State Information Technology Agency: Budget Vote hearings

SAFETY AND SECURITY PORTFOLIO COMMITTEE
04 May 2007
STATE INFORMATION TECHNOLOGY AGENCY: BUDGET VOTE HEARINGS

Chairperson: Ms F Sotyu (ANC)

Documents handed out:
State Information Technology Agency (SITA) presentation

Audio Recording of the Meeting

SUMMARY
The State Information Technology Agency briefed the Committee on its activities in the past year and the plans for the following year. The Agency was in the process of appointing a new CEO. It derived its mandate from the SITA Act and did not receive government allocations. Although it made a small profit, it aimed to be sustainable rather than to operate commercially. The objectives were to lower the cost of IT for government, to increase IT in government departments and use IT for the convenience of citizens and as an empowerment tool. SITA offered a private telecommunications network for the government, hosted systems and was running a project that focused on the internal financial management systems. It undertook procurement, research and development for government. The employment profile was set out. The main client base was set out, of which the South African Police Services were the largest. SITA was transforming itself to address its poor past image, to improve service delivery and cost, and to improve staff morale, and had raised customer satisfaction levels over the last two years. The long time for tenders remained a challenge. The financial position was tabled and it was noted that SITA, although making comparatively low profits, was sustainable. Projects included an on-line and call centre information system on the requirements for passports, an ID-enquiry system through SMS and conferences on improvement of IT in South Africa. It was working to improve the e-government and service delivery, working on an integrated financial management system, and on partnerships to try to address skills shortages. Tenders were assisting the systems. Profits were reinvested into maintenance of infrastructure. SITA was going through re-branding to position itself better and to try to avoid the current confusions over names and acronyms. Comparisons were made with other IT companies. Challenges included the funding model, a weak legislative mandate, the overlap with COMPSEC, skills scarcity vacancies and the fact that departments were not obliged to use its services. Questions by members related to the possible change needed to the mandate, its accountability, and specific projects undertaken for the Police. Members were concerned over what the Agency was doing to address and rectify the shortage of skills in the industry on a long term and short term basis. Members also asked if the relationship between SITA and SAPS had improved, and if tensions highlighted had been resolved, sought clarification on the weak legislative mandate, asked if the SMS tracking system was user friendly to those who had never had ID documents. SITA was asked specifically to provide a list of service providers that had been outstanding for some time.

MINUTES
Budget Vote: Briefing by State Information Technology Agency (SITA)
Mr Jonas Bogoshi, Executive: Chief Strategic Services, SITA informed the committee that Mr Mavhuso, the previous CEO had retired, and SITA was in the process of appointing a new CEO. He noted that SITA was still very much an active agency, which derived its mandate from the SITA Act. As a Schedule 3(8) public company SITA did not receive any government allocations, and must therefore make a profit from its own revenue in order to fund ongoing projects.

Mr Bogoshi informed the committee that when SITA was formed the whole idea was to lower the cost of IT for the government, increase government departments’ IT activity and to increase convenience for ordinary citizens and enable black economic empowerment. All of this had to be done within a secure IT environment. He tabled the mission and vision.

Services offered by SITA included the private telecommunications network for the government, to enable access to an “own system”, the common call network. It hosted government’s transversal systems and was currently involved in a multi billion dollar project that focused on the internal financial management systems. SITA undertook procurement, research and development on behalf of the government and had developed and owned the disaster recovery strategy.

SITA had 2130 permanent employees and the demographic composition was set out. It also contracted between 1000 and 1500 people, but most importantly it had reached its objective of gender employment equity with a leading figure of about 126 women. SITA was ahead of other IT companies in this regard. However, these women were mostly in top or lower positions, and were lacking in middle management that was in need of critical technological skills. SITA was therefore working to invest and develop African skills in middle management.

Mr Bogoshi listed the top twenty successful departments, which counted for about 70% of revenue. He noted that although the Committee would often compare the budget for SITA with that for South African Police Services (SAPS) this was not always a true comparison since SITA did not always participate in all SAPS projects, as tenders were also awarded to the private sector in some cases, and also there could be exclusion from the figures of capital expenditure or what was paid in telecommunications. He noted also that the revenue had been apportioned out across provinces and the greatest revenue earner was KwaZulu Natal.

Mr Bogoshi said that SITA had needed to transform for various reasons. Firstly three to four years ago the image of SITA was poor, as it was associated with corruption and inefficiency. Secondly at that stage SITA’s customers were not impressed with its services, in terms of quality and the cost. The morale of the employees was very low because of instability in SITA, as there had been rapid turnover of chief officials. When the new CEO came in his first objective was to normalize the situation. All seven strategic objectives had been fulfilled over the last years. A survey in 2004/05 in order to gauge the number of satisfied customers concluded that only 47% were happy and this was a wake-up call, as if SITA was a private sector organization it would by this stage have closed. SITA was thus having to work hard to improve its services. Customer satisfaction had to 62% in 2006/07. A major problem with SITA remained its long tender time, often about a year. However, SITA had drastically cut the number of days to 26 days in some tenders, although others, due to statutory requirements could not be reduced to less than 30 days.

Full details were tabled of the financial position. In 2005/06 revenue was at R2.9billion and in 2006/07 was R3.1 billion. SITA had in the last two years they have been financially sustainable and had not approached the Department of Public Services and Administration (DPSA) for help. The profits were 3.9% in 2005/06 and 5.11% in 2006/07. SITA did not focus on making large profits, but aimed rather to be sustainable, so that in comparison to the private sector the profit was low.

Other achievements were Project Gateway, which informed people of the requirements to acquire a passport, that was currently in seven languages and SITA was working on increasing this to eleven languages. A 24-hour call centre operated on these requirements. A new system was running as from 31 March to allow people who had applied for their ID to send an SMS to find out where and how long their ID was going to take. Moreover, SITA, together with the DPSA, had created an Imbizo for citizens to inquire about government’s service delivery. They also held a conference, which was attended by the government, private sector, and oversees delegations that looked into how to improve IT in South Africa.

Mr Bogoshi tabled but did not dwell on budget objectives. SITA intended to improve its customer experience by about 10%, focus on operational efficiency and effectiveness, in order to reduce costs, and accelerate the implementation of e-government and develop appropriate partnerships and alliances to put SITA once again as a front runner, where it was intended to be. One of the initiatives aimed to create more satisfaction among the employees of SITA. SITA was working on improvement of the service programme. It was working with Brazil, India and Canada to improve e-government and had created a municipality blue print on how the municipalities could improve their delivery through the use of IT. The integrated financial management system, besides financial management, carried components of human resources management and business intelligence. As a result in the past nine months SITA had gone on tender on two critical areas and a third was pending. The greatest problem that South Africa was facing was the shortage in skills, so SITA had formed a partnership with the private sector where they traded in skills and built on the critical skills.

Mr Bogoshi said that the financial goals for 2008/09 were to increase the profit by 12% and to reach gross revenue of R3.4 billion. Although gross profit had fallen in the last year it was set to rise. SITA reinvested the profits into the maintenance of the infrastructure. The operating expenditure was going to increase to 60%, because it was going through a re-branding exercise to avoid confusion with other agencies with similar acronyms, and to try to distinguish it from other organizations around the world with the same name. Direct operating costs were projected to fall, but there would be a slight increase in the direct labor because of the projects. The presentation indicated that most of the money went into the maintenance of the infrastructure, mainframe and networks, which in turn affected the amounts set out for assets.

Mr Bogoshi compared SITA with other IT companies as a way of reflecting where SITA currently stood. Using the audit figures of 2004/05, and comparing SITA with companies such as Apple, it stood as the fourth largest IT company. Profit margins were lower for the reasons set out earlier. SITA ranked third in terms of sales per employee and therefore, in direct comparison with the industry, was doing well and had every intention of even becoming better.

Mr Bogoshi concluded that the challenges faced included the constraining funding model, which was currently clearly not working for them, the weak legislative mandate and the overlap with COMPSEC, which was confusing customers especially in the security clusters as the two organizations had different requirements. SITA hoped that this would be resolved quickly by government. Further challenges were the skills scarcity, the number of vacancies and the reluctant client base that made it difficult for SITA to plan properly for sustainable improvement.

Discussion
The Chairperson remarked that the presentation today was of a far higher standard than before.

Mr V Ndlovu (IFP) remarked that if SITA was succeeding in their objectives then perhaps it was necessary to look at a change of mandate.

Mr Bogoshi replied that SITA had two levels of objectives. The first was to improve the effectiveness and efficiency of departments. If that worked well SITA would then be able to improve the service delivery to the public. SITA could obviously measure its successes in the first area, but could not measure whether these efficiencies ultimately translated to improved service delivery. One example was the management services center, which was used by all government departments, and would reach about R3 billion value in about three years. One of the objectives, when it introduced this tender, was how to reduce the overall cost of the desktop. In the result if was, in some cases, able to buy equipment at a 40% discount. This was an example of the type of matter brought in with the introduction of the tenders. Bringing effectiveness to the government was still a project that was in need of technology and human resources and in some cases SITA was still improving the processes, which were not yet at optimum level. It also was a long way off full achievement in terms of the public. Although in key projects it could measure public reaction, on the whole it was not able to measure the public at large. This was the reason for a key project being set as revitalization of e-government, which would enable SITA to measure how business and citizens feel about government delivery. The first pilot project will involve about 500 citizens at various places in South Africa, and would work as a baseline that would show how people viewed government service delivery.

Mr Ndlovu asked for clarity on what was meant by a weak legislative mandate.

Mr Bogoshi replied that the legislation was weak in two areas. Firstly there were overlaps between SITA and COMPSEC. This tended to confuse the various departments but SITA was addressing this. The second area was that the SITA Act applied only to the national and provincial government. Local government had a choice to use SITA or not, but was the focal point of service delivery. This was particularly problematic in that for the smooth running of operations it would be ideal if the mandate extended to the local government.

Rev. K Meshoe (ACDP) asked whether SITA thought the trace and check system, allowing for tracing by SMS, would be user friendly to people who had never had an ID.

Ms A Van Wyk (ANC) remarked that the Committee was aware that SITA was also suffering from skills deficiencies in the industry, but the Department of Home Affairs had reported that a number of work permits were not being accessed. She asked if SITA was considering accessing these in order to bring in the scarce skills to provide an immediate solution to the problem while allowing it to work also on long term skills capacitating projects.

Mr Bogoshi replied that SITA had not accessed the permits because some of the work it handled was sensitive government information, and according to the minimum security standards people who did not hold a South African passport could not be privy to such information. He did concede that if people were hired through the private sector SITA would access the permits. Where foreign nationals worked for other companies SITA would restrict the amount of information the foreign nationals handled.

Rev Meshoe asked what was being done at a practical level to develop and help government to bridge the gap of skills scarcity

Ms Van Wyk questioned what SITA was doing in the long term development of the skills that were currently unavailable.

Mr Bogoshi replied that SITA and the DPSA were looking into the government inadequacies and why it was unable to develop new skills. They had looked at the DPSA new plan, which had been submitted to the Committee, and which focused on increasing the training days from 400 000 days to over a million and a half days. They were working together with DPSA to identify the critical skills in IT that required focus, and how they could partner with industry to ensure that they could upskill departments. The major challenge was that because it was not compulsory for departments to come for training SITA had created a capability yet there was still an option whether or not it would be taken up, which had over time led to the national crisis that it now sought to resolve.

Rev Meshoe asked SITA where its accountability lay.

Mr Bogoshi replied that SITA reported to the DPSA.

Ms Van Wyk asked what SITA was doing with the money given by SAPS, who were the biggest clients, and asked also for examples of any successful projects SITA had undertaken for SAPS.

Mr Bogoshi replied that unfortunately this information was not to hand at present, but he noted that SITA was formed by SAPS in conjunction with National Treasury and in a way was the outsource arm for SAPS. Every application for SAPS was run through SITA, who also held the SAPS mainframe for SAPS. SITA was working with SAPS on improving SAPS infrastructure and some of the projects were the desk top support, to assist SAPS in purchasing computers through SITA, the upgrade of the SAPS network, and involvement in some of the key applications such as AVL, which was a method of locating department vehicles in order to check if they were near a crime scene and could be dispatched to it. SITA was working with SAPS on their documents systems with specific focus on making electronic documents. It was hoped that in the near future SITA would achieve the turning of dockets into electronic copies so as to reduce the amount of dockets that were lost.

The Chairperson reminded SITA that the Committee had, a while ago, requested a list of its clients and service providers and this was still outstanding.

Ms Van Wyk asked if the service level agreement had been signed.

Mr Bogoshi replied that the service level agreement had been signed and SITA was working on the next one.

Ms Van Wyk asked if SAPS was happy with the budget and SITA’s service delivery.

Ms Marelene Meyer, Assistant Commissioner, South African Police Services (SAPS), replied that since the last meeting the relationship between SITA and SAPS had improved but they still had their internal differences, mostly were in relation to the model of SITA. The large portion of the budget that went to maintenance gave SITA a very limited amount for expansion and services delivery, or for preparing for crime combating services and expanding on technology. This was an area to be worked on. She concurred that the service level agreements had been signed and the agreement for 2007/08 had been finalized, but some areas were still being worked on. In terms of network, SITA was doing the current maintenance of the network infrastructure and this was going well. Certain level service and business agreements had been enforced and things had dramatically improved. Other problems were being worked on and would be solved on a monthly basis so that they were aiming for no problems. SITA had about 566 sites where it had equipment in store for the SAPS, comprising more than 120 000 pieces of equipment, and she was of the opinion that SITA and SAPS were working well in order to maintain the standards.

Ms Meyer noted that Mr Bogoshi had spoken to the strategic environment. This was not quite on par with what was happening in the line management. There was already an e-docket system in one police station but it was hoped to capacitate one province first before rolling out this project to the rest of the country. SAPS also had a site evaluation system running, but was taking small steps at a time. SAPS had already tested six sites and had recovered stolen firearms. SITA was helping in the development of the network system. SITA was also helping with the disaster recovery since there was not yet a proper recovery system in place. SAPS was working on their internal capacity and needed to upgrade the systems but this was very expensive. SITA was also assisting here, but costs were a problem. In addition SITA was assisting with the mobile operation units where there was access to closed circuit television and the geographical setup. SAPS was also in the process of rolling out the live scan hardware and software that would replace fingerprint matching. SAPS was also rolling out the programme of supplying satellite images. Service had improved but there was room for further improvement.

Mr M Booi (ANC) thought that the presentation was a little general as it did not show a reflection between SITA and SAPS. He requested a fuller document setting out the relationships.

The Chairperson noted that a report by Ms Meyer had indicated tension between SITA and SAPS. She asked if their working relationship had improved and if they had worked through all of the problems that were listed in the document.

Mr Bogoshi replied that it should be noted that SITA had said it had challenges working with SAPS, not that no working relationship existed. Although the two were in disagreement over the costs of services, which SAPS thought expensive, and some of the quality, most of the SAPS projects were ultimately handled by SITA, and most of the SITA employees were formerly SAPS employees so they understood the department’s work. He agreed that the services list would be made available to the Committee.

The meeting was adjourned.