment management system.
Do you attribute the last category, the we are not going to
make much progress at all to a lack of commitment from the top?
Is that a pure management system or are there legitimate
technical issues preventing progress in that area?
Mr. Cofoni. You know, I don't have specific knowledge about
that, and I would probably defer to Mr. Forman on that. But in
general you can see in an organization like the Army Material
Command or in the IRS, where there is a strong central leader
who is directing change downward. And when you look at
initiatives that you are trying to drive across organizational
boundaries, you have to find, and I think Mark Forman said
that, you have to have leadership emerge that will drive that
change across those organizational boundaries. So it is, by
nature, more difficult to drive systemic change across multiple
organizations than it is to drive it down one; and it is hard
to drive it down through one. So I sort of would defer to Mr.
Forman for the exact answer to that.
Mr. Putnam. Anyone else want to comment on that?
Mr. Fitzgerald. I think most of us have said these are
cultural issues, not technology issues.
Mr. Putnam. So there is no technical barrier that you are
aware of for any of these six becoming implemented.
Mr. Fitzgerald. I think Mark used a good example of the
geospatial data system now that is being shared by all of the
departments and agencies effectively; it is a good example of
how data, in this case, can be shared amongst all applications
that need geospatial data. There is no real technical reason
for the fact that it can't be shared.
Mr. Cofoni. We have not seen technology as the limiting
factor in bringing about this type of change.
Mr. Putnam. In your contract work with the Government, have
you formed any ideas about other lines of business or business
functions outside the top six that are ripe for consolidation
or integration?
Mr. Fitzgerald. We think that they have solicited a lot of
input, I think, from Government and contractor community, and
we think the six are very, very obvious for all of us to help
the Government work.
Mr. Putnam. They are the obvious six. Is that sort of the
consensus? These are the first bite of the apple, easy six.
Mr. Conway. But I believe Mark Forman has a superset list
of 20-some business processes or lines of business, and I think
the six that have been started with are the very fertile areas
for savings. But all 24 will represent benefit to the
Government.
Mr. Putnam. Mr. Conway, would you like to share your
thoughts on the Federal Government SmartBuy software licensing
initiative?
Mr. Conway. You know, the Government has a tremendous
opportunity to exercise its buying power. Traditionally, our
industry, the software industry, has charged its customers by
number of users, and it is a bit counterintuitive, because what
you really hope is that you get the maximum number of users.
But every time you extend the user of a system, you have to pay
a supplier, and so a lot of times, in our industry,
historically, a software company sales representative shows up
every quarter, counts the number of users, and gives you an
additional bill.
The opportunity exists to do it differently, which is to
license the entire enterprise, whether the enterprise is a
commercial company, a university, a series of universities, or
the entire Federal Government; and that is what I think
SmartBuy will evolve to, enterprise-wide licensing of the
Government that is not counterproductive or counterintuitive,
but encourages the use of these systems for every user that can
benefit from them.
Mr. Putnam. Mr. Fitzgerald, do you wish to add anything to
that?
Mr. Fitzgerald. Sure. I mean, the GSA schedules have always
provided the benefit of one-time buys getting the best price
for the Government. As Craig said, and we clearly agree with
it, the opportunity now to license large segments of the
Federal enterprise with software technology we think is a
rational way for the Government to buy and a rational way for
companies to sell and serve the Federal Government, so we are
engaged in the conversations and dialog on the SmartBuy
initiative.
Mr. Putnam. Many of you have stayed in local governments as
customers, you have given examples of cost savings, significant
cost savings at governmental levels other than the Federal
Government. Could you share your observations on how far ahead
of the Federal Government, State governments are, if they are,
and what the keys to their success have been in successfully
bringing about the cultural change to implement the
technological advances?
Mr. Johnson. I will give a few thoughts on that. And I
think one reason might be just in sheer scope and scale of
addressing technological implementation at a State level, as
opposed to the size that we are talking about in the Federal
Government. We have had quite a bit of success with portal
technology with the State of Texas. All of the licensing that
we have talked about before, plus some new innovations. A most
recent one is e-filing, we term it e-filing, where all the
legislative filings within a State that go to the courts, which
heretofore went on paper, are now going to be conducted over
the Internet; and it is the lawyers that are going to pay for
that and be charged a specific dollar value per filing. So we
are taking about filing a case, interrogatories associated with
the case, the motions associated with the case. There are
millions of these. And that is sort of a tactical slice that
one can take on a specific issue in a State. And, of course,
now once that is delivered and seems to be working, it is
something that could be transported to other States.
But, you know, you look at that and then try to compare
that to something in a Federal component, and it is almost
mind-boggling.
Mr. Putnam. Any other thoughts?
Mr. Fitzgerald. You know, with criminal justice, I can look
at the city of Chicago that has automated their entire criminal
justice processes, now just taken over the entire State of
Illinois doing it for the State police, as seeing sometimes
systems scaling now throughout, intergovernmental scaling of
systems. So I think all of us can cite tremendous examples of
efficiencies that State and local governments have achieved,
but, again, the scale of the Federal Government's objectives
are just massive, and I think Mr. Forman and the team are doing
a good job of OMB of tackling them.
Mr. Conway. The best example at a State level that I think
corresponds to the Federal level was the State university
system in California, the largest university system in the
country; 23 different universities. A new chancellor of
education came in, noticed that all 23 universities had their
own data center, they all had their own data processes, very
similar to agencies here in the Federal Government. That
chancellor, whose name is Charlie Reed, decided that the State
university system really has one student that is in the system;
it doesn't matter whether they are attending one campus or
another campus. He standardized the business process, shut down
all the data centers, went to a single data center, and that
business process was replicated from 23 different instances to
one.
The lessons learned in there were tremendous. The
resistance from the 23 universities was the single greatest
challenge to overcome, because they didn't like losing the
control; they wanted to do it themselves. And yet once the
system was in place, it has been tremendously successful. Of
course, failures are orphan and success has a lot of fathers,
and at this point a lot of people are taking credit for that
system, but it really leads back to the leader, the person that
came in with the vision; and I think it is a great example for
the Federal Government as a microcosm.
Mr. Putnam. Charlie Reed can be very persuasive. We hated
to lose him from Florida. How long did it take to implement
that?
Mr. Conway. It took about 2\1/2\ years to get from the
initial specifications through the implementation. And
initially there was an investment in the system, but after the
system was implemented, of course, the costs are a fraction of
what they would have been otherwise, had each of these systems
been operating independently. And, of course, today there is
the same HR system, the same financial system for students,
faculty, and employees. So this has not only been across
agency, in their vernacular, universities, but it has also
crossed different users of the system, from the students to the
faculty to the employers of the university system. It is really
a wonderful case study.
Mr. Putnam. The issue of retaining and recruiting quality
IT managers in the Federal Government has been a challenging
one, and it is one that has received an awful lot of attention.
Several of you alluded to this in your testimony, and it
clearly gets to the heart of our leadership issue, our business
case issue, our personnel challenges. What are you finding as
your companies are pitching the Federal Government for
business? Are you finding high-quality, knowledgeable,
professional people in positions who can make educated
decisions on behalf of the taxpayer about what systems they
need, what components they don't need, what fair prices are?
Are you finding that the quality of IT personnel in the Federal
Government is something that we can all be proud of?
Mr. Fitzgerald. In general, I think the quality is good. I
think the issue is one in which we have a tremendous number of
legacy systems with the people who have been charged with
running those systems about to retire from the Federal
Government, and there is an emerging or looming crisis between
the personnel with the skills to continue to manage these
systems and getting the new systems and modernized systems to
take their place in the meantime. So, you know, I think there
are always issues at a particular project level, but in general
the quality is very good, but there is a looming crisis of
skills about to retire from the Federal work force.
Mr. Putnam. Anyone else?
Mr. Johnson. I would agree with that. I also think that the
Federal Government IT force is making a concentrated effort to
improve itself, given the new technology which is now getting
into the marketplace and transitioning away from the legacy
systems.
Mr. Putnam. The consolidation of these systems obviously
creates a situation where there are clearly fewer systems and,
therefore, less contracts for the private sector to compete
for. How do you balance the savings that we secure through open
competition versus the savings that we receive through
economies of scale yielded through consolidation? Is that
something we ought to be worried about at all?
Mr. Conway. Yes, I think you should. There is already, as
providers to the Federal Government for these types of systems,
very few suppliers. In the software area there are three major
suppliers; there is SAP, there is Oracle, there is PeopleSoft.
These companies have invested enormous amounts to handle the
complexity and the scale associated with Federal and State
governments and large commercial organizations.
It is important to maintain the number of providers so that
there continues to be innovation, competition, price pressure,
and competition among the providers so that the Federal
Government has choice. And I think that as the Government looks
to standardize on technologies, it will be important to strike
a balance between the providers of that technology and their
competition in the open market.
Mr. Putnam. Mr. Fitzgerald.
Mr. Fitzgerald. I think consolidation is inevitable in
every industry, but I think the issue for the Federal
Government is making sure that we continue to cultivate small
and disadvantaged businesses into our contracting process as we
serve the Government and make sure that very vital link in
terms of skills and labor is available in the economy.
Mr. Putnam. Anyone else?
Mr. Johnson. I think we have all accepted the fact that the
Federal Government is modernizing its information technology,
and that is going to happen. I mean, the Fortune 1,000 has done
it; the middle market is doing it now; and everyone is reaping
significant cost benefits because of it. So if part of your
question was do you see any foot-dragging to hold on to legacy
systems because they are inefficient and you can make more
money on them, I don't think that is going to happen. I think
that the wheels are in motion.
Mr. Cofoni. I would just add that you need to contemplate
your question, Mr. Chairman, in the full context of a global
economy and ask the question is the amount of consolidation
that is likely to occur in U.S. Federal Government enough to
sway the balance that might be going on in a global competitive
environment between the various contestants.
Mr. Putnam. Fair point.
A vote has been called and we have just a few minutes to
get down to the House floor. I will take this opportunity to
allow any of the panelists to take 1 minute apiece, if you so
desire, to point out any issue that you think has been
neglected or overlooked in this hearing, or just allow for any
parting thoughts that you may have, beginning with Mr. Cofoni.
Mr. Cofoni. Well, I really thank you for the opportunity,
Mr. Chairman, to be here today. I think I communicated most of
the major points I would have, and I look forward to serving in
any capacity that would benefit the subcommittee in the future.
Thank you.
Mr. Putnam. Thank you.
Mr. Johnson.
Mr. Johnson. I would just like to thank you for the
opportunity. I think this was an excellent idea and a very good
meeting.
Mr. Fitzgerald. I echo the remarks and, as Oracle Corp.,
any way we can serve the subcommittee, we look forward to the
opportunity of doing that.
Mr. Putnam. Thank you.
Mr. Conway.
Mr. Conway. And finally I would say that if there was one
quality that consistently corresponds to success and use of
information technology, it is leadership. When you find a
leader that has a vision for how to use technology, great
things can happen; and I think you do have the leadership here
with Mr. Forman. I think this subcommittee is crucial to
starting a process which will pay off for the U.S. Government
in the billions and billions and billions of dollars, so I
really applaud what you are doing. Thank you.
Mr. Putnam. Thank you.
And I want to thank all of you, and Mr. Forman as well, for
their expertise in helping us to understand these issues. I
speak on behalf of the entire subcommittee in saying that OMB
clearly has our support in this effort. I also note that
agencies are currently preparing their IT budgets for fiscal
year 2005, and I would caution each CIO to heed the direction
of Mr. Forman and the commitment of this subcommittee in
identifying redundancies ripe for integration and
consolidation. Obviously, this subcommittee and staff will
continue its aggressive oversight, both publicly and behind the
scene, until we arrive at a more citizen-centric Federal
Government, a more efficient Federal Government, and cost
savings to the taxpayer.
There may have been some questions for panelists or
statements that we did not get to because of time. The record
will remain open for 2 weeks for such submissions, and we would
ask the panelists' cooperation in answering submitted
questions.
With that, I thank all of you, and we stand adjourned.
[Whereupon, at 11:55 a.m., the subcommittee was adjourned,
to reconvene at the call of the Chair.]