Tech success: SAS helps Marine Corps budgets get lean
<FONT SIZE=2>When the Marine Corps needed to carve fat from operating expenses at its bases, it turned to cutting-edge accounting software from SAS Institute Inc.</FONT>
Paula Brown is district manager of the defense group for SAS Institute Inc.
Henrik G. de Gyor
The Cary, N.C., company helped build a system that provided visibility of the true costs of each service a base provided, and the Marines saved about $89 million from 2000 to 2002, said Maj. Rod Brewster of the Marines' Center for Business Excellence at the Navy Annex in Arlington, Va.
Ultimately, the Marine Corps is aiming to cut $634 million from the operating expenses of its bases by 2007.
SAS' activity-based costing software could help other agencies streamline operations, said Paula Brown, SAS sales representative for the Defense Department and the public sector. She said the President's Management Agenda, which calls on agencies to save money through better accountability, could be a big sales driver for SAS.
The Marine Corps established the business center in 1999 to find ways for bases to cut costs while maintaining quality of services. The center found that competing work through the Circular A-76 process was one way to do this, Brewster said.
But the center also was impressed by an accounting procedure increasingly used in the commercial sector to more accurately estimate the costs of producing goods and services.
Called activity-based cost management, this technique tallies the costs of individual services that an organization provides. While this might seem to be an easy number to generate, often it is not, especially for the military.
"On a military base, labor is free from the service's point of view. But if you want to find the true cost of the supply chain, you really need to wrap up the operation and maintenance expenses with military labor to get the total cost picture," Brewster said.
With such functions being provided by different departments, the true cost of providing a service, be it a maintaining a base road or feeding the troops, might be spread across a number of line items and not easily traceable.
"What is this service costing us? What is it costing the customer? That's not information compiled by most government organizations," Brewster said.
By knowing the true cost of services, the Marines can see which operations supporting those services are redundant, needlessly expensive or could better be done at a regional level.
However, corralling data from a base's legacy financial systems into an activity-based costing model was a challenge.
"The problem was that our modelers spent a lot of time getting extracts from these systems and then plugging them into the desktop tools," Brewster said.
The Marines needed a system that would free accountants to "act more as business advisers instead of doing clerk functions, such as typing data into desktop tools," he said.
So the center built a solution called the Extensible Business Intelligence Toolkit, which could compile and analyze the data automatically for bases and stations.
The center hired Smartronics Inc., California, Md., to provide the data warehouse and chose the activity-based cost accounting software from the SAS.
Founded in 1976, SAS focuses on integrating data warehousing, analytics and business intelligence functions into enterprisewide solutions.
"Understanding what things you want to know and what decisions you want to make from that data is a constant struggle for both commercial and public-sector organizations," Brown said.
In addition to supplying the software to the Marines, SAS also sent a team to different Marine bases, staying at each location four to six weeks, to interview personnel and learn the operations. From these interviews, the team modeled how each base spends money.
Overall, the Marines spent $16 million developing and implementing the tool kit, and have spent approximately $1 million per year maintaining the solution with software licensing, hardware updates and training.
Thus far, 21 installations have taken advantage of the tool kit. Overall, the Marines spend about $3 billion a year for base support. Using this solution, the Marines have saved $20 million in 2000, $31.8 million in 2001 and $37 million for 2002, Brewster said.
Although SAS was the lead contractor in this program, the company works with integrators in most cases. The 9,000-employee, privately owned company counts most federal agencies as its customers, and works with integrators such as Accenture Ltd., BearingPoint Inc., the Boeing Co. and Lockheed Martin Corp., Brown said.
"Sometimes we take the lead [in contract work] though our preference is to collaborate with integrators on their programs," Brown said.
If you have an innovative solution that you recently installed in a government agency, contact Staff Writer Joab Jackson at jjackson@postnewsweektech.com.
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