Your Financial Partner @Work

Balanced Scorecard Evolution

Briefing for NAPA BaSIG

Ed KufeldtDeputy Director, Plans and Strategyed.kufeldt@dfas.mil

February 17, 2005

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World’s Largest Finance and Accounting Operation

DFAS at a Glance - Magnitude of Annual Operations

Process 104M pay transactions to 5.9M military, civilians, retirees and annuitantsMake 6.9M travel paymentsPay 12.6M commercial invoicesProcess 127.3M general ledger postingsManage military and health benefits funds ($234B)Make an average of $455B in disbursements to pay recipientsManage $13.5B in foreign military sales (reimbursed by foreign governments)Account for 282 active DoD appropriations

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Balanced Scorecard Journey

4 Year Evolution started in 2000 with SWOT analysis

Began with a top down approach to implementing strategy and improve quality, timeliness and decrease costFocused on improving customer and employee satisfactionMeasures focused on what we needed to do to achieve our strategic vision to become Best Value using the BSC 4 perspectivesMeasures hard cascaded from Corporate BSC to Business Lines (BLs) & Product Lines (PLs)Ratings rolled up from PLs to BLs to Corporate

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Cascade DFAS Corporate Goals to BL Goals

CUSTOMER PERSPECTIVE - Corporate Measure: Commitments Met Performance Plan

CUSTOMER PERSPECTIVE - Corporate Measure: Commitments Met Performance Plan

BaselineFY 2001 - $24.8MFY 2002 - $22.3M

TargetReduce FY 2001 Baseline by 40%

Vendor PayVendor Pay

Product Line

MeasureInterest Penalty

Payments

BaselineFY 2001 - $35.0MFY 2002 - $32.6M

TargetReduce FY 2001 Baseline by 40%

Commercial Commercial PayPay

Business Line

MeasureExecution of

Agency Performance Plan

deliverables

TargetSuccessfully meet

all 11 Agency Performance Plan

deliverables

DFASDFAS

Corporate

BaselineFY 2001 - $209KFY 2002 - $368K

TargetReduce FY 2001 Baseline by 40%

RomeRome

Site

TargetContribute to

interest penalty reduction goals by averaging 32-34

contract type payments or 64-66 miscellaneous type payments per day

with a 99% accuracy rate

RomeRome

Employee

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FY 2005 Corporate Balanced Scorecard

More focused on stakeholder expectations and the strategic objectives higher up the chain of commandEmphasis is on the DoD, OMB and the President’s strategic objectives BSC measures and targets are closely aligned to the Financial Management Metrics ProgramBenchmark and customer satisfaction measures to track Best Value and becoming World Class

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How DFAS Changed the FY 2005 BSC

Reduced number of measures from 24 to 10

One measure for each President’s Management Agenda objective

Two composite performance measuresOperational Performance Index has four measures for each of our three main Business LinesFinancial Performance index has three measures for Corporate Resource management

Two customer-oriented measuresCustomer satisfaction Closing cost and service gaps identified through Benchmarking

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FY 2005 DFAS Corporate BSC

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FY 2005 BSCs Relationships

Business Line Specific Measures

13 Accounting

19 Commercial Pay

18 Military &Civilian Pay

DFASDFAS

Business Lines

Cascaded Measures from Business Line

DFASDFAS

Product Lines

Six PMA Measures

Two Performance Index Measures

Two Customer Measures

DFASDFAS

Corporate BSC

34 DoD-wide Financial Measures

DoDDoDComptrollerComptroller

FinancialMeasures1. Competitive

Sourcing2. Improved

Financial Performance3. Budget and Performance Integration

4. eGovernment5. Improper Payments6. Human

Capital

OMBOMB

PMA

DFAS BLs are the source ofData for DoD Measures

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FY 2005 Business Line BSC

Measures for delivery of services at the Business LinesBLs brief the Director monthly on their ScorecardsIt’s acceptable to be red if root cause analysis done and action plans working – Quad chart analysisBL metrics are the source of data for DoD Financial Metrics reporting to DoD ComptrollerProduct Lines’ BSCs roll up to BLMore Business Line and Product Line accountability

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BSC Measures by Perspectives

Customer

Financial

Internal

Growth &Learning

•Encourage•innovation

•Improve and•leverage quality

•Enhance corporate•capability and

•intellectual capital

•Deliver systems•solutions

•Reduce cost to•the customer

Best Value

Client/CustomerSatisfaction

Operational Performance

ImprovedFinancial Performance

Budget andPerformanceIntegration

ImprovedFinancial Performance

eGovernment

CompetitiveSourcing

ImproperPayments

BenchmarkedCost andService Gaps

Human Capital

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DFAS Strategic Governance – old model

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Executive Council/Director

Por

tfolio

M

anag

emen

tAcquisition

Management

Lean 6

BusinessLine

Projects Killed

Thre

shol

d fo

r Bus

ines

s Li

ne D

ecis

ion

Concept Development/Due Diligence/ Initiation•Single point of entry

Decision Execution/ Management

Clie

nt

Exe

cutiv

e In

put

DFAS Governance Business Model

Cus

tom

er V

alue

Workgroups

ExecutiveSteeringGroup

Bus

ines

s Li

nes

orC

orpo

rate

offi

ces

Oth

er

Inpu

ts

Issu

es o

utsi

deof

Por

tfolio

Customer Advisory Forum (Client Executive & Customer)

Office of Secretary of Defense

Workgroups

7/4/04 v 2.0

Strategic Direction

Customers

Acquisitions

Approved Lean 6Blackbelt Projects

Business Line

Initiatives

DFAS Governance Business New Model

DFASYour Financial Partner @Work