IT Portfolio Management Lessons Learned

By | August 22, 2008

USAF tech workerBackground:

There were assertions from Congressional Members and Staff in the spring of 2001 to the new AF CIO: “The Air Force does not know where the IT dollars are being spent; why should we increase AF IT budgets?” The Hill used this statement as a rationale to apply reductions to the FY 2002 budget.

The CIO made a decision to ensure that the AF knew where the IT dollars were for the following budget cycle (i.e., for the FY 2003 budget).

In 2001, DoD only required a small number of Exhibit 300’s from Military Departments to include the largest service programs (about 10 per Service and representing only a small portion of the IT budget).

The AF CIO developed a strategy to get a handle on the IT budget.

Approach Chronology:

            • The AF CIO developed a strategy to get a handle on the IT budget.  The CFO was an enthusiastic supporter of the initiative.
            • Joint CIO-CFO policy developed and issued in spring 2001
              • All Air Force programs are required to do an Exhibit 300 (approximately 400 programs).  [Note: There was lots of push back from the field.]
              • The CIO and CFO affirmed that if program Exhibits were not submitted, then no funding would be provided.
                • Guidelines were issued by CIO to augment OMB guidance (and to leverage existing AF documentation requirements).
            • AF CIO delegated responsibility to Major Command CIOs and Functional Community CIOs to oversee and review budget submissions and Exhibit 300’s prior to submission to the AF CIO.  In essence, they were MAJCOM and Functional IT  ‘portfolio managers’.
          • AF CIO held 2 budget reviews in the fall of 2001. Each MAJCOM and Functional CIO briefed budget projections, top 10 programs, changes from prior years and budget shortfall areas.
            • Initial review was very poor.  Many CIOs were only focused on infrastructure programs and not the entire organization’s IT budget.  Some did not have any good aggregate budget data. (In the past, the CIOs only focused on those dollars that they directly controlled.)
            • Through the reviews, peer pressure was very helpful in getting the CIOs to broaden their focus.
            • In preparation for the reviews, the AF CIO staff took the 2001 AF IT budget (~ $5 Billion) and allocated it appropriately to MAJCOM and Functional CIOs.   This helped highlight where CIOs were not addressing major portions of IT budgets in their organizations.

The early budget reviews and grading of budget exhibit submissions were an important catalyst to getting the ball rolling.

            • Exhibit 300’s for all AF programs were submitted in the fall of 2001 and reviewed by the AF CIO organization.
                • The CIO office graded each of the Exhibit 300’s (actually each was a 15-40 page business case), including how each 300 tracked to the top level AF enterprise architecture.  Those that received failing grade were required to be redone and resubmitted.  Comments were provided back to the originator organization on all 300’s with the guidance that shortfalls were to be fixed before the next budget cycle.
                • Format adjustments were made to accommodate field complaints that Exhibit 300 data was redundant to data required for other acquisition oversight processes.  Basically, the decision was to accept other formats and a cross-walk was provided to show how to map other formats to Exhibit 300 formats.

               

            • Prior to the FY 2003 budget hearings in the spring of 2002, the AF CIO office performed an analysis of the AF IT budget and produced a summary report (The Air Force IT Story).  This document compensated for the fact that the Budget 300 Exhibit typically had little in the way of a summary overview or analysis.  As a result, the Hill staffers had to go through each program’s exhibit to gain insight into the budget.
                • The summary analysis divided the budget into three areas: infrastructure; business (and combat support); and mission critical (national security systems).
                • For each area, the AF CIO had an overall budget strategy that was outlined in the report with data to show progress.
                  • Infrastructure was to be flat or declining; business was to be flat; increases were expected in the mission critical area as the AF became more network-centric in war-fighting operations.
                • The AF IT Story tracked to overall AF budget objectives (e.g., the Air Force determined that extending networks to all aircraft was critical to modern warfare).  The IT budget summary also showed where the corresponding budget increases were being made.  Key programs were highlighted, especially those that were showing budget growth.

               

            • The AF IT Story and an indexed disk containing the Exhibit 300’s (over 20,000 pages when printed) was given to the House and Senate staff prior to the budget hearings.
          • At the FY 03 budget hearings, the AF CIO summarized the budget and was able to say with confidence that he knew where every dollar being requested in the FY 2003 budget was going (and that it complied with the AF enterprise architecture, security strategy, etc.)  In truth, the initial 300’s were still rough, but they got better each successive year.
              • The Congressional staff started to call the CIO prior to making recommendations regarding budget cuts to get the CIO’s opinion or to ask for more details.
              • The confidence level on the Hill increased dramatically because there was an understandable top level “story” for the budget, a well defined review process, and lots of data to back up the budget submission.

             

          • For the next budget cycle (the FY 04 budget with internal AF reviews starting in the fall of 2002), the grading criteria were significantly tightened and programs had to have a passing grade before the FY 2003 funding would be distributed (again, this was a joint CIO-CFO agreement).
            • The Exhibit 300’s and the AF IT Story continued to get better.
            • The AF CIO developed an analytical capability and applied it to the budget data.  This analysis permitted comparisons between commands, individual programs (e.g., that showed that one command’s budget request for infrastructure was much higher than another command’s that had more people), and budget versus spent analysis.
                • These analyses permitted questions to be asked that gradually resulted in better categorization of budget items and challenged the MAJCOM/Functional CIOs to drill down into the budgets.
                • By matching budgets and expenses, it was determined that there were many anomalies in the budget.  For example, for operations and maintenance budget items, there were budget submissions year after year with no expenditures, for example in the postal budget area.  It was clear that commands were continuing to budget for line items that they used in the past, but were then spending the money on other areas.

               

          • With each cycle, the budget details got better and the AF CIO was better able to direct budget adjustments (e.g., identify where funding was lower priority), ensure that major AF initiatives were funded, and advocate for appropriate budget increases.  Today, the AF CIO is looked to by the corporate AF to make decisions regarding budget cuts or reallocation.

Lessons Learned

            • Partnership with the CFO was an important ingredient to the strategy.  When the threat of withholding funding was made, the fact that the CFO was endorsing this approach was important.
            • Empowering the subordinate CIO’s was also important.  It forced them to take responsibility for their organizations and move beyond being the “comm. Guy”.  In fact several of the MAJCOM Vice Commanders (who normally ran the MAJCOM budget review processes) remarked about how pleased they were that the MAJCOM CIOs were making recommendations to reduce duplicate funding across their command (using the data that they gathered to support the AF IT portfolio management process)
            • The early budget reviews and grading of budget exhibit submissions were an important catalyst to getting the ball rolling.
            • Tightening grading criteria (e.g., ensuring that architecture elements were really robust and program status information was sufficiently detailed) over time made sense.  The initial intent was to be able to put our arms around all of the dollars.  Subsequent years were focused on gaining increasingly detailed insight into the individual programs, their relationships, and program alignment with overall IT and AF strategies.

bubblerule

Note: John M Gilligan is a former CIO of the USAF