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Making the Most of Leaner Budgets in Challenging Times
Agencies across the defense and intelligence communities face budget austerity challenges. In 2009, then-Defense Secretary Robert Gates told the U.S. Senate Armed Services Committee; “The spigot of defense funding opened by 9/11 is closing.” And in June 2011 testimony to the U.S. Armed Services Committee, Defense Secretary nominee Leon Panetta made clear that the spigot has closed. Yet the demands on the US military are far from showing any signs of abating.
It is possible to maintain and improve current levels of performance amid growing financial challenges, changing mission demands and aging equipment. Through careful examination of customer mission, goals and priorities, defense and intelligence agencies can identify the ends, ways, means and risks to be addressed as they move forward.
Military and intelligence organizations must continue to update their strategies as they move past a period of (often successful) ad hoc adaptation to address the challenges of the emerging world. These organizations have had to keep up with unprecedented demands in the years since 9/11. The result has been significant growth under loose budget controls.
Now, with dramatically tightened funding and an absence of Global War on Terror supplementals, these groups need to refocus their priorities, according to key customer demands, and take a refreshed look at their goals:
Organizational—The driving force behind workforce planning and skill development needs to be the customer. Government is historically a service-based industry. Therefore, as organizations shift to a customer delivery model, their workforce must be focused on deliberately delivering upon customers’ greatest needs and preferences.Acquiring information related to customer behaviors, preferences and satisfaction will enable employees and leadership to consistently set as well as meet customer expectations. This goes a step further as organizations must generate trust in their ability to prioritize—to aid future transactions that remove redundancies and gain efficiencies.Accenture’s Global Consumer Survey in 2010 reiterates that a “one-size-fits- all approach does not enable delivery of successful customer service,” and that “trust is emerging as one of the consumer drivers.”
Technological—Through customer segmentation, organizations can deliver results that customers value most. Organizations must collaborate and deliver solutions that reflect a deliberate customer experience. Improved interactions are directly related to improved cost of service.Specifically, agencies must develop the technological means to allow greater information sharing, collaboration and efficiency—including cloud computing and data centers—and reduce redundant IT spend.
Operational—To achieve operational excellence, agencies must prioritize areas that align with high customer demand. Conversely, they must divest or outsource areas that are low in customer demand. Increasing efficiency and driving delivery comes from understanding, relating to and living the customer experience.
Military and intelligence agencies can apply the thought leadership and best practices from the public, private and nonprofit sectors. These lessons can be used to implement services and technology solutions that directly target customers’ evolving needs across the spectrum of process, technology and human capital—even in the face of shrinking budgets.
Applying proven practices from the private sector will position military and intelligence organizations for outcomes, which may include:
Improved focus on customer needs to target activities toward those that contribute the most to mission success.
Strategic cost reduction or redirection efforts that can result in rapid, deep cost savings without sacrificing effectiveness.
Aligned organizations and streamlined processes to eliminate waste and add greater value to the mission.
Rationalized contractor relationships to eliminate waste and encourage effectiveness.
Among the most important priorities for organizations to achieve their goals is cost efficiency. Drawing on our work with such diverse organizations as the U.S. Army and the New York Metropolitan Transportation Authority, Accenture recommends five key cost management principles:
Rationalize—Eliminating redundant processes, functions and non-critical projects and optimizing cost structure through lower total asset base can save organizations 15 to 25 percent of discretionary IT spend within three to six months.
Consolidate—Merging similar functions creates critical mass, improves productivity and optimizes operational costs by combining like functions and improving operating efficiencies. For example, by consolidating service, operations and data centers, agencies can lower cost-to-serve by 10 to 25 percent in 18 to 24 months.
Automate—Automating manual processes can increase accuracy, improve speed of execution and decrease costs. By reducing direct and administrative travel spend through telework and “hotelling,” for example, agencies can reduce their administrative and travel spend by 5 to 15 percent within two to 12 months.In addition, transferring customer IT requests from Tier 1 to Tier 0 (Self Service) response can produce cost savings for agencies. A crucial aspect of automating processes is to maintain consistency in delivering a positive customer experience over time. Any decrease in customers trust of the automated solutions ultimately affects customer satisfaction. When the automation consistently enables the capabilities that customers value, satisfaction is strengthened and loyalty grows.
Simplify—Agencies should reduce system, process and organizational complexity, lowering costs through a leaner, more efficient organization. Streamlining agency programs through rapid process improvements can yield 10 to 20 percent cost-to-serve savings within six to 12 months.
Source—“Rightsize” spending on goods and services, reducing inventory costs through strategic sourcing and increasing buying power through enterprise-level licensing. Reducing outside spend on goods and services can lower sourcing costs 5 to 15 percent.
The Accenture differenceAs a proven innovator, Accenture has worked with clients to develop new ways of managing and applying technology throughout the marketplace. We apply lessons proven in the private sector, helping the defense and intelligence communities achieve their goals and implement solutions rapidly and efficiently. We help them maximize limited resources and reap the greatest value from new ideas and initiatives. Our deep experience in the intelligence and military community helps us systematically modify and adapt private sector approaches to address the unique imperatives of the national security mission set.
When it comes to operational excellence, Accenture can help agencies through proven Lean Six Sigma methods. We were instrumental in merging Lean and Six Sigma and bringing it to the federal government to gain efficiencies and reduce waste and redundancies. Our strategies can result in 20 to 40 percent cost reductions.
Accenture has a proven track record in the private and public sectors. We helped the Office of the Assistant Secretary of the Army for Acquisition, Logistics and Technology realize $77 million in financial benefits—a return of $77 for every dollar it invested in our Lean Six Sigma program.And using a rapid procurement initiative to improve sourcing, we also helped New York’s Metropolitan Transportation Authority negotiate more competitive terms and amend contracts to yield immediate savings of nearly $40 million, including $18 million in existing contracts.
January 17, 2012
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