Tag Archives: strategy

FDA: “Much work remains” to modernise its IT systems, says US oversight team

By David Bicknell

Sometimes you have to applaud how seriously the US government takes accountability in its departments over their approach to IT projects.

One of the latest by the Government Accountability Office (GAO) is on the IT management at the Food and Drug Administration (FDA).

In a title, ‘Why the GAO did this study’, it points out that the FDA, an agency within the Department of Health and Human Services (HHS), relies heavily on IT to carry out its mission of ensuring the safety and effectiveness of regulated consumer products. Specifically, it says, IT systems are critical to the FDA’s product review, adverse event reporting, and compliance activities.

Recognising the limitations in its IT capabilities, the FDA has undertaken several initiatives to modernise its systems, with the GAO now being asked to assess the FDA’s current portfolio of IT systems, including the number of systems in use and under development, and their purpose and costs; assess the status and effectiveness of the FDA’s efforts to modernise the mission-critical systems that support its regulatory programs; and examine the agency’s progress in effectively integrating and sharing data among key systems.

In its report, the GAO argues that while the FDA has taken several important steps toward modernising its IT environment, much remains to be done.

According to the GAO, the FDA reported spending about $400 million for IT investments in the last  financial year (2011). But, it says, the agency currently lacks a comprehensive IT inventory that identifies and provides key information about the systems it uses and is developing.

It points that both Office of Management and Budget (OMB) and the GAO’s own guidance calls for federal agencies to maintain such an inventory in order to monitor and manage their IT investments. The inventory should include information on each system, such as costs, functionality or purpose, and status. However, the GAO says, the FDA does not have such a comprehensive list of its systems, although budget documents included information on 44 IT investments for fiscal year 2011. 

Until the agency has a complete and comprehensive inventory, the GAO says, it will lack critical information needed to effectively assess its IT portfolio.

GAO goes on to point out that “much work remains on the FDA’s largest and costliest system modernisation effort, the Mission Accomplishments and Regulatory Compliance Services program.” The program is estimated to cost about $280 million and is intended to enhance existing applications and develop new systems that provide information for inspections, compliance activities, and laboratory operations.

However, the GAO argues, much of the planned functionality has not been delivered and its completion is uncertain. Moreover, the program lacks an integrated master schedule identifying all the work activities that need to be performed and their interdependencies.

The FDA’s CIO stated that the agency is now reevaluating the scope of the initiative. As a result, it is uncertain when or if FDA will meet its goals of replacing key legacy systems and providing modernised functionality to support its mission.

In addition, FDA has not yet fully implemented key IT management capabilities essential for successful modernisation, previously recommended by GAO. These include developing an actionable IT strategic plan, developing an enterprise architecture to guide its modernisation effort, and assessing its IT staffing needs.

One of the problems for the FDA has been changes in its management structure, which has meant that since 2008, the agency has had five different CIOs, hampering its ability to plan and effectively implement a long-range IT strategy.

The GAO recommended that the FDA should develop both a comprehensive inventory of its IT systems and an integrated master schedule for a major modernisation effort, and assess its  information needs to identify opportunities for greater sharing.

GAO Report

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Why corporate sustainability strategy is now part of the CFO’s role

By David Bicknell

The organisational politics around sustainability are an ongoing issue. So far the need for a  sustainability strategy has touched those responsible for corporate social responsibility (CSR),  marketing (because of the brand and reputation implications of Carbon Reduction Commitment (CRC) league tables) and IT and Facilities who are having to manage and measure energy usage.

Now, an Ernst & Young report recommends, it is the CFO’s turn to pick up the baton.  As this piece suggests, sustainability trends are shifting the role of the CFO in three key areas:

  • Investor relations:  “Shareholders are speaking much louder and much more stridently than they did just a few years ago.  During the 2011 proxy season, 40 percent of shareholder resolutions were related to ESG issues. And over a quarter of ESG-related resolutions gained a 30 percent “Yes” vote, which Ernst & Young describes as a critical threshold (other observers say anywhere from a 10 to 20 percent vote can motivate companies to rethink their policies).  Mutual fund companies are paying more attention to sustainability related issues, and the rating companies (which have received, ahem, a fair bit of scrutiny lately) are directing more focus towards ESG matters as well.  All this leads to a shift in the duties of companies’ investors relations staffs; and CFOs, according to Ernst & Young, will lend more than a few hands with the demands placed on IR departments.
  • External reporting:  More than 3000 multinationals issue sustainability (or CSR or ESG) reports, and many of these companies now provide more than static or trite glossy PDFs.  Companies including UPS, Timberland, and Microsoft are raising the bar in offering frankness while encouraging increased stakeholder engagement.  To that end, more companies are having their sustainability reporting audited by third parties (such as the Carbon Disclosure Project for carbon emissions performance).  And that experience with third party performance falls into the CFO’s lap because they know how to balance the challenges and opportunities that arise from third-party verification.
  • Operational controllership and financial risk management:  Early last year, the Securities and Exchange Commission issued guidelines to companies on how to disclose risks possibly related to climate change.  Carbon data, and more frequently, water data, is becoming financial data because of these resources increasing price.  What was once tangential to the costs of running businesses has and will be central to the financial risks that come when running a company.  Whether evaluating the costs of large capital projects or ascertaining the reliability of sustainability data, CFOs and the departments they head will be careful when ensuring that all this data is accurate.”

Admittedly, currently this is probably a more US-focused development. But then it’s probably only a matter of time before CFOs here have to start considering the sustainability implications of their job, if they are not doing so already.

Here are five immediate actions CFOs can take to enhance corporate value through sustainability:

• Actively pursue a sustainability and reporting program.
• Ensure that those responsible for sustainability matters do not operate in isolation from the rest of the enterprise — especially the finance function.
• Enhance dialogue with shareholders and improve disclosure in key areas, particularly those related to social and environmental issues.
• Ensure that directors’ skills are relevant to the chief areas of stakeholder concern, including risk management tied to social and environmental matters.
• Consider using nontraditional performance metrics, including those related to environmental/sustainability issues.

Ernst & Young report: How Sustainability has Expanded the CFO’s Role