DOD tries a new risk strategy

Critics say DOD’s chosen methodology lacks a portfolio management perspective

DOD formalizes risk management

The Defense Department’s Business Transformation Agency tested Enterprise Risk Assessment Methodology with nine programs in development.

The Defense Integrated Military Human Resources System.

The General Fund Enterprise Business System.

The Integrated Data Environment/Global Transportation Network Convergence.

The Defense Enterprise Accounting and Management System.

The Expeditionary Combat Support System .

The Global Combat Support System (GCSS)-Army.

The GCSS-Marine Corps.

The Navy Enterprise Resource Planning system.

The Logistics Modernization Program.

— Peter Buxbaum

Last year, the Defense Department’s Business Transformation Agency examined the military’s record of implementing large automated information systems and found it rife with failure.

In response, BTA decided to test-drive a risk-mitigation methodology that has a proven track record in the commercial world. Its critics, however, say its effectiveness is diminished because it does not use portfolio management techniques.

BTA selected the Enterprise Risk Assessment Methodology (ERAM), which it derived from a commercial risk-management approach that uses cross-functional teams to interview key program employees.

Their job is to discover unnecessary program risks and issue risk-mitigation recommendations. BTA officials said they will use the methodology to find out why DOD is not realizing the capabilities it expects from commercial information technology.

“The main purpose of ERAM is to figure out what is preventing us from realizing capabilities,” said Paul Ketrick, BTA’s director of investment management.

BTA is testing ERAM with nine programs. Officials chose those programs because they are still in the early stages of development, which will make it easier to change course, if necessary, Ketrick said.

The teams develop a risk hypothesis before interviewing project leaders. “The hypothesis often changes as the interviews progress,” Ketrick said. “We often go down paths we never expected.”

ERAM teams interview dozens of people to examine potential risks related to the contract, program strategy and requirements, technical factors, people, processes, and external factors. The objective, Ketrick said, is to get a holistic view of potential program risks.

Once the ERAM team completes its interviews, the group drafts risk-mitigation recommendations and discusses them with program managers before they become official.

“The program manager takes responsibility for risk mitigation,” Ketrick said. “There may be some situations when mitigation is not advisable, such as when there is an immediate warfighter need. That’s the program manager’s call.”

DOD expects to expand the use of ERAM to all new major business information systems. The department also is preparing to implement a business capability life cycle assessment program that will examine relationships and interfaces among information systems.

ERAM’s major weakness is that is not a portfolio management tool, government auditors say. The Government Accountability Office has recommended that DOD improve its management of information systems by evaluating risk across a portfolio of capabilities.

ERAM is not a panacea, said Randolph Hite, director of IT architecture and systems at GAO. “Efforts are now under way to better understand the nature and impact of program risks through the application of ERAM,” he said. “ERAM can be valuable in understanding and addressing program risks, but this tool is program-specific and not portfolio-focused.”

Ketrick agreed that ERAM lacks a portfolio view. DOD will try to address Hite’s critique of ERAM by implementing assessments of business capability life cycles (BCL), Ketrick said. “BCL will address how systems fit into the context of the enterprise,” he added. BTA will launch BCL next month.

Although ERAM teams do not have the authority to enforce their risk mitigation recommendations, there can be “dire consequences if someone doesn’t want to follow them,” Ketrick said.

The DOD Investment Review Board may find it necessary to implement a risk-mitigation plan and cut off funding to any program that refuses to adopt a mitigation plan. DOD officials also could suspend milestone development decisions or determine that the program is not compliant with the department’s enterprise architecture.

“If the program spends another dime under those circumstances,” Ketrick said, “someone will go to jail.”

Buxbaum is a freelance writer in Bethesda, Md.

About the Author

Peter Buxbaum is a special contributor to Defense Systems.

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