VA IT Realignment Continues
CONTINUED FOCUS ON CRITICAL SUCCESS FACTORS IS ESSENTIAL TO ACHIEVING INFORMATION TECHNOLOGY REALIGNMENT.
The Department of Veterans Affairs’ mission is to promote the health, welfare and dignity of all veterans in recognition of their service to the nation by ensuring they receive medical care, benefits, social support and lasting memorials. Its three major components, the Veterans Benefits Administration (VBA), the Veterans Health Administration (VHA) and the National Cemetery Administration are primarily responsible for carrying out this mission. Over time, the use of information technology has become crucial to the department’s effort to provide benefits and services, with its budget for IT exceeding $1 billion annually.
In reporting on VA’s IT management over the past several years, the Government Accountability Office (GAO) has highlighted challenges the department has faced in achieving its “One VA” vision, including that information systems and services were highly decentralized and that its administrations controlled a majority of the IT budget. For example, according to an October 2005 memorandum from the former CIO to the Secretary of Veterans Affairs, the CIO had direct control over only 3 percent of the department’s IT budget and 6 percent of the department’s IT personnel. In addition, in the department’s fiscal year 2006 IT budget request, the Veterans Health Administration was identified to receive 88 percent of the requested funding, while the department was identified to receive only 4 percent. The GAO had previously pointed out that, given the department’s large IT funding and decentralized management structure, it was crucial for the department CIO to ensure that well-established and integrated processes for leading, managing and controlling investments were followed throughout the department.
Further, a contractor’s assessment of VA’s IT organizational alignment, issued in February 2005, noted the lack of control for how and when money is spent. The assessment found that project managers within the administrations had the ability to shift money to support individual projects.
CENTRALIZED IT ORGANIZATION
In response to the challenges, the department officially began its effort to provide the CIO with greater authority over IT in October 2005. At that time, the Secretary issued an executive decision memorandum granting approval for the development of a new IT management structure for the department. According to VA, its goals in moving to centralized management are to provide the department better oversight over the standardization, compatibility and interoperability of IT systems, as well as better overall fiscal discipline for the budget.
By July 2006, the department’s realignment contractor began work to assist with the realignment effort. The Secretary approved the department’s new organization structure in February 2007. The new structure includes the assistant secretary for information and technology (who serves as VA’s CIO), the CIO’s principle deputy assistant secretary (DAS), and five deputy assistant secretaries. [Editor’s note: See the interview with Robert Howard, the VA’s CIO in MMT 11.3 earlier this year for a complete description of the new organization.]
IT MANAGEMENT PROCESSES
As the foundation for its realignment, VA plans to implement improved management processes in five key areas: enterprise management, business management, business application management, infrastructure and service support. These processes were recommended by the department’s realignment contractor and were based on industry best practices. According to the contractor, they are a key component of the realignment effort as the Office of Information and Technology moves to a processbased organization. By implementing these improved processes, VA expects to correct deficiencies it has encountered as a result of its decentralized management approach. Proper implementation should result in institutionalizing best management practices that will be sustained regardless of future leadership changes at the department. According to the contractor, with a system of defined processes, the Office of Information and Technology could quickly and accurately change the way IT supports the department. The contractor also noted that failure to include such processes in the realignment would introduce the risk that any progress in completing the realignment would be the result of trial and error.
CRITICAL SUCCESS FACTORS
The GAO has previously reported on key factors that are needed in order to successfully transform an organization to be more results-oriented, customer-focused and collaborative in nature. We reported that conducting large-scale change management initiatives are not simple endeavors and require the concentrated efforts of both leadership and employees to realize intended synergies and to accomplish new organizational goals. We also noted that there are a number of key practices that can serve as the basis for federal agencies to transform their cultures in response to governance challenges, such as those that an organization like VA might face when transforming to a centralized IT management structure.
Among the significant factors identified as critical for ensuring the success of VA’s move to centralized management are:
• ensuring commitment from top leadership.
• establishing a governance structure to manage resources.
• linking the IT strategic plan to the organization strategic plan.
• using work force strategic management to identify proper roles for all employees.
• communicating change to all stakeholders.
• dedicating an implementation team to manage change.
VA’s plans for realigning the management of its IT program include elements of several of the six factors that the GAO identified as critical to the department’s implementation of a centralized management structure (see table 1). Additional departmental actions could increase assurance that the realignment will be completed successfully and without further action the risk to successfully centralizing the IT operations increases, and the longterm benefits of the realignment may not be realized.
It is important that an organization’s top leadership supports and sustains major change initiatives through to completion. The department has addressed this critical success factor through multiple actions. For example, in February 2007, the Secretary approved a new organization structure for centralized IT management. Another example came through approval of the transfer of IT personnel to the Office of Information and Technology. Previously these personnel had been assigned to the administrations (e.g., VHA and VBA) and staff offices. The movement of these personnel should enable the CIO to improve control over IT development and operations in the department.
A governance structure should ensure suitable stakeholder participation in the change initiative and reflect clearly defined stakeholder roles, responsibilities, and decision-making authority.
When an organization is considering a major change initiative, it must ensure there is an established governance structure in place that provides for the effective use and oversight of resources during and after the change. The GAO has reported that organizations need to establish a governance structure that represents the entire stakeholder community and reflects clearly defined roles, responsibilities and decision-making authority among the different levels of leadership. VA has partially addressed this critical success factor. In particular, while the governance plan for centralized management has been approved by the Secretary, the department has not yet established boards necessary to provide governance over the centralized structure and processes that are being developed.
An IT strategic plan should define, in cooperation with the relevant stakeholders, how IT will contribute to the enterprise’s strategic objectives and related costs and risks. Industry documentation further notes that planning helps ensure that leadership understands the link between an organization’s direction and how IT is aligned to meet the organization’s goals. However, VA has not addressed this critical success factor because it has not yet updated an IT strategic plan to reflect the goals of the new centralized structure.
According to department officials, a draft version of an updated IT strategic plan was expected by June 30, 2007. Additionally, this plan is expected to support the department’s strategic plan, which includes the goals of each of the department’s administrations. Until the IT strategic plan is updated, the department will have neither a clear link between the department’s strategic plan and the IT strategic plan nor assurance that the realignment will meet the goals in these plans.
The GAO also reported that it is important to establish an organizationwide knowledge and skills inventory to exchange knowledge among transforming organizations. Valuable information resides in the organizational components of transformations, and when these components are combined, these intellectual assets are extremely powerful and beneficial to employees and stakeholders. Knowledge and skills inventories not only capture the intellectual assets of the new organization but also signal to employees that their particular expertise is valued by the organization.
The department has taken steps to partially address this critical success factor. As stated previously, the department has aligned almost all of its IT workforce under the CIO, having transferred approximately 6,000 personnel from the administrations to the CIO’s office. In addition, the department has identified the responsibilities for work force strategic management within its new organizational structure—the assistant secretary for information technology has responsibility for work force planning; the deputy assistant secretary for information technology resource management has responsibility for ensuring the alignment of IT work force skills with IT goals and objectives; and the Human Resources and Training Management Office has responsibility for developing and executing the human capital plan that supports the IT strategy.
The GAO reported in 2003 that a dedicated implementation team that is responsible for the day-to-day management of a major change initiative is critical to ensure that the project receives the focused, full-time attention needed to be sustained and successful. Specifically, the implementation team is important to ensuring that various change initiatives are implemented in a coherent and integrated way. The department has not addressed this critical success factor because it has not dedicated an implementation team to manage the realignment effort and track its progress.
According to the Director of the Realignment Office, the department has developed performance metrics to measure progress on the implementation of the new management processes. However, metrics have not yet been developed to assess progress in implementing key milestones of the realignment. He noted that the department planned to develop performance metrics for tracking the progress of the realignment and that these metrics were to be finalized by mid-June 2007.
Also, the department expects to implement the new IT management processes incrementally by July 2008, but it has missed key implementation dates for these processes. Implementation of the first 9 of 36 processes was to begin in March 2007; however, as of early May 2007, the department had only begun pilot testing two of the new processes.
As one measure to establish CIO control within the new organization, two deputy assistant secretaries under the CIO are expected to have responsibility for managing and controlling different aspects of the IT budget. Specifically, the deputy assistant secretary for IT enterprise strategy, policy and programs is to have responsibility for the creation, implementation and control of an integrated IT portfolio and for the design, development, and implementation of a portfolio management process. In addition, the deputy assistant secretary for information technology resource management is to have responsibility for managing budget execution and compliance, including tracking actual expenditures against the budget.
However, as of May 2007, the deputy assistant secretary positions had been filled with acting officials, and department officials could not provide a date for when permanent appointees would be named to these positions. In addition, while these offices had been identified in the new organization structure, VA had not determined when personnel would be staffed to the offices and would assume their budget oversight responsibilities. Until these positions are filled with permanent appointees, the department cannot ensure their effectiveness in managing and controlling the IT budget.
As a second measure, the IT governance plan, which was approved by the Secretary in April 2007, describes VA’s approach to enhancing governance, including management of the IT budget. According to the plan, two governance boards are to have responsibility for overseeing the development and approval of the budget and monitoring budget execution:
• The Business Needs and Investment Board is to provide departmentwide investment control for the IT programs. Its responsibilities are to include reviewing investments, formulating and approving budgets, determining the source and amount of funding for IT projects and monitoring budget execution.
• The IT Leadership Board is to develop and approve the departmentwide IT budget based on information submitted to it by the Business Needs and Investment Board. This board is to be chaired by the CIO, and membership is to include key executive leaders in the Office of Information and Technology, administrations, and staff offices.
In addition to these two governance boards, the Strategic Management Council is to be responsible for making decisions on the overall level of IT spending and priorities for the department and for approving budgets.
As of early May 2007, however, VA officials stated that neither the Business Needs and Investment Board nor the IT Leadership Board had been established. VA officials also could not provide a date for when they would be set up. Until the governance boards are in place with the Strategic Management Council, the department will lack a complete governance model for the new organization.
As a third measure to establish the CIO’s control over the IT budget, VA plans to implement processes that specifically address portfolio management and financial management. As noted earlier in this report, it is crucial for the CIO to ensure that well-established and integrated processes are in place for leading, managing and controlling VA’s IT resources. These two processes represent how the CIO organization intends to carry out its responsibilities for the development and control of the budget.
While department officials and realignment documents identified three measures of the realignment that are to provide the CIO with control over the IT budget, VA has yet to identify how and when this control will be achieved. Specifically, the department has not yet staffed with permanent appointees the two deputy assistant secretary positions that will have responsibility for IT budget management and control, established the two governance boards that are to have IT budget oversight responsibility, or developed a schedule for implementation of the IT portfolio management and financial management processes.
RECOMMENDATIONS
To ensure that VA’s IT realignment is successfully accomplished, the GAO has recommended the following six actions:
• Develop detailed IT governance process descriptions that address how the department will manage IT resources within the centralized organization.
• Establish a knowledge and skills inventory to determine what skills are available in order to decide the proper roles for all employees transferred to the new organization.
• Assess personnel requirements under the centralized management model, including career paths and appropriate training requirements.
• Fully staff all offices necessary for supporting the new organizational structure.
• Dedicate an implementation team responsible for change management processes throughout the transformation to a centralized IT structure.
• Expedite the development of performance metrics to track the progress of the realignment.
In addition, to ensure that centralized control of the IT budget is established, the GAO recommended the following three actions:
• Establish milestones to permanently staff the deputy assistant secretary position for IT enterprise strategy, policy and programs and the deputy assistant secretary position for IT resource management.
• Commit to a date for establishing the Business Needs and Investment Board and the IT Leadership Board.
• Establish a schedule for the implementation of the IT portfolio management and financial management processes.
In providing written comments to a draft of the GAO findings, the deputy secretary of Veterans Affairs agreed with the report’s findings and generally concurred with the recommendations. The comments described actions planned that respond to the recommendations: for example, developing and implementing an IT career management program that includes a knowledge and skills inventory for Office of Information and Technology employees and fully implementing the IT governance plan by October 2007.
In addition, the comments provided further information on the department’s actions taken since receiving the draft report, such as the establishment of the Business Needs and Investment Board that is a key component of the IT governance process; establishment of offices responsible for ensuring compliance with IT policies, directives and core IT processes; and filling a senior executive position in the Office of Information and Technology. If the actions that the department has planned to undertake are properly implemented, they should help ensure that the IT realignment is successfully accomplished.
Although the department concurred with all of the GAO recommendations, it provided an alternative approach to dedicating an implementation team responsible for change management processes throughout the transformation to a centralized IT structure. Its written comments indicated that change management would be the responsibility of two organizations in the new structure. The GAO reaffirmed its view that a dedicated implementation team, responsible for day-to-day management of major change initiatives, is crucial to VA’s ability to ensure that the IT realignment is fully and successfully implemented in a coherent, integrated and coordinated manner. ♦