Preserving capacity, General Tom Lawson, Chief of the Defence Staff, Keys to Canadian SAR
Issue link: http://vanguardcanada.uberflip.com/i/507045
D DEfENCE REnEWaL www.vanguardcanada.com aPRIL/May 2015 23 cies – the focus is short term. Only when change is embedded into the fabric of the organization will sustainable results be achieved. Many organizations dive into cost reduction without under- standing which areas hold the most potential for sustainable savings, the factors that drive costs, and the interdependent re- lationships between costs and organizational outcomes. In most organizations a few areas hold the most promise for significant cost reduction while also supporting greater agility. Our approach is focused on achieving complimentary improvements in five cost areas. Within each cost area, we identify proven techniques that provide the most promise for sustainable reductions. 1. Human capital Unpredictable economic conditions emphasize the need for streamlining operations and optimal employment of people in most defence organizations. Changing technology and strategic restructuring require new and different skills and knowledge. This has resulted in increasing organizational costs and associated costs of maintaining workforce readiness. Three areas that provide promise for sustainable cost reduction: • Workforce–mission alignment; • Capabilities-based assessment and workforce analytics; and • Blended learning and cross-training 2. Infrastructure costs To achieve sustainable cost reduction and agility defence organi- zations must fully understand the total lifecycle cost of infrastruc- ture and how to determine the minimum levels of infrastructure investment required to support mission requirements. Today for most organizations this is complicated because data is housed in multiple systems and documents. Considerable time and re- sources are used to discover, collect, manipulate and maintain this information for effective decision-making. The four proven ap- proaches listed below are designed to equip defence installation commanders and managers with the necessary information and decision management framework to ensure that they know what they have, where it is located, what condition it is in, who is using the facility and what it costs. • Reliability centered maintenance; • Asset and IT inventory management; • Smart grid, facilities and installations; and • Joint basing/infrastructure sharing. 3. Information technology The past decade has seen a surge in IT spending to keep pace with defence, security and financial reporting requirements. The in- troduction of new delivery models (e.g., outsourcing, shared ser- vices) complicate the landscape. IT departments are under pres- sure to deliver faster and more cost-efficient products, yet most defence organizations are dissatisfied with the return on IT invest- ment. New threats such as cyber terrorism are causing additional burden on defence organizations to not only protect themselves internally, but to offer guidance and policy to aid their country's commercial sector in warding off attacks. We offer four techniques that could provide promise for sustain- able reduction: • Prototyping and agile development; • Cyber and information assurance; • Business intelligence; and • Data strategy and optimization. 4. Acquisition and procurement Defence organizations manage a more diverse and complex capital investment portfolio as compared to most government and commercial enterprises. Complexities of delivering sea, land, and air platforms require continuous coordination with internal and external stakeholders. Consolidation of duplicated contracts, increased standardization in procurement processes, and strict compliance with policy and regulations are critical outcomes that underpin the coordination. Organizations that employ four techniques to evaluate their portfolio of programs throughout each acquisition phase are more agile and better able to adapt to changing requirements. • Cost estimation; • Priority-based budgeting (PBB); • Industrial base analysis and supplier integration; and • Strategic sourcing. 5. Supply chain logistics While logistics and supply chain planning are enterprise-wide ac- tivities, many defence organizations approach them in silos. Op- timized enterprise supply chain and logistics capabilities require a holistic approach to equipping and operating platforms and weap- ons systems. Achieving this holistic approach requires an integrated and balanced perspective guiding readiness with all supply chain and logistics elements. These elements must be properly planned, re- sourced, and proactively managed. We offer four techniques that provide the most promise for sus- tainable reductions: • Best value maintenance; • Supply chain optimization; • Total ownership cost reduction; and • Burden sharing. A continuous journey If efforts to reduce costs in these five areas are led by inspired leaders, and approached methodically with an unrelenting focus on impact on organizational agility, they can accelerate change and lead to a more agile defence organization. Armed forces will continue to be asked to do more with less. The path to achieving and maintaining agility while reducing costs is complex. It has been said that "it is the journey, not the destination…" Targeting and deploying quick and sustainable wins along the way should be embraced and celebrated. Identifiable cost-cutting, when properly structured, can lead to greater organizational agility, increased combat readiness and ca- pabilities while maintaining traditional military values of innova- tion and pragmatism. For further information, please see Agile Defense: Sustainable Cost Reduction on the Path to Greater Agility at www.pwc.com/ agiledefense.