Microsoft focus on compliance and agility for Government Contractors – Part 2 of 3

This is part two of a three part series that began with a discussion of our impetus for change and continues here with a view on where we are today.

What we’ve done so far

In software development and product management, evolution begins with fit/gap analyses and requirements-oriented build, buy or partner decisions. In the compliance-first world of government contracting, where the range of customer profiles varies dramatically, we start by addressing regulatory gaps first (the “Compliance” vector), then consider fit by industry and anticipate diverse business-mixes and fluid variations at the individual customer level (the “Agility” vector).

What does it mean to be compliant?

To document and explain government contractor requirements we engaged domain experts at the accounting firm McGladrey. An output of that engagement is a whitepaper authored by McGladrey and published by Microsoft. This two-part white paper (available for download from our government contractor website) offers information that we believe will be constructive in shaping ongoing dialog and innovation in this market:

  • Part 1:  Government contractor’s guide to regulatory compliance and requirements for an Enterprise Resource Planning solution
  • Part 2:  Baseline gap-fit assessment of Microsoft Dynamics AX as an ERP for government contracting

We are publishing this document in an effort to convey our commitment to understand the needs of government contractors and be transparent about the range of compliance capabilities required.

Timekeeping and Expense Reporting

During the gap analysis, we identified an opportunity to deliver immediate value for our government contractor customers. Timekeeping and expense reporting is a common denominator requirement for services and manufacturing organizations in both public and private sector operations.

Since Microsoft Dynamics AX already offered robust capabilities in this area, support for government contractor requirements could be delivered quickly. This resulted in the inclusion of timesheet audit trails, absence reporting enhancements and a number of other features that are now part of the Microsoft Dynamics AX 2012 R3 release.

What’s important about this investment is that it aligns with our philosophy of delivering capabilities that make people more productive in their everyday tasks, often starting with functions that have large numbers of users and therefore stand to deliver strong aggregate benefits for our customers.

Indirect Cost Pools, Allocations and Other Functions across Industries

Many compliance requirements derive from indirect cost pools and allocations of indirect costs. However, application of regulatory requirements varies in operational practice because materials-based product manufacturing and hours-based consulting, or hybrid materials-and-hours construction services are different types of businesses with their own commonly accepted policies, practices, processes and procedures.

There are common denominator cross- or multi-industry requirements that Microsoft can address, and there are more niche requirements that are best addressed by domain specialists. By design, Microsoft Dynamics AX provides a layered solution architecture wherein Microsoft delivers core or foundational industry capabilities that address a majority of customer needs. This makes it easier for our partners to extend the design to accommodate specialized requirements and solutions. This is the strategic design principle of Dynamics AX that goes to the heart of our Compliance AND Agility value proposition.

As a result, we are taking a partner-led approach to delivery of multiple flavors of support for government contractor compliance. To offer customers the right solutions, we identified independent software vendors (ISVs) with respective domain expertise in pure hours-based professional services (e.g., Management Consulting and IT Services), hours-and-materials oriented structural design, build and maintenance services (the architecture / engineering / construction or AEC value-chain), and high-tech or discrete manufacturing.

These partners have spent time building out key capabilities required to support cost plus project accounting and other fundamental government contracting requirements. With this portfolio of partners, each with different business area specializations but all with core government contracting capabilities, we are confident that customers will have access to a “better fit” solution – that’s an important step in achieving both Compliance and Agility.

As our partners have been building out their respective solutions, we have been collaborating with and listening closely to their feedback on design approaches taken, challenges encountered and resolutions achieved. This partner-led approach gives Microsoft the insight we need to identify the most effective ways to address common denominator requirements.

To learn about where we are going, please read the next blog in this this series.

Link:  Microsoft focus on compliance and agility for Government Contractors – Part 3 of 3 (publishing on June 18th, 2014)

To learn more, visit us at Microsoft GovCon Alliance.