How Government Contractors Can Make Technology Transformation Work

Technology is transforming the way government contractors operate, but implementing a new platform, system, or AI tool does not automatically create a better organization.

In FPS Podcast #81, Todd Hatherly sat down with Luis Avila of BDO to discuss what successful transformation looks like in the government contracting environment. Their conversation explored how contractors can modernize operations while continuing to meet the compliance demands of a highly regulated industry.

For Avila, the key is to start with the operating model, not the technology itself. Technology should enable a stronger process, but the processes, controls, and people behind it must be designed with the end goal in mind.

Three Elements of Successful Transformation

Avila outlined three areas organizations should consider when approaching a technology-enabled transformation:

• Governance: How is the transformation managed and measured?
• Process: Are existing workflows being improved before technology is introduced?
• Adoption: Are employees prepared and willing to use the new tools and processes?

These elements can apply whether an organization is implementing a major enterprise system, introducing AI into existing workflows, or improving one specific business process.

Governance: Are You Managing the Project or the Outcome?

One of the first distinctions Avila makes is between project management and program management.

A project manager focuses primarily on execution. Is the project within scope? Is it on budget? Will the system go live on schedule?

A program manager takes a broader view and focuses on whether the transformation actually achieves the business outcome the organization intended.

For government contractors, that means looking beyond whether a new system technically works. Organizations also need to consider whether it supports compliance requirements, holds up under audit, and improves the way the business operates.

Establishing measurable goals before implementation is an important part of that process. If an organization wants a new system to improve efficiency, it first needs to understand its current performance and establish a benchmark.

A goal such as improving efficiency by 20 percent is only useful when the organization defines what efficiency means, identifies the workflows being improved, and determines which metrics will demonstrate progress.

Process Transformation: Don't Make a Bad Process Faster

Technology can accelerate a process, but faster does not necessarily mean better.

Avila described a concept he calls "process gravity." Over time, business processes can accumulate additional steps, workarounds, requirements, and exceptions. Organizational changes, acquisitions, new regulations, and different ways of working can all add complexity until a process looks very different from what was originally intended.

When organizations automate those processes without first examining them, they risk making an inefficient process faster instead of actually improving it.

This becomes especially important as organizations introduce AI and automation. A poorly designed workflow can move errors or compliance problems through the organization more quickly, potentially leaving them undiscovered until an audit.

Instead, contractors should first evaluate the process they are trying to improve. Whether the focus is contracts, accounting, finance, procurement, or another area, organizations should determine whether the existing workflow is efficient and aligned with current requirements.

Once the desired process has been designed, the organization can identify the technology that best supports it.

Adoption: Transformation Is Also About People

Even the best technology will not create lasting change if employees do not use it.

Successful adoption starts with explaining why the organization is making a change. In some cases, transformation may be driven by an audit finding or compliance concern. In others, leadership may proactively identify weaknesses and address them before they become larger problems.

Whatever the reason, employees need to understand how the change will affect their day-to-day work and how it can make their jobs easier.

Technology can reduce the time employees spend on repetitive and transactional activities, creating more time for higher-value work. That could mean more time collaborating with suppliers, communicating with vendors, improving sourcing strategies, or addressing other areas that require human judgment.

Organizations also need to make new technology easy to use. Instead of relying only on lengthy manuals, Avila recommended practical resources such as one-page guides, cheat sheets, and job aids that help employees complete the tasks they perform most often.

Reducing that friction can help organizations avoid investing in a new system only to see employees return to spreadsheets and familiar legacy processes months later.

Don't Overlook the Technology You Already Have

As AI receives more attention across the government contracting community, organizations may feel pressure to find the newest standalone AI solution.

But the right tool may already exist within the organization's current technology environment.

Many ERP providers and business applications serving government contractors are already introducing AI capabilities into their platforms. Before beginning another major implementation, organizations should understand what their existing systems can already do.

In some cases, the challenge may be adoption rather than implementation.

Transformation Doesn't Have to Happen All at Once

Modernization can sound like an enterprise-wide undertaking, but organizations do not have to transform everything at the same time.

Contractors can begin with a focused use case or specific pain point. Contract lifecycle management, source-to-pay processes, and workforce management are examples of areas where an organization can redesign a process and use technology to support that improvement.

The goal is to create measurable progress and build momentum rather than allowing the size of a larger transformation effort to prevent the organization from getting started.

Transformation in a Highly Regulated Environment

Government contractors also have an additional consideration: compliance.

Changes to systems and processes must account for requirements involving the FAR, DFARS, Cost Accounting Standards, CMMC, cybersecurity, and other government contracting obligations.

That makes both industry knowledge and technology expertise important when developing a transformation strategy. The right solution is not simply the newest technology or the fastest process. It is a process that improves the business while continuing to support the organization's regulatory and contractual responsibilities.

Successful transformation begins by identifying what the organization is trying to improve. From there, contractors can establish measurable goals, examine the processes behind the problem, select technology that supports the desired outcome, and give employees the tools they need to adopt a new way of working.

Technology may be the enabler, but governance, process, and people are what turn that technology into meaningful change.