Business Transformation: Overview and Perspective

The Department of Defense (DoD) is perhaps the largest and most complex organization in the world. It manages a budget more than twice that of the world's largest corporation, employs more people than the population of a third of the world's countries, provides medical care for as many patients as the largest health management organization, and carries 500 times the number of inventory items as the world's largest commercial retail operation. That being said, DoD's mission, and the changing nature of the threats to which the Department must respond, requires that it become as nimble, adaptive, flexible, and accountable as any organization in the world.

The DoD is engaged in a massive business transformation effort to become that nimble, adaptive organization as it modernizes its processes, systems, and information flows to support 21st Century national security requirements. To help guide this undertaking, the Department released its first integrated Enterprise Transition Plan (ETP) on September 30, 2005. For the first time, the Department provided its internal and external stakeholders a comprehensive view of the systems and initiatives that will transform the largest business entity in the world. Over these past two years the Department has made significant progress, not only in the business capabilities that have been improved, but also in the fundamental ways in which it thinks about business operations and the methods to achieve transformation. These changes manifest themselves in the daily lives of civilian and military personnel throughout the Department, and have set the stage for enabling ongoing business transformation at both the Enterprise and Component levels of the Department.

Business transformation requires a multi-faceted set of activities, especially in a large, complex, hierarchical organization like DoD. Among the core elements necessary to achieve transformation are strategy, culture, process, information, and technology, as depicted in Figure 1 below.

Strategy Strategic direction for enterprise-wide decision making in support of overall organizational objectives		Culture People's attitudes and skills as well as organizational dynamics
Process Operating methods, practices, policies and procedures		Information Accurate, reliable, timely data
Technology Information systems to enable information
Figure 1: Core Business Transformation Elements

The Department recognizes the importance of each of these elements of transformation not only for its individual contribution to the desired outcome, but also for the necessity to achieve alignment in capabilities across all five areas. For example, it will be virtually impossible to achieve business transformation in an organization that may have a highly formed, forward-looking strategy, but has yet to evolve the organizational culture to support this new way of doing business. Investing in the latest and greatest in the area of Information Technology (IT) can be a key enabler for business transformation. However, if the organization has not sufficiently evolved its process and information capabilities, the technology implementation alone will likely fall short in terms of achieving the desired outcomes. Organizations need to be able to mature in each of these areas to effectively drive business transformation, and these changes need to be infused across organizational boundaries in order to produce optimal results.

The Department is well aware that business transformation is a marathon, not a sprint. Following this course, the Department has made steady, significant progress in each of the five areas mentioned above, achieving tangible results that are truly yielding positive returns in its business operations.