The Chief Financial Officers Act of 1990 was the most sweeping financial management reform legislation in 40 years when enacted. Based on private industry standards, the intent was for the government to enhance its financial management practices to include providing auditable financial statements and upgrading financial management systems.
There are efforts underway to update the 1990 act. A bipartisan bill has been introduced in the Senate to improve how agencies manage and monitor funds, and to set new standards and streamline reporting under that law.
While the Army has improved, there’s a long road ahead to emulate private industry. For the Office of the Assistant Secretary of the Army for Financial Management and Comptroller, we are tasked with leading these efforts and investing in our “why.” We articulate that purpose within our vision statement: to optimally resource the Army. To accomplish this, we owe it to our soldiers, civilians and the American taxpayer to operate within a modernized Army.
Virtually every industry has shifted operations to meet the demands of the information age. The Army is no different. This is why our current modernization campaign is the greatest business transformation to date. With billions diverted during the Army’s “night court” sessions to invest in our future, there is plenty to gain from our transformation—and that opportunity is now.
If we are to optimally resource the Army, and operate at the same efficiency as industry, it follows that the Army’s top finance position should reflect the fully realized potential of the private-sector chief financial officer. As the top Army finance official, I intend to highlight some of the ways CFOs are critical to the success of an organization, and share how the Office of the Assistant Secretary of the Army for Financial Management and Comptroller is making progress toward alignment with private industry practices.
Industry experts agree that the role of the CFO has evolved with new technology and the changing role of finance. It almost goes without saying that financial management for a corporation is much more than asset inventories and balance sheets. Finance is at the core of any organization.
Most CFOs in private industry have a holistic and strategic view of the business, which includes recommending optimal ways to invest in innovation, driving technology transformation, implementing data-driven strategies, and providing input on enterprisewide talent management. The CFO is typically the No. 3 position and reports directly to the CEO in a private firm. They serve as a critical strategic partner for an organization. CFOs drive the strategy laid out by the CEO and ensure that the firm’s finances are in alignment with desired outcomes.
For the CFO of the Army, this translates into providing the secretary of the Army with recommendations on financial matters. It means providing leaders at every echelon with current, complete and accurate financial management information to aid programmatic decision-making. In sum, the role should encompass the same holistic and strategic view of a private industry counterpart.
Traditionally, the focus of the top Army finance position has been on stewardship and financial operations. This perspective of a CFO limits the role to a transactional level, detracting from the value the position adds to the strategic vision of an organization and the secretary’s strategy execution.
When we look at financial management from a more encompassing perspective, it becomes clear that our governmental practices are inconsistent with private industry practices.
Military finance tends to focus on outcomes that are simply the measure of success for how well we manage our repeatable business practices. For example, auditability is the byproduct of accountability. It is not an end state. When we hold ourselves accountable to results that inspire greater efficiencies, it will ultimately lead to an increase in purchasing power. This provides the Army with the required resources to fight and win the nation’s wars, and it provides the best return on investment to the American taxpayer.
To achieve greater efficiencies, a CFO must have a multidimensional approach to solving problems beyond traditional finance operations. A CFO looks at operations from the perspectives of people, process and technology. Improving repeatable business processes is just one piece of the puzzle—it must be done in concert with technology transformation and talent management strategies.
The long-term goal for a CFO is not to make incremental improvements to processes. It is, instead, to set the right conditions, which cultivate an adaptable environment to evolving challenges far into the future.
Technology as Catalyst
A private-sector CFO partners with the CEO, chief operating officer and chief information officer to drive business transformation. This includes disruptions to information technology infrastructure. To be effective, the CFO must be future oriented and investment minded, constantly evaluating threats and opportunities that technology changes will bring.
The Army’s enterprise resource planning platforms as we know them today have fallen far behind what we see in the private sector. The General Fund Enterprise Business System, the Army’s largest enterprise resource planning system, was developed around mid-2005, and we had competing priorities. At a time when we needed to rapidly resource the Army for combat operations, developing sustainable business practices for financial management systems was not a top priority. We ended up with 30-year-old business processes that are now in a 15-year-old business system. Those business practices will become obsolete in the future, which means we must change the way we work today.
To meet these challenges, the Office of the Assistant Secretary of the Army for Financial Management and Comptroller is driving a major effort to revamp how the Army does business by 2027. Our office, in partnership with the Office of Business Transformation, is leading an Enterprise Business System Multi-Functional Capabilities Team, comprising representatives from the Business Mission Area Domains of finance, logistics, acquisition and human resources. Our mission is to forge a way ahead that will benefit soldiers and civilians at every level.
With a coalition of qualified experts and stakeholders, we are setting the right foundation with data-driven strategies. Our collaboration on the development of a business system will streamline existing platforms and meet the needs of each business mission area. It challenges conventional methods of how we have approached business before. Modernization is a team effort, and a multifunctional approach to addressing the needs of the Army has proven effective.
CFOs do not operate in isolation, but in collaboration with multiple lines of business to achieve mission outcomes. For modernizing the Army’s enterprise resource planning systems, we have a shared mission and must bridge the gaps where needed to guarantee success.
Promoting No. 1 Priority
Talent management is an important area for CFOs, as training, recruitment and retention are cost-driven endeavors. For the Army, we are a people-first institution, and finance has a profound impact on our readiness.
The Office of the Assistant Secretary of the Army for Financial Management and Comptroller has focused on building our bench with technical experts and data scientists to help solve persistent problems within the finance and comptroller field. Our Robotic Process Automation team has helped commands deploy automations that free their personnel from redundant, labor-intensive tasks, which allows them to focus more on meaningful analysis. The future of finance is about promoting the workforce to engage in higher-level problem-solving that translates into more efficient and effective resourcing.
Similar to how a CFO would concern themselves with user behavior in the private sector, it is important that we always consider the needs of the Army’s No. 1 priority: people. Our office continues to develop software solutions within finance and accounting that put users first by involving them in the development process, and by incorporating their feedback.
Overall, transforming Army finance benefits soldiers and civilians, and by fully realizing the role of the CFO, we will be in a better position to meet the challenges of tomorrow’s battlefield, from technology transformation to talent management and beyond.
It is thought that the CFO Act of 1990 has yet to be fully implemented by the 24 departments and agencies to which it applies, but the driver behind why lies in the lack of authority of the CFO in departments like the Army. If new legislation becomes law, it should ensure the CFO position emulates that of private industry and gives the CFO the necessary authority to both comply with law and serve as a critical strategic partner for the organization.