By Geoff Fein
Earlier this month the Navy transitioned to its new enterprise resources planning (ERP) system that will provide a standard set of management tools to service organizations to improve businesses processes and provide interoperable data for financial, acquisition and supply chain management, according to a top Navy official.
There are two ways to describe Navy ERP–one is that the Navy is using a state of the art system that is available throughout industry to modernize and standardize its processes in the areas of financials. “So you have financial visibility…transparency ,” Ronald Rosenthal, Navy ERP program manager, told Defense Daily in a recent interview.
ERP is a system that integrates processes and data into a system with a common database, he added.
In the late 1990s, the Navy brought in industry to help run several pilots to see how ERP would work, Rosenthal said. Industry had been moving into the ERP planning area for years and had seen the benefits, he added.
The four pilots the Navy ran began to show senior naval leadership the benefits of ERP. A decision was made to converge the pilots into programs in 2004, and today the Navy has just gone “live” with the first iteration of ERP at Naval Air Systems Command (NAVAIR) and seven of NAVAIR’s warfare sites, Rosenthal said.
The system went online Oct. 1 and is being used by about 15,000 people, he added.
The Navy has been loading over 12 million legacy system records into Navy ERP, and Rosenthal said everything is on schedule. “We will be transacting in the system in late November or early December.”
In April, the Space and Naval Warfare System Command (SPAWAR) and its five major sites will go online with ERP. And, in October 2008, the effort will move into the supply command. Rosenthal added the Navy will continue to roll out ERP, eventually to 88,000 users at 121 sites.
“So today I am 15,000 [users] at nine sites. As you can see that’s a major road map we are undertaking,” he said.
A parallel effort will bring upgrades to the ERP system, Rosenthal noted. “Our next major release is in development, which will be the supply component…the single supply solution…which will combine wholesale and retail supply into a single solution that will be built upon the foundation we have in our first release.”
ERP is a major effort to optimize and improve efficiencies, Rosenthal said. “So when you look at the benefits, you are replacing a significant number of old legacy IT (information technology) systems with a single solution.”
With that comes savings in three areas, he said. One is the savings from retiring old legacy systems. The second, and more significant, Rosenthal noted, is the improvements the Navy would have in the supply inventory because of the efficiencies gained with the supply corps having that visibility. “They can operate much more efficiently at lower stock levels than they have today.”
Third, labor-wise, the Navy is under extreme pressure to lower the manpower it uses in its support operations, Rosenthal said. “We are bringing a system forward where you’ll see efficiencies in the way we do our business and then we can re-allocate how we have our people doing the work that is necessary to support the warfighter.”
One example of how ERP will benefit the Navy is in the area of understanding cost of items that are used across the entire Navy enterprise.
“Because in many cases, it’s not only tens of legacy systems, but it probably gets into hundreds of legacy systems,” Delores Etter, the Navy’s acquisition chief, told Defense Daily during the same interview.
“To answer a question where you are trying to understand something that is a financial issue across everything, you have to go out across all those programs, pull in data, put it together…it’s usually not quite the same kind of number,” Etter said. “In many cases it’s either extremely hard to come up with some of these kind of analysis numbers across the Navy, or it may not even be possible to do today because of all of the different financial systems we are using. So as we get everybody onto a single [system], that transparency that is at your fingertips across all of the Navy is going to be a huge benefit.”
The Navy has done numerous studies looking at potential cost savings, Rosenthal said.
Determining savings from retiring legacy IT systems is easy to find, he added. But when it comes to supply, the Navy has done several studies from different perspectives.
“Our cost savings have been anywhere from as high as 8:1 to as low as 4:1,” Rosenthal said. “So in each of those cases it is a wide range, but that’s because of the assumptions you make. We know we can hit the 4:1 and then whatever is above that would be a tremendous benefit.”