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Boosting Performance In Public-Sector IT:
An Interview With A U.S. Defense Department Agency Director
David Fisher talks about his experiences after he went from the private sector to the biggest organization in the U.S. government.
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This article was originally published by The McKinsey Quarterly, July 2008.
By James M. Kaplan and Kreg Nichols
July 2008
Public-sector entities, like many commercial ones, are increasingly undertaking large transformation programs to streamline and improve their core operations. Nowhere is this task more challenging than in the US Department of Defense (DoD), which is committed to transforming its business practices to support faster and more agile operations. This multiyear mission will touch all aspects of the DoD, which has annual net operating costs exceeding $620 billion-including more than $30 billion for technology-2.9 million people, and a supply chain involving 5.2 million items.
In 2005, the DoD established the Business Transformation Agency (BTA) to help guide transformation efforts throughout the department. The BTA's responsibilities include deploying enterprise IT systems, publishing the Business Enterprise Architecture, and helping to carry out investment decisions. The agency, for example, oversees programs that manage pay and travel for the armed services, makes proposals to organizations such as the army and the navy (called "components" inside the Pentagon) about how they can transform themselves most effectively, and encourages standardization throughout the department.
Few people have as good a position to reflect upon the DoD's transformation as David Fisher, the BTA's first official director. Fisher joined the DoD from Silicon Valley, where as a consultant he helped private-sector companies to implement large enterprise systems. As a special assistant to the deputy undersecretary of defense for financial management, Fisher helped guide an enterprise-level business transformation and served on the team that launched the BTA. McKinsey's James Kaplan and Kreg Nichols met with him in his office, in Arlington, Virginia, near Washington, DC, to discuss the differences between public- and private-sector transformations, as well as what he has learned about managing megaprojects.
David Fisher
Vital Statistics
Born in 1965, in San Francisco, California
Education
Graduated with BA in communication in 1987 from Stanford University
Earned MBA in 1998 from Leavey School of Business, Santa Clara University
Career highlights
Department of Defense
Director of Business Transformation Agency (2006-present)
Director, Transformation Planning and Performance (2005-06)
BearingPoint
Managing director (2000-05)
Fast Factsbr />
Author of Optimize Now (or else!): How to Leverage Processes and Information to Achieve Enterprise Optimization (and Avoid Enterprise Extinction)
Speaker on business process optimization at conferences
The Quarterly: Coming from Silicon Valley, how similar do you think the public and private sectors are?
David Fisher: While the mission may be different, many of the business challenges are the same-for example, tracking supply chains or making certain that people are paid correctly and on time. But the public sector differs in some significant ways. For example, the scale is very different. The size and scope of the Department of Defense are challenging. The best way to think about our size is to take a look at our budget. In all, last year we had gross costs of over $600 billion, more than the sum of the revenues of, say, Wal-Mart, GE, and IBM. It's enormous, and there's nothing comparable to it in the private sector.
Also, our leadership changes regularly-at least every eight years, when presidential administrations turn over, and generally more often. This is a challenge when you consider that huge organizations in the public and private sectors work at transformations for a long time, sometimes up to ten years, before really starting to reap the benefits. Paul Brinkley, the deputy undersecretary of defense for business transformation, reminds us that IBM was undergoing transformation for ten years before the company really started to reap the benefits of overhauling the supply chain, for example. Even in the best situations, transformations take a long time to accomplish. We look to commercial business for an indicative timeline, but you'd have to combine four or five of the Fortune 10 to get the scale of the DoD.
The Quarterly: What have you been able to use from your commercial-sector experience?
David Fisher: My experience working with large companies helped prepare me for this type of role by giving me a willingness to buck the cultural trend and to suggest new ways of doing business. The BTA has been trying to apply the best practices from the commercial world, especially about how we govern and manage IT investments. If there are processes that we can streamline to help programs deliver capabilities faster, without getting bogged down in some of the administrative activities, we try to do that.
This can be hard to do in a complex, hierarchical environment like the Department of Defense. Fortunately, many people around me, who have more experience within the government culture, have proved to be tremendously valuable at identifying constraints we face in public projects-constraints that just wouldn't be there in the private sector.
The department has been trying to modernize the way it does business for a long time, and we still have a long way to go. Every administration tries, and I'm sure we make some progress each time. But on the whole, we're not where we want to be-or where we need to be. We want to build on the good work that's been done before us, but we also need to question previous actions that weren't successful and to offer new solutions.
The Quarterly: What are the goals of your transformation efforts?
David Fisher: Our overall objective is to guide business transformation efforts at the enterprise level of the Department of Defense in order to improve the DoD's ability to perform its mission. We do that sometimes directly, sometimes indirectly. The BTA has a combination of operational and technical roles to play-for example, we manage the systems that handle travel and payroll for about 1.5 million employees of the DoD. But a big part of our role is to identify skill sets that are scattered throughout the DoD and unite them so that its components can work better together. For example, we bring the functional people and the technical people together so that a set of data standards affecting multiple areas can be agreed on.
Successful coordination among the components doesn't come from exercising authority but rather from exerting influence. People in the components don't have to open the door to us, and I'm not empowered to make them open the door. But if I can demonstrate value, they're going to open the door to me, whether I'm empowered or not. It's all about adding value. There are certain things that we have authority for, but even in an environment where you have authority, your authority will only carry you so far in the effort to move things forward in a positive direction.
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