To help address this challenge, many  agencies are in the process of replacing their core financial systems as part  of their financial management system improvement efforts. Although the  implementation of any major system is not a risk-free proposition,  organizations that follow and effectively implement disciplined processes  can reduce these risks to acceptable levels. The key to having a  disciplined system development effort is to have disciplined processes in  multiple areas, including project planning and management, requirements  management, configuration management, risk management, quality  assurance, and testing. HHS Had Not Effectively Implemented Disciplined Processes, Information Technology Management Practices, and Human Capital Planning

We found that HHS had adopted some best practices in its development of  UFMS. However, at the time of our review, HHS had not effectively implemented  several disciplined processes essential to reducing risks to acceptable  levels and therefore key to a project’s success, and had adopted other  practices that put the project at unnecessary risk. However, we found  that HHS had focused on meeting its schedule to implement the first phase  of the new system at the Centers for Disease Control and Prevention (CDC)  in October 2004, to the detriment of disciplined processes and thus had  introduced unnecessary risks that may compromise the system’s cost,  schedule, and performance. These matters are discussed in detail in our report. Project management and oversight using quantitative measures. We  found that HHS did not have quantitative metrics that allowed it to fully  understand (1) its capability to manage the entire UFMS effort; (2) how  problems in its management processes would affect the UFMS cost,  schedule, and performance objectives; and (3) the corrective actions  needed to reduce the risks associated with the problems identified with  its processes. Compounding these UFMS-specific problems are departmentwide  weaknesses we have previously reported in information technology (IT)  investment management, enterprise architecture, and information  security. Specifically, HHS had not established the IT management  processes needed to provide UFMS with a solid foundation for  development and operation. Strategic workforce planning is essential for  achieving the mission and goals of the UFMS project. In its comments, HHS characterized the risk in its  approach as the result, not of a lack of disciplined processes, but of an  aggressive project schedule. With a project of this  magnitude and importance, we stand by our position that it is crucial for  the project to adhere to disciplined processes that represent best practices. Therefore, in order to mitigate its risk to an acceptable level, we continue  to believe it is essential for HHS to adopt and effectively implement our 34  recommendations. Delaying implementation of significant functionality at  CDC is a positive step forward given the risks associated with the project.
Why GAO Did This Study

GAO has previously reported on systemic problems the federal government faces in achieving the goals of financial management reform and the importance of using disciplined processes for implementing financial management systems. As a result, the Subcommittee on Government Efficiency and Financial Management, House Committee on Government Reform, asked GAO to review and evaluate the agencies' plans and ongoing efforts for implementing financial management systems. The results of GAO's review of the Department of Health and Human Services' (HHS) ongoing effort to develop and implement the Unified Financial Management System (UFMS) are discussed in detail in the report Financial Management Systems: Lack of Disciplined Processes Puts Implementation of HHS' Financial System at Risk (GAO-04-1008). In this report, GAO makes 34 recommendations focused on mitigating risks associated with the project. In light of this report, the Subcommittee asked GAO to testify on the challenges HHS faces in implementing UFMS.

What GAO Found

HHS had not effectively implemented several disciplined processes, which are accepted best practices in systems development and implementation, and had adopted other practices, that put the project at unnecessary risk. Although the implementation of any major system is not a risk-free proposition, organizations that follow and effectively implement disciplined processes can reduce these risks to acceptable levels. While GAO recognized that HHS had adopted some best practices related to senior level support, oversight, and phased implementation, GAO noted that HHS had focused on meeting its schedule to the detriment of disciplined processes. GAO found that HHS had not effectively implemented several disciplined processes to reduce risks to acceptable levels, including requirements management, testing, project management and oversight using quantitative measures, and risk management. Compounding these problems are departmentwide weaknesses in information technology management processes needed to provide UFMS with a solid foundation for development and operation, including investment management, enterprise architecture, and information security. GAO also identified human capital issues that significantly increase the risk that UFMS will not fully meet one or more of its cost, schedule, and performance objectives, including staffing and strategic workforce planning. HHS stated that it had an aggressive implementation schedule, but disagreed that a lack of disciplined processes is placing the UFMS program at risk. GAO firmly believes if HHS continues to follow an approach that is schedule-driven and shortcuts key disciplined processes, it is unnecessarily increasing its risk. GAO stands by its position that adherence to disciplined processes is crucial, particularly with a project of this magnitude and importance. HHS indicated that it plans to delay deployment of significant functionality associated with its UFMS project for at least 6 months. This decision gives HHS a good opportunity to effectively implement disciplined processes to enhance the project's opportunity for success.