State Information Technology Agency

Corporate Strategy 2009/10 Presented by: Femke Pienaar – CEO (Acting)

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Agenda

• Background

• Strategic Imperatives

• Budget 2009/10

OPERATIONALEFFICIENCY

FINANCIALSUSTAINABILITY

IMPROVEDSERVICES

CUSTOMER & STAKEHOLDERSATISFACTION

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Background

• WHERE DID IT ALL START?

Presidential Review – 1998.

Merger in 1999 of Infoplan, Central Computer Services and SAPS’ IT/IS/IM Services.

• SITA’S OBJECTIVES are derived from the SITA Act.

Section 6 of the Act enjoins SITA to:-

Provide information technology;

Provide information systems;

Provide ICT related services in a maintained information systems security environment; and to

act as an agent of the South African Government.

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Strategic Focus

• There is an urgent need to go “back to basics” - Provide Mandated Services.

• SITA must build operating capability that supports the ICT requirements of government.

• SITA must be seen to be contributing to improved service delivery.

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Guiding Principles

Reduce CostsImprove Productivity

Citizen Convenience

Intro

du

ce HD

I’s in

to IC

T

En

sure in

terop

erability

of system

s

Imp

rove S

ystems

Secu

rity

En

sure eco

no

mies

of scale

Red

uce D

up

lication

Government IT Architecture

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Organisational Structure

BOARD OFDIRECTORS

ChiefFinancial Officer

(acting)Mr A Pretorius

Chief:Regulatory Affairsand Procurement

Mr A P Pedlar

Chief ExecutiveOfficerVacant

Chief:Business

OperationsMs F Pienaar

Chief:Strategic Services

Mr M Mtimunye

Chief:Shared

ServicesMs R E Magoma-Nthite

ChiefInformation

OfficerMr E Khan

Company SecretaryMs E Strydom

Chief Internal AuditMs L Samuel

Audit and RiskCommittee

MINISTER OF PUBLIC SERVICE AND

ADMINISTRATION

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Service Portfolio

SITA provides a broad spectrum of IT services, which are structured under the following categories:

•Client Services•Infrastructure Services•Hosting & Data Centre•Business Portfolio Management•Service Management Centre

•Professional Services•Procurement Services•Service Management Centre•Training; and •Research and Development

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SITA Contribution to Government Programme of Action

• Providing ICT connectivity and remote support by leveraging off the next generation

network that SITA has built.

• Creation of an ICT Blueprint that governs the deployment of ICT’s to Thusong Centres,

• Deploying a shared services platform that will be used to support ICT’s deployed within

these communities.

• Establishing an Open Source Programme Office that will create an Open Source

Laboratory, and an implementation roadmap for Open Source deployment in Government.

• Contributing to the development of a catalytic next generation e-government prototype.

• Developing the framework for a new ERP system in government (IFMS)

• Developing a Government Wide Enterprise Architecture Framework.

• Developing a framework for adopting a Service Orientated Architecture within Government.

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Client feedback highlight performance Challenges

• Lack of a fully executed IT Service Management Framework (ITSM)

• Poor quality and pricing of services;

• Overcharging on the mandatory components of its services (“monopoly”);

• Deficient or possibly non-existent Service Level Agreements (SLA’s) or absence of SLA management

processes;

• Capacity constraints (HR);

• Project management and continuity (projects which are started but then abandoned for various reasons)

• Possible business continuity issues.

• The lengthy procurement lifecycle

• Timely submission of correct and accurate invoices.

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Strategic Imperatives

• Client Relationship Building

• Optimize Information Communication Technology (ICT) Infrastructure and Services

• Modernize Public Service Operations

• Develop Our People

• Achieve operational excellence

• Reduce costs

• Extend our service footprint;

• Improve financial sustainability

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Develop a detailed Service Catalogue that clearly defines each of SITA’s service

offerings.

Increase utilisation to improve cost efficiency

Develop new value added offerings e.g VOIP, LAN & desktop support, DRP

Develop and implement Security Framework

Implement Green Strategy

Key Initiative : Strategic Imperative 1

“Optimize Information Communication Technology (ICT) Infrastructure and Services “

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Optimise and automate departmental core processes

Digitise paper documents [Electronic Document and Records Management]

e-Payments - Improve payment processing, invoicing and administration to reduce

cash transactions

e-Government – enable electronic transactional capability for citizens

m-Government – provide and implement a government wide mobility strategy

Government Wide Collaboration

. IFMS

Key Initiative : Strategic Imperative 2

“Modernize Public Service“

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Key Initiative : Strategic Imperative 3

“Develop our people “

Develop Integrated Talent Management Strategy

Focus on embedding our organisational values to ensure they are instilled

in the way we work

Develop leadership and employee interventions to enhance the

organisations capabilities

Determine and define a strategy for closing specific technical skills gap and

generic management and leadership skills

Improve and professionalize the existing management processes and

governance

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Key Initiative : Strategic Imperative 4

“Achieve Operational Excellence “

Implement an IT Service Management framework

Implement an enterprise and operational governance structure for IT

Develop and implement planning and business processes to deliver clear and

transparent mechanisms for tracking progress and performance against strategic

objectives

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Create a shared services model to centralise, standardise and consolidate the

delivery of all service offerings.

Adopt a standard operating environment that can aid in lowering the total cost of

ownership.

Develop and Implement an IT Asset management strategy

Define and implement a Voice over IP (VOIP) strategy

Develop options to minimise duplication by consolidating and standardising non-

core business infrastructure and applications (Including hardware, software, third-

party contracts including WAN links)

Key Initiative : Strategic Imperative 5

“Reduce Cost “

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License Management – Implement Procurement specific interventions that are specified below:

•Improve processes that improve the turnaround times for procurement•Electronic portal for the purchase of ICT commodities.•Simplify the bidding process by the use of templates.•Enter into single/multi/ year government wide contracts with major software suppliers and

single enterprise licenses for vendors that dominate the space.•Extend hardware and software procurement models to incorporate mass storage,

backup, telecommunications and other IT devices and peripherals.•Entrench software and hardware renewal as a government wide initiative as opposed to

a departmental function.•Establish a streamlined procurement process and use volume purchasing and site

licenses to establish attractive prices on standardised hardware and software.•Develop cost effective and flexible procurement practices such as Strategic Sourcing;

Performance based contracts that will allow government to obtain greater value for its ICT

expenditure.

Key Initiative : Strategic Imperative 5 - continued

“Reduce Cost “

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Key Initiative : Strategic Imperative 6

“Extend Our Service Footprint “

Develop and implement strategies to extend service offerings to existing

customersDevelop and implement a strategy to extend the existing SITA offerings to local

government, using the shared services model

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Key Initiative : Strategic Imperative 7

“Improve Financial Sustainability “

Develop and maintain long term funding strategies.Develop and maintain effective working capital management strategies.Develop and implement an integrated, consistent and robust planning cycle

regime.Map services regarding Revenue/Market Share/ProfitabilityDevelop, Implement and Maintain competitive costing and sustainable pricing

strategies (commercial models).Develop strategies to protect existing revenue streamsAsset Management

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Key Initiative : Strategic Imperative 8

“Build Client Relationships“

Develop and implement a service portfolio databaseImplement CRM

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Budget 2009/10

• Revenue: R4,365 billion

• Gross Margin: 20%

• Surplus after tax: R209,2 million

• Debtors days: 65

• Manage creditor days: 65

• Capital expenditure: R 516,3m

• Operating expenditure: 16.5% of Revenue

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Budget 2009/10

2009/10BUDGET

R' 000

Gross Revenue 4,365,212

Less: Cost of sales 3,492,169

Gross Surplus 873,042

Operating Expenses 720,260

Operating Surplus 152,782

Other Income 137,743

Surplus before tax 290,525

Tax 81,347

Net Surplus/ (loss) 209,178

Assumptions

Gross surplus as a percentage of revenue 20.0%Operating Expenditure as a % of Revenue 16.5%Surplus Before Tax 6.0%Revenue Growth 10.0%

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Budget 2009/10 – Statement of Financial Position

STATEMENT OF FINANCIAL POSITION 2009/10BUDGET

R' 000

ASSETS

Cash and cash equivalents 645,328

Trade and other receivables 725,569

Property, plant & equipment 1,368,057

Other 74,181

TOTAL ASSETS 2,813,135

LIABILITIES

Trade and other payables 622,117

Interest bearing borrowings 10,400

Provisions 41,745

Income received in advance 250,000

Current tax liability 81,347

Post-retirement medical liability 85,000

TOTAL LIABILITY 1,090,609

TOTAL NET ASSETS 1,722,527

TOTAL LIABILITIES AND ASSETS 2,813,135

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Budget 2009/10 – Cashflow Statement

CASH FLOW STATEMENT

2009/10BUDGET

R' 000

Cash from operating activities 394,464

Cash flows from investing activities (516,293)

Cash flow from financing activities (5,200)

Increase/(decrease) in cash and cash equivalents (127,029)

Cash and cash equivalents beginning of year 772,358

Cash and cash equivalents end of year 645,328

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Budget 2009/10

2004/05ACTUAL

2005/06ACTUAL

2006/07ACTUAL

2007/08 ACTUAL

2008/09BUDGET

2009/10BUDGET

2010/11BUDGET

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

Gross Revenue 2,636,757 2,946,185 3,356,615 3,607,613 3,968,374 4,365,212 4,801,733

Less: Cost of sales 2,140,601 2,382,589 2,644,743 2,690,289 3,174,699 3,492,169 3,841,386

Gross Surplus 496,156 563,596 711,872 917,324 793,675 873,042 960,347

Operating Expenses 410,802 488,347 579,724 607,441 694,466 720,260 768,277

Operating Surplus 85,354 75,249 132,148 309,883 99,209 152,782 192,069

Other Income 15,531 39,511 71,991 118,092 127,539 137,743 148,762

Surplus before tax 100,885 114,760 204,139 427,975 226,749 290,525 340,831

Tax 31,630 33,429 60,645 128,774 79,362 81,347 95,433

Net Surplus/ (loss) 69,255 81,331 143,494 299,201 147,387 209,178 245,398

Assumptions

Gross surplus as a percentage of revenue 18.8% 19.1% 21.2% 25.4% 20.0% 20.0% 20.0%Operating Expenditure as a % of Revenue 15.6% 16.6% 17.3% 16.8% 17.5% 16.5% 16.0%Surplus Before Tax 3.8% 3.9% 6.1% 11.9% 6.0% 6.0% 6.0%Revenue Growth 14.50% 11.7% 12.0% 7.5% 10.0% 10.0% 10.0%

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Budget 2009/10 continued

STATEMENT OF FINANCIAL POSITION 2004/05ACTUAL

2005/06ACTUAL

2006/07ACTUAL

2007/08 ACTUAL

2008/09BUDGET

2009/10BUDGET

2010/11BUDGET

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

ASSETS

Cash and cash equivalents 664,892 1,085,064 1,096,728 1,101,257 772,358 645,328 512,016

Trade and other receivables 664,784 556,251 664,972 801,626 713,697 725,569 798,326

Property, plant & equipment 535,279 477,129 474,619 594,133 1,066,669 1,368,057 1,676,378

Other 59,171 108,472 109,137 63,550 73,437 74,181 75,099

TOTAL ASSETS 1,924,126 2,226,916 2,345,456 2,560,566 2,626,161 2,813,135 3,061,819

LIABILITIES

Trade and other payables 560,167 581,601 697,412 656,213 647,052 622,117 610,259

Interest bearing borrowings 36,400 31,200 26,000 20,800 15,600 10,400 5,200

Provisions 58,645 54,000 60,000 73,500 38,298 41,745 45,502

Income received in advance 346,521 536,541 352,327 276,637 250,000 250,000 250,000

Current tax liability 10,693 22,109 57,414 74,241 79,362 81,347 95,433

Post-retirement medical liability 69,765 78,196 85,540 93,213 82,500 85,000 87,500

TOTAL LIABILITY 1,082,191 1,303,647 1,278,693 1,194,604 1,112,812 1,090,609 1,093,894

TOTAL NET ASSETS 841,935 923,269 1,066,763 1,365,962 1,513,349 1,722,527 1,967,925

TOTAL LIABILITIES AND ASSETS 1,924,126 2,226,916 2,345,456 2,560,566 2,626,161 2,813,135 3,061,819

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Budget 2009/10 continued

CASH FLOW STATEMENT

2004/05ACTUAL

2005/06ACTUAL

2006/07ACTUAL

2007/08 ACTUAL

2008/09BUDGET

2009/10BUDGET

2010/11BUDGET

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

Cash from operating activities 342,261 508,932 165,588 271,171 163,370 394,464 419,159

Cash flows from investing activities (123,172) (83,560) (148,724) (261,442) (487,069) (516,293) (547,271)

Cash flow from financing activities (5,200) (5,200) (5,200) (5,200) (5,200) (5,200) (5,200)

Increase/(decrease) in cash and cash equivalents 213,889 420,172 11,664 4,529 (328,899) (127,029) (133,312)

Cash and cash equivalents beginning of year 451,003 664,892 1,085,064 1,096,728 1,101,257 772,358 645,328

Cash and cash equivalents end of year 664,892 1,085,064 1,096,728 1,101,257 772,358 645,328 512,016

Question & Answer session

Thank you