    United States Postal Service: Opportunities to Strengthen IT
    Investment Management Capabilities (15-OCT-02, GAO-03-3).

    The U.S. Postal Service invests hundreds of millions of dollars
    in information technology (IT) each year to support its mission
    of providing prompt, reliable, and efficient mail service to all
    areas of the country. It must support these operations through
    the revenues it earns for its services. Growing operating
    expenses and capital needs in the face of reduced revenues
    highlight the need for the Postal Service to invest its IT
    dollars wisely. Accordingly, the Senate Committee on Governmental
    Affairs and its Subcommittee on International Security,
    Proliferation, and Federal Services asked GAO to evaluate how
    well the Postal Service manages its IT investments.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-03-3
        ACCNO:   A05283
      TITLE:     United States Postal Service: Opportunities to Strengthen
    IT Investment Management Capabilities
         DATE:   10/15/2002
      SUBJECT:   Financial management
    	     Information technology
    	     Investment planning
    	     Investments
    	     Postal service
    	     Best practices

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    GAO-03-3

                                           A

    Report to Congressional Committees

    October 2002 UNITED STATES POSTAL SERVICE Opportunities to Strengthen IT
    Investment Management Capabilities

    GAO- 03- 3

    Letter 1 Executive Summary 2

    Purpose 2 Background 2 Results in Brief 5 Principal Findings 6
    Recommendations for Executive Action 9 Agency Comments and Our Evaluation
    10

    Chapter 1 11

    Introduction Postal Service*s Mission and Organization 11

    Postal Service*s Information Technology Environment 14 Weaknesses in the
    Postal Service*s Investment Management Process 15

    Postal Service*s Approach to Investment Management 16 IT Investment
    Management Framework 23 Objective, Scope, and Methodology 26

    Chapter 2 28

    Postal Service Boards Are Established but Operating without a Complete
    Process

    Guide 29 Executes Most Key

    CTO Organization Oversees IT Investments 32 Foundational Practices

    IT Project and System Information Is Maintained to Support Project
    Management 36 Processes Ensure That IT Investments Support Business Needs
    and

    Meet User Needs 39 Structures Are in Place for Selecting IT Investment
    Proposals 40

    Chapter 3 43

    Postal Service Shows Portfolio Selection Criteria Are Defined, but Do Not
    Adequately

    Address All Factors 45 Mixed Progress in IT Investments Are Not
    Consistently Analyzed and Prioritized within Managing Its IT

    the Context of a Portfolio 47 Investments as a An IT Investment Portfolio
    Is Developed, but Project Expectations

    Are Not Routinely Revised 50 Portfolio

    Portfolio Performance Oversight Is Performed, but without Comprehensive
    Guidance 53

    Chapter 4 56

    Postal Service Has Yet Policies and Procedures Are Defined, but Post-
    Implementation Review Process Is Not Institutionalized 58

    to Implement IT Investments Are Not Evaluated from the Perspective of
    Portfolio Processes to Better

    Performance 60 Meet Strategic Goals

    Process for Managing Succession of Systems and Technology Is Not
    Established 62 Activities for Benchmarking the Investment Process Are Not

    Institutionalized 65 Potential Impacts of Leading Technologies Are Not
    Routinely

    Considered in Strategic Planning Efforts 66 Chapter 5

    70 Conclusions,

    Conclusions 70 Recommendations for Executive Action 70 Recommendations,
    Agency Comments and Our Evaluation 72 and Agency Comments

    Appendixes

    Appendix I: Postal Service Projects with Major IT Components in
    Development or Deployment 74

    Appendix II: Postal Service IT Projects That GAO Reviewed 76 Enhanced
    Security Capability Program 77 Organization Structure, Staffing and
    Management 78 Point of Service ONE System 79 Surface- Air Management
    System 79

    Appendix III: Comments from the United States Postal Service 81

    Appendix IV: GAO Contact and Staff Acknowledgments 83 GAO Contact 83
    Acknowledgments 83

    Tables Table 1: Stage Two* Critical Processes Required for Building the
    Investment Foundation 28 Table 2: Summary of Results for Stage Two
    Critical Processes and

    Key Practices 29 Table 3: IT Investment Board Operation 31 Table 4: IT
    Project Oversight 35 Table 5: IT Project and System Identification 38

    Table 6: Business Needs Identification 40 Table 7: Proposal Selection 42
    Table 8: Stage Three* Critical Processes Required for Developing a

    Complete Investment Portfolio 43 Table 9: Summary of Results for Stage
    Three Critical Processes and

    Key Practices 44 Table 10: Portfolio Selection Criteria Definition 46
    Table 11: Investment Analysis 49 Table 12: Portfolio Development 52 Table
    13: Portfolio Performance Oversight 55 Table 14: Stages Four and Five*
    Critical Processes Required for Improving the Investment Process and
    Leveraging IT for

    Strategic Outcomes 57 Table 15: Summary of Results for Stages Four and
    Five Critical Processes and Key Practices 58

    Table 16: Post- Implementation Reviews and Feedback 60 Table 17: Portfolio
    Performance Evaluation and Improvement 62 Table 18: Systems and Technology
    Succession Management 64 Table 19: Investment Process Benchmarking 66
    Table 20: IT- Driven Strategic Business Change 69 Table 21: Postal Service
    IT Projects in Development or

    Deployment 74 Table 22: Postal Service IT Projects Selected by GAO for
    Review 76 Table 23: POS ONE DARs 79

    Figures Figure 1: The Five Stages of Maturity within ITIM 5 Figure 2:
    Overview of the Organizational Structure of the Postal Service 13

    Figure 3: Capital Planning and Budgeting Cycle 19 Figure 4: Process for
    Approving Major New Projects 21 Figure 5: Project Control and Evaluation
    Process 23 Figure 6: The Five Stages of Maturity with Critical Processes
    25

    Abbreviations

    ACDCS Air Contract Data Collection System B& FA Budget and Financial
    Analysis BCS Business Case System CAPE Capital and Program Evaluation CFO
    Chief Financial Officer CIC Capital Investment Committee CIO Chief
    Information Officer CPC Capital Projects Committee CPS Corporate Planning
    System CTO Chief Technology Officer DAR Decision Analysis Report EIR
    Enterprise Information Repository ESC Enhanced Security Capability IRB
    Investment Review Board IT information technology ITIM information
    technology investment management OSS& M Organization Structure, Staffing
    and Management POS ONE Point of Service ONE PTRS Program Tracking and
    Reporting System SAMS Surface- Air Management System

    Executive Summary Purpose The United States Postal Service invests
    hundreds of millions of dollars

    each year in information technology (IT) to provide prompt, reliable, and
    efficient mail service to all areas of the country. The Postal Service is
    intended to be self- supporting from postal operations and is mandated to
    break even over time. Yet the Postal Service is currently facing a
    financial

    crisis brought about by declining revenues and growing operating expenses
    and capital needs. In April 2001, GAO designated the Postal Service*s
    transformational efforts and long- term outlook as High Risk, 1 noting
    that the Postal Service is at growing risk of not being able to continue
    its

    mission of providing the current level of universal service throughout the
    nation while maintaining reasonable rates and remaining largely
    selfsupporting through postal revenues.

    A successful method of helping to improve operational effectiveness and
    efficiency is to implement a structured process for maximizing the value
    and minimizing the risk of IT investments. GAO*s research into the
    management practices of leading organizations demonstrates that effective
    management of investments requires the use of disciplined, structured
    investment management processes. Given the Postal Service*s large
    expenditures for IT and its deteriorating financial position, the Chairmen

    and Ranking Minority Members of the Senate Committee on Governmental
    Affairs and its Subcommittee on International Security, Proliferation, and
    Federal Services requested that GAO assess the Postal Service*s IT
    investment management capabilities. In addressing this request, GAO used
    its IT Investment Management Framework 2 and assessed the Postal Service

    against the different stages of this framework. Background With nearly
    800,000 career employees, the Postal Service is the second

    largest U. S. employer compared with U. S. private sector organizations,
    with a mission that remains vital to the nation*s communication and
    commerce even in an age of overnight delivery services and electronic
    communications. It maintains an extensive infrastructure, consisting of
    over 38, 000 post offices, branches, and stations and 350 major mail 1 U.
    S. General Accounting Office, Transformation Challenges Present
    Significant Risks,

    GAO- 01- 598T (Washington, D. C.: Apr. 4, 2001). 2 U. S. General
    Accounting Office, Information Technology Investment Management: A
    Framework for Assessing and Improving Process Maturity (Exposure Draft),
    GAO/ AIMD10. 1. 23 (Washington, D. C.: May 2000).

    processing and distribution facilities. The Postal Service relies heavily
    on IT throughout its operations and management processes to run the
    machines that process and sort mail, efficiently assign long- distance
    transportation of mail to alternative surface and air carriers, support
    pointof- service terminals, collect and analyze inventory and sales
    information, process payroll and accounts payable, and perform other
    activities. Communication networks also play a vital role in linking
    together various elements of the Postal Service*s infrastructure and
    transmitting information to various locations for storage, processing, and
    analysis. For fiscal year

    2002, the Postal Service approved approximately $583 million for IT,
    including funds for both capital investments and operating expenses.

    The Postal Service has reported that it is providing customers with added
    value; improving the efficiency of operations; containing costs; fostering
    a performance- based culture; and improving management of enabling
    functions, such as financial management, purchasing, and IT. 3 The Postal
    Service has established the specific goal of obtaining organizationwide
    connectivity through IT to enable it to enhance security, add valuable

    product features, and manage its operations in real time. Based on
    research into the IT investment management practices of leading private-
    and public- sector organizations, GAO has developed an information
    technology investment management maturity (ITIM) framework. This framework
    identifies critical processes for successful IT investment organized into
    a framework of five increasingly mature stages.

    The ITIM is intended to be used both as a management tool for implementing
    these processes incrementally and as an evaluation tool for determining an
    organization*s current level of maturity. The overriding purpose of the
    framework is to encourage investment processes that increase business
    value and mission performance, reduce risk, and

    increase accountability and transparency in the decision process. This 3
    United States Postal Service, United States Postal Service Transformation
    Plan.

    (Washington, D. C.: Apr. 1, 2002).

    framework has been used in several GAO evaluations 4 and has been adopted
    by a number of agencies.

    These agencies have used ITIM for purposes ranging from self- assessment
    to redesign of their IT investment management processes. The five stages
    of the framework represent increasing levels of maturity in managing IT
    investments. Stages two, three, four, and five each build on the preceding

    one and represent steps toward achieving more stable and effective
    processes for managing IT investments. With the exception of the first
    stage* characterized by the general absence of investment management
    processes* each maturity stage consists of critical processes that must be
    implemented and institutionalized for the organization to satisfy the
    requirements of that stage and be able to advance to the next stage. These
    critical processes are further broken down into key practices* the
    specific

    tasks and conditions that must be in place for an organization to
    effectively implement the necessary critical processes. Figure 1 shows
    ITIM*s five stages of maturity.

    4 U. S. General Accounting Office, Information Technology: INS Needs to
    Strengthen Its Investment Management Capability, GAO- 01- 146 (Washington,
    D. C.: Dec. 29, 2000); U. S. General Accounting Office, Information
    Technology Management: Coast Guard Practices Can Be Improved, GAO- 01- 190
    (Washington, D. C.: Dec. 12, 2000); U. S. General Accounting Office,
    Information Technology Management: Social Security Administration
    Practices Can Be Improved, GAO- 01- 961 (Washington, D. C.: Aug. 21,
    2001); U. S. General Accounting Office, Information Technology: DLA Needs
    to Strengthen Its Investment Management Capability, GAO- 02- 314
    (Washington, D. C.: Mar. 15, 2002).

    Figure 1: The Five Stages of Maturity within ITIM Source: GAO.

    Results in Brief The Postal Service has established significant
    capabilities for managing its IT investments. It has in place numerous
    foundational practices for

    selection and control, such as a detailed review and approval process for
    new projects, tracking of project cost and schedule data, and
    identification of its business needs, and it involves users in project
    development. These stage two processes provide assurance that the projects
    selected meet the

    Service*s organizational needs and will be completed on time and within
    budget. However, the Postal Service has yet to develop comprehensive
    guidance to address all aspects of the investment management process. Such
    guidance would allow the Service to better coordinate its IT investment
    management process and ensure that the process is performed

    consistently throughout the organization. The Postal Service performs many
    of the practices that are key to a stage three level of maturity, such as
    managing a portfolio of IT investments. For example, the Service performs
    many of the activities for developing a portfolio of investments and
    overseeing these investments. However, the

    processes for annually selecting and overseeing the investment portfolio
    are not documented. Further, the Postal Service does not analyze,
    prioritize, or select its portfolio using criteria that adequately address
    cost, benefit, schedule, and risk. Accordingly, the Postal Service cannot
    ensure that it is selecting the investments that will maximize returns to
    the

    organization, taking into account the appropriate level of risk. Finally,
    the Postal Service has a number of steps to take before it has attained
    the maturity of a stage four or five organization* systematically
    improving the investment process and using IT to achieve business
    outcomes. For example, the Postal Service does not either regularly
    evaluate the performance of completed projects or have a process to
    evaluate its investment portfolio or to manage the succession of its IT
    investments. Further, the Service does not have a process to measure
    itself against other organizations and is not yet in a position to use
    evaluation

    techniques to continually improve both the investment portfolio and the
    investment process to better achieve strategic outcomes.

    Principal Findings Postal Service Executes

    To develop sound capabilities in investment management, an organization
    Most Key Foundational must first be capable of controlling its investments
    so that they finish Practices predictably within established cost and
    schedule expectations, and it must have in place basic capabilities for
    selecting new IT investments. An organization must also have an
    established investment board that is

    responsible for managing its investments and investment processes. The
    Postal Service has established many basic investment selection and control
    capabilities. At the enterprise level, it manages all capital investments
    through a consistent set of management processes. Still, opportunities
    exist to strengthen aspects of core enterprisewide practices for IT
    investment management. For example, the Postal Service has not

    developed organizationwide policies and procedures to guide the different
    enterprise- level management entities involved in the investment process.
    Nor has it developed guidance for management oversight of IT projects. As
    a result, it may not reap the benefits of a consistent and coordinated
    approach to investment management to be gained by institutionalizing those
    practices that it is performing.

    Postal Service Shows Mixed Organizations need to create a complete
    investment portfolio* consisting

    Progress in Managing Its IT of projects that are proposed, under
    development, and in operation* and Investments as a Portfolio

    continuously assess and manage their investments on the basis of expected
    and actual cost, benefit, schedule, and risk data. Taking such a portfolio
    perspective enables organizations to assess their investments
    comprehensively, considering proposals along with previously funded
    investments and selecting the mix of investments that best meets their
    mission needs. The perspective of the portfolio enables organizations to
    rise above selecting and controlling projects that best meet the
    objectives of narrow program areas to selecting and controlling projects
    that best meet the organization*s overall goals.

    The Postal Service performs a number of practices that are key to
    developing and managing a complete investment portfolio. For example, it
    provides adequate resources for analyzing investments and developing the
    portfolio. The Service validates the cost, benefit, schedule, and risk
    data it uses in analyzing investments. The Service also assigns its IT
    investments to logical categories and distributes its portfolio selection
    criteria throughout the organization. The Postal Service has not
    established organizationwide policies and procedures for selecting,
    analyzing, and overseeing its IT portfolio. While the Service selects its
    annual investment portfolio using established criteria, these criteria do
    not adequately address cost, benefit, schedule, and risk factors. Senior
    executives do not receive sufficient information to aid them in selecting
    and overseeing the portfolio. For example, the quarterly Investment
    Highlights provides information on the status of projects, but it does not
    include complete information on costs. Further,

    the Postal Service does not have a defined process for reporting problems
    in a project*s performance to senior executives.

    Because the Postal Service lacks established policies and procedures for
    selecting, analyzing, and overseeing its investment portfolio, and because
    its selection criteria are inadequate, it risks choosing individual
    investments in an ad hoc fashion. A portfolio developed in this way may
    not best meet the Service*s needs. In addition, because information they
    need for oversight is incomplete, senior executives may be unable to
    determine whether the investment portfolio is performing as expected.

    Postal Service Has Yet to As an organization builds its investment
    management capabilities, it should Implement Higher Level begin using
    evaluation techniques to improve its investment processes and Processes to
    Better Meet its portfolio while maintaining mature control and selection
    processes. The Strategic Goals

    post- implementation review is a key tool for comparing the outcome of a
    completed investment with the expectations described in its business case.
    Another higher level process is planning for the retirement of systems and
    their replacements, so that low- value systems are retired to make way for
    higher- value systems, and the transition between systems is smooth.
    Finally, an organization that completes the implementation of its
    selection, control, and evaluation processes should seek to continuously
    improve its capabilities for using IT investments to support and improve
    business outcomes.

    Within these higher- level processes, the Postal Service has developed
    guidance and training for performing post- implementation reviews. In
    addition, the Postal Service prepares an integrated financial plan that
    includes an estimate of overall return on investment. It has also
    allocated resources for identifying strategic uses for emerging
    technologies. The Postal Service, however, is not regularly performing
    postimplementation reviews of completed investments to determine whether
    they have achieved the expected benefits at the estimated cost or to
    determine if investment management processes should be revised. Nor has
    the Postal Service evaluated the performance of its investment portfolio

    beyond determining the return on investment. While the Postal Service has
    developed guidance for the retirement of systems, it does not have a
    process for routinely identifying and analyzing investments for succession

    and planning for their migration to their successors. The Postal Service
    also lacks a process for benchmarking other organizations* investment
    management approaches with the intention of improving its own internal

    processes. Finally, the Postal Service does not have a process for
    identifying, evaluating, and implementing leading- edge IT products and
    processes to achieve strategic changes to the business. Although these
    weaknesses are associated with high- level maturity processes, performing
    additional key practices in these areas will help the

    Postal Service to better evaluate and continuously improve its management
    processes and its investment and portfolio performance, learn from other
    organizations, and use breakthrough technologies to improve strategic
    outcomes.

    Recommendations for To strengthen the Postal Service*s capabilities for
    investment management

    Executive Action and address the weaknesses discussed in this report, we
    recommend that the Postmaster General develop a plan that initially
    focuses on correcting

    the weaknesses in critical processes associated with maturity stages two
    and three before addressing the weaknesses at maturity stages four and
    five, because critical processes at the lower stages provide the
    foundation for building those at higher maturity stages. The plan should
    be developed within 6 months. At a minimum, the plan should specify an
    approach to

     develop comprehensive guidance that defines and describes the complete
    investment management process, unifies existing processes enterprisewide,
    and reflects changes in processes as they occur;

     develop additional process guidance, as needed, to completely define the
    operations and decision- making processes of investment boards and other
    management entities involved in managing IT investments;

     ensure that cost, benefit, schedule, and risk expectations are set and
    approved in the original business case for each investment; that accurate
    and complete actual cost, benefit, schedule, and risk data are

    tracked against these expectations; and that status information on these
    four criteria is periodically reported to executive- level investment
    boards; and

     establish a structured, transparent, and documented portfolio selection
    process that assesses, prioritizes, selects, and funds investments
    according to established portfolio selection criteria, including explicit
    cost, benefit, schedule, and risk criteria.

    The Postmaster General should ensure that the plan specifies measurable
    goals and time frames, prioritizes initiatives, designates a senior
    manager responsible and accountable for directing and controlling the

    improvements, and establishes review milestones. After addressing the
    stage two and three processes, the Postal Service should create processes
    required for stages four and five that, at a minimum

     ensure that guidance for conducting post- implementation reviews is
    complete, including criteria for selecting systems for review, and that
    post- implementation reviews are conducted on all appropriate systems,

     establish a process for evaluating and improving portfolio performance,

     establish a process for managing the succession of systems and
    technology,

     establish a process to benchmark the investment processes of leading
    organizations to identify opportunities for improvement, and

     establish a process to employ IT investments strategically to improve
    business outcomes. Agency Comments and

    The Postal Service*s Chief Financial Officer provided written comments on
    Our Evaluation

    a draft of this report (reprinted in app. III). In these comments, the
    Postal Service stated that the report offered an opportunity to consider
    changes and improvements in its IT investment management processes. The
    Service added that it would carefully evaluate each of the report*s
    recommendations to determine the necessary actions for adopting and
    integrating key practices outlined in the GAO ITIM model that are
    appropriate for the Postal Service.

    The Postal Service identified a few key points where it differed from
    GAO*s IT investment management framework. In succession planning, the
    Postal Service stated that it uses an institutionalized portfolio approach
    to address

    the succession of its IT hardware, software, and systems. While this
    approach may be appropriate as part of a succession management process,
    our evaluation found that the Postal Service does not have a process for
    regularly reviewing the performance of existing systems against
    established criteria.

    The Postal Service also provided comments pertaining to postimplementation
    reviews that describe cost studies, the budget process, and the activities
    of the Office of Inspector General as satisfying this critical process. We
    disagree with the Postal Service in this matter. While guidance

    for cost studies does exist, budget activities and Inspector General
    evaluations do not satisfactorily address the requirements of this
    critical process, and the Service provided evidence of only three
    postimplementation cost studies having been conducted since 1990.

    Chapt er 1

    Introduction Postal Service*s The Postal Reorganization Act of 1970 (P. L.
    91- 375) created the United Mission and

    States Postal Service, an independent, self- supporting organization,
    replacing the former United States Post Office Department. The act
    Organization

    charges the Postal Service with binding the nation together through the
    personal, educational, literary, and business correspondence of the people
    and providing reliable and efficient mail services to all areas of the
    country. The Postal Service is intended to be self- supporting from postal
    operations

    and is mandated to break even over time. With nearly 800,000 career
    employees, the Postal Service is the second largest employer compared with
    U. S. private sector organizations. It has an extensive infrastructure,
    consisting of more than 38,000 post offices, branches, and stations; 240,
    000 delivery routes to over 137 million delivery addresses; a fleet of
    215,000 vehicles; 350 major processing and distribution facilities; and
    nearly 800,000 career employees.

    The Postal Service is now facing a financial crisis brought about by
    declining revenues and growing operating expenses and capital needs,
    including the cost of existing and new investments in information
    technology (IT). In February 2002, we reported significant declines in the
    Postal Service*s net income from fiscal year 1995 to fiscal year 2001 and
    a net loss of $1. 68 billion in fiscal year 2001 alone, resulting in part
    from declining mail volumes and from terrorist incidents. 5 In April 2001,
    we placed the Postal Service*s transformational efforts and long- term
    outlook on our High- Risk list, noting that the Postal Service is at
    growing risk of not being able to continue its mission of providing the
    current level of universal service throughout the nation while maintaining
    reasonable rates and remaining largely self- supporting through postal
    revenues.

    The Postal Service has acknowledged the need for a new business model in
    light of these events and various trends now shaping the delivery services
    marketplace, such as consumer interest in new service types and increasing
    security concerns. Other increases in the cost of doing business, such as
    the rising costs of retirement and health benefits, heighten the need for
    action. To conserve cash and limit debt, the Postal Service has

    continued its freeze on capital spending for most facility projects, and
    its 5 U. S. General Accounting Office, U. S. Postal Service: Deteriorating
    Financial Outlook Increases Need for Transformation, GAO- 02- 355
    (Washington, D. C.: Feb. 28, 2002). U. S. General Accounting Office, U. S.
    Postal Service: Financial Outlook and Transformation Challenges, GAO- 01-
    733T (Washington, D. C.: May 15, 2001).

    total budgeted capital outlays have declined in fiscal year 2002 for the
    third consecutive year to $2.2 billion.

    The Postal Service has reported that it plans to respond to these trends
    by providing customers with added value, improving the efficiency of
    operations, containing costs, fostering a performance- based culture, and

    improving its management of enabling functions such as financial
    management, purchasing, and IT. 6 The Postal Service has established the
    specific goal of connecting all of its components through IT, to enable it
    to enhance security, add valuable product features, and manage its
    operations in real time.

    The Postal Service accounts for its expenditures in separate expense and
    capital accounts, according to Generally Accepted Accounting Principles to
    which public financial reporting by U. S. corporations must conform.

    Expenditures categorized as *expense* generally comprise operating costs
    and are primarily funded through a general operating budget. Expenditures
    categorized as *capital* are for one- time costs, are project- specific,
    and are depreciated.

    The Postal Reorganization Act vested direction of the Postal Service in an
    eleven- member Board of Governors, including nine appointed by the
    President. The nine governors appoint the Postmaster General, who is the
    Chief Executive Officer, and who, with the nine governors, appoints the

    Deputy Postmaster General. The Postal Service*s executive vice presidents
    are the Chief Operating Officer and the Chief Financial Officer. The
    Postal Service has senior vice presidents for Government Relations and
    Public Policy, Human Resources, Operations, Office of the Chief Marketing
    Officer, and Office of the Chief Technology Officer. Figure 2 shows an
    overview of the Postal Service*s current organizational structure.

    6 United States Postal Service, United States Postal Service
    Transformation Plan (Washington, D. C.: April 2002).

    Figure 2: Overview of the Organizational Structure of the Postal Service

    Source: U. S. Postal Service.

    Postal Service*s The Postal Service has come to rely increasingly on IT.
    In the early 1980s, it Information

    used data centers and mainframe computers to support administrative
    functions such as personnel, accounting, and payroll processing. In the
    Technology

    mid- 1980s, the Postal Service began to incorporate IT into its core
    business Environment

    activities by interconnecting various components of its mail processing
    system through telecommunications and automation. Today, the organization
    relies on IT throughout the full range of its operations and

    management processes to run the machines that process and sort mail,
    assign mail efficiently to alternative surface and air carriers, support
    pointof- service terminals, collect and analyze inventory and sales
    information, process payroll and other accounts payable, and perform other
    activities. Communication networks also play a vital role in linking
    together various elements of the Postal Service*s infrastructure and
    transmitting information to various locations for storage, processing, and
    analysis. The Postal

    Service expended approximately $700 million for IT in fiscal year 2002 and
    plans to spend about $1 billion for IT in fiscal year 2003.

    The Postal Service currently manages almost 650 IT systems and
    applications that operate in support of postal functions. It has 24 IT-
    related projects in development or recently completed, each estimated to
    cost at least $10 million. The total investment cost estimated for these
    projects since 1997 is more than $2 billion, ranging from about $10
    million to about

    $404 million per project. (See app. I for a list of the Postal Service*s
    ITrelated projects currently in progress.) Projects with major IT
    components in development or implementation phases include the following:

     Point of Service ONE* A retail point- of- sale information system that
    is intended to replace outdated retail terminals at postal retail windows
    and provide more timely and accurate information.

     Associate Office Infrastructure* Expected to support a common
    information system for retail, delivery, and administrative operations in
    post offices.

     Delivery Operations Information System* Scheduled to replace three
    current information systems and assist delivery unit supervisors in
    managing office activities, planning street activities, and managing route
    inspection and adjustment activities.

     Time and Attendance Collection System* Expected to replace five existing
    time and attendance systems and enable labor resources

    to be more efficiently allocated by providing supervisors with accurate,
    real- time labor data by type of work being performed.

     Advanced Computing Environment* A major infrastructure modernization
    initiative that is expected to replace existing workstations and
    transitions applications to a Web- based environment.

    Weaknesses in the Given the challenges the Postal Service currently faces,
    effective Postal Service*s

    management of its existing and new IT investments is crucial if it is to
    provide the service expected while remaining self- supporting. However,
    Investment recent reviews, performed by the Postal Service*s Office of
    Inspector Management Process

    General (OIG) and by us, have raised some concerns regarding the Service*s
    investment management. The OIG has identified weaknesses in the management
    of some investments in recent years. For example, in September 2001, the
    OIG reported that projects have been proposed to the Board of Governors
    for approval without adequate documentation and analyses and that other
    projects may not achieve anticipated performance and financial results. 7
    In March 2001, the OIG*s review of the Delivery Operations Information
    System found weaknesses in the methods and

    assumptions that were used to derive figures on estimated savings and
    return on investment. 8 In September 1999, the OIG found that Point of
    Service ONE was not achieving the results outlined in its business case. 9
    The Postal Service has made enhancements to its investment policies and

    procedures to address the issues the OIG raised. In September 2000, we
    identified a number of issues with the management of the Postal Service*s
    e- commerce program, including inconsistencies in reviewing and approving
    e- commerce initiatives and deficiencies in the financial data reported.
    We made several recommendations to the Postal Service that addressed these
    issues. This program was subsequently scaled back by the

    7 United States Postal Service, Office of Inspector General, Decision
    Analysis Report Process, DA- AR- 01- 005 (Arlington, VA: Sept. 27, 2001).
    8 United States Postal Service, Office of Inspector General, Delivery
    Operations Information System, DA- AR- 01- 003 (Arlington, VA: Mar. 29,
    2001). 9 United States Postal Service, Office of Inspector General, Point
    of Service ONE, DA- AR- 99002 (Arlington, VA: Sept. 20, 1999).

    Postal Service, as both revenues and customer response fell below
    expectations. 10 Postal Service*s

    Several individuals and oversight boards are involved in managing IT
    Approach to investments, from reviewing and approving a proposed IT
    project, through

    the process of budgeting for it and monitoring it once it is implemented,
    Investment

    and evaluating it at its conclusion. These individuals and oversight
    boards Management

    and their roles are described below.

     Board of Governors* Eleven- member board that governs the Postal
    Service; comprises the Postmaster General, the Deputy Postmaster General,
    and nine Presidential appointees; expected to approve any project with
    capital and *expense investment* 11 costs of $10 million or

    more.

     Capital Projects Committee (CPC)* Three members of the Board of
    Governors who are to review proposals for any new project with capital and
    expense investment costs of $10 million or more and make recommendations
    to the full Board on whether to approve it.

     Postmaster General* Chief Executive Officer of the Postal Service and a
    member of the Board of Governors; expected to approve or review any
    project with capital and expense investment costs of $7.5 million or more.

     Establish Team* Comprises the Deputy Postmaster General, the Chief
    Financial Officer, the Chief Operating Officer, the Chief Marketing
    Officer, the Senior Vice Presidents of Operations and Human Resources,

    the Controller, and a field vice president; is to set financial and
    nonfinancial goals for the Postal Service at the start of its annual
    planning and budgeting process and determine funding for existing and
    proposed IT projects as part of the budget formulation process.

    10 U. S. General Accounting Office, U. S. Postal Service: Postal
    Activities and Laws Related to Electronic Commerce, GAO/ GGD- 00- 188
    (Washington, D. C.: Sept. 7, 2000) and U. S. General Accounting Office, U.
    S. Postal Service: Update on E- commerce Activities and Privacy
    Protections, GAO- 02- 79 (Washington, D. C.: Dec. 21, 2001). 11 Expense
    investments are a special category of expense. They are generally one-
    time expenditures in support of the development or deployment of a major
    project. Routine operating expenses are not considered expense
    investments.

     Capital Investment Committee (CIC)* Comprises the Chief Technology
    Officer (CTO) and other senior executives. Is to review proposals for any
    project with capital and expense investment costs of $7. 5 million or
    more.

     Deploy Team* Comprises several vice presidents; with the Establish Team,
    is to determine funding for IT projects as part of the Postal Service*s
    annual planning and budgeting process.

     Vice President of Finance (Controller)* Is to review and validate
    proposals for any project with capital and expense investment costs of $5
    million or more.

     Capital and Program Evaluation (CAPE)* Group within the Finance
    Department under the Controller. During the review process for new
    projects, is expected to validate the assumptions and cost, benefit, and
    schedule estimates; prepare the Postal Service*s 5- year Capital
    Investment Plan (CIP); monitor projects with capital and expense
    investment costs of $5 million or more; and perform cost studies of
    selected completed projects.

     Chief Technology Officer (CTO) Organization* Comprises the Office of the
    CTO and the Information Technology Department headed by the Chief
    Information Officer (CIO). The CTO organization assists other functional
    units in developing business cases for projects that have an IT component.
    It is also involved in the project concurrence process, where feedback on
    a project is given to the sponsoring organization by functional areas and
    relevant field units. The CTO organization is also responsible for
    developing systems standards and requirements for organizationwide
    compliance. At the strategic level, the CTO and CIO recommend and present
    corporatewide IT projects before the Establish Team during the annual
    capital planning cycle.  CTO Investment Review Board* Three- member board
    comprises the CTO, CIO, and Manager of IT Value; is to manage the process
    of

    selecting projects within the CTO organization, review the performance of
    all IT projects in development, and conduct detailed reviews of selected
    IT projects on a monthly basis.

    The Postal Service has established a number of capital planning,
    investment control, and budgeting processes to manage its IT investments.
    These include processes for (1) developing the investment portfolio, (2)
    approving major new projects, and (3) controlling and evaluating projects.

    Process for Developing the The Postal Service*s annual capital planning
    and budgeting cycle begins in Investment Portfolio

    January with a process called the CustomerPerfect! management cycle. The
    Establish Team and the Deploy Team, composed of Postal Service executives,
    manage this annual organizationwide direction- setting process, led by
    Operations and aided by the Budget and Financial Analysis (B& FA) and the
    Capital and Program Evaluation (CAPE) groups within the Finance
    Department. The Establish Team is expected to align the organization*s

    targets and goals with its commitment to listen to the three *voices* that
    represent aspects of its mission: the Voice of the Business (financial
    benefits), the Voice of the Customer (customer satisfaction), and the
    Voice of the Employee (employee satisfaction). The Establish Team is to
    review project and program funding requests and make preliminary selection
    and funding decisions on the basis of how the requests fit the
    organization*s mission and budget. This process sets the Postal Service*s
    financial and nonfinancial goals for the year. Figure 3 provides detail on
    the Postal Service*s capital planning and budgeting cycle.

    Figure 3: Capital Planning and Budgeting Cycle

    Source: U. S. Postal Service documents.

    Process for Approving The process for approving major new IT projects is
    the same as for any

    Major New Projects other new projects with capital costs of $5 million or
    more. These major

    projects are to proceed through the formal approval process and are
    monitored by the Finance Department in conjunction with the program
    sponsors when they are in development and implementation phases.

    The process for approving proposed capital investments is defined in the
    Postal Service*s F- 66 manual. 12 The process begins with the sponsoring
    unit preparing a Decision Analysis Report (DAR), which presents the
    business case for the proposed project. Figure 4 provides detail on the
    process for approving major new projects.

    12 United States Postal Service, General Investment Policies and
    Procedures: Handbook F- 66, (April 1999, revised February 2002).

    Figure 4: Process for Approving Major New Projects

    Source: US. Postal Service.

    Control and Evaluation During a capital project*s life cycle, control and
    evaluation are

    Process accomplished through two processes. Project sponsors are to
    produce

    quarterly compliance reports that summarize the project*s status. These
    reports are to be used by CAPE, along with other financial information, to
    produce the quarterly Investment Highlights that are distributed to the

    Board of Governors and others to present the status of Board- approved
    projects. This project oversight process continues for 18 months beyond a
    project*s initial implementation. The Program Performance Group, part of
    CAPE, studies selected projects that are still in development to determine

    whether they remain on track to achieve cost goals. The Program
    Performance Group may also conduct cost studies, after implementation, to
    determine whether cost goals have been met. Changes in scope, schedule, or
    total capital funding needed for a project trigger the requirement for a
    modified DAR, which must be reviewed and approved through the same process
    as the original DAR.

    At the operational level, the CTO organization*s project managers and
    portfolio managers conduct the day- to- day oversight of IT projects,
    including those sponsored outside of the CTO organization, by tracking
    performance of IT projects in the Program Tracking and Reporting System
    (PTRS) and reporting project status every month to the CTO Investment
    Review Board. When problems are identified, they are addressed through

    interaction with the sponsoring organization, which may choose to bring
    the issue to senior executives if the problem is likely to affect their
    ability to meet their objectives.

    IT investments that are not funded by capital funds are controlled and
    evaluated through the annual budget process. Executive- level oversight is
    performed through annual reviews of program descriptions called

    *program narratives,* which provide input to the budget decision. At the
    operational level, ongoing oversight is performed through routine tracking
    of system operation. Figure 5 shows the Postal Service*s project control
    and evaluation process.

    Figure 5: Project Control and Evaluation Process

    Source: U. S. Postal Service.

    IT Investment Based on research into the IT investment management
    practices of leading

    Management private- and public- sector organizations, we have developed an
    information

    technology investment management maturity (ITIM) framework. This Framework
    framework identifies critical processes for successful IT investment

    organized into a framework of five increasingly mature stages. 13 The ITIM
    is intended to be used both as a management tool for implementing these
    processes incrementally and as an evaluation tool for determining an
    organization*s current level of maturity. The overriding purpose of the
    framework is to encourage investment processes that increase business
    value and mission performance, reduce risk, and increase accountability
    and transparency in the decision process. This framework has been used in
    several GAO evaluations 14 and has been adopted by a number of agencies.
    These agencies have used ITIM for purposes ranging from self- assessment
    to redesign of their IT investment management processes.

    ITIM is a hierarchical model comprising five *maturity stages.* These
    maturity stages represent steps toward achieving stable and mature
    processes for managing IT investments. Each stage builds upon the lower
    stages; the successful achievement of each stage leads to improvement in
    the organization*s ability to manage its investments. With the exception
    of the first stage, each maturity stage is composed of *critical
    processes* that must be implemented and institutionalized for the
    organization to achieve

    that stage. These critical processes are further broken down into key
    practices that describe the types of activities an organization should be
    performing to successfully implement each critical process. An
    organization may be performing key practices from more than one maturity
    stage at one time. This is not unusual, but efforts to improve investment
    management capabilities should focus on becoming compliant with lower
    stage practices before addressing higher stage practices.

    Stage two in the ITIM framework encompasses building a sound investment
    management process* by developing the capability to control projects so
    they finish predictably within established cost and schedule expectations*
    and establishing basic capabilities for selecting new IT projects. Stage
    three requires that an organization continually assess proposed and
    ongoing projects as parts of a complete investment portfolio:

    an integrated and competing set of investment options. This approach
    enables the organization to consider the relative cost, benefit, and risk
    of newly proposed investments along with those previously funded and to
    identify the optimal mix of IT investments to meet its mission,
    strategies, and goals. Stages four and five require the use of evaluation
    techniques to

    13 GAO/ AIMD- 10. 1. 23. 14 GAO- 01- 146; GAO- 01- 190; GAO- 01- 961; GAO-
    02- 314.

    continuously improve both the investment portfolio and investment
    processes to better achieve strategic outcomes. Figure 6 shows the five
    maturity stages and the associated critical processes.

    Figure 6: The Five Stages of Maturity with Critical Processes

    Source: GAO.

    As defined by the model, each critical process consists of *core elements*
    that indicate whether the implementation and institutionalization of a
    process can be effective and repeated. Key practices must be executed to
    fulfill the core elements and implement the critical process. The core
    elements are as follows:

     Organizational commitments* Actions taken by management to ensure that
    the critical process is established and will endure. Key practices
    typically involve establishing organizational policies and engaging the
    sponsorship of senior management.

     Prerequisites* Conditions that must exist within an organization to
    enable it to successfully implement a critical process. Key practices

    typically involve allocating resources, establishing organizational
    structures, and providing training.

     Activities* Actions that must be taken to implement a critical process.
    An activity occurs over time and has recognizable results. Key practices
    typically involve establishing procedures, performing and tracking work,
    and taking corrective actions as necessary.

    Objective, Scope, and The objective of our review was to assess the Postal
    Service*s capabilities

    Methodology for effectively managing its IT investments. To determine
    these capabilities

    and the organization*s level of maturity in managing its IT investments,
    we applied our ITIM framework and the associated assessment method. As a
    part of the ITIM assessment method, we obtained documentary and
    testimonial evidence and observed demonstrations of several internal
    systems showing the organization*s execution of various key practices. We
    evaluated the Postal Service against 14 critical processes in maturity
    stages

    two, three, four, and five. We did not evaluate the Postal Service on key
    practices for one critical process in stage three* Authority Alignment of
    IT Investment Boards* because major IT capital investments are managed by
    the same oversight entities, and we determined that this critical process
    was not applicable.

    To determine whether the Postal Service had implemented the 14 critical
    processes we assessed, we first reviewed documentation relating to the
    organization*s IT investment management practices, including written
    policies, procedures, and guidance that it had developed, and other forms
    of documentation that provided evidence that these practices had been
    executed. Documents included the Postal Service*s F- 66 manual,

    Investment Highlights reports, executive memoranda, program narratives
    required for the annual budget formulation, DARs, performance indicators,
    and the minutes from meetings of the CIC, the CPC, and the Board of
    Governors. We also reviewed a variety of administrative and system
    documents from the CTO organization, including evidence of its formulation
    process for IT investment proposals and its oversight process

    for IT investments. We interviewed a number of senior officials, including
    the Chief Financial Officer (CFO), the CTO, and the CIO. Within the Office
    of the CFO, we also spoke with the Manager of Capital and Program
    Evaluation and the

    Manager of Corporate Budget. Within the Office of the CTO, we interviewed
    the Manager of IT Value and a representative from the

    Enterprise Architecture Office. We also spoke with senior officials from
    the functional units, such as the Manager of Logistics Systems, the
    Manager for Human Resources Technology Management, and the Manager of
    Customer Service Operations.

    As part of the analysis, we selected four projects, representing a range
    of functional units, stages of development, and sizes, and examined them
    to determine the extent to which the Postal Service*s policies and
    procedures for IT investment management were being implemented. The
    projects we

    selected for review were (1) Enhanced Security Capability, (2)
    Organization Structure, Staffing and Management, (3) Point of Service ONE,
    and (4) Surface- Air Management System. Appendix II contains additional
    information on each of the projects we reviewed. To perform the project
    reviews, we reviewed project management documentation such as DARs,
    project management plans, and PTRS reports. To clarify information

    in these documents and gain further insight we also interviewed managers
    in the sponsoring functional units, project managers, and the members of
    the project management teams. The teams included staff who had been

    assigned responsibility for project oversight within the Office of the
    Chief Technology Officer. We compared the evidence we collected through
    document reviews and

    interviews to the detailed requirements for each key practice and critical
    process that is specified in the ITIM. In accordance with the ITIM
    assessment method, we considered a key practice to have been *executed*
    when we determined, by team consensus, that sufficient evidence existed

    to confirm that the Postal Service was executing the practice in
    accordance with stated ITIM criteria. When we determined that there were
    significant weaknesses in the Postal Service*s execution of a practice or
    found insufficient evidence of its execution, we concluded that the
    practice was not executed. Once the key practices were assessed, we
    determined which of the 14 critical processes had been implemented. A
    critical process was determined to be *implemented* when all related key
    practices were designated as executed. Otherwise, according to the ITIM
    assessment method, the critical process would not be considered to have
    been

    implemented. We conducted our work at the Postal Service*s headquarters
    offices in Washington, D. C., from October 2001 through July 2002, in
    accordance with generally accepted government auditing standards.

    Postal Service Executes Most Key

    Chapt er 2

    Foundational Practices At the stage two level of maturity in the IT
    investment management framework, an organization has attained repeatable,
    basic selection and control processes and successful IT investment control
    processes at the project level. In other words, the organization can
    select projects that meet established selection criteria and can identify
    expectation gaps early and take appropriate steps to address them.
    According to ITIM, critical processes at this stage include (1) defining
    investment review board operations, (2) developing processes to determine
    the progress of individual IT projects, (3) creating an inventory of IT
    investments, (4) identifying IT project and systems business needs, and
    (5) developing a

    basic process for selecting new IT proposals. Table 1 shows the purpose of
    each critical process in stage two.

    Table 1: Stage Two* Critical Processes Required for Building the
    Investment Foundation

    Critical process Description

    IT investment board To define and establish the governing board( s)
    responsible operation for selecting, controlling, and evaluating
    investments. IT project oversight To regularly determine each IT project's
    progress toward cost and schedule milestones using established criteria,
    and take corrective actions when milestones are not achieved. IT project
    and system

    To create and maintain an IT project and system inventory to
    identification assist in managerial decision- making.

    Business needs To ensure that each IT program and project supports the
    identification organization's business needs and meets users' needs.

    Proposal selection To ensure that an established, structured process is
    used to select new IT proposals. Source: GAO.

    The Postal Service is executing nearly 90 percent of the key practices
    associated with stage two critical processes. Specifically, the Postal
    Service is carrying out all of the key practices associated with selecting
    proposals that meet established criteria, aligning IT projects with the
    organization*s business needs, and maintaining information on IT projects
    and systems in an inventory. The Postal Service has yet to execute a few
    key practices associated with

    establishing an IT investment management foundation. For example, the
    Postal Service does not have guidance defining the overall framework for
    its IT investment management process, and policies and procedures for

    project oversight are not documented. When the Postal Service implements
    the remaining critical processes associated with stage two, it will
    acquire the additional key controls needed to fully implement basic
    control processes. For example, with an investment management process
    guide, the Postal Service will gain assurance that IT investment
    activities will be performed in a consistent and cost- effective manner.
    Table 2 summarizes the status of the Postal Service*s critical processes
    for

    stage two, showing how many associated key practices it has executed.

    Table 2: Summary of Results for Stage Two Critical Processes and Key
    Practices Key

    Total required practices

    by critical Percentage of key Critical process

    executed process practices executed

    IT investment board operation 4 6 67% IT project oversight 9 11 82 IT
    project and system identification 7 7 100

    Business needs identification 8 8 100 Proposal selection 6 6 100

    Totals 34 38 89%

    Source: GAO.

    The following discussion provides information on steps the Postal Service
    has taken to implement each of these critical processes.

    Boards Are Established The creation of decision- making bodies or boards
    is central to the IT but Operating without investment management process.
    At the stage two level of maturity,

    organizations define one or more boards, provide resources to support a
    Complete Process

    their operations, and appoint members who have expertise in both Guide

    operational and technical aspects of proposed investments. Resources
    provided to support the operations of IT investment boards typically
    include top management*s participation in creating the board( s) and

    defining their scope and formal evidence acknowledging management*s
    support for board decisions. The boards operate according to a written IT
    investment process guide tailored to the organization*s unique
    characteristics, thus ensuring that consistent and effective management

    practices are implemented across the organization. 15 Once board members
    are selected, the organization ensures that they are knowledgeable about
    policies and procedures for managing investments. Organizations at the
    stage two level of maturity also take steps to ensure that executives and

    line managers support and carry out the decisions of the IT investment
    board. According to ITIM, an IT investment management process guide should
    be a key authoritative document that the organization uses to initiate and
    manage IT investment processes and should provide a

    comprehensive foundation for policies and procedures developed for all
    other related processes.

    The Postal Service has executed four of the six key practices for this
    critical process by establishing investment boards; providing adequate
    resources for related activities; appointing experienced senior- level
    executives to the boards; and implementing policies, procedures, and
    processes to ensure that executives and line managers support and carry
    out decisions made by the boards.

    However, the Postal Service has yet to develop a written,
    organizationspecific process guide to direct the operations of the
    investment boards. While the F- 66 manual provides general guidance on the
    organization*s investment management process, it does not constitute an IT
    investment process guide because it does not sufficiently define the
    investment

    process. Specifically, the manual does not include information on the
    roles of the Establish Team and the CTO Investment Review Board. In
    addition, it does not provide detail on the processes followed by other
    boards involved in the investment management process (e. g., the CIC and
    CPC). Finally, the manual does not identify the manner in which investment
    boards* processes are to be coordinated with other key organizational
    plans and processes (such as the budget formulation process). Without an

    investment management process guide, the Postal Service lacks the
    assurance that IT investment activities will be coordinated and performed
    in a consistent and cost- effective manner. Table 3 shows the rating for
    each key practice required to implement the

    critical process for establishing IT investment board operation at the
    stage two level of maturity. Each of the *executed* ratings shown below

    15 According to ITIM, a process is a sequence of steps performed for a
    given purpose, and a process guide is a document that defines the unique
    manner in which the general IT investment guidance will be implemented
    within the organization.

    represents an instance where, based on the evidence provided by Postal
    Service officials, we concluded that a specific key practice was currently
    being executed by the organization.

    Table 3: IT Investment Board Operation Type of practice Key practice
    Rating Summary of evidence

    Organizational 1. An organizationspecific Not executed. The Postal Service
    has not developed an investment process guide to

    commitments IT direct its board operations. While the F- 66 manual
    provides general investment process

    guidance on the organization*s investment management process, it does
    guide is created to not constitute an investment management process guide
    in that it does not direct each board's

    (1) include information on the roles of the Establish Team and the CTO
    operations. Investment Review Board, which are responsible for selecting
    IT

    investments to be funded in the budget formulation process and performing
    project oversight functions; (2) provide detail on the processes followed
    by other boards involved in the investment management process (e. g., the
    CIC and the CPC); or (3) identify the manner in which investment boards*
    processes are to be coordinated with other key organizational plans and
    processes (such as the budget formulation process).

    2. Organization Executed. The Postal Service has several processes in
    place to ensure that executives and line executives and line managers
    support and carry out decisions made by managers support the oversight
    boards with investment management responsibility. For

    and carry out IT example, the Postal Service uses *accountability letters*
    similar to Senior

    investment board Executive Service contracts to ensure that the executives
    and line decisions. managers support the decisions of the investment
    boards.

    Prerequisites 1. Adequate Executed. Adequate resources, such as supporting
    staff, are available for investment resources are

    board operations. provided for operating each IT

    investment board. 2. Board members Executed. Members of Postal Service
    investment boards are senior- level executives understand the who have
    extensive experience with the organization*s operations and IT

    investment board's investment management approach. policies and procedures
    and exhibit core competencies in using the IT investment approach via
    training, education, or experience.

    (Continued From Previous Page)

    Type of practice Key practice Rating Summary of evidence

    Activities 1. Each IT Executed. The CPC, CIC, and Establish Team include
    members who have extensive investment board is knowledge and experience of
    business and IT investment management. created and defined

    The CFO or CTO are members of the boards and contribute IT knowledge with
    board and expertise. membership integrating both IT and business

    knowledge. 2. Each IT Not executed. The Postal Service has not developed a
    written organization- specific investment board

    process guide for IT investment management. As a result, the Postal
    operates according Service*s enterprise- level investment boards are
    operating without to written policies documented policies and procedures.
    and procedures in the organizationspecific

    IT investment process guide.

    Source: GAO.

    CTO Organization Investment boards should effectively oversee IT projects
    throughout all Oversees IT

    life- cycle phases (concept, design, testing, implementation, and
    operations/ maintenance). At the stage two level of maturity, investment
    Investments boards should review each project*s progress toward predefined
    cost and schedule expectations, using established criteria and performance
    measures, and should take corrective actions to address cost and milestone
    variances.

    According to ITIM, effective project oversight requires, among other
    things, (1) having written polices and procedures for project management;
    (2) developing and maintaining an approved management plan for each IT

    project; (3) making up- to- date cost and schedule data for each project
    available to the oversight boards; (4) reviewing each project*s
    performance by regularly comparing actual cost and schedule data with
    expectations; (5) ensuring that corrective actions for each under-
    performing project are documented, agreed to, implemented, and tracked
    until the desired outcome is achieved; and (6) having written policies and
    procedures for oversight of IT projects.

    The Postal Service has executed most of the key practices in the area of
    project oversight. For example, the Postal Service has developed several
    policies and procedures for project management, including the Program
    Management Process Guidelines, which are high- level project

    management guidelines used for all projects; the more- detailed Software
    Process Standards and Procedures used by the Postal Service*s business
    solution centers to develop and maintain systems; and the recently- issued
    Integrated Solutions Methodology, which provides a process for managing a
    system*s development throughout the life- cycle phases. In addition, IT
    projects have an approved, up- to- date project management plan, in
    accordance with project management guidelines. Data on a project*s actual
    cost and schedule are provided to the CTO Investment Review Board, 16
    which is responsible for overseeing the performance of IT projects, and to

    other oversight groups as appropriate. Actual cost and schedule data for
    the four projects we reviewed were provided to (1) the CTO Investment
    Review Board in the form of PTRS reports, (2) the Board of Governors
    through quarterly Investment Highlights reports featuring capital
    expenditures and schedule data, and (3) field and headquarters offices
    through accounting and management reports featuring data on projects*
    actual capital and expense costs. 17

    Finally, the CTO Investment Review Board regularly oversees the
    performance of projects by comparing actual cost and schedule data to
    expectations and performs special reviews of projects that do not meet
    expectations. When these reviews are performed, corrective actions are

    defined, documented, agreed to by the program manager and the CTO
    Investment Review Board, and tracked until the desired outcome is
    achieved. According to the IT program manager for Organization Structure,
    Staffing and Management (OSS& M), special meetings were held for this
    project to address schedule performance issues. Also, officials from the

    CTO organization stated that the office generates reports listing projects
    that are not meeting cost, schedule, or customer satisfaction expectations
    and brings them to management*s attention so that *special reviews* can be
    performed. These reports identify the manager and group responsible for
    the project, provide a summary of the problem, the status of the
    resolution, and a target date for resolving the problem. The CTO
    Investment Review Board tracks action items to resolve the problem until
    they are completed.

    16 The CTO Investment Review Board (CTO IRB) is comprised of the Postal
    Service*s CTO, Vice President for Information Technology, and Manager for
    IT Value. According to Postal Service officials, the CTO IRB proposes IT
    infrastructure investments on the basis of business case analyses and
    performs regular reviews of these and other investments sponsored by
    business units to monitor expense and capital expenditures and project
    plans and schedules, track contributions, and resolve any issues or
    concerns. 17 One of the four projects we reviewed, Enhanced Security
    Capability, is actually a program

    comprising over 30 different initiatives. See appendix II for information
    on this program.

    Notwithstanding these strengths, the Postal Service has a few weaknesses
    in its oversight of IT projects. First, while the Postal Service has
    written policies and procedures addressing how the CTO Investment Review
    Board is to oversee IT investments, it does not have any that sufficiently
    define the Establish Team*s role in the oversight process. The F- 66
    manual, for example, notes that senior management is to continually review
    the

    performance of capital projects and discusses some mechanisms that could
    be used for this purpose (e. g., compliance reports). However, it does not
    provide specifics on the role of the Establish Team or define processes
    for oversight of projects beyond the initial deployment phase. Without
    adequate policies and procedures, project oversight may not be performed
    consistently. In addition, without these policies and procedures, the
    Postal Service lacks the transparency that is helpful in both
    communicating and

    demonstrating how project oversight is performed. Second, the Postal
    Service*s investment boards do not adequately oversee project performance
    by comparing actual cost data to expectations. Specifically, while the
    Establish Team and CTO Investment Review Board each compare actual cost
    data to annual budget expectations, the Postal Service could not
    demonstrate that these boards compared the data to original expectations
    established in the DAR. In addition, while the Investment Highlights used
    by executives to monitor project performance

    contains schedule information, it does not contain complete information on
    actual project costs because it does not report operating expenses.
    Without comparisons of complete actual cost data to original expectations,
    Postal Service executives may not be able to easily determine whether the
    projects they have selected are progressing as planned or whether
    corrective actions are needed.

    Table 4 shows the rating for each key practice required to implement the
    critical process for project oversight at the stage two level of maturity
    and summarizes the evidence that supports these ratings.

    Table 4: IT Project Oversight Type of practice Key practice Rating Summary
    of evidence

    Organizational 1. The organization has Executed. The Postal Service has
    developed written policies and procedures for commitments written policies
    and

    project management, including Program Management Process

    procedures for project

    Guidelines, Software Process Standards and Procedures, and an management.
    Integrated Solutions Methodology.

    2. The organization has Not executed. The CTO Investment Review Board has
    written policies and written policies and

    procedures for overseeing projects. However, there are no written
    procedures for policies and procedures that sufficiently address how the
    Establish management oversight of Team is to oversee projects. For
    example, the F- 66 manual does not IT projects.

    provide specifics on the role of the Establish Team or on how this team is
    to oversee capital projects that have been deployed for over 18 months or
    ongoing infrastructure- type projects. Prerequisites 1. Adequate resources
    are

    Executed. The Postal Service has adequate resources for performing IT
    project provided to assist the

    oversight, including managers and staff assigned responsibility for board(
    s) in overseeing IT this activity, and systems that capture information on
    actual costs, projects. schedule, and risk.

    2. Each IT project has and Executed. The Postal Service*s project
    management procedures require that an maintains an approved approved
    project management plan be maintained for each IT project. project
    management plan

    In addition, cost and schedule controls are applied during project that
    includes cost and

    reviews. Approved project management plans were maintained for the
    schedule controls.

    four projects we reviewed, and cost and schedule controls were applied
    during project reviews. 3. An IT investment board Executed. The Postal
    Service has a number of oversight boards with is operating. responsibility
    for managing IT investments, including the Establish Team, the CIC, the
    CPC, the Board of Governors, and the CTO

    Investment Review Board. 4. Information from the IT

    Executed. IT project and system information is used by the CTO Investment
    project and system Review Board to support executive management*s project
    inventory is used by the IT management responsibilities. investment board
    as applicable. Activities 1. Each project*s up- to Executed. Projects* up-
    to- date cost and schedule data are provided to the CTO date cost and
    schedule

    Investment Review Board, the Establish Team, and other oversight data are
    provided to the groups as appropriate. Actual cost and schedule data for
    the four appropriate IT investment projects we reviewed were provided to
    (1) the CTO Investment board.

    Review Board through the Program Tracking and Reporting System (PTRS), a
    tool used by the Board to monitor IT project performance, and (2) other
    oversight groups through quarterly reports featuring capital expenditures
    and schedule data and monthly financial reports featuring actual capital
    and expense cost data of projects.

    (Continued From Previous Page)

    Type of practice Key practice Rating Summary of evidence

    2. Using established Not executed. The Postal Service*s investment boards
    do not adequately oversee criteria, the IT investment project performance
    by comparing actual cost data to expectations. board oversees each IT
    Specifically, while the Establish Team and CTO Investment Review project's
    performance Board each compare actual cost data to annual budget
    expectations, regularly by comparing

    the Postal Service could not demonstrate that these boards actual cost and
    schedule compared the data to original expectations established in the
    DAR. In data to expectations.

    addition, while the Investment Highlights used by executives to monitor
    project performance contains schedule information, it does not contain
    complete information on actual project costs in that it does not report
    operating expenses. 3. The IT investment board

    Executed. Special reviews of projects that have not met predetermined
    performs special reviews of

    standards are performed. According to the IT program manager for projects
    that have not met

    OSS& M, special meetings were held for this project to address
    predetermined schedule performance issues. performance standards. 4.
    Appropriate corrective

    Executed. Appropriate corrective actions for each under- performing
    project are actions for each underperforming defined, documented, and
    agreed to by the oversight board and the

    project are project manager. defined, documented, and

    agreed to by the IT investment board and the project manager.

    5. Corrective actions are Executed. Corrective actions are implemented and
    tracked to help ensure that implemented and tracked an agreed- upon
    outcome is achieved. until the desired outcome

    is achieved. Source: GAO.

    IT Project and System To make good management decisions, an organization
    must know how Information Is

    funds are being expended toward acquiring, maintaining, and deploying its
    IT investments. Implementing this critical process requires an
    organization Maintained to Support

    to identify all projects and systems within the organization and create
    one Project Management

    or more repositories or inventories of information about them. This
    information is required to track the organization*s IT resources to
    provide a basis for analyses showing major cost and management factors and
    trends. An IT project and systems inventory can take many forms and does
    not have to be centrally located or consolidated. The guiding principles
    for developing the inventory are that the information maintained should be

    accessible where it is of the most value to investment decision makers and
    relevant to the management processes and decisions that are being made.

    According to ITIM, organizations at the stage two level of maturity
    provide adequate resources for tracking IT projects and systems, designate

    responsibility for managing the project and system identification process,
    and develop related written policies and procedures. Resources required
    for this purpose typically include managerial attention to the process;
    staff; supporting tools; an inventory database; inventory reporting,
    updating and

    query tools; and a method for communicating inventory changes to affected
    parties. Stage two organizations develop and maintain information on their
    IT projects and systems in one or more inventories according to written
    procedures, recording changes in data as required, and maintaining

    historical records. Access to this information is provided on demand to
    decision makers and other affected parties. The Postal Service has
    executed all of the key practices for this critical process. The Service
    has established a number of repositories of information on its IT projects
    and systems in the form of the Enterprise Information Repository (EIR),
    and automated systems such as PTRS that track actual cost, schedule,
    benefit, and risk associated with the Postal Service*s IT programs and
    projects. Members of the Postal Service*s

    investment boards have access to the systems used to maintain information
    on the organization*s IT programs and projects. Information is maintained
    in these databases because they are also used for other purposes. For
    example, project managers input up- to- date systems and project status

    information to PTRS; the Corporate Planning System (CPS) and PTRS are
    updated automatically as financial transactions are processed. Finally,
    the Postal Service retains records showing changes in the information
    maintained on each IT investment over time and provides these records to
    its investment boards.

    Table 5 shows the rating for each key practice required to implement the
    critical process for IT project and system identification at the stage two
    level of maturity and summarizes the evidence that supports these ratings.

    Table 5: IT Project and System Identification Type of practice Key
    practice Rating Summary of evidence

    Organizational 1. The organization has written policies Executed. The
    Postal Service has written policies and procedures commitments and
    procedures for identifying its IT

    for the Program Tracking and Reporting System PTRS projects and systems
    and collecting, in and EIR. Information captured in these systems is an
    inventory, information about the IT relevant to the investment management
    process. projects and systems which is relevant to the investment
    management process.

    2. An official is assigned responsibility for Executed. The CTO
    organization is responsible for maintaining

    managing the IT project and system PTRS and EIR. identification process
    and ensuring the inventory meets the needs of the investment management
    process.

    Prerequisite 1. Adequate resources are provided for Executed. Postal
    Service officials stated that adequate staff support identifying IT
    projects and systems and is available to identify programs, projects, and
    systems, collecting relevant information into an and provided evidence of
    staffing levels in key units

    inventory. including IT Value and the CTO organization.

    Activities 1. The organization's IT projects and Executed. Information on
    IT projects and systems is maintained in systems are identified and
    specific PTRS and EIR. information about them is collected in an
    inventory. 2. Changes to IT projects and systems Executed. Project
    managers ensure that systems and project status are identified, and change
    information is information is kept up to date in PTRS and that cost
    maintained in the inventory.

    amounts captured in financial and corporate planning systems are updated
    automatically as financial transactions are processed. 3. Information from
    the inventory is Executed. IT investment decision makers and other
    affected parties available on demand to decision makers have access to the
    various systems used to capture IT

    and other affected parties. project and system information. Although this
    information is available on demand, a number of systems must be accessed
    in order to obtain complete information on expected and actual costs,
    benefits, schedule, and risks.

    4. The IT project and system inventory Executed. Historical records are
    maintained for the primary systems and its information records are that
    contain IT project and system information, PTRS and maintained to
    contribute to future EIR. Project managers also input up- to- date systems
    and investment selections and assessments. project status information to
    EIR and PTRS, and the CPS and PTRS are updated automatically as financial
    transactions are processed. Finally, the Postal Service is retaining
    records that show changes in the information

    maintained on each IT investment over time and providing these records to
    its investment boards.

    Source: GAO.

    Processes Ensure That Defining business needs for IT projects helps ensure
    that projects support IT Investments Support

    the organization*s mission goals and meet users* needs. This critical
    process creates the link between the organization*s business objectives
    and Business Needs and its IT management strategy. According to ITIM,
    effectively identifying Meet User Needs

    business needs requires, among other things, (1) developing policies and
    procedures for identifying business needs and associated users for IT
    projects, (2) defining the organization*s business needs or stated mission
    goals, (3) defining business needs for projects, and (4) identifying users
    for projects who will participate in the project*s development and
    implementation.

    The Postal Service has executed all of the key practices for this critical
    process. The Service*s business needs are defined in a number of
    documents, including the organization*s strategic plan and recent

    Transformation Plan. Business needs and project users are being identified
    and defined in accordance with policies and procedures, and users are
    involved in project management throughout a project*s life cycle. For
    example, the project management team for Point of Service ONE conducts
    interviews to ensure that the system is providing the information needed
    for decision making, and staff working in field locations tested

    Point of Service ONE software to provide input on modifications required
    to support their needs. The business needs and associated users of the
    four projects we reviewed were clearly identified and defined in the DARs
    used to obtain project approval and in other project justification
    documentation.

    In addition, users of these projects were involved in project development
    activities through direct collaboration with CTO staff, user groups, and/
    or change control groups. Because the Postal Service is executing all the
    key practices associated with identifying business needs, it has increased
    confidence that its IT projects will meet both business needs and users*
    needs.

    Table 6 shows the rating for each key practice required to implement the
    critical process for business needs identification at the stage two level
    of maturity and summarizes the evidence that supports these ratings.

    Table 6: Business Needs Identification Type of practice Key practice
    Rating Summary of evidence

    Organizational 1. The organization has written

    Executed. The Postal Service has written policies and procedures for
    commitment policies and procedures for

    identifying business needs (and the associated users) in its F- 66
    identifying the business needs manual, Program Management Process Guide,
    and Integrated

    (and the associated users) of Solutions Methodology.

    each IT project. Prerequisites 1. Adequate resources are

    Executed. According to Postal Service officials, adequate resources are
    provided for identifying

    provided for identifying business needs and associated users. business
    needs and associated Program managers in the CTO organization also have
    methods and users.

    tools for analyzing business needs, identifying users, and converting
    business needs into statements of technical requirements.

    2. The organization has defined Executed. Business needs are defined in
    the Postal Service*s strategic plans, business needs or stated

    integrated financial plan, annual performance plans and reports, and
    mission goals.

    Postal Service Transformation Plan.

    3. IT staff are trained in Executed. CTO organization staff with assigned
    project management business needs identification. responsibilities are
    trained and experienced in the process of

    identifying business needs and developing technical solutions to meet
    these needs. In addition, they collaborate with business units in
    developing solutions to ensure that business needs are met. Business units
    are directly involved in this process. 4. IT projects and systems are
    Executed. Information on IT systems and projects is maintained in a number
    of identified in the IT project and

    systems, including PTRS and EIR. system inventory.

    Activities 1. The business needs for each Executed. Policies and
    procedures require that the business needs for each IT IT project are
    clearly identified

    project be clearly identified and defined. The business needs for the and
    defined. four projects we reviewed were clearly identified and defined.

    2. Specific users are identified Executed. Policies and procedures require
    that the specific users be identified for each IT project. for each IT
    project. Specific users were identified for the four IT

    projects we reviewed. Source: GAO.

    Structures Are in Place As a basic step in the direction of implementing
    mature stage two

    for Selecting IT processes, an organization must develop a sound process
    for selecting IT proposals and projects. Once adequate resources are
    provided and an

    Investment Proposals official is designated with responsibility for
    selecting proposals, stage two organizations establish a structured
    selection process. Resources required

    for selecting proposals typically include managerial time and attention,
    staff, and supporting tools and methodologies. Executives analyze and
    prioritize the proposals and make related funding decisions according to
    an established, structured process.

    The Postal Service has executed all of the key practices pertaining to
    selecting IT proposals: executives and managers follow established
    selection processes, the CFO has been designated with responsibility for
    the organization*s budget formulation process, adequate resources are
    being provided to support related activities, a structured process is in
    place for developing new IT proposals, and executives analyze and
    prioritize the proposals according to established selection criteria.

    Postal Service executives and managers follow established processes for
    selecting IT investments. Specifically, functional units, the Finance
    Department*s CAPE group, the Establish Team, and the organization*s
    enterprise- level investment boards all follow established processes for
    proposing, prioritizing, and selecting IT investments. Officials reported
    that the Establish Team operates in accordance with established management
    cycle processes supported by the organization*s CPS and that these
    processes, although not documented, are generally understood by

    members of the team. Finally, the CTO organization has developed selection
    criteria for that unit*s proposed IT investments that are incorporated in
    its new Business Case System (BCS).

    Table 7 shows the rating for each key practice required to implement the
    critical process for proposal selection at the stage two level of maturity
    and summarizes the evidence that supports these ratings.

    Table 7: Proposal Selection Type of practice Key practice Rating Summary
    of evidence

    Organizational 1. Executives and managers follow Executed. Executives and
    managers follow established processes for commitments an established
    selection process. selecting IT investments that are embodied in the
    Service*s

    capital planning and budget formulation processes. 2. An official is
    designated to Executed. The Postal Service has formally designated
    responsibility for manage the proposal selection

    the annual budget formulation process to the CFO. process. Prerequisite 1.
    Adequate resources are Executed. Adequate resources are available to
    support proposal

    provided for proposal selection selection activities in the functional
    units, the Finance

    activities. Department, the CTO organization, and the Establish Team.

    Activities 1. The organization uses a Executed. Proposals for new
    investments are developed by the structured process to develop new
    functional units, and the CTO organization has a structured IT proposals.

    process for supporting the development of IT- related proposals. 2.
    Executives analyze and prioritize Executed. Vice presidents of the Postal
    Service*s functional units new IT proposals according to develop and rank
    proposals for new IT investments, and the established selection criteria.

    Establish Team analyzes and prioritizes the proposals annually, along with
    existing IT investments, according to established criteria. 3. Executives
    make funding Executed. The Establish Team makes funding decisions for new
    IT decisions for new IT proposals proposals according to an established
    process as part of the

    according to an established Postal Service*s budget formulation
    activities. Team members

    process. are executive- level officers.

    Source: GAO.

    Postal Service Shows Mixed Progress in

    Chapt er 3

    Managing Its IT Investments as a Portfolio An IT investment portfolio is
    an integrated, enterprisewide collection of investments that are assessed
    and managed collectively based on common criteria. Managing investments
    within the context of such a portfolio is a conscious, continuous, and
    proactive approach to expending limited resources on an organization*s
    competing initiatives in light of the relative benefits expected from
    these investments. Taking an enterprisewide perspective enables an
    organization to consider its investments

    comprehensively so that the collective investments optimally address its
    mission, strategic goals, and objectives. This portfolio approach also
    allows an organization to determine priorities and make decisions about
    which projects to fund based on analyses of the relative organizational
    value and risks of all projects, including projects that are proposed,
    under development, and in operation.

    According to ITIM, critical processes performed by organizations at the
    stage three level of maturity include (1) defining portfolio selection
    criteria, (2) engaging in project- level investment analysis, (3)
    developing a complete portfolio based on the investment analysis, and (4)
    maintaining oversight

    over the investment performance of the portfolio. In addition,
    organizations with more than one board that selects IT projects for
    funding must align the authority of their IT investment boards. Although
    authority

    alignment is a critical process for the stage three level of maturity, we
    did not assess it in this study, because the Postal Service has a single
    set of organizationwide investment processes that apply to IT investments.
    Table 8 shows the purpose of each critical process in stage three.

    Table 8: Stage Three* Critical Processes Required for Developing a
    Complete Investment Portfolio

    Critical process Description

    Portfolio selection criteria To ensure that the organization develops and
    maintains definition IT portfolio selection criteria that support its
    mission, organizational strategies, and business priorities. Investment
    analysis To ensure that all IT investments are consistently analyzed and
    prioritized according to the organization*s

    portfolio selection criteria. Portfolio development To ensure that an
    optimal IT investment portfolio with manageable risks and returns is
    selected and funded.

    Portfolio performance To ensure that each IT investment portfolio achieves
    its oversight cost, benefit, schedule, and risk (CBSR) expectations.
    Source: GAO

    The Postal Service has executed many of the key practices associated with
    stage three critical processes. For example, the organization*s portfolio
    selection criteria are distributed throughout the organization, and they
    are reviewed and modified as appropriate. In addition, executives examine
    the mix of proposals and investments across portfolio categories in making
    funding selections. However, many key practices still need to be executed

    before the Postal Service can effectively manage its IT investments from a
    portfolio perspective. For example, the Postal Service has not defined the
    policies and procedures for any of the stage three critical processes. In
    addition, the Service has not developed portfolio selection criteria that

    adequately address cost, benefit, schedule, and risk. Until the Service
    fully implements critical processes associated with managing investments
    as a complete portfolio, it will not have ready access to the data needed
    to make informed decisions about competing investments.

    Table 9 summarizes the status of the Postal Service*s stage three critical
    processes, showing how many associated key practices it has executed.

    Table 9: Summary of Results for Stage Three Critical Processes and Key
    Practices Tot al required

    Percentage of key Key practices

    by critical practices

    Critical process executed process

    executed

    Portfolio selection criteria definition 4 6 67% Investment analysis 2 7 29
    Portfolio development 6 9 67 Portfolio performance oversight 6 9 67

    Totals 18 31 58%

    Source: GAO.

    The following discussion provides information on the steps the Postal
    Service has taken toward implementing each of the critical processes.

    Portfolio Selection To manage IT investments effectively, an organization
    needs to establish

    Criteria Are Defined, rules or *selection criteria* for determining how to
    allocate scarce funding to existing and proposed investments. Thus, the
    process of developing an

    but Do Not Adequately IT investment portfolio necessarily involves
    defining appropriate cost,

    Address All Factors benefit, schedule, and risk criteria for evaluating
    individual proposals for

    investments. To ensure that the organization*s strategic goals,
    objectives, and mission will be satisfied by the investments, the criteria
    should have an enterprisewide focus that reflects these strategic goals.
    Further, if an organization*s mission or business needs and strategies
    change, criteria for selecting investments should be reexamined at the
    portfolio level. Portfolio selection criteria should be disseminated
    throughout the organization to ensure that decisions concerning
    investments are made in a consistent

    manner and that this critical process is institutionalized. To achieve
    this result, project managers, organizational planners, and other decision
    makers should receive information on the organization*s selection criteria
    and address the criteria in IT proposals and business cases, project
    oversight activities, and strategic and business planning processes.

    Resources required for this critical process typically include the time
    and attention of executives involved in the process, adequate staff, and
    supporting tools.

    The Postal Service has executed four of the six key practices for this
    critical process. First, adequate resources are available to conduct
    portfolio selection criteria definition activities. Second, several
    working groups, including the Establish Team, are tasked with creating and
    modifying portfolio selection criteria. Third, portfolio selection
    criteria in the form of performance indicators and targets and program
    narratives that

    are required for budget formulation are distributed throughout the
    organization. Fourth, the Establish Team performs periodic reviews of the
    portfolio selection criteria and, in doing so, considers the
    organization*s

    current strategic goals and objectives, changing the criteria from year to
    year as required by current circumstances and priorities.

    Nonetheless, the Postal Service has yet to develop written guidance
    establishing procedures to be followed in creating, modifying, and using
    criteria for selecting a portfolio. Postal Service officials use annual
    performance plans, performance indicators and targets, and program
    narrative requirements as portfolio selection criteria. While these
    criteria are based on the Postal Service*s mission, goals, strategies, and
    priorities,

    they are not adequate because they do not address cost, benefit, schedule,
    and risk considerations in a manner that (1) provides sufficient and

    meaningful cost, benefit, schedule, and risk information to effectively
    assess investments and (2) would allow the Service to compare them against
    one another, prioritize them, and select those that best meet its needs
    and priorities. For example, program narratives do not include complete
    cost information. While expected capital costs are reported for the next 6
    years, expense is only reported through the end of the current fiscal
    year. Further, the criteria do not include a weighting schema or other
    method that would allow the Establish Team to compare the risk- adjusted
    returns of competing investments. The CTO organization uses such criteria
    to prioritize investments and assist in making selection decisions.
    Without portfolio selection criteria that adequately address cost,
    benefit, schedule,

    and risk considerations, Postal Service officials have less assurance that
    they are selecting the mix of investments that best meets the
    organization*s needs and priorities. Table 10 shows the rating for each
    key practice required to implement the critical process for defining
    proposal selection criteria at the stage three level of maturity and
    summarizes the evidence that supports these ratings.

    Table 10: Portfolio Selection Criteria Definition Type of practice Key
    practice Rating Summary of evidence

    Organizational 1. The organization has written

    Not executed. The Postal Service does not have written policies commitment
    policies and procedures for creating and procedures for creating and
    modifying IT

    and modifying IT portfolio selection portfolio selection criteria.

    criteria. Prerequisites 1. Adequate resources are provided Executed.
    Adequate resources are available to conduct IT for selection criteria
    definition proposal selection criteria definition activities, activities.

    including the Establish Team, which develops portfolio selection criteria
    each year as part of the budget formulation process. 2. A working group is
    designated to Executed. The Establish Team is responsible for creating and
    be responsible for creating and modifying the Postal Service*s IT
    portfolio selection modifying the IT portfolio selection

    criteria. criteria.

    (Continued From Previous Page)

    Type of practice Key practice Rating Summary of evidence

    Activities 1. The enterprisewide IT investment Not executed. While the
    Establish Team approves portfolio board approves the core IT portfolio

    selection criteria based on the Postal Service*s selection criteria,
    including cost, mission, goals, strategies, and priorities, these benefit,
    schedule, and risk criteria, criteria are not adequate because they do not
    based on the organization's mission,

    address CBSR considerations in a manner that (1) goals, strategies, and
    priorities.

    provides sufficient and meaningful information to effectively assess
    investments and (2) would allow the Postal Service to compare investments
    against one another, prioritize them, and select those that best meet the
    Service*s needs and priorities.

    2. The IT portfolio selection criteria Executed. The Postal Service
    distributes portfolio selection are distributed throughout the

    criteria in the form of strategic and annual organization. performance
    plans, performance indicators and targets, and program narrative
    requirements used for budget formulation. 3. The IT portfolio selection
    criteria

    Executed. The Establish Team reviews the Postal Service*s IT are reviewed
    using cumulative portfolio selection criteria each year. In these
    experience and event- driven data and

    reviews, the Team considers the organization*s modified, as appropriate.

    strategic goals and objectives, changing the criteria that it uses from
    year to year as required by current circumstances and priorities. Source:
    GAO.

    IT Investments Are Not This critical process ensures that all IT
    investments are consistently Consistently Analyzed analyzed and
    prioritized according to the organization*s portfolio selection

    criteria, which should include cost, benefit, schedule, and risk and
    Prioritized within considerations. According to ITIM, effective investment
    analysis requires, the Context of a among other things, that (1) portfolio
    selection criteria have been Portfolio

    developed; (2) cost, benefit, schedule, and risk data are assessed and
    validated for each investment; (3) the investment review board compares
    each investment against the organization*s portfolio selection criteria;
    and (4) the investment review board creates a ranked list of investments
    using the portfolio selection criteria.

    The Postal Service has executed two of the key practices in this area.
    First, the Postal Service has adequate resources for analyzing
    investments, including CAPE and other dedicated staff. Second, the Postal
    Service ensures that cost, benefit, schedule, and risk data concerning IT
    investments are validated. The Service does this in two particular
    instances: (1) during the development of the DAR, the document for
    approving capital projects, there is a validation step in which Finance

    Department staff independently verify the accuracy and integrity of the
    data presented and a validation memo is signed by the Controller to

    confirm that the data are correct; (2) as part of the annual budget
    formulation process, the data submitted on the various budget proposals
    are reviewed, and thus validated, by various levels of management up to
    the senior vice president of the functional unit sponsoring a proposal.
    Nevertheless, the Postal Service has a number of weaknesses in the way it
    analyzes investments for portfolio management. First, it does not have
    policies and procedures that sufficiently address this critical process.
    Its F- 66 manual includes some procedures for analyzing proposed
    investments; however, it does not specify an approach for analyzing

    existing investments to make portfolio selection decisions. Nor does it
    describe a process to establish portfolio selection criteria that
    adequately incorporate cost, benefit, schedule, and risk considerations.
    In addition, it does not address capital projects that have been deployed
    for more than 18 months or ongoing infrastructure- type projects. Second,
    while investments are analyzed by executives during the approval process,
    through the review of quarterly status reports, and during the annual
    budget formulation activities, these investments are not assessed against
    portfolio selection criteria that adequately consider cost, benefit,
    schedule, and risk factors. The F- 66 manual does not explicitly require
    the preparation of a risk assessment when the DAR is developed for a new
    investment. Further, when the Establish Team reviews budget documents as
    part of the annual budget formulation process, these documents do not

    provide sufficient information on cost, benefit, and risk to determine
    whether investments are progressing according to the approved DAR
    parameters.

    Table 11 shows the rating for each key practice required to implement the
    critical process for analyzing investments at the stage three level of
    maturity and summarizes the evidence that supports these ratings.

    Table 11: Investment Analysis Type of practice Key practice Rating Summary
    of evidence

    Organizational 1. The organization has written Not executed. The Postal
    Service does not have policies and procedures that commitment policies and
    procedures for

    sufficiently address this critical process. The F- 66 manual analyzing IT
    investments. includes procedures for analyzing investments, for example,
    by validating DAR information. However, these guidelines do not

    (1) specify how the Establish Team is to analyze investments or use
    investment analysis data to make portfolio selection decisions; (2)
    recommend the use of portfolio selection criteria that adequately
    incorporate CBSR considerations; (3) apply to

    capital projects that have been deployed more than 18 months or to ongoing
    infrastructure- type projects; or (4) provide guidance on how projects are
    to be evaluated against one

    another (e. g., there are no specific provisions for dealing with projects
    that are conflicting, overlapping, or redundant). Prerequisites 1.
    Adequate resources are

    Executed. The Postal Service has adequate resources for analyzing provided
    for investment analysis investments, including dedicated staff (e. g.,
    CAPE staff who activities.

    validate DARs) and tools. 2. IT investment portfolio

    Not executed. While the Postal Service has developed portfolio selection
    selection criteria have been

    criteria, these criteria are not adequate because they do not developed.

    address CBSR considerations in a manner that (1) provides sufficient and
    meaningful information to effectively assess investments and (2) would
    allow the Service to compare investments against one another, prioritize
    them, and select those that best meet the Service*s needs and priorities.
    3. Information from the IT project Not executed. The Postal Service*s
    investment boards with management and system inventory is used by
    responsibility do not use information from the IT project and the IT
    investment board.

    system inventory for analyzing investments in the context of portfolio
    management.

    Activities 1. Each IT investment board Executed. The Postal Service
    ensures that CBSR data for IT investments ensures that the CBSR data and

    are validated through the DAR process and management*s other required data
    are validated

    review of CBSR data submitted during the budget formulation for each
    investment within its cycle. span of control.

    2. Each IT investment board Not executed. While the Establish Team
    analyzes all IT investments, it does so assesses each of its IT

    with portfolio selection criteria that are not adequate because
    investments with respect to the

    they do not address CBSR considerations in a manner that (1) IT portfolio
    selection criteria.

    provides sufficient and meaningful information to effectively assess
    investments and (2) would allow the Postal Service to compare investments
    against one another, prioritize them, and

    select those that best meet the Service*s needs and priorities. 3. Each IT
    investment board

    Not executed. While the Postal Service*s Establish Team evaluates and
    ranks prioritizes its full portfolio of IT

    the organization*s full portfolio of existing and new IT investments using
    the portfolio investments, it does so with criteria that do not adequately
    selection criteria.

    address cost, benefit, schedule, and risk. Source: GAO.

    An IT Investment At the stage three level of maturity, organizations
    design processes for Portfolio Is Developed, developing an IT portfolio
    and develop written policies and procedures to

    ensure that projects are selected that best fit their strategic business
    but Project direction, needs, and priorities. Each organization has
    practical limits on

    Expectations Are Not funding, the risks it is willing to take, and the
    length of time for which it will Routinely Revised

    incur costs on a given investment before benefits are realized. To address
    these limits, stage three organizations group existing and proposed IT
    investments into predefined logical categories, for example, by cost or by
    type of investment (i. e., facilities or equipment). Once this is
    accomplished, organizations can compare investments and proposals within
    and across the portfolio categories and select the best overall portfolio
    for funding.

    According to ITIM, the portfolio development process cannot be performed
    well unless certain conditions are first satisfied, including (1)
    providing adequate resources for a portfolio development process; (2)
    appointing to IT investment boards people who exhibit core competencies in
    developing portfolios; (3) analyzing individual IT investments, including
    validating

    associated cost, benefit, schedule, and risk data; and (4) defining
    investment categories. Organizations should also create written policies
    and procedures for establishing and maintaining the portfolio development
    process. Assuming that this foundation is in place, the IT investment

    boards of stage three organizations assign each investment to a portfolio
    category, examine the mix of existing and proposed investments across
    these categories, and make selections for funding. Each IT investment
    board also establishes annual cost, benefit, schedule, and risk
    expectations for individual IT projects and gathers and validates data on
    actual performance. A repository of information on developing portfolios
    is established, updated, and maintained. Resources required for this
    critical process typically include staff, supporting tools for developing
    portfolios, and managerial time and attention to portfolio development.

    The Postal Service has executed six of the nine key practices for this
    critical process by providing adequate resources to implement this
    critical process; assigning competent managers to the board responsible
    for the portfolio development process; developing common portfolio
    categories; assigning IT programs and projects to portfolio categories on
    the basis of established criteria; examining the mix of proposals and
    investments across the common portfolio categories and making selection
    decisions for

    funding; and establishing, updating, and maintaining repositories of
    portfolio information.

    Postal Service officials reported that adequate management time and staff
    resources are available for this critical process. In addition, several
    systems are in use that support portfolio development activities,
    including PTRS, BCS, and CPS. Postal Service officials stated that the
    organization provides training in the use of these systems. Moreover,
    members of the Postal

    Service*s enterprise- level investment boards are senior- level executives
    who have had many years of experience in the organization and in working
    with the IT investment management process. The Postal Service also has
    defined common IT investment portfolio categories for the organization.
    The Postal Service*s IT investments are considered to relate either to
    corporatewide or functional unit activities and are further classified by
    funding type (capital or expense) and investment type (facilities,
    equipment, field, or other), as provided for in the organization*s F- 66
    manual and budget instructions.

    Postal Service programs and projects are now being assigned to portfolio
    categories based on the criteria described above. Further, the Establish
    Team examines the organization*s entire portfolio of IT investments
    annually and then selects programs and projects for funding. The Postal
    Service collects and stores information relating to the portfolio
    development process in a variety of forms ranging from IT project and
    systems inventories and finance/ budget and corporate planning systems to
    manual backup books maintained by the Finance Department.

    Even though these important steps in stage three portfolio development
    have been taken, some weaknesses remain. The Postal Service has yet to
    develop written policies and procedures for establishing and maintaining

    portfolio information on its IT investments. The Postal Service has
    defined investment categories in its F- 66 manual 18 but has not developed
    written policies and procedures for establishing and maintaining portfolio
    information on IT investments. Moreover, even though the CTO

    organization monitors data on the performance of IT projects, the
    Establish Team does not perform complete analyses of the performance of
    individual

    18 The Postal Service classifies its investments as either capital or
    expense. Section 1- 4 of the F- 66 Manual states that capital investments
    are investments in real property or personal property that are charged to
    an asset account. Examples of capital investments include real property,
    leasehold improvements, and personal property investments (equipment or
    vehicles). Expense investments include lease agreements, research and
    development projects, new products and services, and major operating
    expense investments. Expense investments are accounted for as expenses on
    the balance sheet. Routine operating

    expenses associated with the day- to- day business of the organization are
    not considered to be investments.

    investments or establish cost, benefit, schedule, and risk expectations
    for each investment annually.

    While the Establish Team reviews investments each year from a strategic
    planning and funding perspective, neither the analyses it performs nor the

    Investment Highlights reports on the projects provided to the Board of
    Governors adequately consider actual benefit and risk or contain complete
    information on cost. For example, the business case for the Surface- Air
    Management System includes information on over a dozen different types

    of qualitative benefits expected to be obtained by investing in that
    project. However, Investment Highlights reports provided to the Board of
    Governors only include information on the number of installations
    completed to date. In addition, although information on projects* capital
    costs is included in Investment Highlights, information on operating
    expenses is not. As a result, information on these aspects of project
    performance is not routinely provided to the Board of Governors. Without
    complete cost, benefit, schedule, and risk data, Postal Service executives
    do not have the information needed to analyze and compare all investments
    and select those that best fit with the strategic business direction,
    needs,

    and priorities, of the organization. Table 12 shows the rating for each
    key practice required to implement the critical process for portfolio
    development at the stage three level of maturity and summarizes the
    evidence that supports these ratings. Table 12: Portfolio Development

    Type of practice Key practice Rating Summary of evidence

    Organizational 1. The organization has written Not executed. The Postal
    Service has not developed written policies and commitment policies and
    procedures for

    procedures for establishing and maintaining an IT portfolio establishing
    and maintaining the

    development process. portfolio development process. Prerequisites 1.
    Adequate resources are provided Executed. Adequate management time, staff
    resources, and training for executing the portfolio development

    are available to perform this critical process, and various process.

    automated systems capture information on the Postal Service*s IT
    investment portfolio. 2. Board members exhibit core Executed. Members of
    the Postal Service*s Capital Investment competencies in portfolio
    Committee and Establish Team are senior- level executives development.

    who have extensive experience with the organization*s operations and the
    IT investment management process.

    (Continued From Previous Page)

    Type of practice Key practice Rating Summary of evidence

    3. Individual IT investments have been Not executed. The Postal Service
    ensures that IT investments* CBSR

    analyzed and their cost, benefit, data are validated. However, the
    Establish Team analyzes schedule, and risk data have been

    IT investments using portfolio selection criteria that do not validated.

    adequately address cost, benefit, schedule, and risk. 4. The organization
    has defined its Executed. The Postal Service investment categories in its
    F- 66 common portfolio categories. manual are based on type of expenditure
    (capital or

    expense), type of investment (facilities, equipment, field, other), and
    expected total cost (under $5 million, $5 million to under $7.5 million,
    $7. 5 million to under $10 million, and $10 million or more). Activities
    1. Each IT investment board assigns Executed. The Postal Service assigns
    IT programs and projects to

    investment proposals to a portfolio portfolio categories on the basis of
    established criteria category. contained in its F- 66 manual.

    2. Each IT investment board examines Executed. The Establish Team examines
    portfolios of investments the mix of proposals and investments categorized
    based on total expected capital costs and across the common portfolio
    makes selections for funding. categories and makes selections for funding.

    3. Each IT investment board approves Not executed. Although, according to
    Finance Department officials, or modifies the annual CBSR management may
    approve or modify project expectations expectations for each of its
    selected IT

    at any time, there is no process for routinely doing so. The investments.

    Establish Team does not routinely approve or modify cost, benefit,
    schedule and risk expectations for each existing and new IT investment on
    an annual basis. However, the CTO Investment Review Board does evaluate
    CBSR data for all projects with IT components. 4. A repository of
    portfolio

    Executed. The Postal Service collects and stores information relating
    development information is to the portfolio development process in
    multiple repositories established, updated, and maintained. ranging from
    IT project and systems inventories and financial and corporate planning
    systems to project managers* records and manual backup books maintained by
    the Finance Department for Board of Governors

    programs and projects. Source: GAO.

    Portfolio Performance The purpose of this critical process is to ensure
    that each IT investment

    Oversight Is achieves its cost, benefit, schedule, and risk expectations.
    It builds on the

    critical process for IT project oversight at stage two by adding elements
    of Performed, but without

    benefit measurement and risk management to an organization*s investment
    Comprehensive control capability. Executive- level oversight of project-
    level risk and

    Guidance benefit management activities provides the organization with
    increased

    assurance that each investment will achieve the desired cost, benefit,
    schedule, and risk expectations.

    According to ITIM, effective oversight of portfolio performance requires,
    among other things, that the investment board (1) has access to up- to-
    date cost, benefit, schedule, and risk data; (2) monitors the performance
    of each investment in its portfolio by comparing actual project- level
    cost, benefit, schedule, and risk data to the predefined expectations for
    the project; and (3) corrects poorly performing projects.

    The Postal Service is executing six of the nine key practices for this
    critical process by providing adequate resources for monitoring and
    controlling IT project performance and giving investment boards access to
    data on actual and expected cost, benefit, schedule, and risk that are
    maintained in the organization*s IT project and system inventory. In
    addition, the CTO Investment Review Board provides oversight for all IT
    projects by monitoring these data and providing feedback on performance to

    sponsoring organizations. These oversight activities include working with
    IT project management teams to identify and address any development and
    deployment issues that may arise. Despite these strengths, however, the
    Postal Service has yet to develop policies and procedures that address
    performance oversight from a portfolio perspective. Moreover, while
    expectations are established in DARs or business cases that include cost,
    benefit, schedule, and risk, and

    the CTO organization monitors actual performance results, the Postal
    Service has not established a mechanism for revising expected benefit and
    risk expectations after its boards approve the investments or for
    notifying the Establish Team when an investment has not met cost, benefit,
    schedule, and risk expectations. Until the Postal Service executes all key
    practices associated with this critical process, senior executives will be
    less likely to determine whether the investments they have selected are
    delivering mission value at the expected cost and risk.

    Table 13 shows the rating for each key practice required to implement the
    critical process for portfolio performance oversight at the stage three
    level of maturity and summarizes the evidence that supports these ratings.

    Table 13: Portfolio Performance Oversight Type of practice Key practice
    Rating Summary of evidence

    Organizational 1. The organization has written Not executed. The Postal
    Service does not have policies and procedures commitment policies and
    procedures for

    that address portfolio performance oversight. monitoring and controlling
    portfolio performance.

    Prerequisites 1. Adequate resources are provided Executed. The Postal
    Service has adequate resources for monitoring for monitoring and
    controlling the and controlling the portfolio*s performance. They include
    portfolio*s performance. the CTO Investment Review Board, portfolio
    managers, and PTRS. 2. Annual CBSR expectations are

    Not executed. Cost, benefit, schedule, and risk expectations are agreed
    upon for each IT investment. established in projects* DARs or business
    cases. While benefit and risk expectations may be revised through the
    annual budget process or a DAR modification, they are not reviewed and
    revised on an annual basis. 3. The IT investment board has Executed. The
    Postal Service has systems and reports that capture access to up- to- date
    actual and

    up- to- date actual and expected cost, benefit, schedule, and expected
    CBSR data in a repository.

    risk. They include PTRS, used by the CTO Investment Review Board to
    monitor program performance; the program narratives developed for budget
    formulation purposes; and the DARs that define CBSR expectations.
    Activities 1. Each IT investment board

    Executed. The CTO Investment Review Board monitors each project*s monitors
    the performance of each performance by regularly comparing actual CBSR
    data to investment in its portfolio by expectations. The Establish Team
    also does this through comparing actual CBSR data to

    the program review it performs as part of the budget expectations.

    formulation activities. 2. Using established criteria, the IT

    Not executed. Using established criteria, the CTO Investment Review
    investment board identifies its Board identifies investments that have not
    met CBSR investments that have not met criteria. However, the Postal
    Service does not have a predetermined CBSR performance defined process for
    notifying the Establish Team that an expectations.

    investment is not on track. 3. The IT investment board and the

    Executed. The CTO Investment Review Board and project manager project
    manager determine the root determine the root cause of poor project
    performance cause of the poor performance.

    during project reviews. 4. The IT investment board and the

    Executed. The CTO Investment Review Board and project manager project
    manager develop an action

    develop an action plan designed to remedy the identified plan designed to
    remedy the cause( s) of poor performance. identified cause( s) of poor
    performance.

    5. Corrective actions are initiated Executed. The CTO Investment Review
    Board tracks corrective and outcomes are tracked. actions until they are
    completed. Source: GAO.

    Postal Service Has Yet to Implement

    Chapt er 4

    Processes to Better Meet Strategic Goals Organizations that achieve the
    stage four level of maturity evaluate their IT investment processes and
    portfolios to identify opportunities for improvement. At the same time,
    these organizations are able to maintain the mature control and selection
    processes that are characteristic of stage three in the ITIM model. A key
    tool for accomplishing this critical process is the post- implementation
    review, in which outcomes of individual IT investments are compared to the
    organization*s plans and expectations. This review typically results in
    identifying lessons learned from the investment experience that are used
    by the organization to improve its understanding of the key variables in
    the investment*s business case.

    Analyzing a number of post- implementation reviews can also provide
    insights into the organization*s overall IT investment management process.
    This analysis is facilitated by classifying individual investments into
    logical categories and using the lessons learned to fine- tune associated
    processes, as well as aspects of the portfolio. In addition, at stage four
    maturity, organizations are capable of systematically planning for and
    implementing

    decisions to discontinue or deselect obsolete, high- cost, and low- value
    IT investments and planning for successor investments that better support
    strategic goals and business needs.

    Organizations acquire stage five capabilities when they create
    opportunities to shape strategic outcomes by learning from other
    organizations and continuously improving the manner in which they use IT
    to support and improve business outcomes. Thus, organizations at the stage
    five level of maturity benchmark their IT investment processes

    relative to other best- in- class organizations and conduct proactive
    monitoring for breakthrough information technologies that will allow them
    to significantly improve business performance. Table 14 shows the purpose
    of each critical process in stages four and five.

    Table 14: Stages Four and Five* Critical Processes Required for Improving
    the Investment Process and Leveraging IT for Strategic Outcomes Critical
    process Description

    Stage 4* Improving the Investment Process

    Post- implementation To compare outcomes of recently implemented
    investments reviews and feedback to the expectations for them and develop
    a set of lessons learned from these reviews.

    Portfolio performance To assess and improve overall IT investment
    portfolio evaluation and

    performance and the investment management process. improvement

    Systems and technology To ensure that IT investments in operation are
    periodically succession management evaluated and determine whether they
    should be retained, modified, replaced, or otherwise disposed.

    Stage 5* Leveraging Information Technology for Strategic Outcomes

    Investment process To identify and implement measurable improvements in
    the benchmarking IT investment management processes so that the processes
    meet or exceed those used by best- in- class organizations. IT- driven
    strategic To dramatically improve business outcomes by strategically
    business change employing IT investments. Source: GAO.

    The Postal Service is executing five of the thirty- four key practices
    associated with the five critical processes in stages four and five. For
    example, it has policies and guidance for conducting post- implementation
    reviews and provides training to individuals involved in these activities.
    The Postal Service also provides resources for identifying opportunities
    for IT- driven strategic business change. However, it does not regularly
    capture lessons learned from post- implementation reviews, the performance
    of its portfolio, or benchmarking in order to improve its investment
    processes. In addition, it does not actively manage the succession of its
    IT systems or investments. Until it implements stage four and five
    critical processes, the

    Postal Service will not be positioned to effectively improve its IT
    investment management processes and successfully leverage IT to improve
    business outcomes. Table 15 summarizes the status of the Postal Service*s
    critical processes for stages four and five and shows how many associated
    key practices it has executed.

    Table 15: Summary of Results for Stages Four and Five Critical Processes
    and Key Practices

    Key Percentage of

    practices Total required by

    key practices Critical process

    executed critical process executed

    Stage 4* Improving the Investment Process

    Post- implementation reviews & 3 650% feedback Portfolio performance
    evaluation &

    0 60 improvement Systems & technology succession 0 90

    management Tot al s 3 21 14%

    Stage 5* Leveraging Information Technology for Strategic Outcomes

    Investment process benchmarking 0 7 0 IT- driven strategic business change
    2 6 33

    Tot al s 2 13 15%

    Source: GAO.

    The following discussion provides information on steps the Postal Service
    has taken to implement each of the critical processes.

    Policies and Post- implementation reviews are performed (1) to examine
    differences

    Procedures Are between estimated and actual investment costs and benefits
    and possible ramifications for unplanned funding needs in the future and
    (2) to extract

    Defined, but PostImplementation lessons learned about the investment
    selection and control processes that can be used as the basis for
    management improvements. Investments that Review Process Is Not

    have completed development and those that were terminated before
    completion should be reviewed promptly to identify potential management

    Institutionalized and process improvements. According to ITIM, this
    critical process

    involves identifying the projects to be reviewed; initiating reviews and
    developing policies and procedures for conducting the reviews; and
    ensuring that quantitative and qualitative data are collected, evaluated
    for reliability, and analyzed during the course of the reviews.

    The Postal Service has executed three of the six key practices required to
    implement the critical process for post- implementation reviews. First,
    the CTO organization and Finance Department have each developed policies
    and procedures for performing post- implementation reviews. These

    include the CTO organization*s Program Management Process Guidelines and
    the Finance Department*s National Cost Study Process. Second, according to
    Postal Service officials, the Service has adequate resources to perform
    review activities. Third, Postal Service staff are trained in conducting
    post- implementation reviews.

    The Postal Service, however, has several weaknesses in this critical
    process. First, no investment board has been assigned responsibility for
    (1) identifying projects for which post- implementation reviews are to be
    conducted and (2) ensuring that post- implementation reviews are
    initiated. Second, the Postal Service has no institutionalized process for
    routinely (1) identifying projects for which post- implementation reviews
    are to be conducted, (2) collecting quantitative and qualitative data
    while performing post- implementation reviews, and (3) developing lessons
    learned and improvement recommendations about the investment process and

    capturing them in a written product or knowledge base. This is evidenced
    by the fact that, while the Finance Department*s Program Performance Group
    is responsible for conducting post- implementation cost studies, only
    three of them have been performed since 1990. Until the Postal Service
    implements an institutionalized process for routinely performing
    postimplementation

    reviews, senior executives will lack key information needed to improve the
    performance of the IT investment portfolio as well as the investment
    management process.

    Table 16 shows the rating for each key practice required to implement the
    critical process for post- implementation reviews at the stage four level
    of maturity and summarizes the evidence that supports these ratings.

    Table 16: Post- Implementation Reviews and Feedback Type of practice Key
    practice Rating Summary of evidence

    Organizational 1. The organization has written Executed. The CTO
    organization and Finance Department have each commitment policies and
    procedures for

    developed policies and procedures for performing postimplementation
    conducting post- implementation reviews. The Postal Service has developed
    policies reviews.

    and procedures for performing post- implementation reviews. These include
    the Software Process Standards and Procedures, Integrated Solutions
    Methodology (ISM), Project Management Process

    Guidelines, and the National Cost Study Process.

    Prerequisites 1. Adequate resources are Executed. Postal Service officials
    stated that adequate resources are available provided for conducting post

    for conducting post- implementation reviews. implementation reviews.

    2. Each IT investment board Executed. Postal Service staff have received
    training in conducting post ensures that individuals

    implementation reviews. conducting post- implementation reviews are
    trained. Activities 1. An IT investment board Not The Postal Service has
    not assigned any investment board with

    identifies the projects for which a executed. responsibility for
    identifying the projects for which a post

    post- implementation review will implementation review will be conducted
    and ensuring that post

    be conducted and a post implementation reviews are initiated.

    implementation review is initiated for each designated investment.

    2. Quantitative and qualitative Not The Postal Service does not have an
    institutionalized process for

    investment data are collected, executed. routinely performing post-
    implementation reviews. Only three post evaluated for reliability, and

    implementation cost- studies have been performed since 1990. analyzed
    during the postimplementation reviews.

    3. Lessons learned and Not The Postal Service does not have an
    institutionalized process to improvement recommendations executed. develop
    and capture lessons learned and improvement about the investment process
    recommendations about the investment process and individual and the
    individual investment are

    investments. developed, captured in a written product or knowledge base,
    and distributed to decision makers.

    Source: GAO.

    IT Investments Are Not Stage four evaluations of portfolio performance
    enable organizations to Evaluated from the

    determine what contribution their collected pools of IT investments are
    making to mission goals and needs. Evaluations of this sort are similar to
    Perspective of post- implementation reviews involving individual projects,
    but different in Portfolio Performance that they apply to entire IT
    investment portfolios. This critical process seeks to determine how well
    IT investments are helping to achieve the strategic needs of the
    enterprise, satisfying the needs of individual units and users, and
    improving business performance through IT. Performance

    information for an organization*s entire portfolio of investments has to
    be compiled and analyzed and trends examined. Developing baseline
    performance data is critical to making this a meaningful exercise.
    According to ITIM, the process of addressing problems and opportunities
    for improving the investment process and the investment portfolio usually
    involves developing written policies and procedures for the investment
    management process, creating recommendations for the IT investment board,
    documenting the decision criteria used to measure portfolio performance,
    deciding whether or not to implement each recommendation, and tracking the
    progress made. Resources required for this critical process typically
    include staff support, methods and tools to aid the teams conducting post-
    implementation reviews, and current and historical portfolio data.

    To advance to the stage four level of maturity, an organization must first
    ensure that all of the prerequisites, commitments, and activities that are
    characteristic of levels two and three have been put into place. The next
    step is to develop written policies and procedures for evaluating and
    improving its IT investment portfolio that include defining requirements
    for measuring performance data. Cost, benefit, schedule, and risk must all
    be fully considered to enable an organization to construct a picture of
    the overall performance of its IT investment portfolio.

    The Postal Service is not executing any of the six key practices for this
    critical process. First, while the Establish Team reviews existing and
    proposed IT investments each year as a part of the organization*s budget
    formulation process, no evaluations are being done that are designed to
    identify opportunities for improving portfolio performance. Also lacking
    are written policies and procedures that define the organization*s key
    measures and the methods used to assess portfolio performance, evaluation
    methods, reporting requirements, and other applicable policies and
    procedures. Because the Postal Service has not collected data for this

    critical process, including baseline performance information on its IT
    portfolio, it is more difficult to perform evaluations that could result
    in recommendations for improving its process for selecting a portfolio.
    Table 17 shows the rating for each key practice required to implement the
    critical process for evaluating and improving the performance of the
    portfolio at the stage four level of maturity and summarizes the evidence
    that supports these ratings.

    Table 17: Portfolio Performance Evaluation and Improvement Type of
    practice Key practice Rating Summary of evidence

    Organizational 1. The organization has written

    Not executed. The Postal Service has not developed enterprise- level
    commitment policies and procedures for

    written policies and procedures for evaluating and evaluating and
    improving the

    improving the performance of its IT investment portfolios. performance of
    its portfolio( s). Prerequisites 1. Adequate resources are provided Not
    executed. The Postal Service does not perform enterprise- level for
    conducting the portfolio

    evaluations of portfolio performance. performance evaluation and
    improvement process. 2. Board members who are

    Not executed. The Finance Department does not perform enterprise- level
    responsible for evaluating and activities to evaluate and improve
    portfolio performance. improving the investment processes and investment
    portfolio( s) exhibit core competencies in portfolio performance
    evaluation and improvement.

    Activities 1. Comprehensive IT portfolio Not executed. The Postal Service
    has not developed comprehensive performance measurement data are

    definitions of measurement data for IT portfolio defined and collected
    using agreed performance or methods for collecting data of this sort. upon
    methods.

    Moreover, data are not collected on actual qualitative benefits, and the
    risk data captured in Postal Service information repositories are
    incomplete.

    2. Aggregate performance data and Not executed. The Postal Service does
    not collect the aggregate IT trends are analyzed. portfolio performance
    data required to perform analyses of this sort.

    3. Investment process and portfolio Not executed. The Postal Service has
    not performed the analyses improvement recommendations are required to
    serve as the basis for improving the investment developed and implemented.

    and portfolio selection processes. Source: GAO.

    Process for Managing Managing the succession of systems and technology
    entails periodically

    Succession of Systems evaluating IT investments to determine whether they
    should be retained,

    modified, replaced, or otherwise disposed of. According to ITIM, system
    and Technology and technology succession management includes (1) defining
    policies and Is Not Established

    procedures for managing the IT succession process, (2) assigning
    responsibility for the succession management process, (3) developing
    criteria for identifying IT investments that may meet succession status,
    and (4) periodically analyzing IT investments to determine whether they
    are ready for succession. This critical process enables the organization
    to recognize low- value or high- cost IT investments and augments the
    routine replacement of systems at the end of their useful lives. This
    critical process supports the development of a forward- looking, solution-
    oriented view of

    IT investments that anticipates future resource requirements and allows
    the organization to plan appropriately. The Postal Service has not
    performed any of the nine key practices required to implement this
    critical process. For example, while the Postal Service*s project
    management guidelines define procedures for retiring investments, they do
    not describe how to review systems regularly to identify candidates for
    retirement. According to officials from the CTO organization, decisions on
    succession management are usually made

    between business unit managers and CTO office staff (e. g., portfolio
    managers), but no individual or group has been assigned responsibility for
    managing the succession process from an enterprise perspective, which
    would allow the Postal Service to better anticipate future resource
    requirements. Finally, the Postal Service has neither defined the criteria
    for identifying investments that may meet succession status nor taken
    steps to regularly analyze IT investments for possible succession.

    According to CTO organization officials, the Postal Service has retired or
    replaced roughly 250 systems since 1998. However, this was not done within
    the structure of an institutionalized succession management process.
    Postal Service officials have stated that IT investments are reviewed, for
    example, during the annual budget formulation process to

    analyze them for possible succession. However, without an
    institutionalized process for succession management, the Postal Service
    may not be able to identify those IT investments that are eligible for
    succession in enough time to minimize the effect of the transition on
    their successors.

    Table 18 shows the rating for each key practice required to implement the
    critical process for managing the succession of systems and technology at
    the stage four level of maturity and summarizes the evidence that supports
    these ratings.

    Table 18: Systems and Technology Succession Management Type of practice
    Key practice Rating Summary of evidence

    Organizational 1. The organization has written Not executed. While the
    Postal Service has procedures in place for system commitments policies and
    procedures for

    retirements, it lacks written policies and procedures for managing the IT
    succession managing the succession of the organization*s IT process.

    investments. 2. An official is designated to Not executed. According to
    officials in the Offices of the CFO and CTO, the manage the IT succession
    Postal Service has not designated responsibility for managing process.

    the IT succession process. Prerequisites 1. Adequate resources are Not
    executed. The Postal Service has no formal process for conducting IT
    provided for conducting IT succession activities. succession activities.

    2. Investment board members Not executed. According to Postal Service
    officials, decisions on the exhibit core competencies in IT

    management of systems and technology succession are succession decisional
    activities. made between business unit managers and CTO organization
    staff, not by members of an investment board.

    3. Information from the IT project Not executed. The Postal Service*s
    enterprise- level investment boards do and system inventory is used by not
    use information from the IT project and system inventory the IT investment
    board.

    for succession management. Activities 1. The IT investment board Not
    executed. The Postal Service does not have criteria for identifying IT
    develops criteria for identifying IT investments that may meet succession
    status.

    investments that may meet succession status. 2. IT investments are
    periodically Not executed. The Postal Service does not have a process in
    place for analyzed for succession and periodically analyzing IT
    investments to see if they are eligible appropriate investments are for
    succession. CTO organization officials have told us that identified as
    succession

    the Service instead uses the annual budgeting process and candidates.

    critical events such as the recent Year 2000 computing challenge as
    opportunities to analyze investments for succession.

    3. The interdependency of each Not executed. While the Establish Team
    performs trade- off analyses as a investment with other

    part of the organization*s annual budget formulation process, investments
    in the IT portfolio is including some consideration of the
    interdependencies of its analyzed.

    IT programs, projects, and systems, the interdependency of each investment
    with other investments in the IT portfolio is not analyzed in the context
    of systems and technology succession management.

    4. The IT investment board Not executed. The Postal Service does not have
    a formal process for makes a succession decision for identifying
    candidates for succession. In addition, no each candidate IT investment.

    investment board has responsibility for making decisions on succession
    management. Source: GAO.

    Activities for In stages two through four, organizations ensure that sound
    investments Benchmarking the are selected, controlled, and evaluated
    within the context of the IT

    investment management process and the enterprisewide portfolio. In the
    Investment Process stage five level of maturity, a shift in orientation
    occurs as organizations Are Not

    evolve toward using information on leading technologies to identify
    Institutionalized opportunities for business change and to implement
    changes in their overall business process. Benchmarking the investment
    process allows organizations to identify opportunities for improvement and
    to implement

    measurable improvements in their IT investment management processes so
    that these processes meet or exceed those used by best- in- class
    organizations. Improvements can include using innovative investment
    oversight tools and techniques or improving the feedback mechanisms for
    lessons learned. According to ITIM, investment process benchmarking
    includes (1) defining policies and procedures for using benchmarking to
    improve the IT investment management process, (2) collecting baseline

    data on the organization*s current IT investment management process, (3)
    identifying and benchmarking external comparable best- in- class processes
    for IT investment management, and (4) improving the organization*s
    investment management processes. The Postal Service has not fully executed
    any of the seven key practices required to implement this critical
    process. While there have been some efforts to identify best practices
    from best- in- class organizations and

    incorporate these practices into the Postal Service*s IT investment
    management processes (such as the CTO organization*s use of lessons
    learned in benchmarking to develop the BCS), the Postal Service has not
    defined policies and procedures for improving the IT investment management
    process using benchmarking. It also does not have any institutionalized
    processes to routinely (1) collect baseline data on the

    organization*s current IT investment management process, (2) identify and
    benchmark external best- in- class processes for IT investment management
    in comparable organizations, or (3) actually improve the organization*s

    investment management processes. Without these processes, the Postal
    Service is less likely to learn from best- in- class organizations, which
    will hinder any concerted effort to improve its IT investment management

    processes. Table 19 shows the rating for each key practice required to
    implement the critical process for investment process benchmarking at the
    stage five level of maturity and summarizes the evidence that supports
    these ratings.

    Table 19: Investment Process Benchmarking Type of practice Key practice
    Rating Summary of evidence

    Organizational 1. The organization has written policies and Not executed.
    The Postal Service has not developed written commitments procedures for
    improving its IT investment

    policies and procedures for improving its IT management process using
    benchmarking. investment process through the use of benchmarking
    techniques.

    2. A senior official is designated to manage Not executed. The Postal
    Service has not designated a senior the benchmarking activities. official
    to manage benchmarking activities.

    Prerequisites 1. Adequate resources are provided for Not executed.
    Investment process benchmarking is not an conducting process benchmarking
    activities. institutionalized process at the Postal Service. 2.
    Organizational managers and staff with Not executed. The Postal Service
    has not designated responsibilities in this area are trained in
    responsibility for performing benchmarking process benchmarking techniques
    or are

    activities and has not provided staff with training or experienced in
    using these techniques.

    experience in this process. Activities 1. Baseline data are collected for
    the Not executed. The Postal Service has not taken steps to organization's
    IT investment management

    measure components of its investment processes.

    management processes to provide a baseline against which expected and
    actual process changes may be measured.

    2. External comparable best- in- class IT Not executed. External
    comparable best- in- class processes for investment management processes
    are

    IT investment management were identified and identified and benchmarked.

    benchmarked for some processes, including the CTO organization*s business
    case development process. However, the Postal Service does not have an
    institutionalized process for benchmarking the investment management
    process.

    3. Improvements are made to the Not executed. Improvements were made to
    some processes as a organization's investment management result of
    benchmarking (e. g., the CTO processes. organization*s investment
    management process). However, the Postal Service does not have an
    institutionalized process for benchmarking the

    investment management process. Source: GAO.

    Potential Impacts of Information technologies can provide opportunities
    for an organization to

    Leading Technologies move dramatically in new directions to meet its
    goals. Thus, once an organization finds it can competently manage its
    enterprisewide portfolio

    Are Not Routinely of investments, it should actively seek out
    opportunities to use alternative

    Considered in Strategic technologies. Planning Efforts

    According to ITIM, stage five organizations provide adequate resources for
    conducting IT- driven activities that can result in strategic business
    change. These may include developing an advanced IT laboratory, test
    center, or

    library; conducting technical research; employing internal staff and
    external experts or reviewers; and obtaining supporting tools. Stage five
    organizations also develop applicable written policies and procedures and
    designate an official to oversee their implementation. The central focus
    of these activities is to follow technological events and to identify and
    evaluate technologies that appear to offer strategic business- changing
    capabilities. Once a conclusion has been reached that specific technology
    offers the organization significant opportunities, senior managers plan
    for

    and implement changes to the organization*s business processes.
    Organizations at a stage five level of maturity may create an advanced
    technology group, a cross- departmental group of experts, or technology
    centers of excellence. Finally, to strengthen management on these types of
    activities, mature organizations designate responsibility for this key

    practice to a single senior- level manager. The Postal Service has
    executed two of the six key practices required to implement this critical
    process by designating responsibility to specific organizational units to
    support activities aimed at IT- driven strategic

    business change and by providing a range of related resources. However,
    steps have yet to be taken to execute the remaining key practices,
    including creating and maintaining a knowledge base of state- of- the-
    technology IT products and processes; actively identifying technologies
    with businesschanging capabilities; and planning and implementing
    strategic changes to business processes on the basis of the capabilities
    of these technologies.

    The Postal Service has assigned responsibilities to several units that
    could leverage IT to implement strategic business change, including its
    Transformation Plan Office, Office for Strategic Planning, and the CTO
    organization. Also, within the CTO organization, the Information

    Technology unit has established the positions of Enterprise Architect and
    Manager of Technology Standards. To ensure standardization, the Postal
    Service has also developed the IT Infrastructure Toolkit process and
    established the Enterprise Architecture Councils and the Management
    Steering Committee.

    The Postal Service is also providing a range of resources that could be
    used to support the critical process of IT- driven strategic business
    change. The Service is funding a testing laboratory and has established
    Integrated Business Solutions Systems Centers and developed an IT Toolkit
    system and associated processes. The IT Toolkit system serves as a
    repository of information on technologies and application systems that
    have been approved for use within the Postal Service.

    In addition, the Postal Service*s CTO organization is taking several steps
    to initiate changes to the business process based on currently available
    stateof- the- practice IT approaches. First, the CTO has developed a plan
    for a corporate database called the Corporate Data Mart, which could serve
    as a

    repository of data from 35 separate Postal Service systems. According to
    Postal Service officials, the CTO organization is working with each
    functional unit to determine which legacy systems will transition to the
    data mart and plans to incorporate future systems in the data mart. This
    transition may eliminate costly legacy systems or avoid the investment
    cost to replace them. The CTO organization is sponsoring the Advanced

    Computing Environment initiative to transition to a less costly
    distributed computing environment. According to officials, under this
    approach, activities will be standardized, centralized, and reengineered
    such that the costs per Postal Service user will be reduced.

    These accomplishments can be helpful to the Postal Service, particularly
    in light of its financial difficulties and the need to identify new, more
    costeffective ways of accomplishing its mission. By continuing to foster a
    more coordinated approach to using IT investments to achieve its business
    goals, using resources from across the organization, and disseminating

    information that is gathered more broadly, the Postal Service can more
    effectively capitalize on opportunities uncovered by efforts already
    underway. Table 20 shows the rating for each key practice required to
    implement the critical process for IT- driven strategic business change at
    the stage five level of maturity and summarizes the evidence that supports
    these ratings.

    Table 20: IT- Driven Strategic Business Change Type of practice Key
    practice Rating Summary of evidence

    Organizational 1. The organization has written Not executed. The Postal
    Service does not have written policies and commitments policies and
    procedures for

    procedures for conducting IT- driven strategic business conducting IT-
    driven strategic change activities. business change activities.

    2. An official is designated to Executed. Responsibility for ensuring IT-
    driven strategic business manage the activities within this change is
    distributed across several Postal Service units, critical process.
    including the Transformation Plan Office, Office for Strategic Planning,
    and the CTO organization.

    Prerequisite 1. Adequate resources are Executed. The Postal Service is
    providing a range of resources related

    provided for conducting IT- driven to identifying opportunities for IT-
    driven strategic business strategic business change

    change. These include funding a testing laboratory, activities. acquiring
    expertise from consulting firms, establishing an Enterprise Architect and
    Integrated Business Solutions Systems Centers, and developing an
    Information

    Technology Toolkit system. Activities 1. The organization creates and Not
    executed. The Postal Service has not created a knowledge base of

    maintains a knowledge base of state- of- the- technology IT products and
    processes. state- of- the- technology IT products However, the CTO
    organization has created a database of and processes. approved IT products
    called the IT Toolkit.

    2. Information technologies with Not executed. The Postal Service does not
    have an institutionalized

    strategic business- changing process for conducting studies of emerging
    trends, events, capabilities are identified and

    and technologies with the potential to strategically change evaluated. its
    business processes. 3. Strategic changes to the Not executed. The Postal
    Service does not have a process in place to

    business processes are planned implement business processes based on the
    capabilities of and implemented based on the leading- edge information
    technologies it has identified. capabilities of identified information
    However, decisions on changes to business processes are technologies.

    currently being made in order to incorporate state- of- the practice IT
    approaches and technologies such as desktop outsourcing, data warehousing,
    and data center consolidation.

    Source: GAO.

    Conclusions, Recommendations, and Agency

    Chapt er 5

    Comments Conclusions Information technology provides key core operational
    capabilities that the Postal Service must rely on to achieve its mission.
    Only by effectively and efficiently managing its IT resources can the
    Postal Service gain opportunities to further leverage its IT investments
    and make better allocation decisions among many investment alternatives.

    The Postal Service has in place most of the foundational practices
    required to ensure that IT investments are being selected and monitored to
    support its overall objectives. A comprehensive process guide for
    investment management and written policies and procedures for management
    oversight of investments will allow the Postal Service to better
    coordinate its IT investment activities and ensure that they are performed
    consistently. Once the Service has fully implemented all the critical
    processes for stage two, it will have the controls necessary to allow it
    to effectively manage its IT investments. The Postal Service shows mixed
    progress in managing its IT investments as a portfolio. The Service
    performs many portfolio development and

    oversight activities. However it lacks policies and procedures for
    managing its portfolio. It has not defined criteria that allow it to
    effectively analyze, prioritize, and select its investments from a
    portfolio perspective. In addition, the Postal Service*s reporting of
    performance data is largely limited to capital projects, which are a
    smaller portion of its portfolio than are operating expenses. Until the
    Service fully implements critical processes associated with managing
    investments as a complete portfolio, it will not have ready access to the
    data it needs to make informed decisions about competing investments.

    The ability of the Postal Service to continue to improve its investment
    management process is contingent on its ability to learn from its current
    practices and investments and from other organizations. The Service
    currently has no institutionalized processes to learn from its own
    experience and from other organizations. Such processes can contribute to
    the long- term success of the Postal Service*s IT portfolio and support
    its mission.

    Recommendations for To strengthen the Postal Service*s capabilities for
    investment management

    Executive Action and address the weaknesses discussed in this report, we
    recommend that the Postmaster General develop a plan that initially
    focuses on correcting

    the weaknesses in critical processes associated with maturity stages two

    and three before addressing the weaknesses at maturity stages four and
    five, because critical processes at the lower stages provide the
    foundation for building those at higher maturity stages. The plan should
    be developed within 6 months. At a minimum, the plan should specify an
    approach to

     develop comprehensive guidance that defines and describes the complete
    investment management process, unifies existing processes enterprisewide,
    and reflects changes in processes as they occur;

     develop additional process guidance, as needed, to completely define the
    operations and decision- making processes of investment boards and other
    management entities involved in managing IT investments;

     ensure that cost, benefit, schedule, and risk expectations are set and
    approved in the original business case for each investment; that accurate
    and complete actual cost, benefit, schedule, and risk data are

    tracked against these expectations; and that status information on these
    four criteria is periodically reported to executive- level investment
    boards; and

     establish a structured, transparent, and documented portfolio selection
    process that assesses, prioritizes, selects, and funds investments
    according to established portfolio selection criteria, including explicit
    cost, benefit, schedule, and risk criteria.

    The Postmaster General should ensure that the plan specifies measurable
    goals and time frames, prioritizes initiatives, designates a senior
    manager responsible and accountable for directing and controlling the

    improvements, and establishes review milestones. After addressing the
    stage two and three processes, the Postal Service should create processes
    required for stages four and five that, at a minimum

     ensure that guidance for conducting post- implementation reviews is
    complete, including criteria for selecting systems for review, and that
    post- implementation reviews are conducted on all appropriate systems;

     establish a process for evaluating and improving portfolio performance;

     establish a process for managing the succession of systems and
    technology;

     establish a process to benchmark the investment processes of leading
    organizations to identify opportunities for improvement; and

     establish a process to employ IT investments strategically to improve
    business outcomes. Agency Comments and

    The Postal Service*s Chief Financial Officer provided written comments on
    Our Evaluation

    a draft of this report (reprinted in app. III). In these comments, the
    Postal Service stated that the report offered an opportunity to consider
    changes and improvements in its IT investment management processes. The
    Service added that it would carefully evaluate each of the report*s
    recommendations to determine the necessary actions for adopting and
    integrating key practices outlined in the GAO ITIM model that are
    appropriate for the Postal Service.

    The Postal Service also identified key points where it stated that it
    differs from GAO*s IT investment management framework. The Postal Service
    also explained that it uses a hierarchy of delegations to select and
    oversee its investments, from the Board of Governors through the lowest
    level of management, to ensure that senior management can concentrate on

    strategic issues and the most significant projects. We did observe this
    structured approach to the selection and oversight process and have
    recognized it in our report.

    In succession planning, the Postal Service stated that it uses an
    institutionalized portfolio approach to address the succession of its IT
    hardware, software, and systems. According to the Postal Service, this
    approach enables senior management to determine strategically driven
    solutions based on priorities, lessons learned, available technology, best
    practices, affordability, risk assessments, and business needs. Our
    guidance suggests that, while each of these aspects may be appropriate as
    part of a succession management process, effective succession management
    entails regularly reviewing the performance of existing systems against
    established criteria. Such a process allows an organization to identify
    systems that should be retained, modified, replaced, or otherwise disposed
    of in a timely manner. However, as we stated in our report, the Postal
    Service does not have such a process.

    The Postal Service provided comments pertaining to post- implementation
    reviews that describe cost studies, the budget process, and the activities
    of the Office of Inspector General (OIG) as satisfying this critical
    process. We

    disagree with the Postal Service in this matter. While guidance for cost
    studies does exist, the Service provided evidence of only three
    postimplementation cost studies having been conducted since 1990. The
    Postal Service*s budget process does not satisfactorily address this
    critical process. Specifically, the budget process does not capture
    lessons learned

    and disseminate them to other projects and work processes in order to
    improve them, and this is a major objective of post- implementation
    reviews. Finally, while OIG does conduct evaluations from which lessons
    learned may be drawn and used to improve other projects and work
    processes, OIG evaluations are not part of the regular systems life cycle.

    Appendi xes Postal Service Projects with Major IT

    Appendi x I

    Components in Development or Deployment Table 21: Postal Service IT
    Projects in Development or Deployment Approved Approval Sponsoring

    Approving capital costs Project name date unit board

    in thousands

    Associate Office Infrastructure Phase II Deployment 11/ 1997 IT BOG $207,
    416 Commitment Management* Integrated Operations 09/ 1998 EN/ IP BOG 33,
    921 Management Pilot CONFIRM 10/ 2000 MK PMG 9, 253

    Corporate Call Phase III Deployment 06/ 1998 MK BOG 255, 761 Delivery
    Operations Information System Deployment 08/ 2000 OP/ IP BOG 127, 620
    Delivery Operations Information System Research and

    06/ 1998 OP/ IP BOG 39, 987 Development e- Commerce IT & Virtual Store
    Modification 02/ 2000 IP/ MK PMG 9, 705

    Enhanced Security Capability Program Implementation 11/ 2000 IT BOG 43,
    343 Field Retail Operations Group 01/ 1999 FI COO 3, 444 Forwarding
    Control Systems 08/ 1998 EN BOG 33, 874 Identification Code Sort & CM- IOM
    09/ 1998 EN BOG 156, 500 Integrated Data System* Upgrade 01/ 2001 EN BOG
    33, 787 Letter Recognition Enhancement Program 05/ 2001 EN BOG 222, 403
    Mail Evaluation, Readability & Lookup Instrument* Phase II 10/ 2001 EN/ MK
    BOG 141, 118 Mail Evaluation, Readability & Lookup Instrument* Phase II
    07/ 2000 EN/ MK BOG 45, 400 Research and Development Mail Item Retrieval
    Systems Modernization* Phase II

    08/ 2000 EN COO 1, 713 Research and Development Net Post* Mailing On- Line
    System 11/ 1999 MK BOG 18, 638

    Organization Structure, Staffing & Management System 07/ 2001 FI/ HR PMG
    9, 000 PARS 04/ 2002 EN/ OP BOG 307, 640 Point of Service ONE* Stage IIB
    Deployment 04/ 2000 MK BOG 403, 900 Postal Field Computing Infrastructure
    01/ 2001 IT BOG 41, 562 PostalOne!* Phase I 11/ 1999 MK BOG 10, 085
    PostalOne!* Phase II 05/ 2002 MK BOG 54, 148 Recognition Improvement
    Program 06/ 2000 EN BOG 131, 150 Self- Service Vending Machines
    Acquisition Post- Deployment 08/ 1998 MK BOG 29, 938 Shared Services
    Accounting 04/ 2002 FI PMG/ COO 9, 481 Standard Accounting for Retail*
    Retail Accounting 01/ 2001 FI/ IP BOG 34, 357 Standard Accounting for
    Retail* General Ledger 02/ 2000 FI/ IP COO 5, 600 Surface- Air Management
    System Deployment 07/ 2000 OP BOG 38, 385 Surface- Air Management System*
    Alaska 05/ 2001 OP COO 7, 419 Surface- Air Support System 06/ 2001 OP BOG
    15, 516

    (Continued From Previous Page)

    Approved Approval Sponsoring

    Approving capital costs

    Project name date unit board in thousands

    Time & Attendance Collection System* National 01/ 2001 FI/ IP BOG 46, 673
    Time & Attendance Collection System* Pilot 08/ 2000 FI/ IP COO 4, 149

    Key: BOG Board of Governors IP Information Platform COO Chief Operating
    Officer IT Information Technology EN Engineering MK Marketing GL General
    Ledger OP Operations FI Finance PMG Postmaster General HR Human Resources
    Source: U. S. Postal Service documents.

    Postal Service IT Projects That GAO

    Appendi x II

    Reviewed The ITIM assessment guidance recommends that case studies be
    conducted of selected IT investment projects to validate organization-
    level evidence and better understand the organization*s IT investment
    management process. 19 Accordingly, we selected four projects for review
    from the list shown in appendix I to provide information on IT investments
    in a cross- section of sponsoring Postal Service organizations. To conduct
    our review, we interviewed managers responsible for the IT investments and
    members of the project management teams to obtain information on

    implementation of ITIM key practices. Table 22 summarizes key information
    on these investments.

    Table 22: Postal Service IT Projects Selected by GAO for Review Approved
    capital cost

    Date approved & Title Sponsoring unit (in millions) Investment purpose
    approving entity

    Enhanced Security CTO/ IT $43. 3 To secure Postal Service mail processing,
    November 2000 Capability Program

    business operations, and electronic Board of Governors

    (ESC) communications by providing enhanced security capabilities to
    networks, systems, and applications. Organization, Structure

    CFO and Human $9. 0 To provide a foundation for the Postal July 2001
    Staffing & Management Resources Service*s new human resources and
    Postmaster General System (OSS& M)

    payroll systems. Point of Service ONE

    Marketing $403. 9 To provide a new platform for service April 2000 (POS
    ONE)* Stage IIB delivery at 13, 504 sites, and replace the Board of
    Governors

    Postal Service*s existing Integrated Retail Terminals. Surface- Air

    Network Operations $38. 4 To replace Air Contract Data Collection July
    2000 Management System Management System (ACDCS) and assign mail to Board
    of Governors (SAMS)

    alternative surface and air carriers. Source: U. S. Postal Service
    documents.

    The sections below provide additional information on the investments we
    reviewed.

    19 ITIM Exposure Draft, Appendix III, Guidance for Conducting an ITIM
    Assessment, pages 158- 159.

    Enhanced Security Enhanced Security Capability (ESC) is a comprehensive
    program to secure Capability Program

    the Postal Service*s networks, systems, and applications. Its goals, as
    defined in the DAR, are threefold: 1. Create an environment that allows
    Postal Service employees, business partners, suppliers, and customers to
    conduct business in a secure and

    user- friendly environment. 2. Eliminate or prevent unauthorized use of
    and access to Postal Service

    systems and applications. 3. Deny unauthorized access to Postal Service
    networks while ensuring

    access to authorized users. ESC supports the Postal Service*s three
    *voices* by, among other things, providing the resources to secure the
    infrastructure and mission critical business applications (Voice of the
    Business), providing the necessary security to protect customers* private
    data (Voice of the Customer), and

    providing additional assurances that employee data are secure (Voice of
    the Employee). It also supports the Transformation Plan*s near- term
    strategy to ensure the safety and security of mail customers and
    employees.

    The DAR for this CTO organization- sponsored program was approved by the
    Board of Governors on November 13, 2000. It requested capital funds of
    about $43.3 million to secure the Postal Service*s networks, systems, and
    applications and establish the underlying program management structure.
    Efforts to implement ESC actually began in March 2000 with $873,000 in
    seed money. The initiation efforts included updating pertinent policies
    and procedures and creating a team to respond to security incidents.

    In an effort to heighten security in response to the recent terrorist
    attacks and anthrax incidents, many objectives for the program were
    reprioritized, and program officials are consequently considering
    extending the schedule for completing fiscal year 2003 goals into the next
    fiscal year. According to the most recent status report on the program,
    additional capital funds

    would not be needed to accommodate the new schedule, if it is approved.
    ESC is not a one- time effort but an ongoing program to secure Postal
    Service operations. It is managed as a collection of over 30 initiatives,
    each

    one managed separately, with its own project plan, milestones, and
    schedules.

    Organization Structure, The purpose of Organization Structure, Staffing
    and Management (OSS& M) Staffing and

    is to allow the Postal Service to easily manage its organizational
    structure by facilitating access to data and enabling it to model
    organizational Management structures and implement new structures quickly.
    OSS& M is intended to replace the Organization Management Staffing System,
    a legacy system with limited functionality and usage that does not meet
    current needs to

    manage organizational structures. It is being developed using commercial
    off- the- shelf technology.

    While OSS& M can stand alone, it is to serve as the foundational piece for
    a human resources/ payroll enterprise system that will integrate many
    Postal Service systems into one with the ultimate goal of having a single
    source for all employee data. The Postal Service currently uses a number
    of human

    resource and payroll systems that, according to Postal Service officials,
    duplicate data, connect through cumbersome interfaces, and operate under
    different processing cycles. The new human resources/ payroll enterprise
    system will address these weaknesses by streamlining business processes
    and consolidating all the data about an employee into one central
    repository. OSS& M supports the Transformation Plan*s corporate shared

    services strategy. It is jointly sponsored by Human Resources and Finance.
    The DAR for the project was approved by the Postmaster General on July 23,
    2001. It requested capital funds of $9 million for the national deployment
    of the system. Initial funding in the amount of $7 million had also been
    approved to conduct proof- of- concept and pilot activities and to assess
    the cost of operating the recommended off- the- shelf software in the
    Postal Service environment. The results of these activities were used as
    input to the DAR.

    OSS& M was scheduled to be fully deployed in the spring of 2002. It has
    been delayed because of organizational changes and the additional time
    required for pilot testing. It is now scheduled to be deployed by December
    1, 2002.

    Point of Service ONE The Point of Service ONE system (POS ONE) is a
    replacement system for

    System the Postal Service*s existing retail terminals; it is approved to
    provide new terminals, application systems, network connections, and a
    data warehouse designed to support management decision- making. The Postal
    Service identified the need to replace its existing terminals in the early

    1990s and approved $9.9 million in funding to identify alternative
    approaches. This work was performed in the mid- 1990s, and information
    obtained from contractor bids was used to develop a DAR for POS ONE* Stage
    I. The Board of Governors approved that DAR and three others to fund work
    planned to be performed from June 1996 to September 2001, and a fifth DAR
    for Stage III is under development for the next increment of work on the
    system. Dates and dollar amounts for these approved DARs are shown in
    table 23.

    Table 23: POS ONE DARs Capital funding DAR No. Approval date (in millions)

    1 June 1996 $274. 9 1* additional funding May 1998 53. 7 2A June 1999 166.
    5 2B April 2001 403.9

    Total (approved POS ONE capital funding) $899. 0

    Source: U. S. Postal Service documents.

    Surface- Air The Surface- Air Management System (SAMS) is a replacement
    system that Management System

    provides critical transportation- related logistics capabilities by
    enabling the Postal Service to assign mail electronically to the least-
    cost available surface and air carrier services. The legacy system that
    SAMS was designed to replace-* the Air Contract Data Collection System
    (ACDCS)* was outmoded; it was designed in 1983 and in 1990 the
    manufacturer of the system informed the Postal Service that it would no
    longer provide operating system support. SAMS now serves as the Postal
    Service*s mail assignment engine to surface and air transportation
    services, laying the cornerstone for all future logistics systems. The
    program plan for SAMS

    shows that additional functionality expected to be provided using SAMS
    beyond ACDCS included indexed surface routes, capacity management,

    real- time carrier updates via electronic data interchange, automated
    tender considerations, local change auditing and reporting, electronic
    manifest tracking, improved maintenance of mail distribution tables,
    improved data capture capabilities, improved payment processing, stable
    and scalable infrastructure, and communications benefits. The program plan
    also shows that SAMS was expected to produce the following measurable
    benefits: decreased commercial air costs, increased utilization of surface
    routes, reliability and maintainability of SAMS software, decreased
    downtime, improved claims processing, decreased network costs, improved
    data collection capabilities for evaluation of air and surface routes, and
    decreased capacity overloading.

    The Postal Service began conceptual design work on SAMS in October 1999
    (Phase I) and detailed design and development work in March 2000 (Phase
    II). This work formed the basis for the SAMS DAR approved by the Board of
    Governors on July 11, 2000 for capital funding of $38.4 million.

    Comments from the United States Postal

    Appendi x II I Service

    Appendi x V I GAO Contact and Staff Acknowledgments GAO Contact Lester P.
    Diamond, (202) 512- 7957, DiamondL@ gao. gov Acknowledgments In addition
    to the individual named above, John T. Christian, Joanne L.

    Fiorino, Peggy A. Hegg, Min S. Lee, Thomas F. Noone, Sabine R. Paul, and
    Margaret R. Sullivan made key contributions to this report. (310424)

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    a

    GAO United States General Accounting Office

    Why GAO Did This Study

    The U. S. Postal Service invests hundreds of millions of dollars in
    information technology (IT) each year to support its mission of providing
    prompt, reliable, and efficient mail service to all areas of the country.
    It must support these operations through the revenues it earns for its
    services. Growing operating expenses and capital needs in the face of
    reduced revenues highlight the need for the Postal Service to invest its
    IT dollars wisely. Accordingly, the Senate Committee on Governmental
    Affairs and its Subcommittee on International Security, Proliferation, and
    Federal Services asked GAO to evaluate how well the Postal Service manages
    its IT investments.

    October 2002 UNITED STATES POSTAL SERVICE Opportunities to Strengthen IT
    Investment Management Capabilities

    The full report, including GAO's objectives, scope, methodology, and
    analysis is available at www. gao. gov/ cgi- bin/ getrpt? GAO- 03- 3. For
    additional information about the report, contact Joel C. Willemssen (202-
    512- 6408), WillemssenJ@ gao. gov.

    What GAO Recommends

    GAO recommends that the Postmaster General take several actions, including
    the following: (1) using a portfolio approach to IT investment management,
    including establishing explicit cost, benefit, schedule, and risk
    criteria; and (2) evaluating the performance of investments as a whole in
    order to capture and institutionalize *lessons learned* to improve the
    investment process. In written comments on a draft of the report, the
    Postal Service expressed differing views on a few key points but stated
    that the report provides an opportunity to consider changes and
    improvements to its investment management processes.

    Highlights of GAO- 03- 3, a report to the Senate Committee on Governmental
    Affairs and the Subcommittee on International Security, Proliferation, and
    Federal Services United States General Accounting Office

    G A O Accountability Integrity Reliability

    Highlights What GAO Found

    The Postal Service has in place many of the foundational capabilities
    required for managing IT investments described in GAO*s IT Investment
    Management framework, illustrated below. Proposed major projects go
    through established review processes and must be approved at a high level
    before being implemented. Control processes also are in place.

    Although the Postal Service evaluates proposed IT projects before
    investing in them, it does not fully manage these investments from a
    portfolio perspective by assessing projects on the basis of indicators
    that clearly link performance to initial selection criteria. Such a
    portfolio approach would enable the Postal Service to consider proposed
    projects along with those that have already been funded and to select the
    mix of investments that best meets its mission needs.

    The Postal Service has not yet attained the key attributes associated with
    the most capable organizations, such as evaluating the performance of
    investments as a whole, capturing *lessons learned,* and
    institutionalizing these lessons to benefit the organization. Until it
    addresses areas such as these, the Postal Service will not be in a
    position to continually improve its investment process and leverage its IT
    capabilities for strategic outcomes.

    The Five Stages of Maturity within GAO*s IT Investment Management
    Framework

    Source: GAO.

    Page i GAO- 03- 3 U. S. Postal Service IT Investment Management

    Contents

    Contents

    Page ii GAO- 03- 3 U. S. Postal Service IT Investment Management

    Contents

    Page iii GAO- 03- 3 U. S. Postal Service IT Investment Management

    Contents

    Page iv GAO- 03- 3 U. S. Postal Service IT Investment Management

    United States General Accounting Office Washington, D. C. 20548

    Page 1 GAO- 03- 3 U. S. Postal Service IT Investment Management

    A

    October 15, 2002 Lett er

    The Honorable Joseph I. Lieberman Chairman The Honorable Fred Thompson
    Ranking Minority Member Committee on Governmental Affairs United States
    Senate

    The Honorable Daniel K. Akaka Chairman The Honorable Thad Cochran Ranking
    Minority Member Subcommittee on International Security,

    Proliferation and Federal Services Committee on Governmental Affairs
    United States Senate

    In response to your request, this report addresses the Postal Service*s
    capabilities in information technology (IT) investment management. The
    Postal Service invests hundreds of millions of dollars each year in
    information technology to provide prompt, reliable, and efficient mail
    service to all areas

    of the country. Our evaluation determined that the Postal Service is
    executing many of the foundational practices necessary for managing these
    investments, but the Postal Service has additional opportunities to
    implement more mature and effective processes. We are making
    recommendations to strengthen the Postal Service*s investment management
    capabilities.

    We are sending copies of this report to the Chairman and Ranking Minority
    Member of the House Committee on Government Reform, the Chairmen and
    Ranking Minority Members of the House and Senate Committees on
    Appropriations, the Postal Service*s Postmaster General/ Chief Executive
    Officer, and the Postal Service*s Chief Financial Officer. We will also
    make copies available to others on request. In addition, the report will
    be available at no charge on the GAO Web site at http:// www. gao. gov.

    Staff acknowledgments are included in appendix IV. If you have any
    questions about this report, please contact me by telephone at (202) 512-
    6408 or by E- mail at WillemssenJ@ gao. gov. Joel C. Willemssen Managing
    Director, Information Technology Issues

    Page 2 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Executive Summary Page 3 GAO- 03- 3 U. S. Postal Service IT Investment
    Management

    Executive Summary Page 4 GAO- 03- 3 U. S. Postal Service IT Investment
    Management

    Executive Summary Page 5 GAO- 03- 3 U. S. Postal Service IT Investment
    Management

    Executive Summary Page 6 GAO- 03- 3 U. S. Postal Service IT Investment
    Management

    Executive Summary Page 7 GAO- 03- 3 U. S. Postal Service IT Investment
    Management

    Executive Summary Page 8 GAO- 03- 3 U. S. Postal Service IT Investment
    Management

    Executive Summary Page 9 GAO- 03- 3 U. S. Postal Service IT Investment
    Management

    Executive Summary Page 10 GAO- 03- 3 U. S. Postal Service IT Investment
    Management

    Page 11 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 1

    Chapter 1 Introduction

    Page 12 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 1 Introduction

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    Chapter 1 Introduction

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    Chapter 1 Introduction

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    Chapter 1 Introduction

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    Chapter 1 Introduction

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    Chapter 1 Introduction

    Page 18 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 1 Introduction

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    Chapter 1 Introduction

    Page 20 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 1 Introduction

    Page 21 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 1 Introduction

    Page 22 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 1 Introduction

    Page 23 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 1 Introduction

    Page 24 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 1 Introduction

    Page 25 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 1 Introduction

    Page 26 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 1 Introduction

    Page 27 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Page 28 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 2

    Chapter 2 Postal Service Executes Most Key Foundational Practices

    Page 29 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 2 Postal Service Executes Most Key Foundational Practices

    Page 30 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 2 Postal Service Executes Most Key Foundational Practices

    Page 31 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 2 Postal Service Executes Most Key Foundational Practices

    Page 32 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 2 Postal Service Executes Most Key Foundational Practices

    Page 33 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 2 Postal Service Executes Most Key Foundational Practices

    Page 34 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 2 Postal Service Executes Most Key Foundational Practices

    Page 35 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 2 Postal Service Executes Most Key Foundational Practices

    Page 36 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 2 Postal Service Executes Most Key Foundational Practices

    Page 37 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 2 Postal Service Executes Most Key Foundational Practices

    Page 38 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 2 Postal Service Executes Most Key Foundational Practices

    Page 39 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 2 Postal Service Executes Most Key Foundational Practices

    Page 40 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 2 Postal Service Executes Most Key Foundational Practices

    Page 41 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 2 Postal Service Executes Most Key Foundational Practices

    Page 42 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Page 43 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 3

    Chapter 3 Postal Service Shows Mixed Progress in Managing Its IT
    Investments as a Portfolio

    Page 44 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 3 Postal Service Shows Mixed Progress in Managing Its IT
    Investments as a Portfolio

    Page 45 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 3 Postal Service Shows Mixed Progress in Managing Its IT
    Investments as a Portfolio

    Page 46 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 3 Postal Service Shows Mixed Progress in Managing Its IT
    Investments as a Portfolio

    Page 47 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 3 Postal Service Shows Mixed Progress in Managing Its IT
    Investments as a Portfolio

    Page 48 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 3 Postal Service Shows Mixed Progress in Managing Its IT
    Investments as a Portfolio

    Page 49 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 3 Postal Service Shows Mixed Progress in Managing Its IT
    Investments as a Portfolio

    Page 50 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 3 Postal Service Shows Mixed Progress in Managing Its IT
    Investments as a Portfolio

    Page 51 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 3 Postal Service Shows Mixed Progress in Managing Its IT
    Investments as a Portfolio

    Page 52 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 3 Postal Service Shows Mixed Progress in Managing Its IT
    Investments as a Portfolio

    Page 53 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 3 Postal Service Shows Mixed Progress in Managing Its IT
    Investments as a Portfolio

    Page 54 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 3 Postal Service Shows Mixed Progress in Managing Its IT
    Investments as a Portfolio

    Page 55 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Page 56 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 4

    Chapter 4 Postal Service Has Yet to Implement Processes to Better Meet
    Strategic Goals

    Page 57 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 4 Postal Service Has Yet to Implement Processes to Better Meet
    Strategic Goals

    Page 58 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 4 Postal Service Has Yet to Implement Processes to Better Meet
    Strategic Goals

    Page 59 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 4 Postal Service Has Yet to Implement Processes to Better Meet
    Strategic Goals

    Page 60 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 4 Postal Service Has Yet to Implement Processes to Better Meet
    Strategic Goals

    Page 61 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 4 Postal Service Has Yet to Implement Processes to Better Meet
    Strategic Goals

    Page 62 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 4 Postal Service Has Yet to Implement Processes to Better Meet
    Strategic Goals

    Page 63 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 4 Postal Service Has Yet to Implement Processes to Better Meet
    Strategic Goals

    Page 64 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 4 Postal Service Has Yet to Implement Processes to Better Meet
    Strategic Goals

    Page 65 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 4 Postal Service Has Yet to Implement Processes to Better Meet
    Strategic Goals

    Page 66 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 4 Postal Service Has Yet to Implement Processes to Better Meet
    Strategic Goals

    Page 67 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 4 Postal Service Has Yet to Implement Processes to Better Meet
    Strategic Goals

    Page 68 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 4 Postal Service Has Yet to Implement Processes to Better Meet
    Strategic Goals

    Page 69 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Page 70 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 5

    Chapter 5 Conclusions, Recommendations, and Agency Comments

    Page 71 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 5 Conclusions, Recommendations, and Agency Comments

    Page 72 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Chapter 5 Conclusions, Recommendations, and Agency Comments

    Page 73 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Page 74 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Appendix I

    Appendix I Postal Service Projects with Major IT Components in Development
    or Deployment

    Page 75 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Page 76 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Appendix II

    Appendix II Postal Service IT Projects That GAO Reviewed

    Page 77 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Appendix II Postal Service IT Projects That GAO Reviewed

    Page 78 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Appendix II Postal Service IT Projects That GAO Reviewed

    Page 79 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Appendix II Postal Service IT Projects That GAO Reviewed

    Page 80 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Page 81 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Appendix III

    Appendix III Comments from the United States Postal Service

    Page 82 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Page 83 GAO- 03- 3 U. S. Postal Service IT Investment Management

    Appendix IV

    United States General Accounting Office Washington, D. C. 20548- 0001

    Official Business Penalty for Private Use $300

    Address Service Requested Presorted Standard

    Postage & Fees Paid GAO Permit No. GI00
    *** End of document. ***