Interview transcript
Terry Gerton Deloitte’s got a new report out that suggests that inefficiencies and mission support functions are diverting resources from war fighting. Can you start by walking us through the central argument there? How do you connect those dots?
Tom Muir Sure, it’s a great topic, and certainly one that’s timely, not just for the Department of War, but other federal agencies. We think we’re at a unique point in time for government agencies, particularly with artificial intelligence, machine learning, an empowered and upskilled workforce to deliver on the promise of back office services. We won’t call them back office services in this report. We call them mission support services. Because at least when they’re the Department of War, Department of Defense, it is absolutely critical that they make the most of their budget and their priorities to focus on the mission of the department and the priorities to meet the national defense strategy and to enable our national security. We think we have a unique period of time for the department to deliver at speed and scale. They’re doing this in their mission. Secretary Hegseth talked about this about a week ago about acquisition transformation. And they can do that, take that same approach to mission support services that enable the mission of war fighters, improves readiness, enables the department to do their mission, and from an employee perspective, improves the ability of employees to leverage new technologies to deliver on their tasks in support of the mission.
Terry Gerton So you and I both spent some time wandering the halls of the Pentagon on the OSD stack. Many enterprise reform efforts have failed or come up short when it comes to being deployed in DOD. Talk us through some of the cultural difficulties and the organizational difficulties in doing this kind of reform.
Tom Muir Well, as you and your listeners know well, the department is budgeted and funded through appropriations under Title X, right? Military departments are funded to drive the performance of their military departments aligned with Department of War, Department of Defense priorities and national defense strategy. So part of the budget process would argue against this, but in order for them to achieve the efficiencies and effectiveness that the department needs to drive its mission capabilities, there’s a consolidation that’s critical for them to achieve that speed and skill we talked about earlier. We think that this is a unique opportunity because for the first time in, at least in my experience working in the Pentagon and agency supporting the Pentagon, they have a number of private sector leaders that are present in key leadership positions across the Department of War and Department of Defense that this be this is second nature to them. Improving performance, delivering on customer experience, reducing costs, recapitalization and empowering and upskilling the workforce is what they have done in private sector. And they’re bringing that same experience and insights to their government positions now inside the Pentagon. So we think because of technology, leadership and the current environment of cost savings and delivery on mission, this is the right time to have this conversation.
Terry Gerton People have said for years that Fortune 100 global companies can do this and are incentivized to do this, but the military operates under different constraints. So all of those private sector folks sometimes run up against some real obstacles in the military. What are some of the lessons that you think from the corporate world get that can realistically be applied inside DoD?
Tom Muir That’s a great point. You know, we cannot expect to apply all the lessons from private sector to the Department of Defense or Department of War. It’s just, it — particularly not carte blanche. It is a unique mission. It is critical to our national security. It is critical to our economic security globally. And so the Deloitte team has significant experience throughout the years working with Fortune 100 companies to stand up technology-driven multifunctional back offices. So this brings together HR, IT, finance, and acquisition of the four that we’ve specifically focused on in terms of our mission support services in this paper. And our work in private sector, we enable that consolidation, centralization, and mission focus of these cross-functional teams. Many agencies in private sector or companies in private sector call this a global business service. We tend to refer to it in Deloitte as sort of a center office concept, not a back office, because these offices and functions are critical to the mission of the performance of government agencies. For the private sector, we call them business units. Critical in the performance of business units, lowering cost, driving efficiencies, delivering on profit and loss statements to enable shareholder interest. In government, we think it’s more critical. It’s delivering on mission. This is not just about cost effectiveness and performance and efficiencies, it’s delivering on mission.
Terry Gerton I’m speaking with Tom Muir, he’s a specialist executive with Deloitte. So Tom, one of the big recommendations in your report is that all of this can be AI enabled, taking an AI-first approach. Talk us through how that would work. Is that sort of a way to bridge what kind of have been long running cultural differences between the services and the DOD staff? And what safeguards need to be in place if you’re going to deploy AI in a defense sector?
Tom Muir That’s a great question. You know, the Department of Defense is accelerating the adoption of advanced AI right now and machine learning in support of military capabilities to address their national security challenges. That same approach applies for these functional areas of HR, IT, finance, and contracting. Many of us employ AI routinely in our daily lives, and the workforce ought to be able to employ AI in their workforce lives to deliver on mission. We think AI can immediately apply to a wide range of DoD missions. But when we think about AI to improve audit readiness, right? The Department of Defense is under a statutory requirement to get a clean audit by December of 2028. And the Department truthfully has struggled with that remediation projects over the previous years. There’s a unique ability right now with the technologies available in AI and machine learning to drive that audit readiness, audit remediation, enterprise data management, acquisition of common goods and services at a lower cost point, at greater efficiency and greater performance. There’s an ability for them to gain significant momentum in some of these projects that they’ve already undertaken and pilots that they have advanced for the use of AI and ML technologies and deliver those tools to their workforce and upskill this workforce to use those tools to deliver better performance. We think we’re at a unique point, rather, for our agencies to do this within the Department of Defense, within the Pentagon.
Terry Gerton So Tom, I looked at the back of the report and there’s a ‘what DOD can do today’ page and I thought we could have pulled this from 1990 or 2000 or 2010 or 2020. What makes today’s environment different where Deloitte thinks that this is actually achievable?
Tom Muir The delight team has taken this approach, particularly with the Department of War, Department of Defense, because we think it’s based on three things. The first is, it is a tech forward approach to solving some of these pervasive problems that you and I just talked about, Terry, that have been very difficult for government agencies to move forward over decades. Right? We’ve done a bunch of shared services initiatives that have not gotten the department very far, not just the Department of War, Department of Defense, but other agencies as well across the federal government. We think there’s a second piece to this, and that is it’s a show not tell. We think there’s an ability for AI and ML to deliver to workers and workforce to not study the problem, but to demonstrate very rapidly in matters of weeks and months, not six months to a year, and implement technologies and, as you mentioned earlier, safeguard those technologies, right? There’s a cybersecurity discussion and an ethical use of AI discussion to this to this challenge. And we think the department is putting together policies that do just that. And the third piece is focus on outcomes, not processes, not business processes, but transforming business processes to deliver outcomes for the war fighter in the Department of Defense, Department of War’s discussions. But for other agencies, it’s deliver outcomes for their departments, agencies and bureaus. In business, it’d be deliver, you know, outcomes for the business units and profit and loss statements. That same discussion applies just to the bureaus and the agencies across the federal government.
Terry Gerton So let’s assume that DoD takes Deloitte’s recommendations and moves out on them and implements them. Five or 10 years down the road, what would look different and how would you measure or demonstrate that the efficiencies have actually improved readiness?
Tom Muir The great question. You know, in our minds, at least as we discuss this amongst our teams and as we share this with our clients in the Pentagon and in other federal agencies, we think looking back, right, 10 years from now, what does success look like? We think success is a consolidated mission support focused organization that delivers and manages standardized processes at speed and scale, leveraging technology to upskill the workforce, to allow them to live, to focus on cost and performance. We think when you look at the memorandums and the guidance that has come out recently from the Pentagon about recapitalization of the workforce, about acquisition transformation, it’s about delivery of the skill necessary to defend our nation, to deter threats and defeat them if necessary. We think that that’s critical when you look back, you know, from where we are today to that journey that they’re gonna undertake. And they’ve already taken many actions that’ve already begun. As you and I, who both worked in the Pentagon together, many of these actions are already in place. It’s just a matter of bringing that capacity and a consolidated, multifunctional mission support organization that allows them to deliver on the mission of supporting war fighters more effectively, more efficiently, at higher performance and lower cost. And then those cost savings can be put into critical capabilities necessary for war fighters at the front lines.
Terry Gerton How much of this can DoD do on its own without asking permission from Congress and how much does Congress officially need to support?
Tom Muir I believe that the Department has had an ongoing conversation with Congress, you know, particularly the oversight committees, both the HASC and the SASC in particular, and the appropriations committees on their outcomes that they’re looking to achieve by their transformation plans. We saw the first one just brought forward by the secretary of war last week. Secretary Hegseth discussed where he thought the department needed to move with acquisition transformation. I think we’re starting to see more of those in terms of direct report program portfolio management offices and how the department is tackling some of these large national security challenges. That dialog is ongoing. I think the department can do all of this within its budget and take that budget and put it back towards war fighting missions, right? The cost savings that come from this multifunctional shared service delivery services in support of their mission can be put towards that frontline war fighting mission. So I think that this is savings to the department that they can then put against mission and delivery for war fighters.
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