Veterans Affairs: Continued Focus on Critical Success Factors Is
Essential to Achieving Information Technology Realignment
(15-JUN-07, GAO-07-844).
The Department of Veterans Affairs (VA) spends nearly $1 billion
yearly to support its information technology (IT) needs; yet it
has encountered persistent challenges in managing IT projects. In
October 2005, VA initiated a realignment to centralize its IT
management program that it plans to complete by July 2008. GAO
was requested to determine (1) whether the department's
realignment plan includes critical factors for successful
implementation and (2) how the centralized management approach is
to ensure that the chief information officer (CIO) is accountable
for the department's entire IT budget. To do so, GAO identified
critical success factors, analyzed realignment and budget
documents, and held discussions with VA officials.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-07-844
ACCNO: A70867
TITLE: Veterans Affairs: Continued Focus on Critical Success
Factors Is Essential to Achieving Information Technology
Realignment
DATE: 06/15/2007
SUBJECT: Budget authority
Chief information officers
Federal agency reorganization
Information resources management
Information technology
Internal controls
Policy evaluation
Program management
Strategic planning
Systems design
Veterans benefits
Program implementation
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GAO-07-844
* [1]Results in Brief
* [2]Background
* [3]Centralized IT Organization
* [4]IT Management Processes
* [5]Successful Organization Transformations Are Based on Critica
* [6]VA Realignment Plans Include Critical Success Factors
* [7]Top Leadership Has Committed to the Realignment
* [8]Governance Structure to Manage Resources Not Yet Complete
* [9]IT Strategic Plan Is to Be Updated to Reflect New Organizati
* [10]IT Workforce Aligned under CIO, but Staff Roles Have Yet to
* [11]Certain Actions Have Been Taken to Address Communication
* [12]VA Has Not Dedicated an Implementation Team to Manage the Re
* [13]Centralized Control of IT Budget Has Not Yet Been Clearly Es
* [14]Deputy Assistant Secretaries to Control Aspects of IT Budget
* [15]IT Governance Plan Identifies Boards to Assist in
Management
* [16]Two New Management Processes Are to Address IT Budget
* [17]Conclusions
* [18]Recommendations for Executive Action
* [19]Agency Comments and Our Evaluation
* [20]GAO Contact
* [21]Staff Acknowledgments
* [22]GAO's Mission
* [23]Obtaining Copies of GAO Reports and Testimony
* [24]Order by Mail or Phone
* [25]To Report Fraud, Waste, and Abuse in Federal Programs
* [26]Congressional Relations
* [27]Public Affairs
Report to Congressional Requesters
United States Government Accountability Office
GAO
June 2007
VETERANS AFFAIRS
Continued Focus on Critical Success Factors Is Essential to Achieving
Information Technology Realignment
GAO-07-844
Contents
Letter 1
Results in Brief 2
Background 4
VA Realignment Plans Include Critical Success Factors 9
Centralized Control of IT Budget Has Not Yet Been Clearly Established 16
Conclusions 19
Recommendations for Executive Action 20
Agency Comments and Our Evaluation 21
Appendix I Scope and Methodology 23
Appendix II Comments from the Department of Veterans Affairs 25
Appendix III GAO Contact and Staff Acknowledgments 30
Table
Table 1: Summary of VA's Actions Addressing Critical Success Factors 9
Figures
Figure 1: Office of Information and Technology Organizational Chart 6
Figure 2: Timeline of Key Events for VA IT Realignment 7
Abbreviations
CIO chief information officer
DAS deputy assistant secretary
IT information technology
IV&V independent verification and validation
VA Department of Veterans Affairs
VBA Veterans Benefits Administration
VHA Veterans Health Administration
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separately.
United States Government Accountability Office
Washington, DC 20548
June 15, 2007
The Honorable Bob Filner Chairman The Honorable Steve Buyer Ranking Member
Committee on Veterans' Affairs House of Representatives The use of
information technology (IT) is crucial to helping the Department of
Veterans Affairs (VA) effectively serve our nation's veterans--the
department expends about $1 billion annually in support of its IT program.
Nonetheless, VA has encountered persistent challenges in managing its IT
projects. For example, in 2004, after spending almost $250 million over 5
years, the department experienced a highly publicized failure on an
initiative to replace its financial management system. According to VA's
Inspector General, this failure was the result of issues related to
managing and monitoring the implementation of the system. We previously
reported^1 that a contributing factor to VA's challenges in managing
projects was the department's decentralized management structure, in which
its administrations^2 and headquarters offices^3 controlled a majority of
the department's IT budget.
To provide greater authority and accountability over its resources, in
October 2005, the department initiated a realignment of its IT program.
The goals were to centralize IT management under the department-level
Chief Information Officer (CIO) and standardize operations and the
development of systems across the department using new management
processes based on industry best practices. Completion of the realignment
is scheduled for July 2008.
^1GAO, Veterans Affairs: The Role of the Chief Information Officer in
Effectively Managing Information Technology, [28]GAO-06-201T
(Washington, D.C.: Oct. 20, 2005); and Veterans Affairs: The Critical Role
of the Chief Information Officer Position in Effective Information
Technology Management, [29]GAO-05-1017T (Washington, D.C.: Sept. 14,
2005).
^2The VA comprises three administrations: the Veterans Benefits
Administration (VBA), the Veterans Health Administration (VHA), and the
National Cemetery Administration (NCA).
^3The headquarters offices include the Office of the Secretary, six
Assistant Secretaries, and three VA-level staff offices.
Given the importance of information technology for supporting VA's
mission, you requested that we review the department's effort to realign
its IT program. Specifically, our objectives were to determine (1) whether
the department's realignment plan includes critical factors for successful
implementation of a centralized management approach and (2) how the
centralized management approach is to ensure that the CIO is accountable
for the department's entire IT budget, including those funds that
previously had been controlled by its administrations.
In conducting this review, we obtained and analyzed relevant documents
from VA, its realignment contractor, and the independent verification and
validation contractor supporting the initiative. To assess the
realignment, we identified critical success factors by reviewing relevant
GAO products and researching industry best practices on organizational
transformations. In addition, we conferred with a leading provider of
research and analysis on the IT industry to obtain its input on the
relevance and soundness of factors we identified for consideration in our
assessment of the realignment effort. We then assessed whether the
department's realignment documentation identified actions that reflected
these factors and held periodic meetings with realignment team members,
including contractors, to discuss whether and how these factors were being
considered in the department's realignment plans and actions. To determine
how the centralized management approach will ensure that the CIO is
accountable for the entire IT budget, we reviewed documentation and plans
that addressed budget oversight and execution under the new organization.
To supplement our analysis, we met with officials in VA's Office of
Information and Technology who are responsible for managing and executing
the budget. We conducted our study from June 2006 through May 2007 in
accordance with generally accepted government auditing standards. For more
details on our scope and methodology, see appendix I.
Results in Brief
VA's plans for realigning the management of its IT program include
elements of several of the six factors we identified as critical for the
department's implementation of a centralized management structure;
additional departmental actions could increase assurance that the
realignment will be completed successfully. Since undertaking the
realignment in October 2005, VA has concentrated its efforts on
transferring approximately 6,000 staff to the CIO's office and on creating
a new centralized organizational structure. The department has also
approved its IT governance plan to address how the Office of Information
and Technology will manage resources; however, it has not yet established
the boards that are to provide governance over the centralized structure.
In addition, the department has identified the responsibilities for
managing its workforce within its new structure but has not yet
established a knowledge and skills inventory to help determine the proper
roles for all employees in the new organization. Further, while VA has
highlighted the importance of managing change in its realignment
documentation, it has not dedicated an implementation team to manage the
realignment and track its progress through the use of performance metrics.
As a result, the department may jeopardize the success of its efforts and
may not realize the long-term benefits of the realignment.
Within the realigned structure, VA plans to ensure that the CIO will be
accountable for the entire IT budget through three primary measures.
First, the new centralized organization includes positions for two new
deputy assistant secretaries who are to be responsible for the development
of VA's annual IT budget and for tracking actual expenditures against the
budget. Second, the new governance plan calls for the establishment of
CIO-level governance boards, which are to oversee both the development and
approval of the budget and monitor its execution. Third, implementation of
two new IT management processes--portfolio management and financial
management--are to be used to establish control over the budget. While
these measures show the potential for establishing the CIO's control of
the budget, VA has neither fully implemented them nor committed to a time
frame for doing so. Thus, their effectiveness in ensuring accountability
for the budget has not yet been established.
To address the critical success factors for implementing a centralized
management structure and to ensure that the CIO has control of the IT
budget, we are recommending that the Secretary of Veterans Affairs take
actions in several areas, including dedicating an implementation team to
manage change, expediting development of performance metrics to track the
progress of the realignment, and establishing governance boards to provide
oversight of the centralized structure.
In providing written comments on a draft of this report, the Deputy
Secretary of Veterans Affairs generally concurred with the report's
findings and recommendations. (The department's comments are reproduced in
app. II.) The comments described actions that begin to address our
recommendations. Among its actions, the department proposed to manage its
change to a centralized structure without a separate dedicated
implementation team; however, we continue to believe that a dedicated
implementation team is crucial to the department's ability to ensure that
the realignment is successfully completed. Establishing such a team, as
well as properly implementing our other recommendations, should help
ensure that the IT realignment is successfully accomplished.
Background
VA's mission is to promote the health, welfare, and dignity of all
veterans in recognition of their service to the nation by ensuring they
receive medical care, benefits, social support, and lasting memorials. Its
three major components, the Veterans Benefits Administration (VBA), the
Veterans Health Administration (VHA), and the National Cemetery
Administration are primarily responsible for carrying out this mission.
Over time, the use of information technology has become crucial to the
department's effort to provide benefits and services, with its budget for
IT exceeding $1 billion annually.
In reporting on VA's IT management over the past several years, we have
highlighted^4 challenges the department has faced in achieving its "One
VA" vision,^5 including that information systems and services were highly
decentralized and that its administrations controlled a majority of the IT
budget. For example, according to an October 2005 memorandum from the
former CIO to the Secretary of Veterans Affairs, the CIO had direct
control over only 3 percent of the department's IT budget and 6 percent of
the department's IT personnel. In addition, in the department's fiscal
year 2006 IT budget request, the Veterans Health Administration was
identified to receive 88 percent of the requested funding, while the
department was identified to receive only 4 percent. We have previously
pointed out that, given the department's large IT funding and
decentralized management structure, it was crucial for the department CIO
to ensure that well-established and integrated processes for leading,
managing, and controlling investments were followed throughout the
department.
Further, a contractor's assessment of VA's IT organizational alignment,
issued in February 2005, noted the lack of control for how and when money
is spent.^6 The assessment found that project managers within the
administrations had the ability to shift money to support individual
projects. Also, according to the assessment, the focus of department-level
management was only on reporting expenditures to the Office of Management
and Budget and Congress, rather than on managing these expenditures within
the department.
^4 [30]GAO-06-201T and [31]GAO-05-1017T .
^5The One VA vision is to create versatile new ways for veterans to obtain
services and information by streamlining interactions with customers and
integrating IT resources to enable VA employees to help customers more
quickly and effectively.
Centralized IT Organization
In response to the challenges that we and others noted, the department
officially began its effort to provide the CIO with greater authority over
IT in October 2005. At that time, the Secretary issued an executive
decision memorandum granting approval for the development of a new IT
management structure for the department. According to VA, its goals in
moving to centralized management are to provide the department better
oversight over the standardization, compatibility, and interoperability of
IT systems, as well as better overall fiscal discipline for the budget.
By July 2006, the department's realignment contractor began work to assist
with the realignment effort. The Secretary approved the department's new
organization structure in February 2007. As noted in figure 1, the new
structure includes the Assistant Secretary for Information and Technology
(who serves as VA's CIO), the CIO's Principle Deputy Assistant Secretary
(DAS), and five Deputy Assistant Secretaries. The five Deputy Assistant
Secretaries are new senior leadership positions within the Office of
Information and Technology created to assist the CIO in overseeing
functions such as cyber security, IT portfolio management, systems
development, and IT operations.
^6Gartner Consulting, OneVA IT Organizational Alignment Assessment Project
"As-Is" Baseline (McLean, Virginia; Feb. 18, 2005).
Figure 1: Office of Information and Technology Organizational Chart
The department has also identified the offices that will report to the
Deputy Assistant Secretaries. For example, the Asset Management Office
will report to the Deputy Assistant Secretary for Information Technology
Resource Management and is charged with providing staff with the software
and hardware needed to do their jobs in the most cost-effective manner.
In addition, the Secretary approved an IT governance plan in April 2007
that is intended to enable the Office of Information and Technology to
centralize its decision making. The plan describes the relationship
between IT governance and departmental governance and the approach the
department intends to take to enhance governance. Figure 2 shows a
timeline of the realignment effort.
Figure 2: Timeline of Key Events for VA IT Realignment
IT Management Processes
As the foundation for its realignment, VA plans to implement improved
management processes in five key areas: enterprise management, business
management, business application management, infrastructure, and service
support. These processes^7 were recommended by the department's
realignment contractor and were based on industry best practices.^8
According to the contractor, they are a key component of the realignment
effort as the Office of Information and Technology moves to a
process-based organization. By implementing these improved processes, VA
expects to correct deficiencies it has encountered as a result of its
decentralized management approach. Proper implementation should result in
institutionalizing best management practices that will be sustained
regardless of future leadership changes at the department. According to
the contractor, with a system of defined processes, the Office of
Information and Technology could quickly and accurately change the way IT
supports the department. The contractor also noted that failure to include
such processes in the realignment would introduce the risk that any
progress in completing the realignment would be the result of trial and
error.
^7For example, some of the processes are risk management, IT architecture
management, workforce management, and change management.
^8Specifically, these processes are derived from the IT Governance
Institute's Control Objectives for Information and related Technology
(CobiT(R)) and Information Technology Infrastructure Library (ITIL) as
configured by the Process Reference Model for IT (PRM-IT) from a VA
contractor.
Successful Organization Transformations Are Based on Critical Success Factors
We have reported in the past^9 on key factors that are needed in order to
successfully transform an organization to be more results oriented,
customer focused, and collaborative in nature. We reported that conducting
large-scale change management initiatives are not simple endeavors and
require the concentrated efforts of both leadership and employees to
realize intended synergies and to accomplish new organizational goals. We
also noted that there are a number of key practices that can serve as the
basis for federal agencies to transform their cultures in response to
governance challenges, such as those that an organization like VA might
face when transforming to a centralized IT management structure.
Among the significant factors we identified as critical for ensuring the
success of VA's move to centralized management are
o ensuring commitment from top leadership,
o establishing a governance structure to manage resources,
o linking the IT strategic plan to the organization strategic
plan,
o using workforce strategic management to identify proper roles
for all employees,
o communicating change to all stakeholders, and
o dedicating an implementation team to manage change.
^9GAO, Results-Oriented Cultures: Implementation Steps to Assist Mergers
and Organizational Transformations, [39]GAO-03-669 (Washington, D.C.:
July 2, 2003); and Highlights of a GAO Forum: Mergers and Transformation:
Lessons Learned for a Department of Homeland Security and Other Federal
Agencies, [40]GAO-03-293SP (Washington, D.C.: Nov. 14, 2002).
VA Realignment Plans Include Critical Success Factors
VA's plans for realigning the management of its IT program include
elements of several of the six factors that we identified as
critical to the department's implementation of a centralized
management structure (see table 1). Additional departmental
actions could increase assurance that the realignment will be
completed successfully. Without further action to fully address
the factors we have identified, the risk to successfully
centralizing the IT operations increases and the long-term
benefits of the realignment may not be realized.
Table 1: Summary of VA's Actions Addressing Critical Success
Factors
Source: GAO.
Top Leadership Has Committed to the Realignment
It is important that an organization's top leadership supports and
sustains major change initiatives through to completion. We have
testified that top leadership involvement for making management
improvements is critical to overcoming an organization's natural
resistance to change, marshaling the resources needed to improve
management, and building and maintaining organizationwide
commitment to new ways of doing business.^10 In addition, in
reporting on the results of a forum to identify useful practices
and lessons learned from major private- and public-sector
organizational transformations, we noted that a key factor for
successful organizational transformation was ensuring that top
leadership drives the effort.
The department has addressed this critical success factor through
multiple actions. For example, in February 2007, the Secretary
approved a new organization structure for centralized IT
management. This structure was recommended by the realignment
contractor following its review of the department's strategic
business objectives, existing organization structure, and business
processes and will serve as the framework for organizing the IT
workforce under the centralized model. The structure assigns roles
and responsibilities for IT management that VA expects will
provide the Office of Information and Technology leadership the
organizational stature and credibility to deal effectively with
the administrations on IT matters.
Another example of the Secretary's commitment to the realignment
came through approval of the transfer of IT personnel to the
Office of Information and Technology. Previously these personnel
had been assigned to the administrations (e.g., VHA and VBA) and
staff offices. The movement of these personnel should enable the
CIO to improve control over IT development and operations in the
department.
Governance Structure to Manage Resources Not Yet Complete
A governance structure should ensure suitable stakeholder
participation in the change initiative and reflect clearly defined
stakeholder roles, responsibilities, and decision-making
authority. When an organization is considering a major change
initiative, it must ensure there is an established governance
structure in place that provides for the effective use and
oversight of resources during and after the change. According to
VA's independent verification and validation contractor, two
critical aspects of governance are (1) the inclusion of relevant
stakeholders in the development of any new processes resulting
from the initiative and (2) holding these parties accountable for
execution of their responsibilities throughout the entire life
cycle of the initiative. We have reported that organizations need
to establish a governance structure that represents the entire
stakeholder community and reflects clearly defined roles,
responsibilities, and decision-making authority among the
different levels of leadership.^11
^10 [41]GAO-05-1017T .
VA has partially addressed this critical success factor. In
particular, while the governance plan for centralized management
has been approved by the Secretary, the department has not yet
established boards necessary to provide governance over the
centralized structure and processes that are being developed. One
of these boards--the Business Needs and Investment Board--is to
provide investment control for the department's IT projects.
According to VA officials, this board had not been established
because some of the positions on the board had not yet been filled
by permanent staff.
In addition, the documentation that the department provided to us
lacks detailed descriptions of how the new organization would
support a completed, centralized IT governance process. Until the
department establishes the elements needed to provide governance
over its new IT structure and processes, the department cannot
provide assurance that implementation of centralized management
will be successful.
IT Strategic Plan Is to Be Updated to Reflect New Organization
Our November 2002 report noted that organizations attempting a
transformation needed to establish a coherent mission with
integrated strategic goals and align the transformed organization
to support those goals.^12 For example, if an organization's
strategic goal is top-quality medical care, IT strategic goals and
the related transformation should be aligned to support that goal.
An IT strategic plan should define, in cooperation with the
relevant stakeholders, how IT will contribute to the enterprise's
strategic objectives and related costs and risks. Industry
documentation further notes that planning helps ensure that
leadership understands the link between an organization's
direction and how IT is aligned to meet the organization's goals.
According to this documentation, an organization and its
strategies should be integrated, clearly linking enterprise goals
and IT goals, and recognize opportunities as well as current
limitations. Further, integration of enterprise and goals should
be broadly communicated throughout the organization to ensure that
all users and stakeholders have a clear sense of what the
organization is attempting to accomplish.
^11GAO, Health Information Technology: HHS Is Taking Steps to Develop a
National Strategy, [42]GAO-05-628 (Washington, D.C.: May 27, 2005).
^12 [43]GAO-03-293SP .
However, VA has not addressed this critical success factor because
it has not yet updated an IT strategic plan to reflect the goals
of the new centralized structure. According to department
officials, a draft version of an updated IT strategic plan is
expected to be completed by June 30, 2007. Additionally, this plan
is expected to support the department's strategic plan, which
includes the goals of each of the department's administrations.
Until the IT strategic plan is updated, the department will have
neither a clear link between the department's strategic plan and
the IT strategic plan nor assurance that the realignment will meet
the goals in these plans.
IT Workforce Aligned under CIO, but Staff Roles Have Yet to Be
Defined
Workforce strategic management is necessary to ensure that an
organization has the personnel resources capable of developing and
delivering the services required of the organization. We have
previously reported that success in major change initiatives is
more likely when the best individuals are selected for each
position based on their competencies rather than on where they
work.^13 That is, the new organization needs to avoid a situation
where key personnel are selected on the basis of an understanding
that each of the originating components gets its "turn" in the
selection process. Such an approach not only undermines the
quality of the selections but also raises questions about top
leadership's ability and commitment to creating a new, integrated
organization.
We have also reported that it is important to establish an
organizationwide knowledge and skills inventory to exchange
knowledge among transforming organizations. Valuable information
resides in the organizational components of transformations, and
when these components are combined, these intellectual assets are
extremely powerful and beneficial to employees and stakeholders.
Knowledge and skills inventories not only capture the intellectual
assets of the new organization but also signal to employees that
their particular expertise is valued by the organization.^14 In
addition, industry documentation notes that workforce strategic
management should be supported by well-defined personnel
competencies, staffing of appropriate roles, training, and related
factors necessary for high performance.
^13 [44]GAO-03-293SP .
^14 [45]GAO-03-669 .
The department has taken steps to partially address this critical
success factor. As stated previously, the department has aligned
almost all of its IT workforce under the CIO, having transferred
approximately 6,000 personnel from the administrations to the
CIO's office. In addition, the department has identified the
responsibilities for workforce strategic management within its new
organizational structure--the Assistant Secretary for Information
Technology has responsibility for workforce planning; the Deputy
Assistant Secretary for Information Technology Resource Management
has responsibility for ensuring the alignment of IT workforce
skills with IT goals and objectives; and the Human Resources and
Training Management Office has responsibility for developing and
executing the human capital plan that supports the IT strategy.
Nonetheless, key tasks remain to be completed in order for this
critical factor to be fully addressed. For example, department
officials indicate that VA is currently assessing the roles and
responsibilities of the approximately 6,000 staff that have been
permanently assigned to the Office of Information and Technology,
but the department has not yet established a knowledge and skills
inventory to determine what skills are available in order to
decide the proper roles for all employees within the new
organization. Also, the department has not yet developed policies
and procedures to centrally manage the IT personnel, assessed
personnel requirements, defined training requirements, or created
career and training paths and requirements for the personnel.
Until the department completes these important tasks, the success
of the realignment is at risk because IT personnel may be situated
in inappropriate positions within the department or they may lack
adequate training to fulfill their job requirements.
Certain Actions Have Been Taken to Address Communication
Any major change initiative should be supported by an effective
communication strategy that shares expectations, reports on
progress, and articulates the mission, service objectives, and
policies and procedures. Our 2002 report on transformations noted
that such communication should reach out to employees, customers,
and stakeholders, engaging them in a two-way exchange.^15
Furthermore, communication should provide for feedback about
progress and concerns from stakeholders that will result in
meaningful improvement in the transformation.
^15 [46]GAO-03-293SP .
The department has partially addressed this critical factor for
successful implementation of its new structure. In particular, VA
has taken actions to improve communication for the realignment by
addressing staff concerns. During our site visits to two VA
medical centers, communication of realignment goals and activities
had been a concern for IT staff. The staff at these locations
reported they had difficulty communicating directly with VA
headquarters staff responsible for the realignment to obtain
responses to issues. In addition, the department's realignment
contractor reported in its survey of 167 VA facilities that 47
percent of VA facility staff wanted to see more information about
the realignment and 23 percent of VA facility CIOs reported little
opportunity for feedback from the VA field sites.
In response to these concerns, the department distributed policy
memoranda on changes resulting from the realignment and requested
employee input on the realignment through a forum on the VA Web
site. In addition, the department held conferences for Office of
Information and Technology management and staff (which included
sessions with the VA CIO) to communicate the goals and activities
of the realignment. Nonetheless, further action could help ensure
sustained communication throughout the realignment effort.
Specifically, while the department has identified the Business
Relationship Management Office as the single point of contact
between the Office of Information and Technology and the
administrations, it has not yet staffed this office. According to
the department, it has concentrated its efforts to date on
transferring staff to the CIO's office and on creating a new
organizational structure. However, the performance of the Business
Relationship Management Office in communicating the needs of the
administrations to the Office of Information and Technology will
be critical to the success of the realignment. Until this office
is fully staffed, VA increases the risk that communication across
the department will be inadequate, jeopardizing user and
stakeholder support for the initiative.
VA Has Not Dedicated an Implementation Team to Manage the Realignment
We reported in 2003 that a dedicated implementation team that is
responsible for the day-to-day management of a major change
initiative is critical to ensure that the project receives the
focused, full-time attention needed to be sustained and
successful.^16 Specifically, the implementation team is important
to ensuring that various change initiatives are implemented in a
coherent and integrated way. The team must have the necessary
authority and resources to set priorities, make timely decisions,
and move quickly to implement the transformation. In addition, the
implementation team can assist in tracking implementation goals
for a change initiative and identifying performance shortfalls or
schedule slippages. It is important for the team to use
performance metrics to provide a succinct and concrete statement
of expected performance versus actual performance. Because of its
close involvement with the change initiative, the implementation
team can also suggest corrections to remedy any problems.
^16 [47]GAO-03-669 .
The department has not addressed this critical success factor
because it has not dedicated an implementation team to manage the
realignment effort and track its progress. At the conclusion of
our review, staff from the IT realignment office, which was
responsible for overseeing the realignment, had been reassigned to
other areas of responsibility within the department's new
structure. In addition, the Director of the Realignment Office
told us that multiple offices will assume responsibility for
managing the realignment through July 2008. For example, the
Office of Quality and Performance Management will oversee process
implementation across the Office of Information and Technology,
and the Office of Oversight and Compliance Management will assess
whether the department is complying with the new processes.
However, there is no one entity currently responsible for managing
the realignment.
In addition, according to the Director of the Realignment Office,
the department has developed performance metrics to measure
progress on the implementation of the new management processes.
However, metrics have not yet been developed to assess progress in
implementing key milestones of the realignment. He noted that the
department planned to develop performance metrics for tracking the
progress of the realignment and that these metrics would be
finalized by mid-June 2007.
Also, the department expects to implement the new IT management
processes incrementally by July 2008, but it has missed key
implementation dates for these processes. Implementation of the
first 9 of 36 processes was to begin in March 2007; however, as of
early May 2007, the department had only begun pilot testing two of
the new processes.^17 With the dissolution of the IT Realignment
Office in June, and the absence of any one entity currently
dedicated for managing the realignment, it is less likely that VA
will be able to ensure that the realignment is managed effectively
throughout its implementation.
^17The two processes are (1) risk management and (2) solution test and
acceptance.
Centralized Control of IT Budget Has Not Yet Been Clearly Established
Within VA's new centralized management structure, the CIO is
expected to be responsible for ensuring that there are fiscal
controls over the department's IT appropriation and for overseeing
capital planning and execution. These responsibilities are
consistent with the Clinger-Cohen Act of 1996,^18 which requires
federal agencies to develop processes for the selection, control,
and evaluation of major systems initiatives. According to the
department, it plans to establish the CIO's control over the IT
budget by (1) designating organizations with specific roles and
responsibilities for controlling the budget to report directly to
the CIO, (2) implementing an IT governance structure that assigns
budget oversight responsibilities to specific governance boards,
and (3) developing and implementing IT portfolio management and
financial management processes in the new organization. While
these measures show the potential for establishing the CIO's
control of the budget, the department has not yet fully
implemented them; thus, their effectiveness in ensuring
accountability for the budget has not yet been established.
Deputy Assistant Secretaries to Control Aspects of IT Budget
As one measure to establish CIO control within the new
organization, two deputy assistant secretaries under the CIO are
expected to have responsibility for managing and controlling
different aspects of the IT budget. Specifically, the Deputy
Assistant Secretary for IT Enterprise Strategy, Policy, and
Programs is to have responsibility for the creation,
implementation, and control of an integrated IT portfolio, and for
the design, development, and implementation of a portfolio
management process. In addition, the Deputy Assistant Secretary
for Information Technology Resource Management is to have
responsibility for managing budget execution and compliance,
including tracking actual expenditures against the budget.
However, as of May 2007, the deputy assistant secretary positions
had been filled with acting officials,^19 and department officials
could not provide a date for when permanent appointees would be
named to these positions. In addition, while these offices had
been identified in the new organization structure, VA had not
determined when personnel would be staffed to the offices and
would assume their budget oversight responsibilities. Until these
positions are filled with permanent appointees, the department
cannot ensure their effectiveness in managing and controlling the
IT budget.
^1840 U.S.C. SS 11311-11313.
^19Currently, the titles for these positions are deputy CIO for IT
Resource Management and deputy CIO for IT Enterprise Strategy, Policy,
Plans, and Programs, pending congressional approval of the Senior
Executive Service deputy assistant secretary positions.
IT Governance Plan Identifies Boards to Assist in Management of
T Budget
As a second measure, the IT governance plan, which was approved by
the Secretary in April 2007, describes VA's approach to enhancing
governance, including management of the IT budget. The plan states
that the decision to undertake IT investments requires adherence
to the governance process to assure that investments align with
the department's strategic plan. In addition, it states that
investment governance decisions should address how the department
will program and budget resources against the IT business plan,
meet customer demands, and allocate funding according to the needs
and requirements of the administrations and staff offices.
According to the plan, two governance boards are to have
responsibility for overseeing the development and approval of the
budget and monitoring budget execution:
o The Business Needs and Investment Board is to provide
departmentwide investment control for the IT programs. Its
responsibilities are to include reviewing investments, formulating
and approving budgets, determining the source and amount of
funding for IT projects, and monitoring budget execution. This
board is to be chaired by the Principle Deputy Assistant Secretary
of the Office of Information and Technology, and its membership is
to include senior representatives of the administrations and staff
offices, resource management offices, and selected IT service
managers.
o The IT Leadership Board is to develop and approve the
departmentwide IT budget based on information submitted to it by
the Business Needs and Investment Board. This board is to be
chaired by the CIO, and membership is to include key executive
leaders in the Office of Information and Technology,
administrations, and staff offices. In addition to these two
governance boards, the Strategic Management Council is to be
responsible for making decisions on the overall level of IT
spending and priorities for the department and for approving
budgets. The Strategic Management Council was in place prior to
the realignment effort and the governance plan noted that it would
be included as part of the governance structure. It is chaired by
the Deputy Secretary, and its membership includes senior
department leadership. As an example of the planned interaction
between the boards, the Business Needs and Investment Board is to
ensure that the administrations and staff offices' requirements
have been identified, documented, justified, scoped, planned, and
prioritized and that funds have been allocated. This information
is to be forwarded with all other prioritized requirements to the
IT Leadership Board for review and endorsement and then sent on to
the Strategic Management Council for departmentwide approval.
As of early May 2007, however, VA officials stated that neither
the Business Needs and Investment Board nor the IT Leadership
Board had been established. VA officials also could not provide a
date for when they would be set up. Until the governance boards
are in place with the Strategic Management Council, the department
will lack a complete governance model for the new organization.
Two New Management Processes Are to Address IT Budget
As a third measure to establish the CIO's control over the IT
budget, VA plans to implement processes that specifically address
portfolio management and financial management. As noted earlier in
this report, it is crucial for the CIO to ensure that
well-established and integrated processes are in place for
leading, managing, and controlling VA's IT resources. These two
processes represent how the CIO organization intends to carry out
its responsibilities for the development and control of the
budget. Specifically, the IT portfolio management process is to
address how the CIO will manage the department's investment
portfolio to achieve strategic objectives and allocate funding.
The process is to include steps VA will take to identify, select,
initiate, manage, and control its projects. According to the
realignment assistance contractor, implementation of this process
should help VA make better investment decisions and gain better
control over its projects.
The financial management process, according to its charter, will
address how the CIO organization plans to manage IT investment
programs,^20 address costs and benefits of investments, and
provide a formal budgeting process for managing the IT portfolio
against the budget. According to the realignment assistance
contractor, implementation of this process should provide the CIO
with accurate cost information to support IT investment decisions
and justify expenditures, and enable this official to ensure that
the Office of Information and Technology operates in a
cost-effective manner by providing a sound basis for cost-benefit
analyses.
^20According to the process charter, these programs encompass cost,
benefits, prioritization within budget, a formal budgeting process and
management against the budget.
While the department had identified individuals who would be
responsible for implementing these two processes, an official in
the realignment office told us that the schedule for implementing
the processes had not been established. The official stated that
VA nonetheless expected to complete implementation of all
management processes and meet the July 2008 target date for full
implementation of the realignment. However, the absence of a
schedule to implement these two processes increases the risk that
they will not be implemented in a timely manner, thus reducing
their effectiveness in contributing to improved IT budget
accountability and oversight.
Conclusions
The department has taken various actions that address several of
the factors we identified as critical to its realignment,
including establishing a new organizational structure, approving
its governance plan, and transferring IT staff to the CIO's
authority. While these are positive steps, the department has much
work to complete in order to ensure the success of its efforts.
For example, the department has not yet developed detailed IT
governance process descriptions to address the management of IT
resources, established a knowledge and skills inventory to
determine the proper roles for employees transferred to the new
organization, or identified the personnel requirements, career
paths, and training requirements for these employees. Further, the
department has not fully staffed offices necessary for supporting
the new structure, identified an implementation team that will be
responsible for managing the change to the new management
structure, or developed performance metrics to assess progress in
implementing key milestones of the realignment. The department's
continued focus on ensuring that these important actions are taken
is essential to successfully achieving and realizing the benefits
of the realignment.
While department officials and realignment documents identified
three measures of the realignment that are to provide the CIO with
control over the IT budget, VA has yet to identify how and when
this control will be achieved. Specifically, the department has
not yet staffed with permanent appointees the two deputy assistant
secretary positions that will have responsibility for IT budget
management and control, established the two governance boards that
are to have IT budget oversight responsibility, or developed a
schedule for implementation of the IT portfolio management and
financial management processes. Without showing how and when such
controls will be in place, it remains unclear if VA's actions will
result in optimizing its IT investment management process to
provide the CIO with full control over the budget.
Recommendations for Executive Action
To ensure that VA's IT realignment is successfully accomplished,
we recommend that the Secretary of Veterans Affairs direct the
Chief Information Officer to take the following six actions:
o Develop detailed IT governance process descriptions that address
how the department will manage IT resources within the centralized
organization.
o Establish a knowledge and skills inventory to determine what
skills are available in order to decide the proper roles for all
employees transferred to the new organization.
o Assess personnel requirements under the centralized management
model, including career paths and appropriate training
requirements.
o Fully staff all offices necessary for supporting the new
organizational structure.
o Dedicate an implementation team responsible for change
management processes throughout the transformation to a
centralized IT structure.
o Expedite the development of performance metrics to track the
progress of the realignment.
In addition, to ensure that centralized control of the IT budget
is established, we recommend that the Secretary of Veterans
Affairs direct the Chief Information Officer to take the following
three actions:
o Establish milestones to permanently staff the deputy assistant
secretary position for IT Enterprise Strategy, Policy, and
Programs and the deputy assistant secretary position for IT
Resource Management.
o Commit to a date for establishing the Business Needs and
Investment Board and the IT Leadership Board.
o Establish a schedule for the implementation of the IT portfolio
management and financial management processes.
Agency Comments and Our Evaluation
In providing written comments on a draft of this report, the
Deputy Secretary of Veterans Affairs agreed with our findings and
generally concurred with our recommendations. (The department's
comments are reproduced in app. II.) The comments described
actions planned that respond to our recommendations: for example,
developing and implementing an IT career management program that
includes a knowledge and skills inventory for Office of
Information and Technology employees, and fully implementing the
IT governance plan by October 2007. In addition, the comments
provided further information on the department's actions taken
since receiving our draft report, such as the establishment of the
Business Needs and Investment Board that is a key component of the
IT governance process; establishment of offices responsible for
ensuring compliance with IT policies, directives and core IT
processes; and filling a senior executive position in the Office
of Information and Technology. If the actions that the department
has planned to undertake are properly implemented, they should
help ensure that the IT realignment is successfully accomplished.
Although the department concurred with all our recommendations, it
provided an alternative approach to dedicating an implementation
team responsible for change management processes throughout the
transformation to a centralized IT structure. Its written comments
indicated that change management would be the responsibility of
two organizations in the new structure. However, in our view,
having a dedicated implementation team, responsible for day-to-day
management of major change initiatives, is crucial to VA's ability
to ensure that the IT realignment is fully and successfully
implemented in a coherent, integrated, and coordinated manner. The
approach articulated in the department's comments does not make
clear how progress will be monitored, schedule slippages or
shortfalls identified, and solutions to problems developed and
implemented. Without having a dedicated implementation team, as we
recommend, the department may increase the risk to the success of
the realignment.
We are sending copies of this report to the Chairman and Ranking
Member of the Committee on Veterans' Affairs, House of
Representatives. We are also sending copies to the Secretary of
Veterans Affairs and appropriate congressional committees. We will
also make copies available to others on request. In addition, the
report is available at no charge on GAO's Web site at
http://www.gao.gov.
If you and your staff have any questions about this report, please
contact me at (202) 512-6304 or [email protected]. Contact points
for our Offices of Congressional Relations and Public Affairs may
be found on the last page of this report. Major contributors to
this report are listed in appendix III.
Valerie C. Melvin
Director, Human Capital and Management
Information Systems Issues
Appendix I: Scope and Methodology
To determine whether the Department of Veterans Affairs (VA)
realignment plan includes critical factors for successful
implementation of a centralized management approach, we obtained
and analyzed realignment documents from VA, its realignment
contractor, and the independent verification and validation (IV&V)
contractor. These documents included the realignment contract
request for quotes and memorandums signed by the Secretary and
Deputy Secretary relating to approval of the permanent assignment
of operations and maintenance and development staff to the Office
of Information and Technology. The documents also included the
establishment of the VA single information technology (IT)
leadership authority. We also obtained and analyzed the
realignment contractor's performance work statement, which
detailed the work the contractor was to perform. In addition, we
reviewed other contractor deliverables, such as process charters
for the new IT management processes, the "to be" organization
structure transition plan, and the transition management plan. VA
also provided IV&V contractor documents that assessed each of the
realignment contract deliverables. We reviewed these documents to
identify problems and concerns raised by the IV&V contractor.
To identify factors critical to the success of the centralization
effort, we reviewed GAO products relevant to organizational
transformation. We also reviewed industry best practices
documentation, such as the IT Governance Institute's Control
Objectives for Information and related Technology 4.0, to identify
industry standard success factors for IT organizations. To
validate the success factors, we met with IV&V contractor
officials to elicit their input on the relevance and soundness of
factors we identified for consideration in our assessment of the
realignment effort. IV&V contractor officials concurred that the
factors we developed are critical to VA's successful IT
realignment. In addition, we compared documents obtained from VA
and realignment contractor officials against these factors to
determine the level to which the critical success factors were
included. We also conducted monthly meetings with the VA
realignment team and the realignment contractor to determine
whether these critical success factors were being considered in
the implementation of the realignment.
We visited the VA medical center and a benefits administration
office in Baltimore and a VA medical center in Philadelphia to
become familiar with the methodology that the realignment
contractor was using to assess VA's readiness for the realignment.
We observed teams from the realignment contractor as they gathered
information that would be used to create a baseline of IT
activities and a transition plan for the department. We selected
these locations due to the schedule availability of the department
and the contractor and because they are representative of VA
facilities.
To determine how the centralized management approach will ensure
that the CIO is accountable for VA's entire IT budget, including
those funds that previously had been administered by its
administrations, we reviewed VA and realignment contractor
documentation and plans that specifically address IT budget
oversight and execution under the realignment. These documents
included roles and responsibilities for those VA organizations
listed in the single IT leadership organization structure that are
to have responsibility for IT portfolio and financial management,
the IT Governance Plan, and the IT Portfolio Management and
Financial Management Process Design and Implementation Plans. To
supplement our analysis, we met with officials in VA's Office of
Information and Technology who are responsible for managing and
executing the IT budget. We conducted our work in VA offices in
Washington, D.C., and at VA facilities in Baltimore and
Philadelphia from June 2006 through May 2007 in accordance with
generally accepted government auditing standards.
Appendix II: Comments from the Department of Veterans Affairs
Appendix III: GAO Contact and Staff Acknowledgments
GAO Contact
Valerie C. Melvin, (202) 512-6304 or [32][email protected]
Staff Acknowledgments
In addition to the contact named above, major contributors to this
report were Barbara Oliver, Assistant Director; Nabajyoti
Barkakati; Jacki Bauer; Neil Doherty; Nancy Glover; B. Scott
Pettis; J. Michael Resser; and Eric Trout.
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www.gao.gov/cgi-bin/getrpt? [48]GAO-07-844 .
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Highlights of [49]GAO-07-844 , a report to congressional requesters.
June 2007
VETERANS AFFAIRS
Continued Focus on Critical Success Factors Is Essential to Achieving
Information Technology Realignment
The Department of Veterans Affairs (VA) spends nearly $1 billion yearly to
support its information technology (IT) needs; yet it has encountered
persistent challenges in managing IT projects. In October 2005, VA
initiated a realignment to centralize its IT management program that it
plans to complete by July 2008. GAO was requested to determine (1) whether
the department's realignment plan includes critical factors for successful
implementation and (2) how the centralized management approach is to
ensure that the chief information officer (CIO) is accountable for the
department's entire IT budget. To do so, GAO identified critical success
factors, analyzed realignment and budget documents, and held discussions
with VA officials.
[50]What GAO Recommends
GAO is making several recommendations to VA, including that it dedicate an
implementation team to manage change, expedite development of performance
metrics, and establish a schedule for implementing management processes.
Commenting on a draft of this report, VA generally concurred with GAO's
recommendations and described actions to address them.
VA's plans for realigning the management of its IT program include
elements of several factors that GAO identified as critical to the
department's implementation of a centralized structure; additional
departmental actions could increase assurance that the realignment will be
completed successfully (see table). Since undertaking the realignment, VA
has concentrated its efforts on transferring approximately 6,000 staff to
the CIO's authority and on creating a new organizational structure. It has
also taken certain actions to establish an IT governance plan, identify
workforce management responsibilities, and increase communication about
the realignment with staff. However, it has not yet created a knowledge
and skills inventory to help determine proper roles for all employees in
the new organization, established governance boards to manage resources,
or dedicated an implementation team to manage change and track the
progress of the realignment with performance metrics. As a result, the
department risks jeopardizing the success of its efforts and may not
realize the long-term benefits of the realignment.
Summary of VA's Actions Addressing Critical Success Factors
Source: GAO.
Within the new structure, the CIO is to have responsibility for ensuring
that there are fiscal controls over the IT appropriation and for
overseeing capital planning processes, budget execution, and financial
management programs. According to the department, it plans to establish
the CIO's control by (1) designating organizations with specific roles and
responsibilities for controlling the budget to report directly to the CIO;
(2) implementing a governance structure that assigns budget oversight
responsibilities to specific governance boards; and (3) developing and
implementing IT portfolio management and financial management processes.
While these measures show the potential for establishing control of the
budget, VA has not yet fully implemented them or committed to a time frame
for doing so. Thus, their effectiveness in ensuring the CIO's
accountability for the budget has not yet been established.
References
Visible links
28. http://www.gao.gov/cgi-bin/getrpt?GAO-06-201T
29. http://www.gao.gov/cgi-bin/getrpt?GAO-05-1017T
30. http://www.gao.gov/cgi-bin/getrpt?GAO-06-201T
31. http://www.gao.gov/cgi-bin/getrpt?GAO-05-1017T
32. mailto:[email protected]
33. http://www.gao.gov/
34. http://www.gao.gov/
35. http://www.gao.gov/fraudnet/fraudnet.htm
36. mailto:[email protected]
37. mailto:[email protected]
38. mailto:[email protected]
39. http://www.gao.gov/cgi-bin/getrpt?GAO-03-669
40. http://www.gao.gov/cgi-bin/getrpt?GAO-03-293SP
41. http://www.gao.gov/cgi-bin/getrpt?GAO-05-1017T
42. http://www.gao.gov/cgi-bin/getrpt?GAO-05-628
43. http://www.gao.gov/cgi-bin/getrpt?GAO-03-293SP
44. http://www.gao.gov/cgi-bin/getrpt?GAO-03-293SP
45. http://www.gao.gov/cgi-bin/getrpt?GAO-03-669
46. http://www.gao.gov/cgi-bin/getrpt?GAO-03-293SP
47. http://www.gao.gov/cgi-bin/getrpt?GAO-03-669
48. http://www.gao.gov/cgi-bin/getrpt?GAO-07-844
49. http://www.gao.gov/cgi-bin/getrpt?GAO-07-844
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