ACE Case Study

8/8/2019 ACE Case Study

1/26

Massachusetts Institute of

TechnologySloan School ofManagement

Center for Information Systems

Research

The ACEProject

Doug Browningsmiledinvoluntarily as hethought of the pleasant side of hisimminentretirement in April2004: more timewith his family. Atage 53 Doug’sretirement ameafter 2! years ingovernmentservie and twoyears as Deputy"ommissioner#seond inommand# of the$nited %tates"ustoms andBorder &rotetion%ervie '"B&(.Doug refleted onwhat should )e themost importantthings he ould tellhis suessor#De))ie %pero. *f all his "B& duties#he wanted to

emphasi+e theimportane andritial points for management’sfous on theAutomated"ommerial,nvironment'A",( pro-et.

Attention to theA", pro-et#whih was integralto )usiness hangewithin "B hadoupied a third of his time as its leadoordinator.

Doug was awarethat the pro-et was

running over )udget and hadreset some of itsrelease deliverydates# )ut ingeneral he feltomforta)le a)outits progress. At thesame time he newthat ten years of effort )y so many

on one of the


2/26

largest iviliansystems pro-ets inhistory would )efor naught if therewere pro)lems

with upoming/eleases 3 or 4.hese woulddeploy ey sreensfor use at points of entry on the1eian and"anadian )orders.n the fish)owlworld of government# a

glith on the sreenof a ustomsoffier heingthe eletronimanifest

of a tru from

1eio ould )e

front page news in

the Washington

Post .

ACE: BIG, MANY

PLAYERS, AND

MORE THAN AN IT

SYSTEM

*ne installed andsuessfullyrunning# A",would )e theentral systemfor "B& operationsand vital for amyriad of other staeholders. A",would )e used )y42#000 "B& personnel#thousands of orporate importeport departmentsand freightforwarders in theglo)al tradingnetwor# and )ydo+ens of other entities using andfeeding data. A",reeived its initialannualappropriation from"ongress in 2000#at whih time thetotal pro-et wasestimated at 6.5 )illion over fiveyears. his made itone of the largestsoftware pro-etsoutside theDefenseDepartment in $.%.federal governmenthistory.


3/26

he ore of A",’sfuntionality wasto support the wor of ustoms offiers

and analysts# partiularly thewor in the field of inspetion andduties)illing onommerialimports andeports. he

system wouldreplae the legaysystem# theAutomated"ommerial

%ystem 'A"%( andseveral others.

,hi)it 6 showsthe priniplestaeholders withthe informationflows to and fromA",.

This case was prepared by Dr. Cyrus F. Gibson, MIT

Sloan School o Manage!ent, Da"id W. #eiss, $pplied

Syste!s Technology, Inc., and Willia! %ee"an, M&$

Candidate, MIT Sloan School. This case is or the purposeo !anage!ent education, rather than illustrating or

endorsing any particular !anage!ent practice. The

authors than' the !any !anagers o the (.S. Custo!s

and &order Protection $gency and ailiated contractors

and agencies who contributed and co!!ented on the case

during its de"elop!ent, particularly Douglas M.

&rowning, Charles #. $r!strong, Sharon Ma)ur and

*awrence +. #osen)weig.

n addition to

software

replaement# A",

would ena)le and

re7uire a hange in

wor praties )y

users. "ustoms

inspetion and

)illing would also

hange from

transation

proessing to

8aount

management#9

moving from the

historial method of

proessing

individual

transations to an

aount)ased

approah for

learane and

)illing purposes.

hus# if almart

were the reipient

of ten thousand

ontainers through

twenty ports of

entry in the month

of April# half of

them re7uiring

some import duty

and do+ens targeted

for inspetion#

almart ould#

under A",# reeive

a single statement

of duties owed for

the month and a

onsolidated report

on inspetion rather

than the thousands

of eletroni and

paper douments

under the old

system.

he 8trade#9

ompanies that

depend on

epeditious flow of

goods into and out


4/26

of the $.%.# were

ritial staeholders

in A",’s suess.

n ;eneral 1otors’s

supply hain# for

eample# there werehundreds of

individuals

managing the

delivery of millions

of parts and

vehiles. ndeed#

the trillion dollars

of $.%. trade

depended on "B&

for the epeditious

and auratehandling of goods.

%tarting from a

history of onflit

)etween the trade

and "ustoms# the

trade"B&

relationship in 2004

had evolved into a

partnership

where)y ompliant

traders were given anum)er of

operational and

)usiness

onessions that

were designed to

ease the )urden of

ustoms’ ativities

on their operations.

hese improved

proesses were a

new part of A",’sfuntionality.

As a result of theterrorism stries of %eptem)er 66#2006# A", had )eome a entral part of the $.%.government’sseurity efforts.

Antiipating#traing#monitoring andinspetingshipments into the

$.%. all dependedon a relia)leomputer systemwith a omplearhitetureena)linginteronnetionswith legay andnew data)ases# andlegay and newappliations

systems. A", had7uily )eome# asa result of


5/26

suh as those of the

>ood and Drug

Administration# the

Department of

Agriulture# the

%tate Departmentand others.

o ahieve itsintent and taeadvantage of urrent tehnology#the A", pro-etinvolved ma-or tehnialinnovations

ompared to itslegay systems.>or eample# thevarious onlinestaeholders woulduse a we))ased platform and portalaess. he )asitehnialarhiteture of thesystem and

interfaes with eystaeholder groupsis shown in ,hi)it2. ,hi)it 3 showsthe arhiteture interms of tehnialfeatures. *neunusual feature of A", ompared tomost governmentsystems was the

inorporation of some modules of a paaged,nterprise/esoure &lanning',/&( system#namely %Awhih had )eenhosen fromseveral 7ualifiedvendors.

he tehnialdevelopment andimplementation of A", was shared )y "B& with a

onsortium of some 40 vendorsled )y B1 andnown as the 8e"ustoms&artnership9 'e"&(.t was reogni+edas essential thatthese developerswor losely with"B&’s own

tehnial staff in planning andeeuting thetransition from thelegayinfrastruture andappliations toA",.

n 2004# A",system

development wasorgani+ationally aey part of the1oderni+ation*ffie within the*ffie of nformation andehnology in"B&. "B& was a priniple agenywithin theDepartment of ?omeland%eurity. '%ee,hi)it 4 for theD?% struture#,hi)it 5 for the"B& struture# and,hi)it @ for the* and1oderni+ationstruture.( naddition to Doug


6/26

Browning# the leadoordinator for A",1oderni+ation# ey players were

oody ?all#former Assistant"ommissioner#*ffie of nformationehnology"harlie Armstrong#Assistant"ommissioner#* %haron 1a+ur of A",

1oderni+ation*ffie# who was

the pro-etmanager for A",and arry/osen+weig# whohad partiular

responsi)ility for liaison )etween"B& field users#trade staeholders#and thedevelopmentteams. Browningand others stressedthat suess of theA", pro-et woulddepend not only on

tehnialdevelopment and

-/ 0 Gibson, #eiss 1 %ee"an

Page -

CIS# Wor'ing Paper 2o. 333

tehnial transition

from the legaysystem# )ut also on

the understanding#

support andwillingness tohange proesses

and proedures onthe part of "B&

field personnel andother staeholders.

he timeline of

A", releases is

shown in ,hi)it C#

and onsisted of the following

ompleted and

planned as of

April# 2004:

#elease 4#

aomplished in

2000# si months

after ontrating

with the vendor

onsortium#

essentially )uilt the

fundamental

tehnology

platform andarhiteture for

A", and the portal

tehnology# in

preparation for

/elease 2.

#elease -# 6!

months after ontrating with

vendors# opened

the portal for usefor aount purposes#

providing a test of aess to all users

via the we)# partiularly for

importingompanies to

eventually see their

aount


7/26

transations with

"B&.

#elease 5,

sheduled for une

2004# wouldtransform )illingand payments froma shipment)yshipment or daily )asis to a monthly )asis via the portal.n addition#/elease 3 wouldena)le importers tomae duty

payments#urrently paid on a port )yport )asison a national )asis#for all duties duefrom all ports. Animportant featureof A", would )emanifested for thefirst time: the useof %A& modules# in

this instane partiularly thefinane modules.

#elease /, wassheduled for Eovem)er andDeem)er of 2004#and would )ring to"B& offiers for the first timeeletroni aess tomanifests for truing rossingfrom "anada and1eio# the $%’snum)er one andnum)er 3 worldtrading partners."B& offierswould have a portal thatonsolidated all

enforement andommerialinformation versushaving to aessmultiple stovepipe

systems. *)serversnoted this would )e the )iggest and potentially mostvulnera)le releaseof A", in its longhistory.

Despite the

importane and

sensitivity of these

releases# theyaounted for only

30 to 40F of


8/26

the total

funtionality of

A",. "omplete

implementation

was planned for

200!.

As of Deem)er 2003# theoutsouring osts )y the e"ustoms&artnership wererunning 4@million over )udget#representing under

60F of the firmoutsouringommitments tothe e"ustoms&artnership of vendors# and the pro-et was simonths )ehindshedule. *n1arh 23rd# "B&o)tained approval

for its re7uest for funding to over the overrun.

&ro-et 1anager

%haron 1a+ur reported in 1arh

2004 that# ingeneral# feed)a

from the field andother staeholders

had )een very positive with

respet to plansand testing of

preliminary andlimited versions of

the system.

A LONG TIME IN

COMING: THE

EVOLUTION

OF CONTEXT AND

COMPLEXITY

As Doug Browning

ontemplated the

foal issues that

would affet thesuess or failure

of A",# he )elieved issues and

pro)lems wererooted in the long

history andinrease in

ompleity of the pro-et# and that

understanding this

evolution wasimportant.

%ine its reationas the fifth at of "ongress in 6C!


9/26

automation )eginning in the6


Page 5


TRADE

R ELATIONS: FROM

“GOTCHA” TO

COOPERATION

he ustoms )ottlene had

serious impats onthe trade. Delaysand unertaintyaround timing thedelivery of imported parts# for eample# threw off ompanies’ a)ilityto mae )reathroughimprovements in

supply hainmanagement# suhas allowing for 8-ustintime9delivery of partsshipped froma)road.ransation)ytransationfinanial proessing meant

la)orintensive

lerial osts. ostsavings andrevenue in the )illions of dollarswere at stae for ompanies and the

$.%. eonomy. he proess generatedonfrontation#evasion andonflit )etween"ustoms and the private setor#desri)ed )y oneo)server as"ustoms playing8gotha9 vs. the

traders playing8ath us if youan.9

"ustoms staff )egan to

oneptuali+e new proesses. A tone

was set in the early


10/26

strong position#

who said toimporters that they

and "ustoms must8automate or

perish.9 heseefforts formed the

)asis for A",design:

Instead o

loo'ing at each

i!port as

6things7

independent o the

recipient

we beganto thin' o

targeting

8what toinspect9

and billing

in light o

:entities,; the

co!panies

that werebeneiting.

We

designed a strea!lined

process by

irst loo'ing at

a

co!pany;s

co!pliancehistory in

the sa!e

way acredit card

co!pany

e3a!inescredit

history and

credit

worthiness.We wanted

to use that

to beco!e

!ore selecti"e in

our

targeting and !ore

co!prehen

si"e in our billing.

Instead o

inspecting

based onwhat was

i!ported

we would

includewho was

i!porting it and what

their

co!pliance

record had been.

Instead o

billing or the duties

on each

separatei!port we

would bill

!onthly or


11/26

$ss

ista

nt

Co

!!

issi

one

r

8$c

tin

g9

ith highepetations# in themid 6


12/26

pro=ect

appro"ed

by

Congress

and it got

bloc'ed. SoCo!!issio

ner >on

#aab

orced us to

thin' o

new

approaches

. We turned

to

i!porters

and started to !o"e

away ro!

the

ad"ersarial

relationshi

p with

the!.

0Sa! &an's,

or!er

C&P Manager

"ustoms reali+edthat they and thetraders were in thesame )oat tradeompanies werereeptive toolla)oration. A

threeyear disussion )eganthat resulted in the"ustoms1oderni+ation Atof 6or thetrade it meantadopting8reasona)le are9in their dealingswith "ustoms#inluding doingtheir own audits#reating their ownoffies of ompliane andoffloading wor previously done )y"ustoms staff."ustoms retainedoversight andontrolled the proess withrewards and penalties.

n 6


13/26


Page /


way as a partner to"ustoms# dealingwith issues and pro)lems in a spiritof omplementarity./epresentatives of the %E )egan towor with "ustomson the design of A",# offeringsuggestions andideas and taing )a to their ompanies anunderstanding of what suh asystem# should itever )e approvedand implemented#would mean interms of their own proesses and

tehnialinterfaes. herelationshipresulted in someimmediateimprovements andenhanements tothe design of A",."ustoms managerswho had partiipated in this saw

it as theulmination of anunusual evolutionin the relationshipof a regulatorygovernmental )odywith private )usiness entities.*ne eperienedoutsider saw it as7uite uni7ue and as

a 8)est pratie9 ingovernment. As itturned out#improved systemdesign and planning for implementationwas -ust one of the )enefits of therade %upport Eetwor.

FUNDING

ACHIEVED

%hortly after the"ustoms=%Erelationship wasformed# "ustomsmanagers )egan toengage %Eommittees andindividual

ompanies withinitIlie ;eneral1otorsIwhihwere ritiallydependent on aneffiient tradingsystem# toapproah andlo))y "ongress tosupport A", and"ustoms

moderni+ation.his led to aninitial foundationfundingappropriation in2006 in the amountof 630 million. A program offie wasesta)lished andsystem design was )egun.


14/26

BEGINNINGS OF

OVERSIGHT,

BEYOND IT, AND

IT OUTSOURCING

As %E was partnering with"ustoms to fundA",# the nature of the pro-et washanging. he )adeperiene withsystemsdevelopment andsystems failureselsewhere in thefederal governmentled to the "linger"ohen At in 6


15/26

not

understand

the scopeand

!agnitude

o this pro=ect. It

too' a

whilebeore we

reali)ed

:this is

really big.; It was not

=ust

technical, it

wasbusiness

reprocessin g. $s

technicians

, there was

inti!idation because

there was a

huge sta'eholder

group, the

trader, whounderstood

so!e o the

newer technologie

s. We did

not want a

repeat o what too'

place with

$CS @thelegacy

syste!A

where the sta'eholder

s in the

trade were

screa!ing at us.

We needed

to

co!pletely

change our

orientation

and co!e

up with

so!ething

that !adebusiness

sense, or as

we put it,

:$ whole

new way o

getting the

trade

in"ol"ed

and getting

trading

done.;

Then we

had the

G$B

people

saying

about us,

:The ol's

in Custo!s

do not ha"e

thebandwidth

to get this

done

internally.;

Bur IT

!anage!e

nt went

through a

lot o soul

searching

0

Ch

arli

e

$r

!st

ron

g,

$ss


16/26

ista

nt

Co

!!

issi

one

r

8$c

ting

9

>rom a tehnial

standpoint#"ustoms designers

of A", o)servedhow the e) too

off in general inthe early


17/26

hese inludedB1# oheed1artin# "omputer %ienes"orporation# ,D%

and many others./eogni+ing theurgeny of gettingthe pro-etunderway# a few of the leading potential primeontrators gottogether andwored with"ustoms to form a

large vendor onsortium. heresulting e"ustoms&artnership 'e"&(was headed )yB1 and governed )y B1 and four other ontrators.he time fromletting the />& toaward of theontrat was four months# anunpreedentedshort period."ustoms reeivedan award from thenterageny/esoure1anagement"onferene# anassoiation of governmentageniesinterating aroundontratmanagementissues# for theeffetiveness andepeditious natureof the ontrat proess.

R EVERBERATIONS

OF 9/11

he sope andimportane of A",hanged

signifiantly as aresult of the falloutfrom


18/26

priority for development

andimplementation. n

partiular# it wasre7uired that any

trans)order shipment had to

have its manifestinformation

su)mitted

eletronially prior to arrival in or

departure from the

$.%. his put A",in a entral role at

the heart of a ey

part of $.%.national seurity.

"olla)orationaross agenieswithin and outsideof D?% for purposes of improved seurityheing )eamethe highest priority.

A 8Eationalargeting "enter9was announed for this purpose.nformation anddata from verydifferent souresinluding other ageniesI suh asthe "entralntelligene

Ageny '"A(# the>ederal Bureau of nvestigation '>B(and the $.%. %tateDepartmentI would have to )eavaila)le andfatored into theanalysis of partiipants in thesupply hain of

imports.


19/26

he net effet of

these hanges didnot inrease the

si+e of A", per se#

)ut shifted priorities andalled for etensive

reorgani+ation#resheduling and

more oordinationof wor aross

agenies. Get manysaw the added

urgeny as a plusto the pro-et:

I don;t see

the security

e!phasis

as a

proble! or

us as

contractors

in the long

run.

Security as

a priority

will bring

us together

better with

our C&P

partners on

the pro=ect

and with

all the

other

agencies;

sta

in"ol"ed. It

will still be

diicult, as

each

agency is

still

charged

with doing

its own

thing as

well as now

charged

with

sharing

and

collaborati

ng. Thosetwo

directi"es

can be "ery

hard to

reconcile.

0

&

r

i

an

E

e

l

!

e

y

,

P

r

o

g

r

a

!

3

e

c

u

t

i

"

e

,


20/26

I

&

M

Despite the potential value of onneting A", toother systems# )yApril of 2004 theDepartment of ?omeland %eurity'D?%( had notsettled on thedevelopment of the Eational argeting

"enter data)ase#nor where it would )e housedorgani+ationally#nor if there would

)e a entral or peripheral role for A",. A",managers new if new parameters for an overall D?%arhiteture wereto emerge thereould )e addedosts and delays inA",.


Page H


COMPLEXITY

BEGETS

GOVERNANCE

BEGETS

COMPLEXITY

hese events#

deisions andunertainties hadimportant effetson the A", pro-etas it was in 2004.he formation of the rade %upport Eetwor had lear )enefiial results interms of olla)oration with

that group of eystaeholders#inluding not onlysystems design and potentially moreeffetiveimplementation )ut7uite diretly inahieving"ongressionalfunding. he

olla)oration

among vendors inthe e"ustoms&artnershiprepresented asignifiantimprovement in

time needed to lineup outsourers.he federalgovernment’songressionalstimulus in theform of the1oderni+ation Atand the "linger"ohen At reateda )asis for valua)le

oversight on the part of ;A* andfor thining more )roadly a)out A",as a )usiness proess hange program rather than stritly an systems upgrade.

At the same time#the several roles of


21/26

"E andgovernmentstaeholders andoverseers# theoutsouring

dependene# theritiality of A",in nationalseurity# and theneed for ontinuedfunding -ustifiationre7uired morerigorous andrelia)le programand pro-et

management. naddition totightening its own praties in theseareas# * and the1oderni+ation*ffie of "B&engaged 1itre"orporation to provide tehnialguidane# oversightand independentvalidation of thedevelopment wor.&rogrammanagement itself was enhaned )yan engagementwith the firm of /o))insJioia# partiularly inhelping to ontrolre7uirementshanges# dealingwith vendors# and )udget and timeontrols. A strongindiation of thesuess of theseefforts ame withthe ahievement in6ederal;overnmentageny soreogni+ed.

hen he )eameDeputy

"ommissioner of "B& in 2002#

Doug Browning

too ationsintended to further engage "ustoms’

leadership in A",and to reinfore the

pro-et as one

aimed at )usinesshange and not -ust

replaement. n

2004 he refletedon what he found

on taing on hissenior position:


22/26

When I

loo'ed

closely I

thought we

in

!anage!ent were

saying the

right things

about the

i!portance

o $C and

the need to

change the

way we do

our wor',

but it still loo'ed too

!uch li'e

an IT

pro=ect. I

wanted to

!a'e it

clear that

the $C

pro=ect was

going to be

the tool that would

dri"e

e"erything

that ta'es

place in

dealing

with the

trade,

including

enorce!en

t and security.

Doug found thatmost of his diretreports# theAssistant"ommissioners#were delegatingtheir role of oversight of A",to their staff

assistants 'see "B&

organi+ation hart#,hi)it 5(. iththe"ommissioner’sfull support Doug

revamped thegovernane proess )ya)olishing whatwere then wor teams uttingaross the "B&organi+ation and putting all "B&governane under the 1oderni+ation

Board 'see ,hi)it@(. All Assistant"ommissioners )eame1oderni+ationBoard mem)ers#and all ten weremade to understandthat the pro-et wasto )e 8strategi9 ineah of their areasof responsi)ility.,ah was madeaounta)le for theresults of their aspets of the pro-et# and suhaounta)ility )eame part of their performanereviews.

A seond ationtaen )y Doug wasthe reation of a8Business,eutive9 position in parallelwith the A",,eutive Diretor on the side#reporting diretlyto him. ?e filledthe position with


23/26

arry /osen+weig#a manager with 36years of "ustomsfield eperiene.he -o) was

reated to insurethat the )usinessre7uirements wereunderstood )y the developers andthat the )usinessusers were awareof the impat of releases on their wor. /o+en+weiginitiated a series of

mehanisms toommuniate# prepare and ensurea hannel of mutual influene

)etween the futureusers of A", andthe designers anddevelopers. ?ereated a team of

8A",Am)assadors#9 605 people from thefield who weretrained in A", andwhat it would do#who then went )a and informedtheir olleagues.arry shuttledregularly )a and

forth# providinginput to thedevelopment people as well asthe users.


Page


Doug also reated

a position entitled8*rgani+ational

"hange

1anagement9 )ut

)y April 2004 it

had not )een filled.

hese deisionsand impats#ranging from thereation of the

rade group tohanges wrought )y


24/26

governanestruture and prinipal oversight )odies in 2004.%haron 1a+ur#

pro-et manager#estimated that shespent on average aday a wee inhearings andreviews# reportingon progress andanswering7uestions fromoversight )odies.

>or 1a+ur andothers in "B& thefunding proesshad )eome more )urdensome anddiffiult than )efore. he 4@million overrun )ythe outsourers hadresulted in are7uest for payment whih"B& had su)mittedin August of 2003through the payments proess.he paymentrepresented outlaysalready made )ythe vendors# andthe delay inreim)ursement had )eome a potentially serious )one of ontention.he re7uest wasfinally granted inlate 1arh 2004. twas estimated thatthe developmentand approval of thefisal year 2004ependiture plan#inluding

oordination of eternal reviewsand oversight7uestions hadoupied some

5#000 manhours#roughly e7uivalentto five peopleworing full timefor si months.

n addition# therewas onern in2004 over issues of olla)oration )etween theoutsoureontrators andsome of thetehnologial staff within * in "B&.,ventual suesswith A",depended ritiallyon an evolutionarytransition from theold system to thenew it was not to )e a 8)ig )ang9utover. hisre7uired highlyeffetive planning#ommuniationsand motivated parties on )othsides. %omeo)servers


25/26

noted that the potential effets of the new platformand the new A",systems on -o)s of

the legaytehniians ould )e anything )ut positive# yet theseeperienedtehniians wereepeted to helptheir privateontrator ounterparts#higher paid

professionals whowould go on to thenet )ig ontrat -o) when A", wasompleted.

>inally# the si+e#ritiality andinteronnetions of A", in the politially harged

governmentenvironment of 2004 meant thatevents lie terroristthreats# funding priority hangesand eonominews# all )eyondA", pro-et and"B& ontrol# ouldat any time have

signifiantnegative effets on pro-et deliveryand on the verysope andfuntionality of the pro-et.

DOUG

BROWNING’S

LEGACY

Doug Browningwanted to do whathe ould toontinue "B&’sommitment and

effort on A",. ?e )elieved the resultsto date had )eensuessful.,videne from thefield for theantiipatedupoming releasesindiated there wasaeptane andsupport and a

desire to mae thesystem wor. ?e )elieved there weregoodommuniations )etween field personnel and thedevelopers.Although thefuture of the staff in "B& wasunertain# Dougthought thatsuess with thefield would set thestage for thosehanges to )esuessful as well.?e new that muhhad to )e done andthat theimplementation of /eleases 3 and 4was ritial to longterm suess. As he put it: 8/elease4Kthat’s hugeK9

Doug )egan to

draft his memo to

prioriti+e issues

and ritial suess

fators for his

suessor.


26/26

!UESTIONS FOR

PREPARATION FOR

CASE

DISCUSSION

1. hat are the

three most

important issues

faing the A",

1oderni+ation

pro-etL

2. hat ationsand approahes

would youreommend toDougBrowning’ssuessorL

3.hat other 7uestions wouldyou as of "B& personnel toimprove your understandingandreommendationsL

-/ 0 Gibson, #eiss 1 %ee"an Page J


3

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ACE Case Study