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DIGITAL TRANSFORMATION PLAN

1 DRAFT/PRE-DECISIONAL

Digital Transformation

Application Portfolio Plan Deputy Chief of Naval Operations, Fleet Readiness & Logistics,

Logistics Information Technology (IT) /Logistics Functional Area

Manager (LOGFAM)

5/29/2018



Table of Contents

List of Figures ............................................................................................................................ 3

Executive Summary ................................................................................................................... 4

Background ................................................................................................................................ 5

Introduction ............................................................................................................................ 5

Core Functions of IT Portfolio Management ........................................................................... 7

Document Purpose ................................................................................................................. 9

Assessment ..............................................................................................................................10

As-Is State and Desired To-Be State ........................................................................................11

As-Is ......................................................................................................................................11

To-Be ....................................................................................................................................12

Application Portfolio Rationalization ..........................................................................................15

Approach ...............................................................................................................................15

Portfolio Management and Governance ................................................................................23

Conclusion: Next Steps .........................................................................................................25

Appendix A: Functional and Technical Health Assessment Examples ......................................26

Appendix B: Sample Governance Model ...................................................................................27

Appendix C: Sample Portfolio Management Mission, Vision, and Strategic Goals ....................28



List of Figures

FIGURE 1: FOUR CORE FUNCTION OF IT PORTFOLIO MANAGEMENT POLICY .................................................................................. 8

FIGURE 2: FOUR CORE FUNCTIONS OF IT PORTFOLIO MANAGEMENT STRATEGIC ACTIONS ............................................................... 8

FIGURE 3: LOGFAM MODERNIZATION VECTORS ................................................................................................................... 11

FIGURE 4: AMAZON CLOUD MIGRATION PROCESS .................................................................................................................. 12

FIGURE 5: MICROSOFT CLOUD MIGRATION PROCESS .............................................................................................................. 12

FIGURE 6. DIGITAL TRANSFORMATION VISION ........................................................................................................................ 13

FIGURE 7. PROPOSED APPLICATION RATIONALIZATION FACTORY................................................................................................ 14

FIGURE 8: APPLICATION RATIONALIZATION APPROACH ............................................................................................................ 15

FIGURE 9: EXAMPLE PROJECT TIMELINE AND ACTIONS ............................................................................................................. 16

FIGURE 10. EXAMPLE OF LIFE CYCLE ANALYSIS ........................................................................................................................ 18

FIGURE 11. RATIONALIZATION LENSES .................................................................................................................................. 19

FIGURE 12. SAMPLE DISPOSITION MATRIX ............................................................................................................................ 20

FIGURE 13. SAMPLE DISPOSITION CRITERIA WITH CROSS-INDUSTRY STANDARDS .......................................................................... 20

FIGURE 14: PROPOSED SYSTEM LIFECYCLE PROCESS ................................................................................................................ 21

FIGURE 15: SAMPLE VECTOR ROADMAP ............................................................................................................................... 22

FIGURE 16: SAMPLE TRANSITION TIMELINE ........................................................................................................................... 23

FIGURE 17: PROPOSED GOVERNANCE MODEL ....................................................................................................................... 24



Executive Summary

In the past few years, there has been heightened conversation at all levels within the Federal

Government around IT Modernization. Policy and guidance has been provided by the White

House, Department of Defense (DoD), and the Navy regarding the steps to be taken and

actions that need to occur to ensure that Federal IT is able to improve mission readiness, not

hinder it. This guidance has been followed all the way down to the Logistics IT Executive

Committee (LOG IT EXCOMM) level, where it was realized that the current processes and

culture are inhibiting innovation and significantly delaying the delivery of Digital Transformation.

To this end, a Digital Transformation Team (DTT) was created to aggressively expand

transformation efforts across the Logistics Functional Area Manager (LOG FAM).

While the DTT has many areas that they are tackling, this document focuses on IT Portfolio

Management (IT PfM) and Application Portfolio Rationalization (APR) within the LOG FAM.

These functions are currently being performed in a limited capacity, within silos in Program

Offices, with no standard methodology or framework being followed. Due to the lack of

management, the IT Portfolio has grown very large and contains many systems performing

duplicative functions. In its current state, the portfolio does not support Digital Transformation

and needs standard processes and cultural change to do so.

In the future, all systems within the LOG FAM Portfolio will have their functionality transferred to

a shared services platform, enabled by cloud and digital, as outlined in the Digital

Transformation Technology Plan. For this transition to be effective, systems will be aligned to

and rationalized within one of the Modernization Vectors. Along with a change in the current

mindset around rationalization, there also needs to be an up to date and industry standard

process put in place to guide and govern portfolio rationalization. This process will take the form

of an “Application Rationalization Factory” and will standardize disparate processes being

performed across the LOG FAM.

Within the Application Rationalization Factory, the proposed rationalization approach will be

used to asses each application using industry standard techniques. Following the approach,

users will conduct a current state analysis, initial assessment using technical and functional

health assessments, and ultimate disposition of applications using a series of levers, lenses,

and factors. The approach is data driven, based on industry standards, and produces lifecycle

characterizations along with IT Roadmaps as outputs. Along with the adoption of the proposed

Application Rationalization approach, this document provides an overview of a proposed

governance model. As the portfolio rationalization process becomes defined, a standard

governance model will be imperative to continued improvement and success. Without a defined

governance model in place, the LOG FAM will not be able to adopt the proposed processes,

leading to continued delays in reaching Digital Transformation.



Background

Introduction

In May of 2017, the White House took multiple steps forward in the process of Modernizing

Federal IT. The first of which established the American Technology Council (ATC) to ensure the

secure and effective use of IT across the Federal Government1. The second of which was the

Executive Order on Strengthening the Cybersecurity of Federal Networks and Critical

Infrastructure2, that tasked the ATC with providing a report on the Modernization of Federal IT.

This report was completed later in 2017 with input from various Federal Agencies while also

including guidance from industry leading representatives3. It highlighted two focus areas for the

modernization effort that the Federal Government should focus on, Network Modernization and

Consolidation, and Share Services to Enable Future Network Architectures. The report also

stated that agencies should “realign their IT resources appropriately using business-focused,

data-driven analysis and technical evaluation” and “emphasize reprioritizing funds and should

consider ’cut and invest’ strategies that reallocate funding from obsolete legacy IT systems to

modern technologies, cloud solutions, and shared services, using agile development practices”3.

These actions by the White House speak to the needs for modernization within the Federal

Government to improve service delivery and focus resources on what customers of the

Government want and need most.

During 2016 and 2017, the DoD, through the National

Defense Authorization Act (NDAA)4, began the

acceleration and reformation of acquisition processes.

The intended outcome was to better equip the

warfighter with ‘the tool they need when they need it’.

These changes saw the Undersecretary of Defense

for Acquisition, Sustainment, and Technology (AT&L)

split into two smaller organizations, the

Undersecretary of Defense for Research and

Engineering (USDR&E) and the Undersecretary of

Defense for Acquisition and Sustainment (USDA&S)5.

Along with this split, the position of Chief Management

Officer (CMO) was elevated and tasked with improving the quality and productivity of business

operations, thereby reducing cost5. This monumental and culture shifting decision was in

response to the current acquisition program taking too long to provide warfighters the tools they

need and the mounting cost of old, outdated technology in need of modernization or

replacement.

1 Presidential Executive Order on the Establishment of the American Technology Council, May 2017 2 Presidential Executive Order on Strengthening the Cybersecurity of Federal Networks and Critical Infrastructure, May 2017 3 Report to the President on IT Modernization, 2017 4 National Defense Authorization Act for Fiscal Year 2016 5 Report to Congress Restructuring the Department of Defense Acquisition, Technology and Logistics Organization and Chief Management Office Organization, 2017

[The reorganization] reflects

the biggest change to the

Pentagon’s structure since

the landmark Goldwater

Nichols reforms.”

Ellen Lord

Under Secretary of Defense

for Acquisition and

Sustainment (A&S)



To support this significant organizational and cultural shift, the Under Secretary of the Navy has

responded by restructuring the Deputy Under Secretary of the Navy for Management (DUSNM)

replacing it with the Office of the DON Chief Management Officer (OCMO). The OCMO is

tasked with acting as “the catalyst to help rapidly prioritize and accelerate business

transformation initiatives”6. The office will focus on auditability and financial accountability,

system rationalization and modernization, data strategy, and business reform across the Navy

and DoD enterprise6. These changes and strategic direction closely follow the guidance from

the White House and DoD to change the current business operations culture to allow for “faster

access to accurate information, reducing overhead and bureaucracy, and streamlining

processes that impede rapid decision making”6.

Similarly, the forward-thinking members of LOG IT EXCOMM recognized the need for the

Deputy Chief of Naval Operations (DCNO) for Fleet Readiness and Logistics to pursue ‘Digital

Transformation’. Several factors contributed to this strategic shift including a mandate by the

Chief of Naval Operations (CNO). The LOG IT EXCOMM recognized that current LOG IT

portfolio funding decisions had been made via Program Objective Memorandum (POM)

activities in years prior. This meant that most, if not all, funding had been allocated for LOG

FAM programs, primarily for sustainment activities. Finding resources to pursue innovation for

systems and applications with existing governance, processes, technology, and people would

be a long, drawn out task. They realized that the current Portfolio Management of LOG IT

systems left them at a severe disadvantage with a significantly delayed timeline or even inability

to modernize in accordance with the CNO vision. To prevent current disparate processes across

multiple Echelons from inhibiting innovation or delay the delivery of digital transformation, a

monumental paradigm shift had to be strategically directed.

The reality of ‘do more with less’ as well as the challenges faced above, lead the IT EXCOMM

to establish a Digital Transformation Team (DTT) to aggressively expand transformation efforts

across the LOG FAM. In defining the future of LOG IT systems, the Transformation Team has

anchored LOG IT transformation to concepts captured under the “cloud computing” label. Cloud

computing is the on-demand, rapid and elastic use of easily managed pooled resources

accessed via public or private networks with minimal upfront cost or no long-term commitment.

Given that cloud is a key enabler of several of the key aspects of digital transformation, careful

consideration must be taken to establish and monitor the cloud migration journey. The strategic

maturity considerations will be detailed in the Digital Transformation Plan, while technical details

for cloud migration, including the Enterprise Technical Reference Framework (ETRF) will be

resident in the Technology Plan. The remainder of this document will focus on highlighting the

portfolio management and application rationalization dependencies in consideration as LOG

FAM actualizes the digital transformation vision set in the Digital Transformation Plan.

As the concept of rationalization is discussed throughout the document, it is important to

standardize several of the terms being used such as system and application. The DoD definition

of a system is a discrete set of information resources organized for the collection, processing,

6 Memo from the Under Secretary of the Navy Regarding Restructure of Secretariat Functions, 2018



• Ensure IT investments support the

Department’s vision, mission, and goals;

• Ensure efficient and effective delivery of

capabilities to the warfighter; and

• Maximize return on investment to the

Enterprise

maintenance, use, sharing, dissemination, or disposition of information7. While the definition of

an application is broader and is a software program hosted by an information system7. Most of

the LOG IT portfolio is comprised of systems, which are made up of various applications. When

the term is applied to rationalization, it is meant to be understood that application rationalization

will also cover DoD systems.

Other concepts that are significant to the transformation

vision are the ideas of Modernization Vectors and

rationalization within the portfolio, both of which are defined

to the right. Most systems will be aligned to the

Modernization Vectors, which are the best-in-breed vehicles

to drive digital transformation while rationalization is the

process that will be used to modernize the portfolio. These

concepts will be discussed further in the “As-Is and Desired

To-Be” and “Application Portfolio Rationalization” sections while their relation to the Core

Functions of IT Portfolio Management will be discussed in the next section.

Core Functions of IT Portfolio Management

When applied to IT, the portfolio becomes

the grouping of IT investments by capability

to accomplish a specific functional goal,

objective, or mission outcome. The DoD

mandates the management of IT

investments in portfolios to accomplish the goals listed on the right:

The DoD further establishes policy that each portfolio is managed using the relevant

architectures, plans, risk management techniques, capability goals and objectives, and

performance measures. To align IT portfolios that are focused on the delivery of business

capability, DoD has established a Business Mission Area (BMA). The IT investments managed

by the Navy LOG FAM strategically align to the processes addressed within the BMA. As the

journey to digital continues, the LOG FAM must reevaluate the existing processes to manage IT

investments in accordance with established DoD and Navy IT PfM policies. However,

reevaluating processes alone without proper coordination on the policy enhancements required

for existing Navy IT PfM policy will only serve to intensify problems faced today. Simply stated,

current Navy IT PfM policy from 2009 creates an environment that overly burdens portfolio

managers and has not kept pace with technological advances in IT. This document will not

undertake the analytical processes needed to document IT PfM policy dependencies but will

serve as guidance to LOG FAM program teams to work within existing laws, regulations,

policies, and guidelines (LRPGs).

7 DoDI 8500.2 “Information Assurance (IA) Implementation”, 2003



IT Portfolio Management is the balanced management of risk and the effective delivery of IT

assets to warfighters. This is accomplished by evaluating investments in IT to identify ways to

leverage existing and planned IT assets that provide similar functions. IT PfM requires the

implementation of an iterative process of analysis, selection, control, and evaluation that mirrors

process used in financial sectors to manage the collection of assets to achieve the maximum

return on investment while limiting the level of risk to the organization. The DoD policy regarding

the four core functions are depicted in Figure 1 below8.

Figure 1: Four Core Function of IT Portfolio Management Policy

These four core functions can be extended to support digital transformation by applying the

following strategic actions in Figure 2 below.

Figure 2: Four Core Functions of IT Portfolio Management Strategic Actions

8 Department of Defense Directive Number 8115.01 Regarding Information Technology Portfolio Management, 2005

Analysis

• Policy: Links portfolio objectives to Enterprise vision, mission, goals, objectives, and priorities; develops quantifiable outcome-based performance measures; identifies capability gaps, opportunities, and redundancies; identifies risks; and provides for continuous process improvement.

Selection

• Policy: Identifies and selects the best mix of IT investments to strengthen and achieve capability goals and objectives for the portfolio and demonstrates the impact of alternative IT investment strategies and funding levels.

Control

• Policy: Ensures a portfolio is managed and monitored using established quantifiable outcome-based performance measures. Portfolios are monitored and evaluated against portfolio performance measures to determine whether to recommend continuation, modification, or termination of individual investments within the portfolio.

Evaluation

• Policy: Measures actual contributions of the portfolio against established outcome-based performance measures to determine improved capability as well as support adjustments to the mix of portfolio investments, as necessary.

Analysis

• Strategic Actions: Align all systems within the portfolio to the approved Logistics mission outcomes and service hierarchy as documented in the DTT Service Plan. Conduct technical and functional health assessment on all systems to provide a quantitative evaluation, as described in Appendix A of this document.

Selection

• Strategic Actions: Align all mission and IT capabilities to the 9 modernization vectors, defined in the “Background” section, based on functionality and services provided. Use the rationalization process outlined in the “Application Portfolio Rationalization” section later in this document as guidance to identify systems that will be sunset, sustained, and optimized. Conduct analysis on the outcome of the rationalization process to determine the effect on funding.

Control

• Strategic Actions: Adopt the use of SoftwareAG ARIS and Alfabet to aide in enterprise architecture, portfolio management, and process improvement. Follow guidance on proposed governance board for managing the portfolio, and ongoing identification and management of readiness capabilities.

Evaluation

• Strategic Actions: Continually track the health of systems within the portfolio and use clearly defined metrics to monitor the portfolios status. Track funding mix of portfolio over time as systems are sunset and the money is reallocated to the modernization vectors.



Document Purpose

From a strategic point of view, this document seeks to support the cultural shift on how the LOG

FAM Portfolio allocates resources to align with digital transformation. Instead of Program Offices

only thinking about how budgeting and resources affect their sphere of influence, a holistic view

of Portfolio Management at the Navy Logistics level needs to be taken to achieve successful

digital transformation. This cultural shift is required to embrace digital and disrupt the way

resources are allocated to align to innovation and digital capabilities. Without drastic changes,

the time scale to enable digital capabilities such as additive manufacturing, artificial intelligence

and analytics, or predictive maintenance will continue to be years rather than months.

From an operational point of view, this document seeks to provide guidance on system

rationalization and PfM. It will be used as a mechanism to drive digital logistics services by LOG

FAM Portfolio Owners and corresponding Program Offices as they either continue the

rationalization efforts they have underway or begin this process for the first time. It is meant to

be used in conjunction with any other LRPGs provided and serve as an aide to lay the

foundation for standard PfM in the LOG FAM while accomplishing effective and timely system

rationalization.



Assessment

As part of the Fall 2017 Digital Transformation Assessment, Navy stakeholders were asked

approximately 200 questions, and 26 percent of invitees completed the survey. Below are the

key findings, impacts, and recommendations regarding the Portfolio Management and

Application Rationalization questions asked.



Shore Maintenance of Ships • NMMES – Navy Maritime Maintenance Enterprise

Solution: N97, NAVSEA 04

• NMMES-TR – NMMES Technical Refresh: N97, NAVSEA

04 / PEO(EIS) PMS-444

Naval Aviation Enterprise • NDMS – NAVAIR Depot Management System:

NWCF, COMFRC

• ALE – Aviation Logistics Environment / Vision

2020: N98, NAVAIR 6.0

Operational Forces Material Readiness • NAMS – Naval Aviation Maintenance System: N41,

PEO(C4I) PMW-150

• NOSS – Navy Operational Supply System: N41, PEO(C4I)

PMW-150

• NOME – Navy Operational Maintenance Environment:

N41, PEO(C4I) PMW-150

• CBM+ ES – Condition-Based Maintenance Plus

Enterprise Solution: N96, NAVSEA 05

Finance & Supply Chain Management • ERP – Navy Enterprise Resource Planning: N41,

PEO(EIS) PMW-220

Figure 3: LOGFAM Modernization Vectors

As-Is State and Desired To-Be State

As-Is

Currently, Portfolio Management and Application Rationalization are performed in a limited

capacity across the LOG FAM. In the cases where these actions are performed, they occur in

silos across the FAM, with individual guidelines and processes implemented due to outdated

policy and guidance. As an example, the most recent IT PfM policy for Navy is dated 2009. Due

to the lack of guidance and oversight over the portfolio, it has ballooned to over 230 active

systems and over 1,600 active applications, most of which are performing duplicative functions.

Because of the current culture within the LOG FAM, the portfolio lacks the ability to curb

expansion as unique solutions are created for common problems. The current thought process

will prevent common solutions for common problems. To this end, the LOG FAM has taken an

aggressive first step by establishing nine modernization vectors to begin rethinking the way

future resources will be allocated to enable digital transformation. The current nine vectors are

aligned by an overall functional purpose; see below:

All systems within the portfolio are officially managed in either the DoD IT Portfolio Repository -

Department of Navy (DITPR - DON) or DON Application and Database Management System

(DADMS). The accuracy of information in these systems varies due to infrequent updates and

the ever-changing landscape of the logistics portfolio. With no unified, commonly used, or

consistently updated tool being used for Portfolio Management, key metrics such as lifecycle,

budget, and functionality are not being tracked or recorded to allow for proper overview and

management of systems. When the information collected is not accurate or complete, this

creates an environment where users must rely on low-fidelity data to make high-fidelity

decisions.

MATERIAL

READINESS



There currently does not exist a common Application Rationalization Framework to aide in the

assessment and ultimate disposition of systems within the portfolio. This, along with the lack of

Portfolio Management, is a contributing factor to why the portfolio has become so large,

unmanageable, and unable to be audited.

To-Be

As the LOG FAM embarks on the journey towards cloud migration, application rationalization

plays a major role in the process. As demonstrated by Amazon and Microsoft (Figure 4 and

Figure 5), cloud migration typically includes a planning, evaluation, migration, and operation

phase, with application rationalization occurring during the evaluation phase. While other cloud

service providers exist, Amazon’s and Microsoft’s cloud migration processes were provided

based on their placement as the top two leaders worldwide in Cloud Infrastructure as a Service

based on Gartner’s 2017 Magic Quadrant9.

Figure 4: Amazon Cloud Migration Process10

Figure 5: Microsoft Cloud Migration Process11

As previously stated, rationalization is carried out by the Program Offices, in silos, without

considering the portfolio in its entirety. In the future, the rationalization process needs to be

more holistic, driven by a strategy and roadmap, while considering the overlaps and gaps of the

entire portfolio. A discussed earlier in this document, the Modernization Vectors play a large role

in the digital transformation process. These Vectors are ultimately supporting the Service

Hierarchy described in the Service Plan, which will be operationalized through the ETRF. Refer

to Figure 6 below to see how we will guide the rationalization of systems to reduce unnecessary

9 Magic Quadrant for Cloud Infrastructure as a Service, 2017 10 Amazon Cloud Migration Process, https://aws.amazon.com/cloud-migration/, 2018 11 Microsoft Cloud Migration Process, https://azure.microsoft.com/en-us/migration/, 2018

https://aws.amazon.com/cloud-migration/

https://azure.microsoft.com/en-us/migration/



and no value add technology while increasing value add services and drive Logistics Mission

Outcomes.

Figure 6. Digital Transformation Vision

Closely mirroring industry best practices, this vision shows the current state of applications each

having their own services, data, and technology, which is how they operate. The system’s

functionality will be transferred, using the Modernization Vectors, to a shared services platform

in the future, enabled by cloud and digital, as outlined in the Technology Plan. For this transition

to be effective, systems must be aligned with and rationalized within one of the Modernization

Vectors. Along with the current mindset around rationalization needing to be changed, there

also needs to be an up to date and industry standard process put in place to guide and govern

portfolio rationalization. While the “Application Portfolio Rationalization section of this document

covers the specific guidance surrounding how to perform rationalization, below gives a high

level strategic view of what rationalization may look like in the future.

In the future, the rationalization process could take the form of a “application rationalization

factory”, depicted in Figure 7, where the rationalization process is conducted by the Program

Offices who are in line with LOG IT EXCOMM strategic vision and have oversight of their line of

service within the portfolio. This is necessary because it begins to implement the idea of

governance across the portfolio and allows decisions to made for the benefit of the entire

portfolio rather than spheres of influence, as it is done today.



• Collapsing unique infrastructure to leverage a common digital platform – this

component will require the use of business process engineering to document the

necessary parameters for the creation of domain driven application program

interfaces (APIs)

• Analysis of unique and common requirements to drive common solutions

(rationalization) – this component incorporates the rationalization process outlined

in the document to leverage common application solutions when possible and

unique solutions otherwise

• Validation and optimization of the service offering – this component is covered in

the Service Plan

Figure 7. Proposed Application Rationalization Factory

The major components of the factory depicted in Figure 7 include:

By standardizing and bringing together disparate processes that are performed across the LOG

FAM, Program Offices will have a common process by which to rationalize systems aligned to

them. Leveraging a technical subject matter expert (SME) and a functional SME will allow

Program Offices to accurately evaluate systems using guidance described in the next section of

this document.



1. Establish an Enterprise view through consistent processes, guidelines, and business

governance

2. Reduce cost through elimination of duplicative systems

3. Improve quality and security through standardization of infrastructure and interfaces

4. Avoid surprises / ad-hoc remediation through standard guidelines and central

enforcement

5. Ensure business continuity through stable and up-to-date platforms

6. Improve security and compliance through enforced security guidelines via

governance

7. Support LOGFAM financial audit by modernizing deficient systems and applications

Application Portfolio Rationalization

Application Portfolio Rationalization can be described as the process to assess the functional

and technical health of applications and identify opportunities to improve capabilities, simplify

the environment, and reduce costs. As it applies to the LOG FAM, application portfolio

rationalization will be performed to the individual applications as well as the portfolio as a whole.

Using this evaluation, decisions will be made to reduce the duplicative functions being

performed across the LOG FAM and move towards a modernized, digitally enabling portfolio.

To provide regulation of the processes that takes place in the rationalization portion of the

application rationalization factory, certain tenets must be established. The following seven

guiding principles should be kept in mind throughout the entire rationalization process and used

as input for decision making.

These guiding principles influence the outcomes that should be achieved through accurate

application rationalization and highlight the benefits of a well maintained and managed portfolio.

These principles represent industry standards and have been socialized to LOG FAM

stakeholders via regular check points and as part of the digital transformation assessment follow

on workshops.

Approach

The Application Rationalization approach, central to the application rationalization factory

concept, is the process by which all applications within the portfolio will be analyzed, evaluated,

and disposed following industry standard practices. The process is supported by a set of steps

shown in Figure 8 below.

Figure 8: Application Rationalization Approach



At a high level the approach is broken into three phases:

Project Plan and Timeline

As described, to start this process, a project plan and timeline must be developed to lay out the

entire rationalization process in an agile fashion. The plan should show the steps that need to

be taken throughout the process and significant milestones or checkpoints that occur. Below is

an example of a project plan and timeline (Figure 9).

Figure 9: Example Project Timeline and Actions

Current State Analysis

The goal of this phase is to validate the current state of all system to identify areas for

innovation. Questions pertaining to lifecycle stage, categorization of services provided, and

costs are answered. It is important to get the most accurate and up to date view of the portfolio

through the data sources currently available such as DITPR - DON or Program Budget

Information System-IT (PBIS-IT). Additionally, interviews with Program Offices and System

Owners should be conducted. In identifying all the questions needing to be answered up front,

gaps can be identified, and solutions can be proposed. This will make the rationalization

process streamlined and more accurate.

Phase 1

Starts with the development of a project plan and timeline, while ending with a current state assessment. This phase sets the scope of the work and sets the stage for the analysis.

Phase 2

Begins with an initial assessment of applications leveraging the results from Phase 1 and concludes with the disposition of applications based on industry standard criteria.

Phase 3

Using the application dispositions from Phase 2, applications are characterized into the different lifecycle phases based on their health. The approach culminates with the development of a roadmap and transition plan to guide the modernization process moving forward.



• Services

• Ownership and Usage

• Functionality

• Financial Information, including

budget and actuals

• Investments and Upgrades

• Lifecycle

• Technical Composition and

Interfaces

Rationalization Levers

1. Eliminate redundancy through platform

standardization

2. Align application criticality to service

levels

3. Optimize / sunset applications that are

past end of service life

4. Enhance/Replace high incident critical

applications

5. Consolidate applications with multiple

instances

6. Explore COTS to supplant heavily

customized solutions

7. Reduce interface complexity to simplify

environment

The examples are based on industry best practices

and knowledge, and represent the types of information

to collect on each system:

Collecting all this data will provide a good view on the

status of the system and its functionality.

Along with the information collected on the left,

functional and technical health assessment workbooks

should be utilized by LOG IT systems. Sample

questions from these assessment workbooks can be

seen in Appendix A. These assessments contain very

detailed questions relating to the functional and

technical health of systems and should be incorporated into interviews or data requests with

Program Managers. When completed in full, the output from these assessments offer a detailed

view into the health of systems in the portfolio and provide an in-depth assessment of systems

against one another. The data will also be used later in the rationalization process, so it is

important that it is completed with a high level of accuracy and detail.

An initial system inventory has been assembled by the DTT by leveraging DITPR –DON and

interviews with stakeholders within the LOG FAM. The inventory for all 230+ systems in the

LOG IT portfolio, with a preliminary mapping to digital transformation services and Vector, will

be provided in the future. There is still an incomplete action at the Vector level to perform a

similar inventory of all rationalizing systems and the underlying applications. This will be utilized

to document as much information as possible to drive decision making.

Initial Assessment

Once the current state analysis has been completed, an initial assessment can begin to see

preliminary results from the analyzed data. This initial assessment helps to visually represent

the current state of the portfolio and make it easy to identify key problem areas.

Evaluating applications against the seven

rationalization levers listed to the right

serves as the first step in assessing the

portfolio’s health and could produce

results that guide the rest of the

rationalization process. Results from the

analysis can take graphical form as

illustrated in the example shown below in

Figure 10. Using these charts makes it

easy to determine problem areas and

provides senior leadership with an ability

to quickly assess the portfolio against

predefined metrics.



Figure 10. Example of life cycle analysis

Although the chart above is being used for illustrative purposes, a few observations are easily

seen regarding the health of the portfolio in question related to life cycle. The first take away is

that around 65% of systems in the sample portfolio are operating past the end of their life cycle.

This raises immediate concerns about the health of the portfolio and the update cycle currently

in place to either sunset or refresh applications as they near end of life. A portfolio that contains

most systems past their end of life exposes itself to many risks the longer these systems are not

remediated. The other major take away from this chart is that the life cycle is unknown for 27%

of the systems. This raises questions of data availability and accuracy. Every system within a

portfolio should have its life cycle phase recorded, tracked, and updated throughout the course

of its existence. Not having life cycle information again exposes the portfolio to risk and shows a

lack of portfolio management.

The observations of the chart above represent real problems that could be occurring within a

portfolio without knowledge of it happening. The outcome of realizing these problems and

drawing attention to them is an output of assessing the systems using the levers provided

above. When assessment is performed across all seven levers, a high-level health assessment

of the portfolio is realized that can drive actions moving forward.

System Disposition

After the initial assessment has been performed to identify high level problem areas, the next

step is to carry out the system dispositions. This is done at the individual application level and

involves looking at each one through the rationalization lenses depicted below in Figure 11.



Figure 11. Rationalization lenses

The five lenses each represent different industry standard views of evaluating systems and are

assessed independently from each other. When they are combined they offer a holistic view on

the adequacy and alignment of systems. Within each of the five lenses there are evaluation

questions that can be asked about each system, which feed into creating the 10 industry

standard disposition factors detailed below. Each disposition factor is directly tied to one of the

five rationalization lenses and relate very closely to the rationalization levers.

Systems can be evaluated individually or against one another using the 10 disposition factors,

along with the technical and functional health assessment scores. Below is an example of an

evaluation of 7 systems using the 10 disposition factors along with the functional and technical

health assessment (Figure 12) as well as sample criteria with which to evaluate systems against

(Figure 13).

Disposition Factors

1. Business Criticality 6. Proximity to EOSL

2. Functional Health 7. Incident Rate

3. Technical Health 8. Customization

4. Functional Redundancy 9. Interfaces

5. Number of Instances 10. Cost



Figure 12. Sample Disposition Matrix

Figure 13. Sample Disposition Criteria with Cross-Industry Standards

Looking at Figure 12, it becomes clear which applications are performing better than others

based on the color coding. This form of evaluation also easily brings into focus individual

problems that applications have as well as overall problems that the systems in the portfolio

face. From the figure, it is easy to see that besides the top application, all other applications

evaluated scored poorly on the technical health assessment and have high incident rates. By

performing this disposition of applications under their control, Program Offices will be able to

determine not only applications that are performing well, but applications that are issues.



1. Sunset: Systems that have scored poorly on the assessment and functionality can be

taken over by an existing system or Vector; have been previously tagged for

decommission

2. Sustain: Systems that scored middle of the road on the assessment but provide key

functionality that cannot be performed by another system

3. Optimize: Systems that scored above average but require minimum enhancements to

support the digital future

Characterization and Lifecycle

Using the application disposition completed above, Program Offices will characterize all

systems into one of three categories detailed below. In doing so, Program Offices will be able to

realize the current mix of systems under their purview and determine where budgets can be

diverted away from legacy systems and reallocated to new transformative and modernizing

efforts.

In addition to the three categories described above, there is a fourth category, Innovation. This

category is reserved for the Modernization Vectors that represent large scale investments in

moving to the digital future. The proposed categorization process and lifecycle is depicted below

(Figure 14). As stated, all systems within the LOG IT portfolio will exist in either the Sunset,

Sustain, or Optimize phase based on their assessment results. The main exception is for the

Modernization Vectors, which will align to the Innovation category. After a system completes the

activities in either the Innovation or Optimization phase, it will move into a constant phase of

Sustainment where it will be maintained until such time as an Optimization phase will be

required to update and refresh the system.

Figure 14: Proposed System Lifecycle Process



The goal of the categorization process is to determine the select subset of Vectors and systems

that can provide all relevant services for readiness capabilities. By rationalizing systems that

provide duplicative functions and selecting the ’best-in-breed’, the LOG FAM portfolio will

become more streamlined and realize a cost savings to increase readiness and become better

equipped to handle the Navy Logistics mission.

Roadmap and Transition Plan

After the initial rationalization has been completed and systems have been assigned to their

categories, a roadmap and transition plan will need to be created by each Vector. These

roadmaps and transition plans will aide in the modernization efforts of each Vector and offer

guidance moving forward. The roadmap will also provide high level visibility of actions in

process to collapse portfolio systems into services aimed at delivering specific functionality.

The system roadmap shows when systems or applications will be sunset, have their

functionality transferred, maintained into the future, or optimized and will include movement for

each Vector. Below is an example of a roadmap that shows systems being brought into the

Vector as well as systems being sunset (Figure 15).

Figure 15: Sample Vector Roadmap

The transition plan will lay out how all the rationalizing systems will be integrated with the Vector

and provide the Who, What, When, and How they will be transitioned and managed in the

future. To aide in the development of the transition plan, a template will be provided for

guidance. Below is a sample transition timeline that shows all the various workstreams that

need to be accounted for when going through the transition (Figure 16).



IT Governance Frameworks

• International Organization for Standards

/ International Electrotechnical

Commission (ISO/IEC) 38500

• Control Objectives for Information and

Related Technologies (COBIT)

• Information Technology Infrastructure

Library (ITIL)

• Responsibility

• Strategy

• Acquisition

• Performance

• Conformance

• Human Behavior

Figure 16: Sample Transition Timeline

Portfolio Management and Governance

The General Services Administration (GSA)

defines IT Portfolio Management as “a risked

based approach to the selection and

management of IT projects integrating business

and IT planning, budgeting, standards,

processes, and governance”. Governance is

further defined as a formal set of processes,

communication forums, roles, responsibilities,

and tools that are executed at all levels of an

organization. Within IT there are many

governance frameworks, each with their benefits

and disadvantages. A sampling of frameworks is shown above. When governance is effectively

implemented across an entire organization, it aligns with and supports the ISO 38500 principles

of:

Along with the principles on the left, the goal of governance is to

aide in investment and prioritization, request management,

issue management, dispute management, auditing, planning,

and performance reporting.

1 15 29 12 26 12 26 9 23 7 21

Jan-13 Feb-13 Mar-13 Apr-13 May-13

Service Readiness

Transition Management

Communications

Enable People

Transfer Knowledge

Service Management

Contract & Finance Mgmt

Implement Technology

START GO LIVE

Transition Planning Month 1 Month 2 Month 3 Stabilization

QA CheckDetailed

planscompleted

QA Check

QA Check

QA Check

QA Check

QA Check

QA Check

Execute Communication PlanComm Plan Handover to Unit

People PlanningRecruiting Begins

OnboardingExecute Rebadging, onboarding, HR communication strategy

Agent Training & ShadowingKT BeginsKT Plans

Completed

Svc Mgmt Assessment Complete

Svc Mgmt Tool Req Complete

Service & GovernanceModels Complete

Initiate Baseline PeriodHandover to Unit

Configure Tools

Contract Signature

Contract Summary

Compliance TrackingProcedures Complete

Contract & Financial MgtProcedures Agreed

TechnologyPlan Complete

Initiate Tools & Tech Builds

Connectivity Established

Component Testing Component Testing Completed

Prepare for Service Rehearsals & Test Scripts

Svc Readiness Planning Complete

Service Rehearsals Executed

Go LiveAuthorization



As portfolio rationalization moves from unstructured to defined processes, a governance model

will be crucial to continued alignment and improvement. Additionally, as the portfolio undergoes

substantial modernization and rationalization,

it becomes imperative that a comprehensive

and effective Portfolio Management and

Governance approach be created and

implemented. To the left is a proposed

governance model (Figure 17) that is designed

to support ISO 38500 principles while creating

a collaborative governance board structure.

The governance board would report on

transformation efforts and be chaired by

representatives of the DCNO N4 and N9 but

have representation from all nine Vectors.

Within this model, a hierarchy becomes

present where each of the Vectors now become responsible for their own progress towards

transformation as well as the transition and transformation of sub-systems that have been

aligned to them.

As PfM becomes more and more complex, defining the governance model, including a stage

gate process, decision criteria and authority rights is critical to achieving a positive outcome.

Questions like:

“Who is going to manage the portfolio, both at the LOG FAM and system level?”;

“How does an optimal portfolio management process integrate with other core

processes?”; and

“What behavioral and/or functional changes will be needed across the enterprise?”;

need to be answered up front to lay the foundation for processes moving forward. Additional

governance samples are included in Appendix B.

To aide in portfolio and process management, the LOG FAM can adopt the use of technology

that can enforce governance behavior. A software suite such as SoftwareAG’s ARIS and Alfabet

is an example of software designed to aid in process improvement and portfolio management.

While the two software tools provide distinct services, they interact and integrate with each other

to share information and support the Business and IT Transformation process.

One function of the ARIS software is to provide Business Process Analysis through its Process

Transformation and Management Platform. This platform allows users to understand the

processes within their business, align them to their strategy, and manage them effectively

moving forward. The other function that ARIS provides is a Governance, Risk, and Compliance

Management Platform. Within this platform, users can adapt faster to new regulations, identify

and decrease risks, and simplify the audit process.

Alfabet is a software tool that works in conjunction with ARIS to provide IT Portfolio

Management. By providing road maps based on enterprise strategy, cost and risk analysis, and

Figure 17: Proposed Governance Model



multi-dimensional portfolio analysis, Alfabet supports the transformation process and seeks to

provide guidance throughout the entre process.

Conclusion: Next Steps

As the LOG FAM continues to drive towards Digital Transformation, the proposed Application

Rationalization Framework and Governance Model will be key in offering guidance on Portfolio

Management moving forward. Program Offices will be able to use the guidance provided in this

document to take control of the systems aligned to them and begin implementing a standardized

rationalization approach. In doing so, systems can begin to be placed on transformation

roadmaps based on their lifecycle characterization and a path to the Digital Future can start to

take shape.

As discussed in the previous section, Governance needs to be established early on across the

entire LOG FAM. Without everyone following a standard set of procedures and processes, the

Digital Transformation Journey will encounter barriers. Within the idea of Governance,

acquisition and adoption of a set of software tools to aide in the process improvement and

portfolio management is important to reduce the burden on users and automate as much as

possible. Continued use of manual processes will not allow for Digital Transformation.

As mentioned previously in this document, the DTT has begun the initial process of assessing

the current state of the portfolio using existing DON tools and stakeholder interviews. While this

analysis serves as a good starting point, a deeper analysis needs to be performed on the entire

portfolio using the guidance provided in this document. Program Offices have control over and

work with the systems within the portfolio everyday thus they represent the best source of

information when it comes to individual systems and applications. Leveraging their knowledge

and commitment to change will be key in the Digital Transformation Journey.



Appendix A: Functional and Technical Health Assessment Examples

Below are sample questions from the functional and technical health assessment workbooks.

Full versions of the assessments will be distributed to the LOG FAM in the future.



Appendix B: Sample Governance Model



Appendix C: Sample Portfolio Management Mission, Vision, and Strategic Goals

The table below is an example of the future enhancements that will be incorporated into this

plan. The strategic goals and objectives will be updated as the LOG FAM continues to drive

rationalization efforts across Echelon I and in conjunction with standardized processes at

Echelon II.

Logistics IT PfM Mission

Enable a streamlined portfolio of modernized IT investments intended to harness disruptive

digital technologies aimed at advancing Fleet Readiness and Logistics.

Logistics IT PfM Vision

Modernize the governance structure and processes underpinning the LOG FAM portfolio to

manage the delivery of Navy Logistics IT systems designed to achieve the best value for

resources programmed and executed.

Strategic Goal 1

“Rationalize the

portfolio”

Provide a clear,

concise, and

complete LOG IT

Portfolio

Strategic Goal 2

“Responsibly

manage IT

resources” Safeguard

financial resources

through the cost-

effective

management of IT

solutions.

Strategic Goal 3

“Realign to support

the enterprise”

Support current

strategic guidance

and policies.

Strategic Goal 4

“Reduce unique

solutions”

Migrate from a

landscape of

multiple, complex IT

solutions performing

similar functions to

fewer strategic

solutions that enable

the mission

Objectives

1.1 Increase the

efficiency of

Department IT

investments by

streamlining IT

acquisition and

improving project

management

processes.

1.2 Still defining

1.3 Still defining

Objectives

2.1 Enable effective

decision-making by

strengthening

governance

processes.

2.2 Still defining

2.3 Still defining

Objectives

3.1 Leverage

Department of

Defense Business

Enterprise

Architecture (BEA)

principles to improve

interoperability and

compliance with

Navy policy, and

standards.

3.2 Still defining

3.3 Still defining

Objectives

Still defining

Table 1: Logistics IT Mission, Vision, and Strategic Goal

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