R2C2 Model

Report
M. Anvari
Army Cost Management & Financial Transparency
AMERICA’S ARMY
THE STRENGTH OF THE NATION
Army Cost Management & Financial
Transparency
Predictive Analytics
Symposium
Washington, DC
November 18-19, 2014
Mort Anvari
Director, Programs and Strategy
US Army, ASA(FM&C)
M. Anvari
Army Cost Management & Financial Transparency
AMERICA’S ARMY
THE STRENGTH OF THE NATION
Army Financial Transparency
Challenges
• DOD Audit Readiness
• Visibility into Cost and Spending
• Meaningful Business Analytics for Decision Making
• Financial System Interface Errors and Rework
Opportunity
• Army Cost Data Capture Strategy and CM
Progress
• Cost Culture and Cost Management (CM) Initiatives
• Army General Fund Enterprise Business System (GFEBS)
• Addressing Financial Material Weaknesses - LSS
• Army Financial Management Optimization (AFMO)
• Army Financial Benefits Reporting and Tracking (AFBRT)
• Army CM Steering Group
2
M. Anvari
AMERICA’S ARMY
THE STRENGTH OF THE NATION
Army Cost Management (CM) is working
Army Cost Management & Financial Transparency
People
1. Leadership Commitment
2. Training
3. FM Workforce (AFMO)
Technology
4. Data Quality (ERP Cost Data, Performance Metrics)
5. Tools & Models (Analytics, BI)
Process
6.
7.
8.
9.
Cost Planning (Cost Estimates, …...)
Cost Analysis (CBA, AoA, ….)
Cost Integration to Requirement, Acquisition & Resource
Cost Control (LSS, AFBRT, …..)
Training
CM Goal: Better Value for Lower Cost
•
Stewardship of nation’s resources
•
Cost informed decision making
•
Continuous improvement
•
Accountability for costs
•
Tracking progress
Data Quality
Cost Analysis
3
M. Anvari
Army Cost Management & Financial Transparency
AMERICA’S ARMY
THE STRENGTH OF THE NATION
Army Cost Management End-to-End Process
Develop &
Maintain Cost
Model
Determine
Cost
Objectives
Establish
Planned
Output
Perform
Cost
Planning
Perform
Cost
Analysis
Perform
Cost
Controlling
CM Process
Activities
Level One
Maintain
Cost Model
Establish
Planned Costs
(inputs)
Capture Actual
Costs
Develop Cost
and Performance
Targets
Capture Actual
Outputs
Capture Actual
Costs
CM Process
Activities
Level Two
Perform
Cost
Accounting
Compare
Results to Plan
Develop
Metrics
Perform Cost
Assignment
Capture Actual
Outputs
Perform Cost
Assignment
Process
Improvement
Adjust Targets
Perform Period
End Close
Perform Period
End Close
Select Method
of Control
Implement (changes
to) Policies &
Procedures
Manage Tradeoffs
4
M. Anvari
Army Cost Management & Financial Transparency
AMERICA’S ARMY
THE STRENGTH OF THE NATION
Army Cost Management and PPBE
Integrating Cost
Management with
PPBE Process
5
THE STRENGTH OF THE NATION
Aligned CM to PPBE
Army Cost Management & Financial Transparency
M. Anvari
AMERICA’S ARMY
6
M. Anvari
AMERICA’S ARMY
THE STRENGTH OF THE NATION
CM Activities and PPBE Phases
Planning
Army Cost Management & Financial Transparency
(6 - 10 Years)
HQDA
Command
/ DRU
Operational
Activity
Strategic Decision-Making:
- Cost Benefit Analysis
- Analysis of Alternatives
- Army Cost Position (LCCE)
- Cost Models / Tools
* FORCES Costing Model
* Capability Costing Tool
- Cost of Army
- Workforce Analysis
Programming
Budgeting
Execution
(1-2 Years)
(Current Year)
Outyear Forecasting:
- Cost Factors & Models
* TRM/OSMIS
* FORCES Costing Model
* AMCOS / Civ Pay Rates
- Army Cost Position (LCCE)
- Contingency Cost Model
- CBA's, LSS
- Incorporate AFBRT Benefits
Formulation / Justification:
- Cost Factors
* OPTEMPO Cost Factors
* Mil Pay Rates
* Civ Pay Rates
- Cost & Spend Plans
- Include AFBRT Initiatives
- Historical Trend Analysis
- Establish Should Cost Goals
Allocation/Funds Distribution:
- Cost Analysis to Support
* Cash Management
* Reprogramming
* Rate of Executution
- Budget vs Actual (Variance)
- Monitor Will /Should Cost
- Track Cost Savings (ARFIT)
- Mid-Year Reviews
Strategic Planning:
- Cost Benefit Analysis
- Cocept Plans
- Workforce Mgmt
- Submit Initiatives to AFBRT
- Trend Analysis
- Cost Models / Tools
- Investment Decisions
- Identify Efficiency Initiatives
Outyear Plans / Controls:
- Cost Targets/
- Annual Efficiency Goals
- Assess Cost & Spend Plans
- Plan Output (Capacity Mgmt)
- Cost Benefit Analysis
- Trade Space Analysis
- Establish AFBRT Milestones
- TRAPS
Measure & Control:
- Variance Analysis
(Cost & Output)
- Benchmarking Best Practices
- Adjust Cost Targets
- Mid-Year Reviews
- Measure Reduction Initiatives
- Adjust Allocation Rules
(6 Years)
Operational Planning:
Continuous Improvement:
- Establish Annual Cost Plans
- Qtrly Cost Mgmt Reviews
- Set Output Goals / Objectives - Variance Analysis
- Optimize Capacity
* Resources (Inputs)
- Adjust to Directives
* Labor Rates
(e.g. TRAPS)
* Output (Unit Cost, Qty)
- Establish Activity Rates
- Budget vs Actual (Variance)
(Labor / Equip)
- OH Allocations
- Estimate OH Allocations
- Product/Service $, Customer $
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M. Anvari
AMERICA’S ARMY
THE STRENGTH OF THE NATION
Enterprise CM Data Need
Views
Full Visibility - Big Cost Data
2.Contracts
# Tables = N * (N-1) / 2
for 10 views 45 cost visibility table is needed
2. Contracts
3.Services
Multi-dimensional Polygon Cost Visibility
4.Funding
3. Services
1- Customers by Contracts
2- Customers by Services
3- Customers by Funding
4- Customers by Cost Centers
5- Contracts by Service
6- Contracts by Funding
7- Contracts by Cost Centers
8- Services by Funding
9- Service by Cost Centers
10 –Funding by Cost Centers
4. Funding
5.Cost
Centers
Army Cost Management & Financial Transparency
1. Customers
.
.
.
.
.
.
.
Org, Year, Supplier, Type .
.
?
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M. Anvari
Army Cost Management & Financial Transparency
AMERICA’S ARMY
THE STRENGTH OF THE NATION
Cost Management Data Capture Strategy
 Improve data quality and cost data visualization tools for decision making.
 Incorporate rigorous Cost Management in funding decision to reduce future cost risk.
 Plan for capture of execution data in support of CM and PPBE processes.
Prioritized, Aligned, and
Optimized Cost Data Capture
Integrate Cost Management
into PPBE and Core
End-to-End processes
9
M. Anvari
AMERICA’S ARMY
THE STRENGTH OF THE NATION
Cost Management Data Architecture
Dash Boards
Analysis
Data
Standardization Presentation
Layer
Common Data Value
Common Exchange Mechanism
Common Entity Model
Army Cost Management & Financial Transparency
Reports
Data
Warehouse
& Information
Management
Layer
Data
Integration
Layer
BI Engine
OLAP
Data
Warehouse
(AESIP)
Data Marts
ETL
Unstructured Data
IPPS-A GCSS-A
Data Sources
Layer
GFEBS
Sources
Databases
Unstructured
Data
File
Systems
ERPs
SOA, ESB,
Web
GFM-DI
High Cost of Data Standardization at Data Source Layer ?
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M. Anvari
Army Cost Management & Financial Transparency
AMERICA’S ARMY
THE STRENGTH OF THE NATION
Cost Attribution Models
Data Views
11
M. Anvari
Army Cost Management & Financial Transparency
AMERICA’S ARMY
THE STRENGTH OF THE NATION
Army Cost Management Steering Group
1st meeting on
18 November 2014
Cost and
Performance Knowledge
enables Resource Informed
Decision Making
12
M. Anvari
AMERICA’S ARMY
THE STRENGTH OF THE NATION
Army Cost Management Architecture
Army Cost Management & Financial Transparency
APS
TA
A
PPBE
PPBE
Enterprise
Cost Models
PM
Dashboards
FORCE
2025
ERP
Data
COST &
PERFORMANCE
MANAGEMENT
PPBE
BIG
Big
DATA
Data
Analytics
AFBRT & BI
13
THE STRENGTH OF THE NATION
Army Cost Management Architecture
 Army Enterprise
Cost Management
Needs & FM
Transparency
Army Cost Management & Financial Transparency
M. Anvari
AMERICA’S ARMY
 Data Capture
Strategy (Big Data)
 Advanced
Analytics
 Cost Performance
knowledge will
improve with
subsequent iterations
 Advanced
Capabilities
14
M. Anvari
Army Cost Management & Financial Transparency
AMERICA’S ARMY
THE STRENGTH OF THE NATION
Cost of Readiness Example
Why Readiness Costing is Needed?
• Major funding reductions put readiness at risk.
• If we don’t know what readiness cost how can we say it’s not enough.
External
• To aid in building budget materials.
• Justify budget decisions to OSD and congressional staff.
Internal (Army Senior Leader questions)
• What is the readiness impact if we assume more risk in funding?
• How much funding can be reduced and still maintain minimum required
deployable units?
• Where is the knee in the curve between cost and readiness?
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THE STRENGTH OF THE NATION
Readiness & Requirements Capacity & Cost
Over
Capacity
Target Readiness Level
Readiness/Requirements
Army Cost Management & Financial Transparency
M. Anvari
AMERICA’S ARMY
Target
Capacity
Minimum Readiness Level
Marginal
Capacity
Under Capacity
D
Cumulative Distribution/Density Function (CDF)
Capacity/Cost
C
B
A
A Conceptual Model
16
M. Anvari
AMERICA’S ARMY
THE STRENGTH OF THE NATION
Cost of Readiness Example
Notional Example:
Cost of Readiness for Personnel
Readiness/Requirements vs. Capacity/Cost
B
C
D
Requirement
Cost
Army Cost Management & Financial Transparency
A
FY14
Capacity’s Impact on Readiness
Zone
Capacity/Cost
A
Readiness
No Change
B
FY16
FY17
Readiness
Component
A
Personnel
P
Readiness-Equipment
Under Capacity
Below Minimum
FY18
FY19
FY20
Readiness Component Capacity Baseline
Supply-on hand
C
D
FY15
Training
B
C
D
P
P
P
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Army Cost Management & Financial Transparency
M. Anvari
AMERICA’S ARMY
THE STRENGTH OF THE NATION
Big Data !
18
Army Cost Management & Financial Transparency
M. Anvari
AMERICA’S ARMY
THE STRENGTH OF THE NATION
19
M. Anvari
Army Cost Management & Financial Transparency
AMERICA’S ARMY
THE STRENGTH OF THE NATION
Table of Acronyms
AESIP
- Army Enterprise Systems Integration Program
AFBRT
- Army Financial Benefits Reporting and Tracking
AFMO
- Army Financial Management Optimization
AoA
- Analysis of Alternatives
BI
- Business Intelligence
CBA
- Cost benefit Analysis
CM
- Cost Management
ERP
- Enterprise Resource Planning
ESB
- Enterprise Service Bus
ETL
- Extraction Transformation and Load
GCSS-A
- Global Combat Support System-Army
GFEBS
- General Fund Enterprise Business System
GFM-DI
- Global Force Management Data Initiative
IPPS-A
- Integrated Personnel and Pay System-Army
OLAP
- Online Analytical Processing
PPBE
- Planning, Programing, Budgeting, and Execution Process
SOA
- Service Oriented Architecture
20

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