Portfolio Committee on Safety and Security Jonas Bogoshi Chief: Strategic Services Mfanyana Salanje Chief Financial Officer 4 May 2007 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
Agenda 5. Challenges 1. Introduction 2. SITA Transformation 4. FY08 Budget 3. Strategic Objectives 2
INTRODUCTION 3
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. 4
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. 5
House of Values 6 Lower Cost Increased Productivity Citizen Convenience Security Interoperability Reduced Duplication Economies of Scale BEE Enablement Government Architecture
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 7
Mandated Services to Government and related Services as per BA (e.g. Consult, Train, Support) Private Telecoms Network Transversal Systems Procure ICT ICT Research IS Inventory Standards & Certification Disaster Recovery Strategy IS Convergence Strategy 8
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 9
Top Accounts 2006/2007 (12 Months ending 31 Customer Name March 07) Mandatory Non Mandatory Total SAPS 235,757,956 407,906,080 643,664,036 DOD 539,923,992 0 539,923,992 DEPT OF CORRECTIONAL SERVICES 57,030,806 67,642,688 124,673,494 DEPT OF JUSTICE 13,249,573 98,976,938 112,226,510 SASSA 3,475,596 97,299,329 100,774,926 KWAZULU NATAL HEALTH 49,073,384 39,709,362 88,782,746 DEPT OF HOME AFFAIRS 65,909,887 21,709,925 87,619,812 DEPT OF SOCIAL DEVELOPMENT 3,712,269 76,711,641 80,423,911 DEPT OF LAND AFFAIRS 38,844,936 26,821,597 65,666,534 DEPT OF EDUCATION 6,067,492 43,486,162 49,553,654 KWAZULU NATAL EDUCATION & CULTURE 8,602,519 40,536,825 49,139,344 PROVINCIAL ADMIN WESTERN CAPE 31,202,304 16,913,885 48,116,189 LIMPOPO HEALTH 9,645,277 36,334,767 45,980,044 EASTERN CAPE OFFICE OF THE PREMIER 24,285,569 20,104,784 44,390,353 GAUTENG HEALTH 0 42,060,191 42,060,191 GAUTENG SHARED SERVICE CENTRE 30,545,516 9,193,440 39,738,956 DPSA 2,443,666 35,600,421 38,044,087 DEPT OF PUBLIC WORKS 19,665,058 16,934,453 36,599,511 DEPT OF LABOUR 32,233,414 864,481 33,097,895 DEPT OF WATER AFFAIRS 21,185,063 10,420,066 31,605,129 EASTERN CAPE SOCIAL PENSIONS 7,991,341 22,886,011 30,877,352 NATIONAL TREASURY 19,438,958 11,373,954 30,812,913 TOTAL 2,363,771,577 Percentage of Total Revenue 70.86% 10
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 11
SITA TRANSFORMATION 12
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. 13
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 14
STRATEGIC OBJECTIVES 15
Trends and Drivers Communication Convergence Service Oriented Architecture egovernment Maturity Identity Management Open Source Movement Strategic Out Tasking Consolidation and Partnerships 16
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 17
Initiatives 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 18
FY08 BUDGET 19
Consolidated Statement of Financial Performance 2007/8 2006/7 2005/6 Budget Forecast Actual R'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 799,238 677,548 610,074 Operating expenses 545,942 479,199 437,533 Net operating income 253,296 198,349 172,541 Other income 48,490 60,188 39,511 Other expenses 128,147 106,284 97,291 Profit before taxation 173,639 152,253 114,761 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. 20
Consolidated Cost of Sales 2007/8 2006/7 2005/6 Budget Forecast Actual R'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 21
Total Depreciation Business Shared Strategic CEO's Operations 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 depreciation on 2007/8 financial year budget 116,132 20,462 3,156 240 792 140,782 Depreciation adjustment based on 2006/7 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 22
Total assets Budget Actual 2007/8 2005/6 Rand Rand 000 000 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 23
Equity and Liabilities Budget Actual 2007/8 2005/6 Rand Rand 000 000 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 24
Property, plant and equipment movements Budget Actual 2007/8 2005/6 Rand Rand 000 000 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 25
Capex Budget Total R'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 26
Cash flow Statement Budget Actual 2007/8 2005/6 Rand Rand 000 000 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 27
PEER COMPARISON 28
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CHALLENGES 32
Challenges Constraining Funding Model Weak Legislative Mandate Industry Skills Scarcity Reluctant Client Base 33
Thank You Q & A Jonas Bogoshi Chief: Strategic Services Mfanyana Salanje Chief Financial Officer A man who does not think and plan long ahead will find trouble right at his door. - Confucius State IT Agency (Pty) Ltd 459 Tsitsa St. Erasmuskloof Pretoria, South Africa Web: www.sita.co.za 34