NATO Takes Command
Oracle E-Business Suite Provides Global Accountability for the World’s Foremost Military Alliance.
by David Baum, November 2008
In the wake of the Second World War, the North Atlantic Treaty established an alliance of 26 countries from North America and Europe known as the North Atlantic Treaty Organization (NATO). It was a historic moment that has influenced the freedom, security, and values of the world for half a century. While NATO’s political and military activities often make headlines on the world stage, few people have an inkling of the operational complexity underlying this vast, global operation. The Brussels, Belgium-based international organization employs tens of thousands of people in 26 countries.
The difficulties inherent in running such a sprawling and diverse organization have increased in recent years, partly as a result of new regulatory strictures such as the International Public Sector Accounting Standards (IPSAS), which NATO must implement for all property, plants, and equipment by 2010. IPSAS is governed by an independent standards body that seeks to serve the public interest by developing high-quality accounting standards for use by public sector entities around the world in the preparation of general-purpose financial statements. The objective of this standards body is to enhance the quality and transparency of public sector financial reporting and strengthen public confidence in public sector financial management.
NATO is confronting these challenges with a centralized financial system based on Oracle E-Business Suite 11i.
Surveying the IT Landscape
NATO uses Oracle E-Business Suite software to manage a wide range of operations, including budgeting, travel, treasury, disbursement, procurement, and supply functions. NATO is also in the process of deploying Oracle Discoverer, Oracle Business Intelligence, and Oracle Business Intelligence Applications to improve reporting and analytic functions.
In 2001 NATO launched the NATO Automated Financial System (NAFS), a decentralized set of financial applications maintained by NATO’s Allied Command Operations (ACO). Following a three-year rollout, NATO deployed the financial system to about 1,200 active users at 24 sites.
NAFS is built around several modules in Oracle E-Business Suite including Oracle General Ledger, Oracle Payables, Oracle Receivables, Oracle Purchasing, and Oracle Cash Management. About 5,000 users depend on the travel management components of the system.
NAFS quickly brought new efficiencies to many of NATO’s core operational processes, including budgeting, travel, treasury, disbursement, procurement, and supply functions. Over time, however, driven by the need for centralized financial processes and the challenge of meeting the requirements of the IPSAS guidelines, NATO required additional functionality.
“Obtaining a consolidated view of operational and financial positions has long been a manual, time-consuming, and resource-intensive process,” admits Philip Declerck, a project manager in the NATO Communication and Information Systems (CIS) Services Agency (NCSA). “Our organization must deliver information more quickly than ever, along with visibility back to source data and complete audit trails.”
NATO’s financial controllers are aware of the benefits of centralized accounting practices, such as the ability to meet fiduciary and statutory requirements more efficiently and more comprehensively manage risk across the extended enterprise. “Our main motivation for updating NAFS to a centralized system was the creation of NCSA as a single agency with a decentralized structure, but with one financial controller and a central accounting department responsible for all decentralized sites of NCSA,” explains Lieutenant General Ulrich H. M. Wolf, NCSA director.
According to Wolf, NATO’s technical goals for the new centralized financial system were to support the IPSAS accounting standard, improve information sharing, and provide a consolidated reporting base for creating financial statements. If all went as planned, Centralized NAFS (CNAFS) would provide one standardized platform that reduced total cost of ownership and offered new financial capabilities throughout NATO.
“Our principal task is to install, operate, maintain, and support the communication and information systems of the affiliated headquarters during peacetime and crisis,” Wolf says. “A centralized approach not only enables new functional opportunities based on improved information sharing and consolidated information but also reduces administration and support costs,” he adds. “Consolidating several systems reduces overall costs while enabling the alliance to create better financial forecasts.”