VA’s mission is to promote the health, welfare, and dignity of all veterans in recognition of their service to the nation by ensuring that they receive medical care, benefits, social support, and lasting memorials. Over time, the use of IT has become increasingly crucial to the department’s effort to provide benefits and services. VA relies on its systems for medical information and records for veterans, as well as for processing benefit claims, including compensation and pension and education benefits. In reporting on VA’s IT management over the past several years, we have highlighted challenges the department has faced in enabling its employees to help veterans obtain services and information more quickly and effectively while also safeguarding personally identifiable information. A major challenge was that the department’s information systems and services were highly decentralized, giving the administrations a majority of the IT budget. In addition, VA’s policies and procedures for securing sensitive information needed to be improved and implemented consistently across the department. As we have previously pointed out, it is crucial for the department CIO to ensure that well-established and integrated processes for leading, managing, and controlling investments in information systems and programs are followed throughout the department. Similarly, a contractor’s assessment of VA’s IT organizational alignment, issued in February 2005, noted the lack of control over how and when money is spent. The assessment noted that 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. In response to the challenges that we and others have noted, the department officially began its effort to provide the CIO with greater authority over IT in October 2005. At that time, the Secretary issued an executive decision memorandum granting approval for the development of a new management structure for the department. According to VA, its goals in moving to centralized management are to enable the department to perform better oversight of the standardization, compatibility, and interoperability of systems, as well as to have better overall fiscal discipline for the budget. In February 2007, the Secretary approved the department’s new organizational structure, which includes the Assistant Secretary for Information and Technology, who serves as VA’s CIO. As shown in figure 1, the CIO is supported by a principal deputy assistant secretary and five deputy assistant secretaries—new senior leadership positions created to assist the CIO in overseeing functions such as cyber security, IT portfolio management, systems development, and IT operations. In addition, the Secretary approved an IT governance plan in April 2007 that is intended to enable the Office of Information and Technology to centralize its decision making. The plan describes the relationship between IT governance and departmental governance and the approach the department intends to take to enhance IT governance. The department also made permanent the transfer of its entire IT workforce under the CIO, consisting of approximately 6,000 personnel from the administrations. Figure 2 shows a timeline of the realignment effort. Although VA has fully addressed two of six critical success factors that we identified as crucial to a major organizational transformation such as the realignment, it has not fully addressed the other four factors, and it has not kept to its scheduled timelines for implementing new management processes that are the foundation of the realignment. Consequently, the department is in danger of not being able to meet its target of completing the realignment in July 2008. In addition, although it has prioritized its implementation of the new management processes, none has yet been implemented. In our recent report, we made six recommendations to ensure that VA’s realignment is successfully accomplished; the department generally concurred with our recommendations and stated that it had actions planned to address them. We have identified critical factors that organizations need to address in order to successfully transform an organization to be more results oriented, customer focused, and collaborative in nature. 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. 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. The department has fully addressed two of six critical success factors that we identified (see table 1). Ensuring commitment from top leadership. The department has fully addressed this success factor. As described earlier, the Secretary of VA has fully supported the realignment. He approved the department’s new organizational structure and provided resources for the realignment effort. However, the Secretary recently submitted his resignation, indicating that he intended to depart by October 1, 2007. While it is unclear what effect the Secretary’s departure will have on the realignment, the impending departure underscores the need for consistent support from top leadership through the implementation of the realignment, to ensure that its success is not at risk in the future. Establishing a governance structure to manage resources. The department has fully addressed this success factor. The department has established three governance boards, which have begun operation. The VA IT Governance Plan, approved April 2007, states that the establishment and operation of these boards will assist in providing the department with more cost-effective use of IT resources and assets. The department also has plans to further enhance the governance structure in response to operational experience. The department found that the boards’ responsibilities need to be more clearly defined in the IT Governance Plan to avoid overlap. That is, one board (the Business Needs and Investment Board) was involved in the budget formulation for fiscal year 2009, but budget formulation is also the responsibility of the Deputy Assistant Secretary for IT Resource Management, who is not a member of this board. According to the Principal Deputy Assistant Secretary for Information and Technology, the department is planning to update its IT Governance Plan within a year to include more specificity on the role of the governance boards in VA’s budget formulation process. Such an update could further improve the structure’s effectiveness. Linking IT strategic plan to organization strategic plan. The department has partially addressed this success factor. VA has drafted an IT Strategic Plan that provides a course of action for the Office of Information and Technology over 5 years and addresses how IT will contribute to the department’s strategic plan. According to the Deputy Director of the Quality and Performance Office, the draft IT strategic plan should be formally approved in October 2007. Finalizing the plan is essential to helping ensure that leadership understands the link between VA’s organizational direction and how IT is aligned to meet its goals. Using workforce strategic management to identify proper roles for all employees. The department has partially addressed this success factor. The department has begun to identify job requirements, design career paths, and determine recommended training for the staff that were transferred as part of the realignment. According to a VA official, the department identified 21 specialized job activities, such as applications software and end user support, and has defined competency and proficiency targets for 6 of these activities. Also, by November 2007, VA expects to have identified the career paths for approximately 5,000 of the 6,000 staff that have been centralized under the CIO. Along with the development of the competency and proficiency targets, the department has identified recommended training based on grade level. However, the department has not yet established a knowledge and skills inventory to determine what skills are available in order to match roles with qualifications for all employees within the new organization. It is crucial that the department take the remaining steps to fully address this critical success factor, so that the staff transferred to the Office of Information and Technology are placed in positions that best suit their knowledge and skills, and the organization has the personnel resources capable of developing and delivering the services required. Communicating change to all stakeholders. The department has partially addressed this success factor. The department began publishing a bimonthly newsletter in June to better communicate with all staff about Office of Information and Technology activities, including the realignment. However, the department has not yet fully staffed the Business Relationship Management Office or identified its leadership. This office is to serve as the single point of contact between the Office of Information and Technology and the administrations; in this role, it provides the means for the Office of Information and Technology to understand customer requirements, promote services to customers, and monitor the quality of the delivered services. A fully staffed and properly led Business Relationship Management Office is important to ensure effective communication between the Office of Information and Technology and the administrations. Communicating the changed roles and responsibilities of the central IT organization versus the administrations is one of the important functions of the Business Relationship Management Office. These changes are crucial to software development, among other things. Before the centralization of the management structure, each of the administrations was responsible for its own software development. For example, the department’s health information system—the Veterans Health Information System and Technology Architecture (VistA)—was developed in a decentralized environment. The developers and the doctors, closely collaborating at local facilities, developed and adapted this system for their own specific clinic needs. The result of their efforts is an electronic medical record that has been fully embraced by the physicians and nurses. However, the decentralized approach has also resulted in each site running a stand-alone version of VistA that is costly to maintain; in addition, data at the sites are not standardized, which impedes the ability to exchange computable information. Under the new organization structure, approval of development changes for VistA will be centralized at the Veterans Health Administration headquarters and then approved for development and implementation by the Office of Information and Technology. The communications role of the Business Relationship Management Office is thus an important part of the processes needed to ensure that users’ requirements will be addressed in system development. Dedicating an implementation team to manage change. The department has not addressed this success factor. 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.