Commerce Watchdog Issues Alert on Major IT Modernization Project


In a management alert, the agency inspector general warned a 20-year, $341 million project is too focused on new technology instead of fixing business processes.

The Commerce Department Inspector General issued a management alert warning officials that an ongoing financial systems modernization effort is poised to fail if program leaders don’t focus on the business processes being migrated along with the tech.

The issue outlined in the management alert “requires immediate attention, given that the program is in a crucial design phase of the overall effort,” Frederick Meny, assistant inspector general for audit and evaluation, wrote.

Commerce has been working on an enterprisewide, cloud-based financial system tying together multiple legacy systems operating throughout the department, dubbed the Business Applications Solution, or BAS, program. The program management duties were contracted out to Accenture Federal Services through a 20-year, $341 million award in April 2020.

“Through this contract, the department will acquire licensing and hosting services for the BAS system’s three new software applications: (1) Oracle Electronic Business Suite for financial management, (2) Procurement Request Information System Management for acquisition management, and (3) Sunflower for property management,” the IG report notes.

In order to implement these same systems across the department, Commerce officials are requiring individual business units “reengineer processes when necessary” rather than customizing the commercial IT system.

However, BAS officials have not developed plans for helping those business units reengineer their processes, which could result in bad processes being ported over or, worse, good processes turned to bad.

“Without defined plans and key reengineering project details, the program may not apply the necessary discipline to sufficiently reengineer business processes,” the IG wrote, potentially leading to failure. “These conditions present risk that financial management processes may not be adequately supported by the new BAS system, which could ultimately lead to schedule delays and cost increases. This approach may also miss an opportunity to fundamentally improve how the department conducts its financial business.”

Officials told the IG the business process reengineering part of the project would occur after the full solution was designed and ready to be implemented, at which time a plan would be developed by Accenture. The IG pointed out that the contract does not include specifics normally seen in business process reengineering plans “such as methodology, tasks and deliverables for identifying existing processes and analyzing potential alternatives.”

Commerce officials said a forthcoming update to the organizational change management plan would include the business process plan, as well.

Prior to this work, the IG recommended conducting an inventory of current financial management processes—another thing the program failed to do in the early stages.

“Program officials stated that they were confident that their numerous, involved and vocal stakeholders would describe existing processes and business outcomes in sufficient detail and identify potential gaps in their needs during the common solution design working groups,” the report states. “Program officials also stated that instead of documenting existing processes, the program’s resources were better spent on configuring BAS applications to provide the same business outcomes and training staff to use them.”

The IG disagreed.

“Documenting existing processes with appropriate details early in a reengineering project is a significant factor for success when an agency implements new or reengineered business processes,” they wrote. “The lack of such documentation means that the program may not fully understand affected processes, identify baseline performance data for processes and manage potential impacts of changed processes, including impacts to processes not within program scope.”

Further, the IG suggested Commerce’s approach is too focused on technology and not improving base processes through technology.

“Acquiring technology in the belief that its mere presence will somehow lead to process innovation is a root cause of bad investments in information systems,” the report states, quoting a business process reengineering guide produced by the Government Accountability Office.

“Instead of developing alternatives from an analysis of existing processes, the BAS program is deriving new processes from the features and configurations of the newly procured applications to meet stakeholders’ existing business outcomes,” the Commerce IG wrote. “However, this software-first approach is likely to force bureaus to change their processes within the limits imposed by the delivered system, rather than an approach that optimizes process alternatives—independent of technology—to be more efficient or effective.”

The IG is not looking for a “formal response,” since the program managers were briefed before the report was issued publicly. The IG’s office is working on a full audit report—“to be issued at a later date”—which will include the department’s response to the issues raised.