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5 ASSESSMENT OF PROGRESS Because of the dynamic nature of the Logistics Systems Modernization Program (LSMP), our assessment of progress will very likely be outdated by the time this report is published. Nevertheless, we believe that an assessment is necessary to call attention to the events that should occur. Our assessment of progress is offered in three major areas of concern. The first describes the events related to the Defense Logistics Agency's (DLA) proposals to the Major Automated Information Systems Review Council (MAISRC) and the critical baseline enhancements (CBEs) that ensued. The second area deals with the progress made in the management of the LSMP. In the third area, we review the progress made in developing the DLA's strategic plan. PROGRAM APPROVAL AND CRITICAL E~CE=NTS In general, we are favorably impressed with the progress the DLA has made in addressing the problems of modernizing the way it does business. At the outset, we understood that the DLA viewed its immediate task as one'of successfully returning to the MAISRC which in November 1'986 had denied approval of Milestone I--the concept development phase of the LSMP. We did not examine in detail the documentation related to that MAISRC review. However, it is our understanding that the Department of Defense's (DOD) disapproval of Milestone I was based on the belief that the DLA's proposal was too hardware oriented and needed additional longer-term planning based on cost-justified functional requirements. In response, the DLA has recognized that if it is to develop functionally based requirements for supporting the military services at the lowest cost, it must work through a series of time consuming and intellectually rigorous steps (see "Business Area Analysis," Chapter 4) in describing the way it now does business and how it should do business during 1992-2010. At the time of the disapproval, the DLA apparently believed that it would be able to restructure and augment its request and return to the MAISRC in March 1988. Thus, based on the current DLA plan to return to a MAISRC in January 1989, one could assert that the LSMP has slipped approximately 10 months in its schedule; we do not agree with such an assertion. In our opinion, the DLA has adopted a much more realistic time 27

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28 schedule for presenting to the Office of the Secretary of Defense (OSD) its long-term logistics modernization program. While the DLA has fallen behind its original schedule, we believe that the defense establishment will be better served because the DLA is now approaching its task in a much more logical and thorough manner. The recent MAISRC experience and the subsequent DLA response caused us to question the LSMP approval and planning process. In our experience, the need to justify a system is often considered after the system has been designed, rather than in concert with the design effort. Also, incremental approaches are generally used, in which individual elements are justified on a piece-by-piece basis, rather than using a holistic approach. Finally, errors are made by attempting to justify programs on the basis of economic considerations alone. In order to avoid these problems in the LSMP, we recommend the following: o o o Develop the justification in parallel with the development of the LSMP. Use a holistic approach to justification. Base the justification on such factors as fulfillment of the DLA requirements, cost avoidance, readiness, and increased response capabilities. The DLA is faced with serious deficiencies in its current hardware and software automation environment. Given that the benefits of the long-term modernization program will not begin to be realized until at least 1992, the DLA identified specific short-term improvements that it believes must be accomplished to permit continuation of effective support of the military services. These improvements have been packaged into a series of 16 short-term upgrades called critical baseline enhancements (CBEs), which are listed in Appendix C. The DLA believes that these enhancements are necessary to maintain effective operation through 1992 and will not inhibit the planning or implementation of the longer-term LSMP. Because of their short-term nature and distinction from the LSMP, we have not examined the CBEs. We understand that the DLA, the OSD, and the General Services Administration (GSA) hardware-software review and approval process has validated the short-term need for the CBEs. We agree that short-term critically needed enhancements~should not wait on the longer-term modernization program. However, we recently learned that two of the CBEs, dealing with upgrades to the DLA's requisition routing system (Item 13, Appendix C) and its logistics data management system (Item 4, Appendix C), are so large that they require a MAISRC review of their own. We believe that such major investments in modernization should be coordinated with the LSMP. It appears to us that the CBEs are being conducted as separate projects, independent of the LSMP and each other. While we agree that the major CBEs referred to above need to be developed, we believe that organizational elements responsible for the LSMP should have sign-off responsibility on CBE decisions involving such things as programming languages, data base management, and protocols that will

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29 provide for future interoperability. It is urgent.that the LSMP planning be given the responsibility and authority to set DLA-wide standards for all future developments. Therefore we emphasize the following point: We recognize the potential for those organizational elements of the DLA involved in short-term operational issues to affect the- longer-term modernization effort. We believe that it is unwise to separate current operations from long-term planning in.such a way as to place de facto priority on operations to the detriment of the longer-term program. This is a management issue that warrants close attention. MANAGEMENT OF THE LOGISTICS SYSTEMS MODERNIZATION PROGRAM During the early stages of the study, we found the LSMP program office to be understaffed for a program of the size, duration, and scope of the LSMP. Even if there were no single major program for modernization, we believe that a strong program management office (PMO) is needed. Considering the agency's many "stovepipe" operations, strong and statesmanlike leadership will be required to draw these operations together in cooperative support of increasing integration as a means to reduce costs, improve responsiveness, and allow new services. The DLA has elected to use matrix management in managing the LSMP. A potential weakness of matrix management is that often no one is really in charge because responsibilities are dispersed among a number of organizations each having their own mission with little motivation to change. In addition, matrixed personnel must often accept direction from more than one leader. In this regard. matrix organizations are more suited for managing processes rather than programs. The choice of matrix management may be self-defeating when considering what the LSMP is to accomplish in changing and improving the way the agency does its business. Because of its dependence on a matrix organization, we recommend that the DLA's top management give careful attention to the management of the LSMP. This includes providing visible support, reviewing progress, requiring results and cooperation, and settling disputes. It is entirely possible, for example, that the PMO can develop detailed plans, but that operations can move the CBEs in a different direction that may or may not track the long-range plan. It will be necessary for the director and the Office of the Director to constantly monitor progress of the entire agency as it moves forward to implement the long-range plan. The PMO must not be allowed to become an island. It must report at a high-enough level to be part of the top management structure of the agency and be a part of, and contribute to, all stages of planning. We have observed that the program manager has been so positioned and that regular meetings have been established to allow continuing interaction with other organizational entities. The authorized staffing level of the PMO has been increased from eight

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30 to thirty. We believe this staffing [eve-l is a minimum for an effort of the magnitude of the LSMP, judging by the necessary work as broken down into individual position-descriptions. Recruiting people with technical and technical-management skills in information sciences and data communications is a major issue, not limited to the LSMP management, which affects the DLA's ability to achieve its modernization goals. We have not seen evidence that the agency has developed a program of recruitment, training, and career development to obtain and retain these skills. Today, the DLA's technical staff-consists of an ample number of designers and programmers skilled on current systems. However, few of these personnel are capable of overseeing the development and acquisition of the new systems that will be required as part of the LSMP. We suggest that the DLA will need to use an overall integration contractor and subcontractors to provide the necessary expertise. This will also provide an opportunity to achieve a transfer of technology to agency personnel. We regard this as only a short-term remedy and believe that in the longer-term the agency needs to increase and develop its technical management resources. The Defense Logistics Agency' s Strategic Plan The LSMP blueprint needs to be based on a strategic plan for the DLA. Through our meetings and briefings with agency personnel, we have urged the DLA to develop such a plan. In response, the Director of the DLA prepared a draft white paper entitled-"Concepts for Restructuring DLA to Operationally Support the Military Services." The paper identifies and discusses the key elements of the agency's operational environment including technology, standards, quality, production, markets, and personnel. It also discusses organizational, procedural, and resource changes that are part of the restructuring for the future. This paper should help in communicating throughout the agency a consistent top-down view of the need for modernization, the changes that will occur, and how these changes will improve performance and benefit employees. We believe that it can be an effective motivating tool and suggest that it be completed and released. However, we believe that the paper should be followed-up with specific and direct guidance to key personnel within the agency. Otherwise, the interpretation of the concepts will be left to the recipients. A major contribution in developing the DLA's strategic plan is the business area analysis (BAA). We believe that the BAA is necessary and we found that it is being done very thoroughly and systematically. However, the process thus far has been developed from the "bottom-up." During its briefing to the committee on January 25, 1988, the DLA outlined its plan to develop a "top-down," cross-functional BAA. It is necessary that such planning be done, based on the goals and objectives of the agency's top management. We emphasize that the BAA is a means to an end (the strategic plan), rather than an end in itself. The BAA should be viewed as a necessary building block in constructing the agency's strategic plan. The ager~cy has underestimated the time and effort needed to complete the BAA.

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31 We caution that such efforts can become so mired in analysis and methodology that their results may come too late or be inconclusive. We strongly encourage continued top-down involvement in the process. It must be more than an analytical exercise if the DLA is to realize the benefits of the LSMP. The DLA's strategic plan also depends on DOD policies and plans. During our briefings, we were told of two OSD documents (Logistics 2010 and Information Systems Architecture) nearing completion that appear to be critical to DLA's strategic planning. Concurrently, the DLA is preparing three documents that should also contribute to the planning of the LSMP: the DLA's Strategic Plan, the DLA's Functional Conceptual Requirements and the DLA's Program Management Plan. We found that progress has been made in developing road maps and schedules for the LSMP. However, we feel it is too early to estimate what level of success the DLA will have in adhering to the schedules.

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