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Speakers

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Keynote Speaker Ken Schmidt

Ken Schmidt, former Director of Communications for Harley-Davidson Motor Company, took the floor as keynote speaker for the ABC&P Forum™ 2003. “Dekked out” in black shirt and Levis, Mr. Schmidt represented a new experience to the audience of business professionals who were accustomed to seeing the usual suit and tie. In a few short seconds heads were nodding and laughter filled the room as the audience related to Mr. Schmidt’s infectious energy.

While focusing primarily on consumer sales, Mr. Schmidt related the principles and importance of uniqueness in supporting the stakeholders of any organization’s product or service regardless of the marketplace. In the case of a Harley-Davidson motorcycle, its unique sound not only announces its presence but also identifies itself sight unseen. This characteristic causes a predictable reaction -- when you hear what you know is a Harley you instinctively look at it. If you’re sitting on it you have instant public recognition and the feeling that you are indeed someone special. It just feels good!

Harley-Davidson has a rich history. It was, however, challenged by the successful introduction of high quality, low priced Japanese motorcycles to the American marketplace. An attempt to compete with the foreign bikes on their terms failed. This eventually led to the sale of Harley-Davidson to an owner that turned out a less than dependable product, giving the famed brand yet another challenge to overcome.

Harley-Davidson also faced a rider reputation syndrome. The bike had a reputation of being the ride for unsavory types and thus suffered a status fallout among mainstream motorcyclists even though Harley-Davidson was once again an independent company and had made incredible quality engineering moves forward.

Without a formal or typical plan, Ken Schmidt, newly hired to help restore the company’s image and market presence, faced the challenge of a lifetime: How to market to consumers worldwide an underrated, pricey motorcycle that had a reputation for appealing only to stereotyped hoodlums? When conventional promotion techniques proved less than satisfactory a hands-on demonstration effort was conceived. Trucks of motorcycles were taken to major motorcycling events for the sole purpose of setting up free demonstration rides.

A cyclist could ride a 15-mile course on a new Harley-Davidson and would be asked to report on the experience after the ride. Involving riders with the product and its features gave H-D a chance to respond directly to the consumer. The relationship that developed as a result of these demonstration venues began to show results through increased sales. This, coupled with continued publicity, public relations and interaction with individual Harley dealerships, began to turn the company around. Harley regained popularity and a following within the entire community as men and women from every walk of life lined up to buy America’s dream machine.

The keyword in Mr. Schmidt’s presentation was ‘passion.’ And, although it was clearly evident that he was not a lover of golf, it is interesting to note this quote by Hal Sutton, PGA Tour Golfer, in a eulogy printed in Payne Stewart, a biography written by his wife Tracey Stewart: “Payne was a passionate person – someone who understood passion at all levels – in his personal life, in his spiritual life, and in his quest to be the greatest golfer in the world. He played with passion, and he lived with passion.”

The engineers at Harley-Davidson had a passion for building the best motorcycle. Harley-Davidson riders/owners have a passion for their motorcycles. This passion is what makes the product and its users successful, unique and willing to pay a high price for something offering more than just quality. “Don’t just communicate…” says Ken Schmidt – connect! Exceed expectations … go beyond! Get passionate about what you are doing! Paying attention to people’s feelings and passions was a win/win solution to a crippled company. Today the demand for Harley-Davidson motorcycles outweighs production ability.

Joseph T. Kammerer

Following the motivational presentation of the keynote speaker, Joseph Kammerer, Deputy Assistant Secretary for Cost and Economics in the Office of the Assistant Secretary of the Air Force, presented a primer on Activity Based Costing.

Mr. Kammerer began by explaining how cost management affects consumption. Cost influences consumption in several ways. As cost of goods falls, quantity demanded increases to the point where “free goods” have an infinite demand. Things that aren’t free but appear to be free (such as labor in military organizations) get over consumed. And, attempts to prevent over consumption lead to rules, regulations and restrictions on producing goods. Managers must be informed of financial aspects of jobs in order to effectively reduce costs. For too long only budget systems were used. There were no cost accounting systems. Budget systems didn’t mesh with ABC, yet accountability was becoming more and more imperative.

New guiding principles were spelled out with the Chief Financial Officer’s Act of 1990, the Government Performance and Results Act of 1993, the Federal Financial Management Improvement Act of 1996, and Title 10 – US Code Part D – Chapter 803 – Section 8022 – Financial Management. Complete, reliable, consistent and timely information meeting definitive requirements was demanded. Developing and reporting cost information was mandatory. Integration of accounting and budgeting information with systematic measurement of performance was also called for.

In the past the Air Force financial paradigm focused primarily on input with less focus on output. Obtaining and executing a budget was more important than determining capability. A more comprehensive financial picture would require a resource input view, a combination cost and performance representation and an evaluation of the cost of production process.

Mr. Kammerer presented examples of the importance of cost visibility and how it could affect the decisions of leadership. He used the F/A-22 compared to the F-15 as an example: the F/A-22 is more expensive to produce than its non-stealth cousin the F-15 but more F-15s are projected to be lost in combat than the F/A-22. The cost then of the F/A-22 could be justified over that of the F-15 based on performance.

The new paradigm would require a complete change in methodology from the past. Focus was on budget and now it would be switched to cost. Budget focused on inputs but cost focuses on outputs/outcomes. The budget was always executed first and now maximizing productivity would come first. And a host of other protocols would be reversed.

Mr. Kammerer explained Activity Based Costing and Activity Based Management with emphasis of the benefits of implementing ABC/M. The Air Force continues to support ABC/M and improving cost management across the board.

Peggy Poindexter

Peggy Poindexter, Director of Acquisition Management, enlightened attendees on NIMA (National Imagery and Mapping Agency) with a brief history of the organization and discussion on the challenges facing the agency. NIMA was established in 1996 and incorporated the Defense Mapping Agency, Central Imagery Office, Defense Dissemination Program Office and the National Photographic Interpretation Center. The imagery elements of the Defense Airborne Reconnaissance office, National Reconnaissance Office, Defense intelligence Agency and the Central Intelligence Agency also were incorporated into the new agency. It was formed in order to more effectively provide timely, relevant and accurate geospatial intelligence in support of national security.

The new agency inherited multiple management architectures with no common process. There were different contract clauses and different reporting requirements. Most acquisitions were managed as Level-of-Effort, said Poindexter. And, there were no integrated schedules between segments and no intuitive critical paths. In fact there were very few schedules. Stovepipe planning led to unintegrated deliveries.

By 1998 there was a recognized need for acquisition process control. The number of segments would be reduced to 30 or so for better management and it was clear that integration through a project perspective was necessary. But, there was still no recognition of what integrated information could do for organization. EAC always equaled BAC, no milestone was ever missed and contractors briefed one other quarterly, which made for a totally unrealistic scenario.

In order to effect a positive transition an Integrated Contract Performance Management (ICPM) process needed to be established which would include empowering the workforce and investing prudently in Information Technology (IT). This would require senior acquisition executives to ‘buy-in’ to this ICPM policy. It would also require a concerted training effort.

As is usually the case, resistance to change was high. A “what’s in it for me” attitude predominated. As the change agent, Ms. Poindexter often heard the refrain: “I don’t understand it; I don’t like it; and, I don’t like you.” Complacent workers and contractors, up to now, had enjoyed an easy ride. Necessary changes were not welcomed by all. Enabling new business practices, being more responsive to change, shortening cycle times, cost-effectively meeting customer needs and enlisting the best ideas from aerospace and commercial industry became the “burning platform” from which to drive change.

Research suggested that Knowledge Management (KM) could help NIMA’s transformation by providing the means to standardize processes and provide common frame of references and vocabulary. This translated into a Project Control System (PCS) incorporating a set of business rules or policy to drive processes. Poindexter detailed the strategy, process, workforce actions related to their industry partners and relating to government program offices and aimed at complimenting NIMA’s National System for Geospatial Intelligence transformation goals and objectives.

Information Technology infusion without an Integrated Contract Performance Management or Knowledge Management strategy, enabling processes, and a workforce motivated to collaborate and share information is problematic, according to Ms. Poindexter. KM must support mission accomplishment and must serve stakeholders regardless of location to filter and funnel data to achieve information “clumping.”

Peggy also emphasized the importance of having a passion for ones task and work. Her passion for Integrated Performance Management was obvious and succeeded in motivating the forum audience.

William Kraus

SAIC’s Bill Kraus wound up the morning session with his presentation, An Integrated Management Environment for Program Planning and Tracking. Mr. Kraus detailed SAIC’s PACE™ (Program Analysis Control Environment) web-enabled program management toolset which incorporates a process of Planning, Tracking, Analyzing and Reporting. The toolset incorporates Dekker TRAKKER® with other COTS tools to provide management and reporting to various government agencies and government contractors.

Gary Christle

Mr. Christle returned to the ABC&P Forum™ 2003 in the capacity of Scientific Analyst to the Assistant Secretary of the Navy (Research, Development and Acquisition) in the Center for Naval Analyses. His discussion on his study of the US Aerospace & Defense Industry View of the Metrics for Acquisition Management was a popular subject among attendees.

Identifying corporate structures and the top performing companies in defense contracting, Christle outlined changes to the corporate environment and how they must measure up to Wall Street expectations. Cash flow, earnings per share (EPS), Sales, company stability and predictability are primary points of consideration. And, according to top corporate officers interviewed, managers must think like business owners.

According to Christle, the US DoD business model is out of date and consequently missing contract incentive opportunities. Their profit allowance does not reflect market realities, as weighted profit guidelines reward assets while Wall Street penalizes assets, and progress payment limitations hinder development of cash flow-based contract incentives. Government limits progress payments to 85%, which limits corporate contracting businesses cash flow. Some middle ground must be found between the high revenue, minimum assets expectations of corporate shareholders and the low cost, payment regulations adopted by DoD.

Of those interviewed, all companies tracked cost and schedule as part of their program/contract specifics. Quality was the next most common concern, followed by customer satisfaction. Portfolios were reviewed at least quarterly at the corporate level and most reviewed on a monthly basis. All First-tier business units reviewed monthly. Two companies rated baseline management as critical. “… Program problems can usually be traced to a poor baseline,” said one President and CEO.

So, what should US DoD acquisition executives monitor from an industry view? First place went to contract cost and schedule performance, specifically EVM-based metrics, followed by industry/company “health”, company management quality and technical performance. And, do it with this philosophy: Stay out of the details, set clear goals and objectives, and measure performance against realistic baselines.

Mr. Christle then outlined how EVM fits into this plan. “Enhancing shareholder value is becoming the mantra of all companies in the US,” he said. Defense companies manage portfolios of large long-term projects and corporate shareholder value depends on the success of those portfolios which can manifest itself by direct profitability from the projects and contracts, or by being a reliable source of “free cash” to finance growth in non-defense or international markets. He concluded by stating that EVM disciplines are now being recognized as essential ingredients of successful program management and thereby a contributor to shareholder value.

Stephen French

After lunch, Stephen French briefed the General Session audience on the progress of Dekker iPursuit® in the Earned Value Management Pilot Program for the United States Army. Mr. French is Chief of the Knowledge Management Coordination Office, under the Deputy Assistant Secretary of the Army for Plans, Programs and Resources in the Office of the Assistant Secretary of the Army for Acquisition, Logistics and Technology. Mr. French was welcomed warmly as a return speaker to the ABC&P Forum™ 2003.

The Office of the Secretary of Defense established pilot programs to test and promote Integrated Digital Environment tools that would reduce cost and improve efficiency. The DoD was spending mega-bucks on EVM analysis software yet there was a lack of timely, useful data. It was obvious that something was wrong because decision makers were forced to rely on regurgitated information and verbal communications from the chain of command.

Among other things, the EVM Pilot would have to demonstrate a reduction in data management workload and costs, reduced delays in data availability, improved understanding of program status and improved program management.

Available tools were inadequate for headquarters to look at EVM. The big question was: “Could we load data on a server and disseminate data information practically and cost effectively?” The problem we faced was by the time reports were issued on programs, they were out of date. Collecting and reporting took time and never provided timely and accurate account of the program at date of report. We were always two months in arrears, stated French. Enterprise wide integrated information dissemination was necessary.

While the iPursuit pilot was proposed before June of 2001, 9/11 seriously affected the pilot program. Downsizing and internal changes were drastically being made. The new concentration on IT security called for strict rules and regulations to be applied to the sharing of information. Encryption, firewalls and more now were required. Extensive testing was also a new requirement to ensure stability and demonstrate that software tools would not affect other systems in place. Leadership changed and with new leaders came a change of focus and philosophy, which added to the issues needing to be dealt with.

Dekker, Ltd. recognized, considered and addressed every major issue facing security and software performance requirements, said French. iPursuit features include canned displays with linked drill-down-to-data which facilitated non-expert use of summaries and data understanding. It also increases analysis credibility and reduces call-backs to PMs. Gauges with target values and automatic notification; cost and schedule integration; data loading and error checking are outstanding in feature and functionality, coupled with unlimited power user support, remote access and Web-enabled application.

Mr. French declared ‘timeliness’ as the issue having the biggest impact on pilot success. The conscious decision not to modify existing contracts limited demonstration of timeliness improvements. Value of near-real time information was under-appreciated and pilot participants continued to recognize analyses as OBE. “Contracts must provide for access to EVM data as soon as it is available,” said French.

The hardest issue the pilot addressed was culture. Mustering enthusiasm for change is not an easy task among people comfortable with the tools and processes they’re used to working with. Success demands leadership commitment and enterprise thinking, which will in the final analysis overhaul, update and greatly improve performance and cost management in Army acquisition.

Denise Albert

Representing Lockheed Martin, Denise Albert, Deputy Program Manager for the US Coast Guard Deepwater Program presented a brief overview of the 125,000 employee-strong company, focusing on their Systems Integration enterprise that employs 31,000. Six principal businesses with 21 international locations handle over 1,000 programs, one of which is the Deepwater Acquisition Project.

The US Coast Guard core missions include: Homeland Security/National Defense, Search and Rescue, Alien Interdiction, Drug Interdiction, Fisheries Protection and Marine Environmental Protection. Deepwater is an acquisition project to replace the ships, aircraft, C4I and logistics systems that perform these missions. There were several factors that led to Deepwater. Equipment was approaching the end of service life and the Coast Guard lacked the capabilities to handle some missions. In addition, technology was obsolete, operation and maintenance costs were increasing, and lack of interoperability within USCG and compatibility with other agencies was evident.

In order to meet the needs and requirements of the project, an integrated systems approach using a single, long-term performance based contract was called for. Risk must be kept low with minimal development and the project must conform to the budget. An innovative strategy produced a contract providing maximum flexibility and established a “partnership in performance” rather than a “managed by contract” approach. Lockheed Martin formed a team with Northrop Grumman to manage this program, valued at $17,000,000,000 over 20 years.

The Deepwater Integrated Product Data Environment (IPDE) consists of two sectors. The design sector incorporates cost/performance optimization thru performance models and total ownership cost models, a common product model and requirement management and traceability. The program management sector features an integrated program management toolset comprising CWBS, IMP/IMS, EVMS, Risk Management Database, and Logistics Management System viewable via a digital dashboard. Both sectors provide collaboration tools, interoperability standards, and web based data management and collaboration environment.

Dekker TRAKKER® is part of the legacy EVM system and Dekker iPursuit® digital dashboard displays multiple views of program data. iPursuit allows access to reporting data but not to management data, securing working data from reporting data. Deepwater represents one of the more complex applications of the TRAKKER EVM tool.

Simon Dekker

Last but not least on the General Session agenda was Simon Dekker, President and CEO of Dekker, Ltd., hosts of the ABC&P Forum™. After thanking attendees for their participation in this forum, Simon emphasized the importance of collaboration and interaction with customers to provide the best management tool set available and began his presentation with a history of the corporation, founded in 1984.

Dekker, Ltd. is now in its 20th year of producing business performance measurement and decision support systems. It all started with the introduction of Dekker TRAKKER® to the marketplace in December of 1984.

Since Dekker predominantly bears independent R&D costs, it took the company 10 years to reach sustained profitability. The first 2 years were difficult at best, with the succeeding 8 years profits were always recycled back into the company exclusively. “We continue to reinvest back to capacity and have realized a healthy growth over the last three years,” said Dekker. Products are developed at high risk and driven by consumer requests and demands. Dekker’s market mix is a blend of software licenses, service and training.

Integrated cost and schedule was an inherent part of Dekker TRAKKER® when it was introduced in 1984 and remains constant with the product’s evolution. Howeverthe product’s appearance has evolved over the years. The ancient green type on a black background layouts have changed several times with today’s look making a meaningful use of color and form.

Quality has always been and continues to be Dekker’s prime, number one, focus. Products are market driven and must work in order to be sold. This requires a capital investment in software development. Feature sponsorship historically offsets 15% of total development costs but all new technology is absorbed by the company and capitalized over a three-year cycle. The bottom line is that products must sell to remain profitable and Dekker is focused on answering all up-to-date requirements demanded by the marketplace.

Dekker’s performance measurement process progresses on a monthly basis by collecting process, activity, accounting, performance and output data, reducing and verifying that data, and finally reporting to customers and management.

System Anomaly Failure Enhancement Requests (SAFERs) are generated with each support call received. Upon review of SAFER disposition by development and customer support personnel, an anomaly or enhancement gets scheduled with each SAFER, requiring 9 activities. From there the process goes through several steps to complete accomplishments. Timephased logs provide a means to determine status of project. Detailed information is collected from timecard and applied to SAFER and a weekly status log is generated to trakk objectives. Each project proposal provides proper detail of schedule, allows for proper cost controls, provides proper level of detail within existing process boundaries on how business is done, and quickly demonstrates areas of risk with progress or maturity ratings.