Bringing the Navy ERP to Life

Written by Karen E. Thuermer

When compared to the private sector, the Navy may appear to be a Johnny-come-lately when it comes to implementing and utilizing enterprise resource planning (ERP) software systems.

In comparison with the other services, however, the Navy has been a pioneer in bringing comprehensive software solutions to a wide range of functions. The Navy’s effort took a major step forward this fall, as the Naval Air Systems Command (NAVAIR) went “live” on the Navy ERP system. Further expansions are planned, beginning next spring with the Space and Naval Warfare System Command (SPAWAR).

The Navy didn’t consider ERP until the late 1990s, when an initiative from the chairman of the Joint Chiefs of Staff called for management and technological innovation designed to achieve improved levels of effectiveness in joint war fighting. The Navy formed four pilot ERP programs to investigate whether commercial off-the-shelf ERP products were feasible for the Navy and to report the findings to senior naval leadership. By then, it was common for private business to integrate and abridge data and processes into unified ERP systems. “We looked at what industry had done and reviewed their best practices,” said Susan Keen, Navy ERP technical director. “It became very clear that we looked very much like a very large global corporation.”

Consequently, the decision was made to replace legacy supply, maintenance and financial management systems with a single integrated, responsive, accurate and integrated system. The software chosen was that developed and offered by SAP, the Germanybased business software company that has been a major force in spreading the ERP concept in recent decades.

ADDED BENEFITS

The benefit of the SAP technology is to provide the Navy, through the ERP system, with a standard set of management tools to improve its processes and provide interoperable data for financial, acquisition and supply chain management. According to Keen, some 70 percent of Fortune 500 companies around the world use SAP’s ERP products.

The system particularly offers financial transparency and total asset visibility. This is important since a primarily goal of the Navy ERP is to modernize and standardize the way the service manages its money, people, programs, supplies and maintenance. Keen reports to Ronald Rosenthal, the Navy ERP program manager. Responsible for all technical matters related to Navy ERP’s design, development, deployment and sustainability, she is enthusiastic about the program.

“We need to understand where our money goes and where our assets are throughout the Navy,” Keen commented. “To do that, we need to have the visibility throughout all the layers of the organization. We need to know where the money is, how it gets spent, where the people are, what they are working on, how we are using our people, and where is our stuff?

“We are very much in need of ensuring that every dollar we get is being spent as effectively as it can be,” she added. This level of visibility will support the Navy in making intelligent decisions as to where to spend money. “That is important, especially with the current situation where we find so many of our warfighters actually in a war environment,” she emphasized.

Today the Navy ERP program, which is based in Annapolis, Md., is the foundation for the Department of the Navy’s logistics and financial business integration and transformation. Its team encompasses approximately 400 personnel from government and industry, and its goal is to provide a robust technology infrastructure to enable innovation, interconnectivity, and collaboration among scientists, engineers, program managers, and business managers.

The several pilot programs were converged in 2004 into the Navy ERP program.

On October 1, the Navy officially began transitioning from its legacy systems to the new Navy ERP system for its first customer, NAVAIR. The lengthy task involved loading more than 12 million legacy system records into the Navy ERP system. By late November, Navy ERP had finished loading the data and the complete transition to Navy ERP was on schedule to be completed in December. The completed system will serve seven NAVAIR sites, with about 16,000 users.

The next big date will come in April 2008, when SPAWAR and its five major sites go on-line with ERP. In October 2008, the effort will move into the Naval Supply Systems Command (NAVSUP), and in October 2009, the Naval Sea Systems Command (NAVSEA). Eventually 88,000 users at 121 sites are expected to be rolled into the Navy ERP.

TOP PRIORITIES

First on the priority list is to have standardized processes in the ERP system in place for financial functions, with acquisitions following. These two areas are considered the backbone of the Navy ERP, making it possible to build further on the system’s release all the way to supply chain management.

“As we bring visibility into the supply chain, anyone who has the need to know where we inventory parts will have the knowledge of where we inventory everything,” Keen said. “Getting containment around what we need to inventory and supply is a key aspect of this implementation.”

By implementing ERP, the Navy also expects to enjoy a benefit of huge amounts of savings. For one, a business case analysis of the program indicated that the Navy could save nearly four times the cost of implementing the program. This is based on improvements to its supply chain as well as the elimination of legacy IT systems.

“We are very confident about our four-to- one ratio,” Keen stated. “When we roll a solution out, we standardize the processes around financial management, acquisition management and work force management. With that we eliminate a lot of legacy applications.” When the labor part of the equation is factored in, the benefit gains could become as high as eight to one.

But implementing the Navy ERP has huge challenges. The biggest is data conversion. “Converting data from a myriad of legacy systems is what makes the public sector unique,” Keen suggested. “The private sector does not have nearly the amount of data.” The way in which each data source related to others outside its own realm was not an issue under previous data legacy systems. But it has to be identified and understood in order to accurately bring the data into the Navy ERP. Plus, each command has its own set of issues.

“It’s very difficult because once it’s entirely integrated, you have to make sure all the various pieces of information are properly connected,” she explained. “We need to make sure data comes in properly so that those touch points are in the system.” Fortunately, few errors are made, and if data ends up in the wrong place, the SAP software has multiple methods in which to validate it. Plus, the Navy Financial Management Office and Defense Finance and Accounting Service assist with validations and data auditing.

“This gives us the confidence that we have coded the system properly,” she added. It’s a huge task, but the good news is that the Navy ERP team is seeing the light at the end of the tunnel with NAVAIR. “They have worked very hard with us and we have a good success there. Now we are activity working hard with SPAWAR,” Keen commented.

TRANSITION AND TRAINING

In addition to issues surrounding data conversion, commands may find it difficult to understand Navy ERP’s purpose, given the wide variety of systems used in the past to manage multiple resources. Consequently, officials acknowledge, the transition to the new system has the potential of spawning anxiety among Navy employees.

To ensure a smooth transition, the Navy ERP team is already working with commanders at SPAWAR and NAVSUP to make certain they clearly understand what processes and functions are going to be covered under the Navy ERP.

“They were then able to determine who in their work force is a resident expert in a functional area,” Keen remarked. “NAVAIR did a great job of identifying those people they view as functional experts and leaders. We are very dependent on engaging leadership and key individuals to have work force trust.”

By identifying these individuals, the Navy ERP team can train these employees to become the command’s Navy ERP trainer. These individuals, in turn, train the command. “We spent time with them on how to be a trainer,” Keen said. “This gives them the ability to continue the training, train new employees and offer refresher training, if necessary. This really needs to be a capability that resides inside the command.”

Some Navy ERP training is Web-based, particularly where training involves functions dealing with time and attendance.

Financial managers, on the other hand, need more detailed training that goes beyond that which can be provided over the Internet. In these cases, training is instructor lead. “SAP is our product vendor. They are very interested in us because we are implementing a public sector version of their software,” Keen remarked. “They are working very close with us on ensuring it meets our needs. Two primary integrators—IBM and Bearing Point—are also assisting the Navy ERP team with implementing the software. Most trainers are from those contractors, and we work with them everyday.”

Overall, training is well received since everyone involved understands the purpose.

“This kind of business change to better support the warfighters is something with which people truly resonate,” Keen said. “It makes us a much more effective and efficient Navy in terms of our mission and supporting our war fighters. When we combine those objectives, while simultaneously upgrading our applications technology and our computer systems, we believe we will receive exponentially greater benefits.” ♦

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