Ministerial briefings, State Information Technology Agency & Public Administration Leadership & Management Agency: Strategic Plans & budgets 2009/10

Meeting report

Ms A Dreyer (DA) lodged an objection to the late start of the meeting and wished this objection to be noted.

The Chairperson expressed appreciation for the attendance at the meeting of the Minister and Deputy Minister of Public Service and Administration, Hon Richard Baloyi, and Hon Roy Padayachie. Their willingness to interact with the Committee were warmly welcomed.

Ministerial briefing
Hon Richard Baloyi, Minister of Public Service and Administration, introduced the Committee to the two Agencies making its briefings. He noted that State Information Technology Agency (SITA) was established under an Act of Parliament, and was an entity with its own Board and executive. It was a State entity, with government being the sole shareholder, and the Minister of Public Service and Administration was its political authority and appointed the Board.

The Minister noted that a conducive environment was the key to the success of any strategic plans. Government, as the sole shareholder, had priorities to get SITA on course. There had been numerous recent changes in its Chief Executive Officers but Government was leading the process to have a permanent CEO appointed and this should happen soon. Despite the fact that there was an Acting Chairperson and depleted Board, Government was confident that SITA indeed had men and women who would make sure that SITA was kept afloat and that it could deliver on its mandate.

The formerly-named South African Management Development Institute had now been renamed the Public Administration Leadership and Management Agency (PALAMA). Its responsibility was to provide training interventions to capacitate the South African public service, from entry level. It had a programme of orienteering new entrants into the public service as to what was expected of them, what the policies were, what the culture of the public service was, and how it co-ordinated with the spheres of government. PALAMA also had an advanced programme for further training that allowed for current public servants to be updated in terms of what was expected of them in order to deliver in terms of the mandate.

State Information Technology Agency (SITA) Strategic Plan and Budget briefing
Ms Zodwa Manase, Acting Chairperson of SITA, introduced what would be covered in the SITA presentation.

Ms Ramabele Magoma-Nthithe, Chief of Shared Services, SITA, touched on some background information of SITA. She then tabled information on its strategic focus, organisational structure, service portfolio, and SITA’s contribution to the Government’s Programme of Action (see attached presentation for details). She highlighted the challenges raised by SITA’s client feedback, stressing that it was important for SITA to turn these around. 

Ms Femke Pienaar, Chief: Business Operations, SITA, then detailed the budget. She noted that SITA wanted to generate R4. 5 billion as revenue. However, there was a dilemna in relation to its financial sustainability management. On the one hand, Government wanted to reduce the costs of doing business through Information Technology (IT) but on the other hand SITA generated all its revenue by offering services to Government. SITA received no separate allocation from government. There was quite a drive to extend its services more into the local authority sphere, although this was not within its mandated objectives. SITA believed that it would support the public service drive of government if it could also get the local authorities to connect to its network. All profits in the organisation were reinvested in the services rendered to government.

Ms Pienaar noted that it remained a challenge to reduce payment of debts to 65 days. This had been an objective for the past 3 years. SITA had managed to reduce its creditor days to 65. SITA made all efforts to pay its small, medium and micro enterprises (SMME) bills within 30 days, recognising that SMMEs needed to pay original suppliers for expensive IT equipment.

The bulk of SITA’s capital expenditure had been spent on network infrastructure and its hosting environment. SITA’s operating expenditure had been 16.8%, and its extended target was to push this down to 15%.

Ms Pienaar then took the Committee through SITA’s various budget allocations. With reference to the CAPEX budget, she drew the Committee’s attention to the fact that the growth shown was in terms of the hosting environment. In order to deliver its services, SITA invested in infrastructure. She pointed out that R338 million had been purely for the upgrade of infrastructure and the hosting environment.

Ms Pienaar then addressed the challenges SITA faced. The first related to SITA’s Service Level Agreement (SLA) management and its BA (Business Agreement) management processes. The relevant legislation (the Act) stipulated that the relationship between SITA and others must be regulated by a Business Agreement and a Service Level Agreement. Unfortunately, because SITA also had a monopoly, there was a resistance from customers to sign the SLA, and this created a problem because SITA believed that the SLA was an instrument whereby it could regulate the business relationship, specifically clarifying expectations and delivery. SITA had realized that approval chains in some departments were very long. It thus worked closely with government legal advisors to find ways to optimise the approval process.

SITA’s debtor book remained a challenge. Because SITA was rendering mandatory services, it was a problem simply to stop services if the client failed to pay. SITA would work closely with the chief financial officers and chief executive officers of the clients to try to get payment on time. If timeous payments were not received, this impacted on SMME payments, as SITA then had to carry the full financial risk related to late payments.

In order to address the global skills challenges in IT, SITA had developed a flagship learnership programme, and details were given in the presentation.

SITA had faced challenges regarding its public image and perceptions, and challenges around having only an Acting CEO for some time, but believed that collectively the Executive could carry the organisation forward.

SITA had been placed under a lot of pressure to participate in Local Economic Development. SITA was in the process of decentralising procurement, and aimed to establish tenders in the provinces so that local companies in those provinces would attend to the delivery.

Finally, Ms Pienaar highlighted the areas in which SITA would be asking for assistance (see attached document)

Discussion
Ms L Odendaal (COPE) wanted to know how long the Chairperson of SITA had been in her position and why there was a consistent turnaround of CEOs. She asked whether this had been a leadership issue, or was due to political interference.

Ms Manase responded that she had been Chairperson since August 2008.

Minister Baloyi added that this was not the first time that Ms Manase had been the Chairperson; she had also done a term of office as Chairperson from 2002, and was very experienced.

Ms H Van Schalkwyk (DA) noted there had been a 2% drop in employee satisfaction levels, and asked whether there had been an improvement on this more recently. She also wanted to know what the latest customer satisfaction index was, as it had dropped in the last year to 61% from the previous year’s 63%.

Ms Magoma-Nthite stated that in 2008/09 there had been an improvement of more than 15% in terms of internal employee satisfaction. She believed this was due to the interventions that had collectively been identified and deployed within the organisation. However, as Ms Pienaar had stated, customer surveys had indicated a further drop in customer satisfaction to 57%. This was largely due to concerns about cost-effectiveness. SITA was doing a global benchmark on all its mandatory services. Its tariffs had been capped until the benchmark exercise was completed. Thereafter SITA would negotiate with Government on its tariffs.

Ms Dreyer (DA) understood that SITA only had government as a customer, yet the government departments did not have to use SITA’s services, and it had said that getting the departments to sign certain agreements and pay their debt was a problem. Ms Dreyer appealed to the Minister to help to see that SITA’s problems around these issues were solved.

Ms J Moloi-Moropa (ANC) wanted SITA to unpack the issue of the Acting CEO and the collective way of working. She asked that some reasons be given as to why SITA thought this would work.

Minister Baloyi wanted to address some of these issues. He stressed that either he or his Deputy Minister would try to attend all Portfolio Committee meetings, unless committed to other more urgent issues. He saw Portfolio Committees as extensions of Parliament that would focus on specific issues and he and his Deputy would be readily available to the Committee.

The Minister stated that he felt that the owed the Nation an explanation about what was happening with SITA – in public discourse more was said about the challenges of SITA than the good that was being done. He undertook to address the Committee on the issues challenging SITA and address the help that was required by it. He added that SITA existed as a State-owned entity, and that, justified or not, this also raised concerns and public debate.

The Minister then addressed the issue of high turnover of CEOs. The public was well aware that SITA had been operating for some time with only Acting CEOs. During its ten years of existence there had been more than ten CEOs. He again stressed his commitment to investigating why this was so, and emphasised his commitment to giving a full report back to the Committee. SITA had been established to drive the State’s IT needs and its challenges had to be dealt with. At present a team of three staff were assisting one another in leading SITA, instead of one CEO, which would strengthen this office to enable delivery until a new CEO was appointed.

The Minister reiterated that it was important to acknowledge challenges but also to show what was being done in order to address the challenges. He preferred to respond fully to the dialogue in another meeting and requested the Committee to put SITA again on the agenda soon.

The Minister added that, despite the fact that SITA was running on Acting capacity and diminished capacity at Board level, he felt confident that it was able to deliver with its present team. The Annual Report would indicate that SITA was indeed afloat. Nothing would be hidden and all unanswered questions would be dealt with, as everything done was in the interest of the State.

Ms Manase added that during her tenure as a Board member, there had been a CEO in place for more than two years and SITA hoped that this situation could again be achieved.

Ms Pienaar said that she wanted to speak to issues of procurement efficiency. SITA had initiated a procurement transformation programme focusing on host optimisation, standardisation, security, and full control over corruption issues. Its highest priority programme was the finalisation of implementation of its enterprise resource programme. This was also an issue raised by its customers. Through this resource planning system, which was implemented in 2007/08, SITA now focused on a project management approach rather than an operational approach. There was better productivity, as all resources were now monitored and the bulk of the invoicing process was now automated, so that there was less human intervention.

Ms Pienaar said SITA had realised that it needed to understand its customers better, particularly from the perspective of its monopoly. SITA had disparate customer relationships at various levels. However, it could now collaborate the information associated with all customers at any point in time. All the leaders in SITA were thus able to get access to the information, and engage with and improve upon customer expectations. SITA and Government Communication Information Systems (GCIS) had also together identified that a national Government IT plan was critical, so SITA hoped to work with all provinces to define this plan. This would also help to manage the demand and supply of the customers.

Ms Odendaal asked how many board meetings had been held in the past year and what attendance had been.

Ms Manase stated that there had been a number of meetings, particularly since the resignation of the CEO in July last year. These meetings largely dealt with dissatisfaction of staff. Between the changeover from the old to the new board, many meetings had taken place, to ensure that SITA was kept afloat. While there had been a slight decline in profits, SITA’s board had worked extremely hard and SITA was still reporting a profit.

Ms Odendaal said that, because SITA was a State owned entity, it was supposed to offer leadership to all government departments across all tiers of government. She asked whether a proper cost analysis had been done for its various initiatives, and what the results indicated for the supply of services to all government departments. She added that Telkom was in a similar position and had spent significant amounts on its networks; SITA should perhaps look to achieving economy of scale by working in conjunction with Telkom.

Ms Pienaar said that after SITA had looked at the compliance with project management principles and the productivity of its resources associated with its project, it had realised that it must begin with an assessment of the competency of all project management, which was implemented last year. Competency assessments were being done on all project management and project administration aspects, and there had been focused development in these areas. SITA also implemented improvement of the Enterprise Project Management (EPR) office, where it defined processes associated with project management, and also defined monitoring and control reports to allow for monitoring of all projects on a monthly basis.

Ms Pienaar explained that SITA now ran the core backbone of the Neutel / Intel new generation networks (NGNs), and the access layer on the Telkom side. At present SITA was reassessing the cost effectiveness of having a split between the two current fixed line operators in the country. Both were now well established, and it was a good time to assess whether Telkom and Intel should remain separate. SITA had a Virtual Private Network (VPN) running on the Telkom / Intel infrastructure and fibres, for security reasons.

Ms Pienaar added that in order to optimise its control environment SITA still needed to standardise processes, and had a programme aiming to ensure that everyone complied with the standardised processes. The ERP implementation was also enhanced by automating many of the systems, which meant that improved automated controls were in place. 

Ms Moloi Moropa took over as Chairperson from this point at the meeting.

Ms Van Schalkwyk asked what action had been taken around issues in the control environment raised by the internal audit. She noted that the Auditor-General’s report indicated irregular expenditure of R11 million and asked for comment on this.

Ms Manase responded that SITA was following up on all of the weaknesses around the control environment, as raised by the internal audit report. The irregular expenditure of R11 million had been a technical matter, and related to a staff member who had authorized a five- year lease agreement when he did not have the authority to do so. The Board, with whom the decision should have rested, had rectified this subsequently. Action had been taken and the staff member was no longer with the organisation. Other employees had also been disciplined.

The Chairperson said that time constraints precluded the issues being addressed more fully.

Public Administration Leadership and Management Agency (PALAMA) Strategic Plans and budget briefing
Dr Mark Orkin, Director General, PALAMA, said that he would convey the broad mandate of PALAMA and explain how it had been reconstituted. He added that PALAMA, in order to be effective on its current scale, found it necessary to work in a partnership model. Its statutory mandate was improvement of the public service through training and development.

PALAMA was guided by the Minister’s programme of priorities. About half of South Africa’s population lived outside urban areas. PALAMA had been reminded by the Minister to take development into these areas forward, particularly for women and black graduates from institutions outside the main centres. The need for change in emphasis in the delivery arm of PALAMA had thus started to be implemented.

In response to the need to develop leadership, PALAMA had induction-training programmes aimed at every new public servant entering the sector. PALAMA also supported the development of the public service in post-conflict countries elsewhere in Africa.

PALAMA’s key target audiences were identified as public servants, HR managers, training institutions, Ministers, MECs and Directors General, and the public.

Mr Rufus Mmutlana, Deputy Director General, PALAMA, highlighted the fact that PALAMA was a State academy and targeted public servants. He presented the demographic breakdown of the 1.4 million public servants, of whom 75% were African. A concern in 2006 had been lack of training for middle management, which PALAMA was addressing. He also highlighted the transformation processes, and pointed out the Ministerial Commission’s initial findings about problems areas, showing how the shift from the former-SAMDI strategic objectives to PALAMA’s strategic objective had addressed these (see presentation for full details).

Mr Mmutlana tabled the PALAMA organogram and Senior Management Services (SMS) Equity profile, and pointed out that the disability profile had increased from 0% in 2006 to the current 2.4%.

Mr Botshabelo Maja, Deputy Director General, PALAMA, presented information about the executive development and learning branch, the curriculum management branch and junior and middle management branch, and their key current developments.

Ms Mondisa Manjezi, Deputy Director General, PALAMA, presented information on how PALAMA worked, particularly its Training Co-ordination branch, and emphasised PALAMA’s outreach and the quality of its training programmes. She also gave an overview of PALAMA’s international relations and international support programmes. She ended her presentation with an overview of PALAMA’s governance and strategic support plans.

Mr Carlo Venter, Chief Financial Officer, PALAMA, focused on PALAMA’s corporate services, equity profile, and corporate finance. He tabled and explained PALAMA’s financial overview (see attached document).

Discussion
The Chairperson thanked PALAMA for the presentation and said although there were some concerns, the issues could not be addressed in depth at this meeting, because of time constraints.

Ms Dreyer was encouraged by PALAMA’s success in looking to creation of entry jobs for unemployed youths. She asked whether PALAMA offered bursaries to students, so that the civil service could work opportunities to students, who would then repay their bursaries by working, and thus encourage young people to follow a career in the civil service.

Dr Orkin acknowledged Ms Dreyer’s suggestion regarding bursaries as useful. Tertiary bursaries were already covered by other institutions, but he agreed that it would be useful for PALAMA to become involved in some of these to support its Barriers to Entry programme.

Ms Dreyer asked if the 23 000 applications for vacant Senior Management Service positions were dealt with by PALAMA alone or across all civil service departments.

Dr Orkin responded that the 23 000 applications were handled by PALAMA alone.

The Chairperson referred to curriculum management and the development and accreditation of curricula. She asked whether, given the existence of the Public Service Sector Education and Training Authority (PSETA), it was necessary to still have this particular line unit in PALAMA. Institutional accreditation was based on Education and Training Quality Assurance (ETQA) requirements, and this surely created duplication in accreditation.

Mr Maja said that one of the key changes that PALAMA was wanting to institute was to move towards more and more accredited training programmes. It hoped that more public servants who attended training programmes would be awarded certificates of competence instead of merely getting certificates of attendance. Currently, less than 10% of PALAMA’s courses were accredited. This meant that almost all of the 112 courses it offered needed to be redeveloped to achieve accreditation and thereby allow public servants to get Competency certificates. PALAMA’s accreditation unit was dealing with the South African Qualifications Authority (SAQA) and PSETA, to get accreditation for these programmes. PSETA did not currently ensure that its credits were aligned with SAQA, but would only check that the PALAMA programmes were aligned. PALAMA now had a joint implementation plan with SAQA and PSETA for that turn-around to be integrated in tertiary institutions.

He also added that quality assurance also dealt with the quality management systems within the organisation. All quality management processes, some of which had an audit implication, were also dealt with.

Mr Maja added that questions about the relevance or benefits of training were related to the analysis about what skills were upgraded. PALAMA and PSETA needed to tighten up on this area. Departments would develop workplace skills plans, which it would then submit to PSETA, who in turn would give PALAMA the profile of what skills the public service needed. That chain had not been as smooth as it should be, and had not given an answer as to who must determine what skills needed to be upgraded each year. It was necessary to strike a balance between employee interests, public interest and State interests.

Ms van Schalkwyk commented that the impact of PALAMA’s work was not always experienced at grassroots level. She asked whether the knowledge of the eight Batho Pele principles, relating to matters such as access, courtesy, and services standards was important, as the public had negative perceptions about the attitude of public servants.

Mr Mmutlana answered that attitude training was part and parcel of PALAMA’s induction programme. Between 3 000 and 4 000 trainees would go through this programme annually. PALAMA’s new induction programme addressed the key issue of attitude, and this programme was compulsory as it defined a public servant. Last year, 2 000 attended the induction programme and in the current year PALAMA hoped to reach many more.

Mr A Williams (ANC), noting that PALAMA did not generate all its own training material, asked what mechanisms it used to make sure that the training it gave was beneficial and relevant. He also wanted to know how much was spent on external consultants who produced the training material.

Ms Odendaal said her major concern was how PALAMA actually defined its successes, and how these were measured in terms of public representation and public experience. She asked who defined its performance, who decided who would be sent for training, and whether programmes were also in place to retain interns.

Mr Mmutlana said that participants who had been trained gave feedback, and facilitators submitted reports. In addition, there were on-site monitoring and evaluation officers to ensure that facilitators were covering all intended outcomes of the programme. PALAMA also intended that impact studies become part and parcel of its programme evaluation.

Mr E Rasool (ANC) asked whether the State or the employee determined what skills were upgraded.

Minister Baloyi said that the State defined policy matters, so it was the responsibility of the State to define policy on training and intervention. Previously, the Department of Public Service and Administration (DPSA), the Public Service Commission and PALAMA would all be called to a round table discussion as to who would set the direction and determine the speed of training. The clear answer was that broad policy on training had to be developed by the State and Department, so that the entities did not pick and choose what was to be provided. It was clear that there was a need for training to build capacity to respond to areas of need. One area was financial management. Another must address the issue of graduates who were not employable, and this fell within PALAMA’s ambit. PALAMA and PSETA were entities that had a role to play in the DPSA in terms of capacity building. The co-ordination between these two entities was very important and they complemented each other.

Committee business: Adoption of Minutes only (not budget vote reports)
Ms Dreyer (DA) proposed that the minutes of the two Committee meetings be adopted, but stated that the DA reserved its rights not to adopt the two draft budget reports, as she felt the Committee was not ready to do this.

Mr Williams (ANC) seconded this motion on behalf of the ANC.

The meeting was adjourned.