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by Richard Jacik

There once was, or so the story goes, a software vendor that was demonstrating to prospective clients the tight integration between two systems. The only problem was that the integration was being accomplished not by the systems themselves, but by another employee of the vendor doing dual data-entry behind the curtain.

True or not, the tale carries a common-sense technology lesson. It's difficult or impossible to have a seamless customer-facing environment if your internal systems aren't doing the job.

The difficult dream
In 1998 the Office of Student Financial Assistance (OSFA) set out to fix the un-fixable. The embattled U.S. Department of Education, perennially targeted for elimination by some Republicans, found itself the proud owner of the federal government's first Performance Based Organization (PBO).

PBOs are intended to turn traditional bureaucracies on their heads by modeling private sector mission-orientation and compensation plans for federal civil servants. Procurements are streamlined and annual performance reviews grade the organization's progress toward goals. Focused as they are on improved services for customers, and greater accountability of executives, pay and advancement in PBOs are tied to results.

OSFA's transformation, a massive undertaking, began with a modernization plan that focused on re-engineering key business processes and applying technology to improve services to its customers: students, financial partners, and schools. Teams were formed (see accompanying list) to design and create web portals and other technology initiatives aimed at improving the external face of the office.

Climb every mountain
Like any decent strategic technology plan, however, OSFA's modernization blueprint addressed ongoing shortcomings in back-office administrative systems, in particular financial management. The Department of Education is notorious for what might generously be called financial anomalies. Its financial aid systems remain on the General Accounting Office's High Risk list due to "inadequate financial reporting, bad reconciliation of financial records, and poor control over information," cited by the GAO as recently as January 2001.

That the strategic plan simultaneously would address back-office systems and customer-facing systems is not surprising. Given ED's 11-year stay on the GAO's High Risk List, however, there was anticipation that its financial management systems would get the attention of the finest talent at OSFA, to the possible detriment of niceties like web portals.

That's not what's happening though. OSFA is moving forward aggressively with systems that help customers and partners work with them. But, as the story goes, it is difficult to make customer-facing systems work properly if internal systems are not up to snuff.

Difficult, not impossible
Depending upon an organization's tolerance for internal confusion, it may choose to provide an external appearance of streamlined internal operations. Customers will either be fooled like naive children or they'll figure out the truth - damaging reputations and ruining projections.

Most schools struggle with similar issues. External clients - students, parents, prospects, applicants - are likely to be impressed with portals, eLearning, integrated one-stop online services and other niceties. But investing in back-office applications for financials (student and institutional) and human resources, and putting meaningful data into the hands of campus decision-makers, can provide real competitive advantage for an institution.

Unfortunately, fixing back-office capabilities while bringing on the latest customer-interaction technologies typically results in neither being accomplished with great success. This has little to do with not spending enough money on the problem or having insufficient skills to get the job done. It has a lot to do with lack of focus.

Solution providers attempt to satisfy simultaneous back-and front-facing requirements with applications that streamline and track administrative processes, adding a window (a page, really) for customers. Such retrofits of customer-centric computing onto back-office systems have evolved from useless, to embarrassing, to tolerable.

Like OSFA, institutions that really want compelling customer-facing capabilities do so at the expense of improving their core administrative applications, at least in the short run. In the post-Y2K budget world, most organizations are hard-pressed to do both.

There is another option. By looking at individual customer-initiated processes from the customer-facing systems to the back-office systems that are involved, it is possible to avoid the whole back-office/customer debate. With this approach, the pieces that need it are re-engineered, one at a time, front-office and back.

There's a catch
Of course, ERP vendors don't make it easy to implement one piece of back-office functionality at a time. That's not how their systems were designed or constructed. So they have a similar problem with customer-facing retrofits. Vendors' track records on delivering component-based systems is roughly analogous to OSFA's success in providing fiscal accountability.

Another pitfall of one-at-a-time retrofitting is an uneven user experience. From screen to screen users are delighted with the new processes and disappointed with the older ones that will eventually be fixed - they hope.

Fits and starts
New systems projects are by definition a political, financial and technical struggle. The tendency to try to do too much, too fast, can dilute the attention of senior management and spread critical resources too thin. Given OSFA's broad set of targets such dilution is practically assured. OSFA efforts still get passing grades, but not straight A's. Stanford University's Maria Inciong has been working with financial aid technologies for eleven years. She appreciates the fact that new and better technologies for access, communication, and data transfer are the focus of OSFA's customer-facing systems, but she's wary about the quality of what's going on behind the scenes.

"The whiz-bang technology is certainly compelling, but it shouldn't be a preference over getting the foundation right," Inciong observes. One of Inciong"s examples: access to the National Student Loan Data System is better and easier than ever before with improved interfaces and better usability, but she has doubts about the timeliness, and thus the quality, of the data.

A real improvement
Despite the shortcomings, benefits are being realized. Inciong points out that OSFA's initiatives have a by-product of improved communication and collaboration between OSFA and its customers. "I'm not sure it was intentional, but we work much closer with the Department of Education on timing and proposed rules. That in turn, helps us serve our students better,' says Inciong.

As for the efficacy of the PBO, Inciong hasn't seen dramatic results from the revised organizational mission and reward programs. Indeed, she points out that while changes are coming fast and furious, those with the greatest impact came prior to 1998, or at least were in the planning stages then.

More to come
Roderick Paige, Secretary of Education, has announced the creation of a working panel to create another blueprint, this one for management excellence. In addition to continuing the modernization effort and making other offices within the department of education more accountable, the goals of this panel include getting clean audits from the agency's auditors, as well as getting OSFA removed from the GAOs High Risk List.

If the PBO has bitten off more than it can chew, or has simply bitten it off in the wrong order, then you wouldn't know it from their aggressive plans. With five teams in place, each working on a number of significant initiatives, the laundry list is long. Will something give? Pleasing the customer is important, but pleasing Congress and the GAO may be mandatory.

Richard Jacik is president and co-founder of Information Methodologies, Inc., higher education's leading enterprise web integrator. Contact him at 703.435.0370 or via eMail at

OSFA's Team Initiatives OSFA's modernization blueprint describes five newly created integrated product teams (IPTs). Each team is tasked with modernizing, reengineering, designing, and implementing technology solutions to support OSFA customers and internal processes. The IPTs and their responsibilities are:

Common Origination and Disbursement: Origination and disbursement of federal Pell Grants and Direct Loans, and common reporting standards for campus funds

Direct Loan Service Reengineering: Student aid awareness and outreach, and the student profile database. Sunset of the Central Data System (which has been in use since 1996)

Financial Partners Transformation: Lenders, guaranty agencies, state agencies, secondary markets and services interaction, data exchange, and interfaces

Portals: Web-enablement of key customer processes including student and school access, applications, downloads, and industry links

Financial Management Transformation: Financial management system, best practices for financial organizations. Key customer processes including student and school access, applications, downloads, and industry links

This article originally published by The Greentree Gazette.