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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