Sita Turnaround Strategies: briefing

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Meeting report

TRANSPORT PORTFOLIO COMMITTEE

LOCAL GOVERNMENT AND ADMINISTRATION SELECT COMMITTEE
10 June 2004
SITA TURNAROUND STRATEGIES: BRIEFING

Chairperson: Mr S Shiceka (ANC)(Gauteng)

Documents handed out:
SITA PowerPoint presentation
SITA Act No 88 of 1998
SITA Amendment Act of 2002

SUMMARY
The State Information and Technology Agency (SITA) presentation looked at its mandate and the successes and challenges of the organisation. Strategic imperatives were highlighted. These related to service delivery, citizen focused projects, leadership, the visibility of SITA, organisational structure and financial sustainability. Questions from the floor focused on the Youth Internship Programme, issues of service delivery, staffing needs and the retention of staff, equity commitments, savings to government, the marketing of SITA and operational problems associated with different government departments.

MINUTES
Members of the SITA delegation included Mr S Ngubane, SITA CEO; Mr M Radebe - Executive: Corporate Affairs; Mr T Kinana, Government Relations Manager, and Ms P Rachidi, Consultant: Government Relations

Mr Ngubane explained the background behind the establishment of the State Information Technology Agency (SITA) and then described the SITA mandate. SITA's responsibilities include: providing government with Information Technology (IT), ensuring a secure environment for information, developing inter-operability between systems, providing IT related goods and services and a cost effective IT service.

Mr Ngubane described the successes and challenges of the organisation. The former included enterprise licence agreements, the youth internship programme, the e-gateway project, the integration of state IT components and the provision of printing services. The challenges included the Information Technology Acquisition Centre (ITAC) which had come under attack from the media, the quality of SITA service, pricing and cost recovery, transformation and skills development and retention. With regard to the financial sustainability of SITA, he said that the cash reserves had grown by 6% for 2004/2005. The projected total revenue for 2005 has grown (from R1 billion in 2001) to R2.6 billion.

Discussion
The Chair said the slides did not show any operational costs. He also questioned the equity situation in the SITA organisation.

Mr Z Ntuli (ANC)(Kwazulu-Natal) asked if the exact number of interns from each province was known.

Mr A Moseki (ANC)(North West) asked if SITA staff were lost to the private sector, what the requirements were for interns, who SITA's partners were besides the government and if Mr Ngubane could elaborate on the problems SITA faced with regard to the provision of quality service.

Mr J Le Roux (DA)(Eastern Cape) also questioned the internship training. What were the levels of training? What period of time was involved? Did each intern get paid R3000 per month? He also asked for clarity on how SITA saved the government R10 million in licence fees.

Kgoshi L Mokoena (ANC)(Limpopo) asked how the youth were identified and from where they came. He referred to previous backlogs at SITA and asked if SITA was now able to provide assistance to departments when they asked for it.

Mr B Mkhalipi (ANC)(Mpumalanga) thanked the presenter for the level of openness displayed and asked how SITA interacted with the Sectoral Education and Training Authorities (SETA). Did these SETAs take part in identifying youths for the programme? He said a problem from before was that SITA did not reach out to the provinces but that it was heartening to know that this was happening.

The SITA representative, Mr Ngubane, explained that costs were broken into the hostings area (SITA has the biggest mainframe environment after Standard Bank), licence fees, salaries and training (R500 million for last year), ITAC (not a cost recovery at this stage) and research and development.

The profit margin for last year was about R80 - R90 million. The gateway project was almost totally unfunded by Government. The projected profit for 2004/2005 was about R50 million.

Mr Radebe noted that the audited equity figures were 48:50. There is an area of challenge in terms of skills in the middle management technical level but SITA was looking into it.

Mr Ngubane said SITA did have problems with certain departments (such as the Department of Defence) that still insist on some systems being run by outside suppliers. He said there might be "protection of turf" and that this was a challenge they were addressing.

Mr Radebe said SITA was co-operating with the Department of Local Government and Housing and the University for the Free State in the recruitment of interns in the Free State. There was a spread of training recruits from the different provinces and SITA advertised broadly for interns. Fewer recruits are taken from Gauteng because there were concentrations of skills training in that area. SITA absorbed some of the graduates, as did the private sector. The R3000 paid to learners is sufficient whilst they are in training. Recruits usually have basic diplomas in IT. There was a partnership arrangement between SITA and SETA.

Mr Ngubane mentioned the areas in which the youths were trained such as life skills, computer literacy, IT and user training, work place experience, data base administration, functional application and administration training, business analysis etc. and gave a breakdown of the demographics of the students. The gateway project provided a unique environment for training. Of the 354 graduates last year, 48% were female and 52% male. Not all graduates had been placed. 6% were placed in SITA, 3% in government and only 1 % in the private sector. Mr Ngubane said more than R100 million was saved last year through the negotiation of Enterprise Licence Agreements. It was thus better than having each department, local government or province negotiating for its own licence.

Mr Ngubane explained some of the problems that affected quality of service. When a department's system was integrated into SITA, any problems they might have experienced before are brought in as well. Sometimes there were difficulties because outside companies supplied hardware and SITA only supplied the software and applications. Hardware problems could occur over which SITA had no control. The solution would be to give the whole service over to SITA - the hardware, software, network and applications. Service Level Agreements (SLAs) that had penalties and held SITA accountable would be introduced. In departments where SITA supplied the hardware, software, network and applications, the same service delivery problems were not experienced.

SITA was making progress in terms of coping but that it "was not yet there" especially where specialist applications for departments were concerned. He said in two to three year's time SITA hoped to have the capacity to bring all on board but this would require some industry partners as well.

SITA's strategic imperative was to be citizen focused and these citizens resided in provinces. SITA had thus made a strategic decision to engage with provinces. He said SITA used to have a very ad hoc approach but that it was necessary to know the needs of each province as no one size fits all and SITA had also to concentrate on low volume areas even though these might not be as profitable.

Ms P Hollander (ANC)(Northern Cape) asked which towns were being targeted in her province as Kimberley was not the only large centre.

Mr Le Roux asked why only 1% of graduates of the Youth Internship Programme were taken up by the private sector. Did the training equip them for the private sector? He also asked whether there were some departments who refused to use SITA at all.

Mr Khaliphi asked if SITA must not also get involved with local government, how many Multipurpose Communication Centres (MPCCs) had information portals available and if SITA rendered services to the IEC and the Municipal Demarcation Board and what the challenges were in these organisations.

Mr Shiceka asked if SITA had quantified the savings they had made so that they could use these to market themselves and was SITA paying competitive salaries. Regarding marketing, he asked what SITA's programme or strategy was and whether SITA had worked out how it would grow systematically so that it could say at the end of a certain period that it had captured the market? How was SITA advancing the cause of Nepad? Could the trained youths be employed in other African countries to develop IT skills there? He questioned the Defence Department's insistence on using outside suppliers for certain "customised" applications. Mr Shiceka also said that the Select Committee could become SITA's marketers.

Mr Ngubane said he was very grateful for the Committee's support. He said SITA was operating wherever government needed them in the Northern Cape and not only in Kimberley. He said he believed that SITA was paying competitive salaries and the staff turnover it had was normal for an organisation. Training a person in a critical area and then losing them to the private sector was always a problem. He thought the Youth Training was not adequate because the technical training was fine but the period of experience was always a problem. The private sector wanted staff with experience and this usually had to happen in the public sector.

At the strategic level there were no Departments that refused to work with SITA but at the operational level there were problems. Historically, certain outside suppliers had provided a service and relationships became entrenched and were difficult to change. The information portal can be accessed from any terminal with internet access so it could be used anywhere but he said the real issue was how MPCCs could be available to all citizens in rural areas. He said he could make the figures available that show how SITA quantified savings to government.

Mr Ngubane explained the sensitive relationship that SITA had with the Department of Defence. He said this department was one of the founder members of SITA and hence it expects "some leeway" and there were problems at the operational level. Defence is supportive of SITA but particular systems were still controlled by outside suppliers. These were twenty years old already and were inefficient and expensive. He said they could certainly benefit from economies of scale and these systems were not as unique as they were made out to be. Some new systems could be introduced if all departments wanted them and this would open up skills opportunities.

Mr Radebe said that SITA was engaging with the Department of Defence at the highest level. With regard to local government, they were working on specific projects from time to time along with the Development Bank of Southern Africa. He said that the complexities at national and provincial levels must be sorted out. SITA rendered services to the Independent Electoral Commssion (IEC) and the Municipal Demarcation Board (if it is part of the former) but he was not sure how they were involved with them. In terms of SITA's fourth strategic imperative that involved a marketing strategy, SITA was very poor in this area but that broader forums of engagement were in the process. SITA wanted to develop a SITA brand that is very visible.

SITA was very involved with NEPAD. He said they participated in debates and formulation of policy.
Delegations from various African countries had been hosted as well as an African Conference. SITA was also represented on other forums such as the UN Forum and the Commonwealth.

Mr Ngubane said that very concrete and specific targets were stipulated in the three-year business plan. SITA's measure of success was not based on turnover or profit but rather it was to see if SITA could deliver services to government that were cost effective. He hoped that once all departments were on the network they could increase other technology and communication services such as e-conferencing and IFP telephoning that gave a better service and provided savings for government. Another big success factor would be how SITA engaged with Industry. He said that pre-94 there were many rip-offs with IT suppliers. SITA must negotiate against this and work with industry using government rules of engagement.

The Chair said his committee would like to speak to SITA again later in the year to monitor developments especially to find out more about technological changes to ensure that government could communicate with fewer costs and with solutions that had come out of research and development. He also commented on the issue of lack of transformation at the technical level and said there were other ways of operating and that this was often used as an excuse to "mystify" the problem. He thanked the delegation and adjourned the meeting.

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