Creating Value through ICT in Local Government – the Cape Town experience

1. Creating Value through ICT in Local Government – the Cape Town experience Name surname Company

2. Function & Duties Municipalities • Electricity • Water and Sanitation • Solid Waste • Roads, Stormwater and transport • Public Housing • Local Economic Development • Social - and primary health services • Emergency Services • Municipal Policing • Urban Planning and Environment • Sport and Recreation • City Administration Local Government – the delivery arm of Government

3. Demographics of Cape Town Population:3.4 million Share of National GDP: 15.9 %Share of Provincial GDP: 82 % Area:2461 km2 Rateable Properties:700 000 Employees: 23 579 City of Cape Town annual budget 2009/10: Revenue: R18,8 billion ZAR Capital: R 6,2 billion ZAR City of Cape Town annual Income 2009/10: From Utility Services: 53 % of total Revenue From Property Tax: 23 % of total Revenue

4. Transforming Local Government Merging autonomous Organisations is complex: • “Lack of standardised financial policies and procedures” • “IT systems entrench the ‘old order’” • “Back-office systems were deemed to be outdated, functionally inadequate and not properly integrated” • “Difficulty in merging these systems was in fact hindering the merger of the administrations and undermining the objectives which motivated the creation of the Unicity”

5. Enable Social / PoliticalConsciouspolicies Creating Value in the Public Sector – “City Leadership only get involved when they realise that – if IT fails they will fail ” High Address historical backlog and service Inequality – Social Upliftment Improve Service Del. Createfinancialvalue Financial & Organisational Transformation Enabled trough ICT Advance socialupliftment Improveservice delivery Advance Social Upliftment Informationtransparency Long-term financial Sustainability and Improved Efficiencies Result: Continue doing more of the same. EnhanceOrganisational Performance Med. High Improved Efficiency

6. Creating Value • “How can you justify spending money on computers when the business of Local Government should be all about:” • Social Upliftment • Service Delivery • Sustainability

7. Public Sector Value Creating Measures Quantifying only the tip of the Iceberg Financial VALUE

8. Strategy Process What makes Organisations Successful? TECHNOLOGY STRATEGY: What must we do ? Organisation PROCESS: How are we going to do it? People People: Who is going to do it ?

9. Our ERP Strategy – Fundamental to Organisational performance MAINTENANCE Processes REVENUE Processes An ERP system offers organizations a comprehensive and integrated solution for managing services such as financial, revenue, human resources, maintenance, procurement, leasing, customer care on a single integrated IT system. It is notso much about the technology as it is about the integration of business processes contained within the system. An ERP system vs. so called ‘best of breed’ systems. PROCUREMENT Processes ASSET MANAGEMENT Processes PROJECT Processes CUSTOMER Processes HR processes PLANNING processes ACCOUNTING processes

10. - Billing to sundry debtors - Financial Accounting SD Sales & Distribution FI Financial Accounting MM Materials Mgmt. CO Controlling - Management Accounting - Procurement & Inventory Management SCADA* R/3 and IS-U/CCS AM Fixed Assets Mgmt PP Production Planning EDI QM Quality Management PS Project System • Plant Maintenance - Asset Management PM Plant Maintenance WF Workflow Field Service Support IS Industry Solutions - Project Accounting HR Human Resources IS-RE Work Clearance* IS-U / FERC SM Service Mgmt GIS AM/FM - Real Estate Management CAD • Human Resources & Payroll IS-U/ CCS • Industry Solution for Utilities • Customer Care & Revenue Management Business Process Integration ERPFact Sheet • 420 end-to-end Business Processes • Cost: R354mil (in 2002) • Single Instance • 8 250 Users • > 500 SAP Sites City Wide • 3,2 mil ISU contracts • 1,2 mil consolidated invoices per month

11. City ofCape Town Cape Town’s ERP Strategy “To implement a functionally rich ERP system, in a manner that will ensure integration, facilitate the merger and bring about organisational transformation.” Thereby, enabling the City to deliver on its Strategic Objectives”

12. Creating FINANCIAL VALUEThe City’s ERP-ROIStudy: Total Project Cost Over 3 years: R355 mil (2001-2003) Support Cost: p/a R 62 mil (2003) Value Creating Opportunities (VCO’s) tracked: • Support Staff Costs • IT TCO • Revenue • Inventory

13. Break-even in June 2005 – with only 11% of the financial value of Improved City Revenue attributed to the ERP Program. City’s ERP program ROI:Payback in 36 months

14. FINANCIAL VALUEImproved Cash Position Go-live Planned loan of R300 mil not taken up

15. ICT spend in the City of Cape Town The value of our IT investment can not be doubted. A relatively diminishing investment is enabling an growing organisational capacity.

16. Public Sector Value Creating Measures Quantifying only the tip of the Iceberg Political VALUE Citizen VALUE Social VALUE Financial VALUE

17. Large disparity in the socio-economic status of citizens • Identifying citizens which can – but don’t pay; versus Citizens which do not have the means to pay. • Support the vulnerable members of society. Examples of social responsible Policies and Tariff- structures enable via the ICT investment: • Free Basic Utility Services. • Grants for the Indigent • Debt relief through arrangements and incentives • Free Internet access from all 100 Municipal Libraries Creating: SOCIAL VALUE

18. Convenience: • Itemized Billing and Consolidated Invoicing. • Pay Municipal Account at any Cash Hall across the City, via Internet, Debit / Stop Order, 3rd party vendors etc. • Centralised Call Centre for account queries and defect reporting. Execution of Service Request • Works Management via Generic Enterprise-wide Process Flexibility of Service • Account available in 3 official Languages Creating: CITIZEN VALUE

19. Go-live Creating: POLITICAL VALUE “Good News” • “Trend Setter” • Compliance: Unqualified Financial Audits • Both National and International Recognition. • But, its actually all about what the newspapers are saying – as demonstrated via the following sequence of newspaper articles: Jan 2003 Sept 2003 Oct 2003

20. Value Creation demands Ongoing Investment ERP Story: 2001-2010 – it’s a journey 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 1 6 Flexible RE PSRM Corporate Performance Management Business Warehouse HCM Benefit Realisation 4.7 Upgrade ERP6 Upgrade

21. City of Cape Town System Capability Corporate Performance Management Financial Perspective Internal Business Process Perspective Vision and Strategy Customer Perspective Innovation & Learning Perspective Business Warehouse R/3 and IS-U Logistics Human Resources Real Estate and Land Revenue Management Finance

22. Service Delivery: The core business of Local Government Receive Report Execute Assign Close Assign Close All Services / Works Request in the City could follow the same process to overcome the challenge of initiating and tracking the diversity of services we are responsible for: The Notification Process Managing Service Delivery through the Corporate Works Management Process.

23. Spatial Reporting: Service Delivery

24. The City’s Dashboard and Reporting Tools The Value of up-to-date Management Information – presented via dashboards

25. City of Cape Town a Systems View Corporate Performance Management Financial Perspective Internal Business Process Perspective Vision and Strategy Customer Perspective Innovation & Learning Perspective Business Warehouse R/3 and IS-U Logistics Human Resources Transactional Systems enabling Local Government Business Process Real Estate Revenue Management Finance

26. “Analytical and Reporting Tools”Only once you have well defined automated Business Processes you can extract Valuable Management Information.

27. Reporting and Dash boarding – Operational Reports Tactical Reports Strategic Reports

28. 2010 Event Tracking Dashboard

29. SDBIP’s – City’s delivery Management

30. Organisational Performance Management

31. Strategy Process The Role of IT Systems in Value Creation IT Systems allow organisations to align and enforce: TECHNOLOGY STRATEGY: What must we do ? Organisation PROCESS: How are we going to do it? People People: Who is going to do it ?

32. The Systems Approach has created Value through being: • TRANSFORMATIONAL : Helped to align the operational activities of the organisation to its strategic imperatives • A CREATOR OF CAPACITY: Provided a robust technical platform to integrate and standardise business processes across the organisation Significantly impacted the city’s operating model, organisational structure and human performance considerations - Services closer to the People. • COMPLIANCE: Provides effective management reporting capabilities, encouraging fairness, accountability, responsibility and transparency • CREATOR OF BENEFITS: Both Financial and non-financial benefits • Provides a Powerful Platform which we believe will continue to create additional value.

33. Thank You