The Department of Defense (DOD) began its Corporate Information Management initiative (CIM) in October 1989 to help meet the challenge of effectively managing its diverse operations as it downsized its forces and activities. At the time, the Department believed that the thousands of systems and numerous administrative and mission-related processessupporting DOD functions were redundant and inefficient and that they should be standardized and made more efficient. To address these problems, Defense planned to simplify and improve business processes; centralize responsibility and authority in functional areas, such as finance, personnel, communications, health affairs, logistics, command and control, and intelligence; and develop an integrated communications and data processing infrastructure based on departmentwide standards. From the outset, DOD recognized that implementing CIM would be difficult because the basic tenet of the initiative—managing and implementing business improvements and building corporate systems along functional lines—represented a major shift in the way Defense traditionally did business. Whereas each military and Defense agency had historically managed its own business functions and information systems, CIM called on senior functional officials, known as Principal Staff Assistants (PSAs),together with their Defense component counterparts to be responsible for implementing improvements and information systems within the Department’s business functions across service and agency lines. As CIM was implemented, Defense emphasized two ways of achieving process improvements and addressing problems associated with its disparate and stovepiped information technology environment. The first was to improve, or reengineer, business processes first and then apply technology to the new processes. The second involved selecting the best DOD information systems from pools of existing, or legacy, systems that provide similar automated support services and eventually replacing the duplicative systems with the best systems. A few years into the CIM effort, this became known as migration. Defense believed that if done properly, migration could cut costs associated with developing and maintaining disparate systems supporting the same functions. It also believed that migration would help to standardize business processes and allow Defense to achieve savings that could be put to better use in advancing warfighting capabilities. Figure 1.1 illustrates how migration would work in one functional area. For its finance and accounting functions, Defense's goal is to reduce the number of systems from the 324 that the services and agencies operated in 1991 to 32 systems. As of the end of fiscal year 1996, the Defense Finance and Accounting Service's strategic plan stated it had reduced the number of finance and accounting systems to 217. The migration strategy for accounting and finance is to (1) identify a single migration system for each of the Department's finance and accounting functions, such as civilian pay, (2) standardize the procedures and practices used to perform these functions, and (3) migrate from existing service-unique systems to the migration systems. For some of these functions, such as general fund accounting, Defense established a two-pronged approach: (1) migrate initially to a single interim system or set of systems within (2) migrate from the service systems to a departmentwide system or set of systems. While Defense began CIM emphasizing the need to improve, or reengineer, processes before applying technology, it ended up placing more priority on obtaining quick savings through an accelerated migration strategy, which began in October 1993. This strategy called for selection of migration systems in 6 months and departmentwide transition to selected systems in the following 3 years. Defense believed that setting tight time frames for migration with some potential slippage would allow it to “harvest the low-hanging fruit” of potential savings before reengineering. By default, this meant that the increased emphasis on migration would postpone the dramatic gains that could be achieved through reengineering. The risks involved with postponing reengineering efforts were significant. Reengineering identifies, analyzes, and redesigns an organization’s core business processes, aiming to achieve dramatic improvements in critical areas of performance, such as cost, quality, service, and speed. It focuses on redesigning the business process as a whole in order to achieve the greatest possible benefits to an organization and its customers. Migration, on the other hand, focuses on standardizing existing processes and information systems. This can yield some benefits, such as reducing the need to maintain disparate systems that support the same functions, but seldom yields dramatic improvements. In addition, if the process is inefficient or outmoded, migration only serves to perpetuate a bad process. Finally, choosing migration before reengineering may cause future reengineering efforts to be more difficult by entrenching inefficient and ineffective work processes. We raised these concerns both before and after Defense decided to embark on the accelerated migration strategy. We believed that the shift in emphasis toward migration seriously endangered CIM’s chances for success. For this reason, and because CIM-related technology investments, which are expected to total billions of dollars each year, are vulnerable to waste and mismanagement, we designated CIM as a high-risk government information technology initiative. Nevertheless, Defense proceeded to concentrate on migration even in areas where it had recognized that there was a significant need to change business processes. One such area was transportation. We reported in 1996 that even though Defense recognized that its military transportation processes were fragmented, outdated, inefficient, and costly, it focused on technology solutions rather than the need to identify and correct the root causes of its transportation problems. Because reengineering took a backseat to migration in other business areas as well, CIM has never been able to achieve the level of cost savings and process improvements originally intended. A recent reportconducted by RAND, a consulting organization, notes that “The CIM effort is today widely viewed as a failure in most quarters of the DOD. It has not resulted in either significant process reengineering or visible savings in the hardware and software required to support all the varied information systems in the Defense infrastructure.” Defense is still planning to invest at least $18 billion in its migration effort from fiscal years 1995 through 2000. Because this investment is significant, we were asked for information on the status and progress of migration and whether Defense has significant controls in place to manage and oversee the effort. Defense reported that it has selected 363 systems for migration. Forty-nine of the 363 migration systems are large-scale, or major, systems that are expected to cost at least $13 billion—or about 72 percent of the total $18 billion cost estimate—to develop, deploy, and maintain over fiscal years 1995 through 2000. Defense has identified 1,938 legacy systems for potential termination. As of April 1996, its Defense Integration Support Tools (DIST) database showed that 281 had already been terminated, 886 were scheduled for termination by the year 2000, and 771 more were identified for potential elimination after the year 2000. Table 1.1 provides the number of systems selected by each functional area, the number of legacy systems identified for potential termination, and DOD’s estimated costs of developing, deploying, and maintaining the migration systems. We excluded costs for 27 systems for which DOD collected costs because the systems were classified. And costs for the remaining 121 of 363 systems were not included in the table because the Office of the ASD C3I had not collected the costs for these systems. Table 1.2 provides the name, status, and cost for each of the 49 major systems. We were asked (1) for information on the number and cost of systems designated for migration, the number of legacy systems already terminated or scheduled for termination, and savings resulting from terminations of legacy systems and (2) whether Defense’s management control and oversight processes for migration systems are ensuring that the investments are economically sound and in compliance with Defense’s technical and data standards. To assess the status of Defense’s overall migration strategy and obtain available information on the number and cost of systems designated for migration, the number of legacy systems already terminated and scheduled for future termination, and savings resulting from terminations of legacy systems, we analyzed a Defense April 1996 report to the Congress containing information on the schedule, cost, and status of the migration systems. Defense prepared this report in response to a requirement in Section 366 of the National Defense Authorization Act for fiscal year 1996. We also obtained and analyzed a copy of the DIST database as of April 1996 that Defense used to develop the report to the Congress, as well as to provide its own senior managers information on migration system selections and legacy system terminations. Additionally, we reviewed—but did not independently verify—cost information that Defense reported to Congress as part of the April 1996 Section 366 report. We also interviewed senior DOD officials to determine if additional cost and performance information on migration systems existed at the Office of the Secretary of Defense (OSD) level. We assessed the reliability of the data presented to the Congress in two ways. First, we identified missing and conflicting information in the April 1996 Section 366 report to the Congress and requested that the ASD C3I staff to clarify conflicting information. Second, we compared the data reported to the Congress for three functional activities (business areas)—Transportation, Civilian Personnel, and Clinical Health—against data provided to us by the functional area managers at these activities. We then established and analyzed a database containing schedule and available cost information for the migration and legacy systems and modified the database to reflect updated schedule, costs, and other descriptive data Defense provided to us during the course of the audit. To assess Defense’s management control and oversight processes for migration systems to determine whether the investments are economically justified and comply with Defense technical and data standards, we reviewed the department-level management and oversight processes for approving the PSAs’ migration system selections and for overseeing major migration systems’ acquisitions by the Major Automated Information System Review Council (MAISRC). Our review did not focus on the process by which the PSAs select, develop, and manage their migration systems. Nor did we examine acquisition review processes within the individual functional areas employed for nonmajor system projects. To analyze Defense’s oversight processes for reviewing and approving the PSAs’ migration system selections, we reviewed department-level approval of the PSAs’ selections.