Note: The article below is excerpted and re-organized content based on a virtual conference hosted by the American Society of Military Comptrollers (ASMC) with presenters Col Sara Dudley (Army Budget Office Director), Paul Landauer (Department of the Navy Associate, DASN), Lt Col Erin Salinas (HQ Space Force Chief, Database and Digital Tools Branch), and Dan Saaty (Decision Lens Co-founder).
Today, financial management (FM) personnel must anticipate fluctuating mission priorities, new programs, Congressional elections, and overlapping budget time horizons. Outdated tools and methods make predicting all the permutations not only time-consuming but practically impossible to begin with. Introducing more advanced scenario-based prioritization tools is critical to game planning various contingencies and responding to the unanticipated.
The result would introduce more adaptability and flexibility into resource allocation, helping ensure more money is spent on the mission. However, to achieve scenario-based planning, the DoD must make some changes:
Change 1. Improved Data Management
To take full advantage of scenario-based planning, organizations must have accurate and structured real-time data coupled with analytical tools that can inform stakeholders and present choices.
Maintaining and relying on accurate data is a challenge. According to Decision Lens co-founder Dan Saaty, “people continue to use tools like Microsoft Excel, Word, and PowerPoint for briefing charts in very static forms. But the reality is the world has already changed within a week of that, so keeping up with that file and letting it represent today’s reality from two weeks ago when the world might have drastically changed becomes impossibly hard.”
Change 2. Improved Data Literacy
Without proper data and scenario-based planning tools, FM managers struggle to communicate the effects of budget cuts on mission readiness.
While financial managers can improve their scenario-based planning with new software, they must also understand the underlying importance of continuous data management, identifying the right data, and connecting to systems of record to provide relevant information to DoD leadership.
With these two elements in place, financial managers can begin analyzing data and providing guidance based on their expertise.
Outcome 1 - A continuous approach to planning
A static budget optimization becomes irrelevant within days or weeks as conditions change. It is for this reason that DoD leadership needs to assign quantitative and qualitative values to its mission priorities in near real-time to adapt to a turbulent geopolitical landscape.
Continuous planning helps achieve a more dynamic response. Col Dudley explained that the real environment is not so abstract. There are many constraints that planners have on their decision-making processes – sequencing of resources, availability of budget, interdependencies between objectives, and looking across multiple planning horizons.
Outcome 2 – Optimizing Budget Performance
Dan Saaty described the purpose of scenario-based planning. “Scenario planning involves many different ingredients to help make decisions on how you ultimately allocate resources. Those ingredients range from what is important to decision makers to how you drive performance toward military objectives while managing risk,” he said.
In its early development, scenario-based planning focused on maximizing a service’s budget dollar value. “In the early stages when we built software to help with scenario planning, we would take these inputs and run a resource allocation optimization scenario, where its goal was to maximize ‘bang for the buck’ and get most of the mission priorities and objectives accomplished with limited resources.”
Outcome 3 – Improved Budget Planning
While ‘bang for buck’ optimization is useful on its own, financial managers must also anticipate environmental factors to justify their budget requests after initial planning. In the Army, budget estimate submissions are scrutinized by the Office of the Secretary of Defense (OSD), the White House, Congressional committees, and finally the Army Commands. According to Col. Sara Dudley, these layers of approval force Army financial managers to plan around a moving dollar target. “By the time a program line gets out of a training resource model to a brigade-sized element in the Army, it’s about 65-70% of whatever that topline number had been programmed for. You automatically try to justify against a line item that is 65% less and has gone through four position changes since it was programmed.”
The DoD must move away from simple ‘bang for buck’ optimization and extend it to more considerations – value and impact, cost, and risk management. Only then can true continuous planning take place.
Technology can assist with managing constant data updates, but a collaborative culture is even more necessary to provide agile, predictive, and aggregated answers to the complex financial questions surrounding mission readiness.
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