Briefing by Arivia.Com Board of Directors on the Status of Arivia.Com

Meeting report

PUBLIC ENTERPRISE PORTFOLIO COMMITTEE
25 September 2002
BRIEFING BY ARIVIA.COM BOARD OF DIRECTORS ON THE STATUS OF ARIVIA.COM

Chairperson: Mr Ben Dikobe Martins (ANC)

Documents handed out:
Arivia.com overview PowerPoint presentation
www.arivia.com
Document awaited and will be available here shortly.
Arivia.com annual report

SUMMARY
The Board of Arivia.com briefed the Committee on the status of Arivia.com. The enterprise aspired to be a major player in Africa and the global market when it came to the provision of ICT services. The Board explained how Arivia.com sought to translate vision into activities, and interpreting ICT solutions that work. They briefed the Committee on the budget of Arivia.com for the following financial year and the milestones reached as well as the issues that need to be addressed to consolidate these milestones.

MINUTES
Mr Zeth Malele of the board of directors of Arivia.com explained that Eskom, Transnet and Denel are all separate state entities, and that Arivia.com had been born from these initiatives. Arivia.com has a vision to be a major player and to be the dominant ICT Company, both in the African market, as well as in the global market. He stated that Arivia.com is an initiative to make the continent work, following the innovation started by the South African president. He stated that Arivia.com did not want to be beaten by anybody else. He said that they were the only ones who offered solutions that work.

Mr Malele also said that it was important for the future of the organisation to translate these visions into activities. Arivia.com would do the best it possibly could for the benefit of the shareholders, and to improve the stakeholders relationship with Arivia.com.

He stated that shares in Arivia.com are held directly by Eskom, Denel and Transnet, which means they are ultimately held by government. Mr Malele said that in business, Arivia.com's main focus would be on the big spenders - the top entities - which would include the South African and other governments. Arivia.com came to life last year, and has been in existence since fifteen months prior to this meeting. Arivia.com, although a home based company, does not want its potential to be restricted, and wants to move to a place where it can play in the backyards of the multi-national corporations.

Niche solutions
Mr Malele described what Arivia.com meant by niche solutions. They were those solutions which required specialised skills, most of which are inherited from the dark ages of South Africa during sanctions, which are now benefiting the IT industry. The idea is to focus on specialised niche markets.

Mr Malele stated that Arivia.com wants to grow other solution areas, but has focused mostly on infrastructure because of the greater demand in this area. Infrastructure solutions are thus Arivia.com's lifeline at the moment. Mr Malele focused on risk management within the areas of expertise within infrastructure solutions. This is due to the effects of September 11, where Arivia.com is making sure that they provide the capacity for support services in case of a similar event happening in our country, or in Africa. Regional infrastructure being provided by Arivia.com changes from province to province, depending on ICT needs.

Mr Malele said that many skilled professionals have come from Eskom, Transnet and Danel. He stated though that Arivia.com are also gathering skills from the private sector, to the point of gaining from competitor companies. It was very important to look ahead to what may be possible, in view of businesses and government operating and co-operating more efficiently and more cost beneficially for both parties.

Moving back to the niche markets, Mr Malele stated that these allow Arivia.com to engage in specialised areas for example, to solve security problems around biometrics. He mentioned national ID systems, passport control systems, drivers licence systems, and national traffic management systems. Arivia.com wanted to make these opportunities accessible to the whole of SADC too. Arivia.com had already deployed biometrics to fourteen other countries. The health infomatics had been provided to most hospitals in the Northern province. Arivia.com is looking into provisions for other provinces. Concerning geographic ICT systems, interpretation of information could occur by looking at maps for information and management strategies. He also mentioned the rentals of computer equipment by Spartan computer rentals.

The budget of Arivia.com
Moving onto the budget of Arivia.com, Mr Malele stated that the good budgeting shown in the overview was testimony to the fact that the entire Arivia.com staff put very hard labour into the company. It is a very difficult time to be working as an IT company, but the fact that figures show progress, means that Arivia.com has done well for its first fifteen months. He said that it was good to produce such results, as it puts Arivia.com on top with the major global IT players. Mr Malele stated that Arivia.com falls within the top four companies in providing IT solutions to the world. The effort put into labour has been part of a broader restructuring programme, which has been one of Arivia.com's most important commitments. Due to the uncertainty many have in IT at this difficult time, it made Arivia.com realise that a great level of commitment is necessary along with delivery on promises to curb uncertainty.

Key initiatives
One of Arivia.com's key initiatives was its responsibility to win new businesses. He stated that Cypa consulting has given Arivia.com a capacity to engage, as it is one of the best consulting agencies in the country. Mr Malele stated that the ability of Arivia.com has created an excess of R640 000 000 of which only 35% was generated from Transnet, Danel and Escom.

Mr Malele stated that Arivia.com is the only IT business that has to deal with unions. He stated that there was no real conflict between Arivia.com management and labour. He stated that these types of stereotypes have been broken down. Mr Malele stated that Arivia.com has created an environment where employees are able to cope with the change in the company; for example, Arivia.com has brought in social workers for employees.

Mr Malele stated that Arivia.com has had a brand presence of itself created, which is as if it has been around for centuries. He stated that none of the competitors could boast of the same gender equality and equality targets. He said that the State information technology agency (SITA) represents the gateway to the government, which means that Arivia.com must facilitate a good relationship with SITA in order for a win-win relationship to be established.

Mr Malele then moved onto explaining milestones which have been reached by Arivia.com. The first milestone described by Mr Malele is the first day activities of Arivia.com, the successful launch and branding of the company. The second milestone explained by Mr Malele is to creation of a commercially viable activity. This was not a destination, but a journey. The third milestone was described by Mr Malele as advancing the interest of Black Economic Empowerment. This allows black people to engage in building a world-class economy in South Africa. This factor might include a strategic equity partnership (SEP), which may bring a foreign partner into the relationship, as well as adhere to the NEPAD initiative. The final milestone stated by Mr Malele is the creation of an opportunity to spread ownership from black economic empowerment to other parts and groups found in the country with an IPO initiative. There was a need to continually look at these milestones for the success of the company, - in order to be a little wiser.

Discussion
A Member encouraged Arivia.com in their plight to become a dominant player and a force to be reckoned with, in Africa and on the world markets. She questioned Arivia.com on their strategies around training, especially for those who have come from disadvantaged communities. She asked if it is possible that youths in schools could be trained so that Arivia.com moves from strength to strength. She asked if clarity could be given on this issue.

Another Member shared the same sentiment. In terms of demographics, how does Arivia.com provide for those previously disadvantaged groups, especially on the disabled people's list, as well as the fact that the executive is made out of 30% women? She also asked Arivia.com if there is now a framework in place to facilitate retrenchments that may occur past the three-year point. She asked Arivia.com's stance on this issue. The Member asked to what extent Arivia.com has extended its services to local government. She also asked what the relationship between Arivia.com and Spartan computer rentals is, as well as the description on the relationship between Arivia.com and SITA.

A Member asked about the government configuration around the issue of IT, concerning Arivia.com, SITA, and other state owned enterprises. He asked how Arivia.com fits into government IT related business. He also asked about a comment made by Mr Malele on bridging the digital divide. How did Arivia.com aspire to improve small business development and participation in ICT companies?

Ms C Nkuna asked if Mr Malele was certain about the lack of strife in the Labour Department. She asked if Arivia.com is overseen by the Public Protector, and if Arivia.com has any statistics on how many labour cases have been solved.

Ms P Themba commented on the ICT workings for hospitals in the North Province. She asked what Arivia.com has planned for other provinces. She also asked what problems Arivia.com is facing concerning gender empowerment e.g. rural women.

Dr Odendaal (NNP) stated that he could not understand why Arivia.com has been born, given the current trends by government in privatisation. He asked why it has now changed to government owned ICT. He asked if the need of privatising ICT ever came up again, would it be viable, or would this whole process be unfruitful.

Ms Nku stated that Arivia.com's place in the government sector was very clear. SITA was created out of the existence of a government Department. Parastatal IT divisions provide IT to parastatals and beyond that. Transnet, for example, would not only use one IT Company, but many according to its many needs. B&B Africa as an IT company only provides logistics services to Transnet, whereas another IT company provides other services. There is a huge amount of co-operation between State IT companies. Arivia.com and SITA have a strange set-up. Although they compete for business, it would be ideal for these two companies to find a way to work together to drive down costs. She stated that there is a framework in place for finding a scheme to work out who is able to do what, and the dynamics of the relationship. Once these logistics had been sorted out, Arivia.com would present it to the committee. She stated that because the company was so young, these issues were being raised for the first time.

Mr Malele stated that there was no way the company could achieve what they had set out to achieve without training. Internship schemes have been set up for younger people to gain more experience. Arivia.com has already started to build relationships with other organisations who are like-minded. This is an attempt to bring all organisations together under a banner of ICT so that it does not just stand as the white organisations from apartheid times, and the black organisations post-apartheid. This is a strategic issue with which everyone has to deal. He stated that Arivia.com does not have the resources to do it as aggressively as they want to. Mr Malele stated that due to the brain drain South Africa is losing its most skilled people. Arivia.com will not be able to stem the tide of the brain drain on its own, and if training is not facilitated.

Mr Malele stated that in terms of the disable category of disadvantaged people, he said that the least work has been completed in this category. He stated that for the disabled category to become an issue, people must have a sufficient interest in the work, and the problem has been that there are not enough candidates coming into from this category. He said that people must have aspirations to move into this area. He also said that awareness must already be created at school level about the disadvantaged areas.

Mr Malele also stated that Arivia.com is not happy with the equity levels within the company at the moment. He stated, though, that gender equality is being worked in from the top done, where women are working in the high technical positions, senior positions, board member position etc. He stated that this is one of Arivia.com's big focuses, and that the process is in progress.

A Member stated that Spartan Computer Rentals came about as a part of Ariel. She said that Arivia.com has not done anything to acquire Spartan, and that they do not have any management control over this part of the company. Concerning training, the Member said that Arivia.com were in the process of talking to people who connect them to organisations who provide internships to previously disadvantaged youth, with the intention to participate in programmes of this nature more often. It was good for youth to experience practical along with the theory they learn in classrooms.

Ms Nku responded that Arivia.com has no intention of retrenching people. She also said that a three year period is a good enough time frame to reflect on certain issues, and decide where they need changing. She stated that Arivia.com should be a business which should grow to fit the people. She said that there was a need to bring the skills into other areas where it was lacking. She stated that a three-year period allowed time to implement a realistic training programme.

Ms Nku stated that the type of public protector process has been followed internally within Arivia.com.

Ms Constance Nkuna asked Ms. Nku if she could clarify the issue on labour, on whether Arivia.com has been able to solve their labour problems.

Mr Malele stated again that Arivia.com has been the only IT organisation to deal with the unions. Given the hostility of certain unions, for instance, COSATU, there is a need to make sure that there were no failures in circumstances relating to labour. It was important for employees to feel a part and parcel of the process of change. He said that Arivia.com has set up an employee participation unit which has allowed the crafting of service issues and proper representation. The board also helped deal with the issues of change and the process of allocation into other sectors of skilled labourers. He also stated that Arivia.com had bought in a middleman, a person totally unrelated to management, to deal with concerns of the employees. He also stated that Arivia.com has a certain commitment geared at achieving Black Economic Empowerment goals.

Mr Malele also said that all major hospitals in the Limpopo province are in phase one of the health IT systems. All other provinces have not gone through a procurement process yet, and once they had, Arivia.com, in conjunction with SITA, would be involved to the full.

The meeting was adjourned.