Veterans Affairs: Continued Focus on Critical Success Factors Is Essential to Achieving Information Technology Realignment
Published: 2007-06-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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. 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. 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.

section_title: Letter
paragraphs: 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 that a contributing factor to VA’s challenges in  managing projects was the department’s decentralized management  structure, in which its administrations and headquarters offices  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.
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.
subsections: section_title: Background
paragraphs: 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 challenges the department has faced in achieving its “One VA”  vision, 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. 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.
subsections: section_title: Successful Organization Transformations Are Based on Critical Success Factors
paragraphs: We have reported in the past 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    ensuring commitment from top leadership,    establishing a governance structure to manage resources,  linking the IT strategic plan to the organization strategic plan,   using workforce strategic management to identify proper roles for all    communicating change to all stakeholders, and    dedicating an implementation team to manage change.
section_title: VA Realignment Plans Include Critical Success Factors
paragraphs: 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.
subsections: section_title: Top Leadership Has Committed to the Realignment
paragraphs: 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. 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.
section_title: Governance Structure to Manage Resources Not Yet Complete
paragraphs: 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.
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.
section_title: IT Strategic Plan Is to Be Updated to Reflect New Organization
paragraphs: 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. 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.
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.
section_title: IT Workforce Aligned under CIO, but Staff Roles Have Yet to Be Defined
paragraphs: 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. 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. 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.
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.
section_title: Certain Actions Have Been Taken to Address Communication
paragraphs: 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. Furthermore, communication should  provide for feedback about progress and concerns from stakeholders that  will result in meaningful improvement in the transformation.
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.
section_title: VA Has Not Dedicated an Implementation Team to Manage the Realignment
paragraphs: 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. 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.
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.
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.
section_title: Centralized Control of IT Budget Has Not Yet Been Clearly Established
paragraphs: 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, 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.
subsections: section_title: Deputy Assistant Secretaries to Control Aspects of IT Budget
paragraphs: 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, 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.
section_title: IT Governance Plan Identifies Boards to Assist in Management of IT Budget
paragraphs: 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:    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.
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.
section_title: Two New Management Processes Are to Address IT Budget
paragraphs: 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,  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.
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.
section_title: Conclusions
paragraphs: 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.
section_title: Recommendations for Executive Action
paragraphs: 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:    Develop detailed IT governance process descriptions that address how the  department will manage IT resources within the centralized organization.
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.
Assess personnel requirements under the centralized management model,  including career paths and appropriate training requirements.
Fully staff all offices necessary for supporting the new organizational  structure.
Dedicate an implementation team responsible for change management  processes throughout the transformation to a centralized IT structure.
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:    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.
Commit to a date for establishing the Business Needs and Investment  Board and the IT Leadership Board.
Establish a schedule for the implementation of the IT portfolio  management and financial management processes.
section_title: Agency Comments and Our Evaluation
paragraphs: 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 melvinv@gao.gov. 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.
section_title: Appendix I: Scope and Methodology
paragraphs: 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.
section_title: Appendix II: Comments from the Department of Veterans Affairs
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: 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.