S t a t e I n f o r m a t i o n T e c h n o l o g y A g e n c y

Select Committee on Local Government & Administration

Lucas Mogashoa

GM Strategic Services

Sagaren Naidoo

GM Finance

10 May 2007

22

Agenda

1. Introduction

4. FY08 Budget

3. Strategic Objectives

2. SITA

Transformation

5. Challenges

33

INTRODUCTION

44

Mandate and Funding

SITA is an enacted company that derives its mandate from – SITA Act 88/1998 as amended 2002. SITA Act 88/1998: General Regulation NR 904,

DPSA, Sept 2005.

Funding Model SITA Pty (Ltd) is a Schedule 3a Public Company. Financially self sustaining through Products and

Services.

55

SITA Act

Objective To improve service delivery to the public and to

promote the efficiency of departments and public bodies through the use of ICT and related services in a secure environment.

66

House of Values

Secu

rity

Inte

rope

rabi

lity

Red

uced

Dup

licat

ion

Econ

omie

s of

Sca

le

BEE

Ena

blem

ent

Lower Cost Increased ProductivityCitizen Convenience

Government Architecture

77

SITA Mission and Vision Vision: To be a global leader in public sector information and

communications technology.

Mission: To cost-effectively enhance public service delivery through information and communications technology

Values: Service Excellence Transparency Integrity Fairness Prudence Innovation

88

Mandated Services to Government

Transversal Systems

Standards & Certification

IS Convergence StrategyDisaster Recovery Strategy

IS Inventory

ICT Research

… and related Services as per BA (e.g. Consult, Train,

Support)

Private Telecoms Network

Procure ICT

99

Human Resources Statistics

African White Coloured Asian Total

         

Male   541 500 74 89 1204

Female   422 404 69 31 926

 

963 904 143 120 2130

1010

Top AccountsCustomer Name

2006/2007 (12 Months ending 31 March 07)

Mandatory Non Mandatory TotalSAPS 235,757,956 407,906,080 643,664,036DOD 539,923,992 0 539,923,992DEPT OF CORRECTIONAL SERVICES 57,030,806 67,642,688 124,673,494DEPT OF JUSTICE 13,249,573 98,976,938 112,226,510SASSA 3,475,596 97,299,329 100,774,926KWAZULU NATAL HEALTH 49,073,384 39,709,362 88,782,746DEPT OF HOME AFFAIRS 65,909,887 21,709,925 87,619,812DEPT OF SOCIAL DEVELOPMENT 3,712,269 76,711,641 80,423,911DEPT OF LAND AFFAIRS 38,844,936 26,821,597 65,666,534DEPT OF EDUCATION 6,067,492 43,486,162 49,553,654KWAZULU NATAL EDUCATION & CULTURE 8,602,519 40,536,825 49,139,344PROVINCIAL ADMIN WESTERN CAPE 31,202,304 16,913,885 48,116,189LIMPOPO HEALTH 9,645,277 36,334,767 45,980,044EASTERN CAPE OFFICE OF THE PREMIER 24,285,569 20,104,784 44,390,353GAUTENG HEALTH 0 42,060,191 42,060,191GAUTENG SHARED SERVICE CENTRE 30,545,516 9,193,440 39,738,956DPSA 2,443,666 35,600,421 38,044,087DEPT OF PUBLIC WORKS 19,665,058 16,934,453 36,599,511DEPT OF LABOUR 32,233,414 864,481 33,097,895DEPT OF WATER AFFAIRS 21,185,063 10,420,066 31,605,129EASTERN CAPE SOCIAL PENSIONS 7,991,341 22,886,011 30,877,352NATIONAL TREASURY 19,438,958 11,373,954 30,812,913

Percentage of Total Revenue 70.86%

1111

Revenue per Business Unit

Central Region 119,160,399

Coastal Region 651,140,081

Northern Region 429,354,617

National Departments 1,056,991,765

SAPS 539,157,035

DOD 539,923,992

1212

SITA TRANSFORMATION

1313

SITA Transformation Reasons for Transformation

SITA Image, Customer Perception, Employee Morale Transformation – A Journey not a Destination

Approach Arrest & Normalise The Situation Rationalise For Optimum Performance

Strategic Imperatives Radically improve service delivery to the Citizens; Prioritise Citizen-centric projects; Drive to the best demonstrated practice in people management and leadership; Overhaul internal and external communication to improve transparency, visibility

and image; Build an appropriate organisation structure and team to achieve strategic

objectives; Maintain financial sustainability.

1414

Performance to Date Service

CSI FY04/5 (47%) FY06/7 (62%)

Procurement Tender Days FY04/5 (242) FY06/07 (76)

Finance Revenue FY05/6 (R2.9Bn) FY06/7[P] (R3.3Bn) PBT FY05/6 (3.9%) FY06/7 [P](4.6%)

Projects Batho Pele Gateway – Translation Track and Trace

GovTech Public Sector ICT Conference Thought Leadership

1515

STRATEGIC OBJECTIVES

1616

Trends and Drivers Communication Convergence

Service Oriented Architecture

eGovernment Maturity

Identity Management

Open Source Movement

Strategic Out Tasking

Consolidation and Partnerships

1717

Objectives

Manage Operations

Radically Improve Customer Experience of SITA Focus on Operational Efficiency and

Effectiveness

Reposition SITA for Public Sector ICT Leadership

Accelerate the Implementation of eGovernment Provide Thought Leadership Develop Appropriate Partnerships and Alliances

1818

Destination to Success - Change Management

Service Improvement Programme

e-Government Revitalisation

Municipality Blueprint

Integrated Financial Management System

New Generation Network Platform

OSS Project Management Office

Industry Wide Skills Development

Initiatives

1919

FY08 BUDGET

2020

Consolidated Statement of Financial Performance

2007/8 2006/7 2005/6Budget Unaudited ActualR'000 R'000 R'000

Gross Revenue 3,475,000 3,335,728 2,946,185

Retained revenue 3,475,000 3,335,728 2,946,185

Cost of sales 2,675,762 2,658,180 2,336,111

Gross profit 799,237 677,548 610,074

Operating expenses 545,942 479,199 437,533

Net operating income 253,295 198,349 172,541

Other income 48,490 60,188 39,511

Other expenses 128,147 106,284 97,291

Profit before taxation 173,638 152,253 114,761

Gross profit % 23% 20% 21%Operating profit % 7% 6% 6%Profit before taxation % 5% 5% 4%Opex % 16% 14% 15%

Note:

Higher Budgeted Opex % due to increased budgeted labour costs, mainly in the DoD environment, planned SITA rebranding,as well as planned building refurbishments. These are once off costs.

2121

Consolidated Cost of Sales 2007/8 2006/7 2005/6

Budget Unaudited ActualR'000 R'000 R'000

Direct Labour 943,595 862,765 782,012

Direct Operating Cost 846,658 1,052,574 739,965

Service Delivery Overheads 780,756 640,492 716,587

Depreciation 104,753 102,349 97,547

Total Cost of Sales 2,675,762 2,658,180 2,336,111

2222

Total DepreciationBusiness Shared Strategic CEO'sOperations Services Services Finance Office Total

R'000 R'000 R'000 R'000 R'000 R'000

Mainframe Equipment 44,086 1 - - - 44,087 Mainframe Softwear 9,607 - - - - 9,607 Network Equipment 37,753 2,383 - - - 40,136 Network Softwear 2,830 1,357 - - - 4,187 Computer Equipment 13,417 3,479 658 204 137 17,895 Computer Softwear 2,533 7,591 2,481 17 605 13,227 Office Furniture 2,710 962 17 19 45 3,753 Buildings & Infrastructure 3,196 4,689 - - 5 7,890

Total direct depreciationon 2007/8 financial year budget 116,132 20,462 3,156 240 792 140,782

Depreciation adjustment based on2006/7 capex budget brought forward 12,000 - - - - 12,000

Total direct budgeted depreciation (incl. 2006/7 capex budget b/f) 128,132 20,462 3,156 240 792 152,782

Depreciation analysis:

Direct depreciation 104,686 - 67 - - 104,753

Indirect depreciation 23,446 20,462 3,089 240 792 48,029

Total depreciation as above 128,132 20,462 3,156 240 792 152,782

2323

Total assets

Budget Actual2007/8 2005/6Rand Rand000 000

Non-current assets 887,307 494,898

Property, plant & equipment 887,307 477,129 Deferred taxation - 17,769

Current assets 1,592,054 1,732,017

Cash and cash equivalents 924,803 1,085,064 Trade and other receivables 571,233 556,251 Work in Progress 96,018 58,327 Current tax asset - 32,375

2,479,361 2,226,915

2424

Equity and LiabilitiesBudget Actual2007/8 2005/6Rand Rand000 000

Capital & reserves 1,159,010 923,267

Ordinary share capital 625,333 625,333 Retained earnings 533,677 297,934

Non-current liabilities 125,988 109,395

Borrowings 20,800 31,200 Deferred tax liability 10,530 - Post retirement medical benefits 94,658 78,195

Current liabilities 1,194,364 1,194,253

Trade & other payables 399,050 581,601 Prepayments 657,114 536,542 Provisions 87,841 54,000 Current taxation liability 50,359 22,110

2,479,361 2,226,915

2525

Property, plant and equipment movements

Budget Actual2007/8 2005/6Rand Rand000 000

Opening carrying values 572,669 535,279

Acquisitions 477,420 83,920

Depreciation 152,782 136,663

Disposals 10,000 5,407

Closing carrying values 887,307 477,129

2626

Capex BudgetTotalR'000

Mainframe Equipment 72,130 Mainframe Software 12,200 Network Equipment 153,041 Network Software - Computer Equipment 26,176 Computer Software 21,455 Office Furniture 2,238 Buildings & Infrastructure 73,180

Total Capital Expenditure Budget (excl capex b/f from 2006/7 financial year 360,420

Carried forward from 2006/7 financial year 117,000

Total Capital Expenditure Budget (incl capex b/f from 2006/7 financial year 477,420

2727

Cash flow Statement

Budget Actual2007/8 2005/6Rand Rand000 000

Operating activities 440,253 508,932

Investing activities 360,420 83,560

Financing activities 5,200 5,200

Net cash movement 74,633 420,172

Adjusted opening cash & cash equivalent 850,170 664,892

Opening cash and cash equivalent 967,170 664,892

Investing activities Capex b/forward from 2006/7 117,000 -

Closing cash & cash equivalent 924,803 1,085,064

2828

PEER COMPARISON

2929

3030

3131

3232

CHALLENGES

3333

Challenges

Constraining Funding Model

Weak Legislative Mandate

Industry Skills Scarcity

Reluctant Client Base

3434

Thank You

Q & A

Lucas MogashoaGM Strategic Services

Sagaren NaidooGM Finance

State IT Agency (Pty) Ltd459 Tsitsa St. ErasmuskloofPretoria, South AfricaWeb: www.sita.co.za

“A man who does not think and plan long ahead will find trouble right at his door.”

- Confucius