How private-sector experience is helping to transform government

A vision of innovation, process improvement and financial excellence is transforming a mission-driven organization and those it serves.

In brief

• Technology and dashboard visualization capabilities are essential tools for streamlining operations and modernizing government.
• Digital transformation will enable agencies to improve their business processes and controls, particularly within the finance function.
• There has never been a better opportunity to nurture a career on the financial side of government.

This article is based on an interview with Irv Dennis, who is the Chief Financial Officer (CFO) for the U.S. Department of Housing and Urban Development (HUD) and oversees 7,500 employees across the country. As an EY partner for 37 years, he served some of the firm’s largest global clients before his retirement.

In January 2018, he became CFO for HUD and was vetted through the full Senate approval process. In the last two years, he has made a meaningful contribution by bringing his private-company experience to the public sector to improve financial infrastructure and reporting.

Under his guidance, the private sector is playing an important leadership role in improving financial practices at HUD. By focusing on material weaknesses, including governance, people, processes and technology, the agency has evolved into one that better serves its constituency and is setting the standard for excellence in financial infrastructure.

Imagine transforming an organization whose mission was never questioned, but whose performance has faced challenges from an operations, administrative and financial perspective. Success has come from asking hard questions, focusing on a vision and driving initiatives to reach that vision.

Modernizing and establishing credibility

In 2018, HUD was a decentralized organization, directly overseeing Community Planning and Development, Fair Housing and Equal Opportunity, Public and Indian Housing, and the Government National Mortgage Association. All of these significant programs operated in silos.

There were inadequate processes and controls, multiple reporting structures, noncompliance issues, and disjointed IT and financial systems that were in a state of disrepair. These material weaknesses and deficiencies did not paint a good picture of health. Systems were antiquated (still some on COBALT), many processes were manual, and technology was not being used effectively. Relationships with stakeholders were poor – within HUD, as well as other agencies. Surveys revealed low employee morale and unsatisfactory customer service.

The government was relying on private-sector experience to turn HUD around, fix what was broken, and launch the agency on a path to modernization and financial improvement.

A transition strategy from private to public

The first step in Irv Dennis’s CFO role was to establish the Agency-Wide Integrity Task Force – a steering committee within HUD with leaders representing each of the operating programs. A detailed transformation plan identified eight key areas where we could make a meaningful difference: corporate governance, financial transformation, IT modernization, enterprise financial risk management, robotics, shared services, stakeholder buy-in and leadership.

In 2019, all but one of the material weaknesses had decreased, and clean financial statements were released for the first time in seven years. “By breaking down silos and collaborating in a team effort, we were able to understand that financial improvement was better for all of us,” said Dennis.

Focusing on improvement and greater efficiency

The people side of HUD was phenomenal – with lots of mission-driven, talented individuals. However, they needed the right tools, training and mentoring to excel in their jobs. As we began the finance transformation, it was important for them to understand what we were trying to accomplish and to keep the communication channels open with other programs and agencies. When the process first started, employee satisfaction scores were in the bottom quadrant of government. Now they are at the top, and employee morale has significantly improved.

Modernizing systems was a major initiative, including better utilization of our current technology, web-based tools, and the use of intelligent automation to eliminate redundancies and manual processes. Ultimately, these would enable better customer interface and improve efficiency. We converted many of our paper-based operations to robotics, creating an environment where people are no longer moving numbers. Instead, they have become data analyzers, which is incredibly powerful and energizing for the workforce.

One of the areas we were most excited about was the data analytics piece. HUD had lots of data, but was not using it to help drive decisions. Under our finance plan, data was centralized into one warehouse, with IT using an operational spending dashboard and business intelligence technology to create an innovative solution. Pushing a few buttons now provides detailed spending analyses, including what has been appropriated vs. spent by congressional district on various programs.

This is particularly relevant in monitoring Coronavirus Aid, Relief, and Economic Security (CARES) Act funding, which accounted for about 25% of finance’s budget. The CARES Act is complicated, with grantee processes and controls that come with a strong sense of compliance. The use of an operational spending dashboard and the accompanying analytics to improve financial infrastructure is now something that other agencies are looking to replicate.

Shared-service capabilities were another prime area of focus. By recognizing where we were duplicating efforts, we were able to move the ledger transaction process and the reconciliation and review functions to an Accounting Resource Center within the U.S. Treasury, thus benefiting from the value of a shared-service concept.

All of the activities in our plan could not have been implemented without stakeholder buy-in and effective private-sector leadership. “Getting people to think differently is not always easy – particularly with the culture at HUD,” said Dennis. Individuals will make any program sustainable through changes in administration. “We were fortunate that they realized the importance of our vision and were willing to make it happen,” he added.

Where are we now

Tremendous progress has been made in improving HUD’s credibility and financial status over the past three years. The agency has regained its reputation for delivering a budget and accurate financial information on time. It has fostered relationships with other agencies and government entities, with many looking to HUD for leadership for the first time.

Through partnerships with the Office of American Innovation and the General Services Administration’s Center of Excellence, we initiated a digital transformation process to focus on modernizing IT within the government. One huge aspect was the data analytics, call centers, cloud adoption and user web-based tools that enabled us to interact with customers and enhance the customer experience.