This report transmits findings on the status of the Department of Defense's efforts to develop a management approach to guide business transformation. January 2009 Update. Illustrations.

Although DOD has made progress toward establishing a management framework for overall business transformation, the framework currently focuses on business systems modernization and does not fully address broader business transformation efforts. In 2005, DOD set up the Defense Business Systems Management Committee to review and approve the business enterprise architecture a transformation blueprint and new business systems modernization investments. It also established the Business Transformation Agency, which currently reports to the Vice Chair of the Defense Business Systems Management Committee, to coordinate and lead business transformation across the department. Despite these steps, DOD has not clearly defined or institutionalized interrelationships, roles and responsibilities, or accountability for establishing a management framework for overall business transformation. For example, differences of opinion exist within DOD about the roles of various senior leadership committees. Until DOD's business transformation management framework is institutionalized and encompasses broad responsibilities for all aspects of business transformation, it will be challenging for DOD to integrate related initiatives into a sustainable, enterprise-wide approach to successfully resolve weaknesses in business operations that GAO has shown are at high risk of waste, fraud, and abuse.

The Department of Defense (DoD) is the largest organization in the world, with operations that span a broad range of agencies, activities, and commands. With an annual budget over $500 billion, DoD employs millions of people that operate worldwide and maintains an inventory system that is an order of magnitude larger than any other in the world. However, the business systems used to manage these resources are outdated and inefficient. DoD relies on several thousand, non-integrated, and non-interoperable legacy systems, that are error prone, redundant, and do not provide the enterprise visibility necessary to make sound management decisions. In order to meet current and future challenges, DoD needs business systems that enable it to be flexible, adaptive, and accountable. Transformation of business systems and process will not only reduce costs and improve performance, it is critical for improving warfighter support. Recognizing this, former Defense Secretary Donald Rumsfeld began a business transformation initiative in July 2001. This report is divided into two parts. Part I evaluates DoD's business systems transformation effort, identifies lessons learned, and make recommendations to improve the prospects for success of the current business transformation effort. Part II includes several cases studies of business systems transformation in the federal public sector, at the Business Transformation Agency (BTA), and in the Military Services. Each case describes a specific transformation initiative and identifies lessons learned from the experience.

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