PRESENTATION TO THE PORTFOLIO COMMITTEE ON LABOUR 09 FEBRUARY 2011

1. PRESENTATION TO THE PORTFOLIO COMMITTEE ON LABOUR 09 FEBRUARY 2011

2. 2 Briefing on the progress made with regard to the Public Private Partnership (PPP) IT Contract with Siemens

3. BACKGROUND TO THE PPP 3

4. MOTIVATION FOR THE PPP 4 • The need to partner with the private sector for improving IT capability, leverage of expertise and specialist knowledge, and exploit international standards and best practice • To address a high turnover of DOL IT staff • The need to integrate labour market services and systems to offer better service • To form part of the move towards automation of services towards e-government initiatives • Achieving maximum IT benefits and objectives against budgetary constraints

5. COMPONENTS OF THE PPP 5 Risk sharing • Department of Labour articulation of the business requirements • Siemens systems design, build, operation and maintenance upfront capital investment ======================= Deliverables • IT Operations and infrastructure : 70% of contractual deliverables • Systems development : 30% of contractual deliverables

6. CURRENT CHALLENGES 6 PPP - STRATEGIC • IT partner delays to systems development arising from lack of capability, poor project/quality and resource management. • IT Partner retrenchments, contract terminations and high staff turnover resulting in loss of skills\knowledge to service the DOL. • Cession of PPP contract by Siemens Limited • Carve out of Siemens PPP - OPERATIONAL • System operational challenges • Outdated equipment in the DoL environment • Increased demand for mobile computing (laptops)

7. STRATEGIC PLAN TOWARDS COMPLETION OF PPP 7 • Diagnostic review of the PPP on areas identified by the DoL • Done • Development of the Exit and Transfer plan • Draft Plan currently in consultation • Establishment of an internal steering committee to manage the transition to a new IT delivery model • Done • Development of a new DoL ICT strategy • Process underway by SITA • Conducting of a feasibility study on a new ICT delivery model • Will commence as soon as strategy is completed • Resourcing of the current Office of the Chief Information Officer (OCIO) office to manage closure and transition • Process underway

8. SCOPE OF DIAGNOSTIC REVIEW 8 KPMG External assistance was sought to: • Determine the impact of the Siemens carve-out and cession of the contract by DoL • Determine the business rationale for the use of SAP as the solution platform • Determine responsibility and liability to purchase software licenses • Investigate and identify current termination options • Penalties due to the Department • Determine whether "Additional Services” have been appropriately costed • Identify measures to address current delivery challenges

9. KPMG HIGH LEVEL FINDINGS 9

10. HIGH LEVEL FINDINGS contd. 10

11. PROJECTS IN PROGRESS 11

12. PROJECTS IN PROGRESS 12

13. PROGRESS TO DATE 14 • Letter of termination / intention not to renew contract was given to Siemens. • Secured involvement and participation of National Treasury, SITA and the State Attorney to assist in resolving current PPP contract problems. • Strengthened governance structures to oversee current IT projects - Management Committee receives regular progress reports and provides guidance to the IT Steering Committee. - Increased participation of business stakeholders at forums • SITA Contract manager appointed to oversee the PPP contractual matters • High level engagement with Siemens Limited is underway - implementation of recommendations of the PPP KPMG diagnostic report • Engagement with SITA on the development of the ICT strategy

14. 15 Thank you