Information Brief

1. Defence Information Brief To the Joint Standing Committee On Defence 15 June 2007 Peter Pedlar Acting CEO Tau Mashigo Head: Business Performance Femke Pienaar Head: Client Business Units Cisco van Schaik GM: DOD business Unit Web: www.sita.co.za

2. Agenda 1. SITA Mandate & Services 2. SITA Financials 3. SITA transformation 4. SITA Strategic Objectives 5. SITA / DOD Relations 6. DOD ICT Spend / Budget 7. DEIS Master Plan

3. SITA MANDATE & SERVICES

4. 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. • 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. • Funding Model • SITA Pty (Ltd) is a Schedule 3a Public Company. • Financially self sustaining through Products and Services.

5. Government IT House of Values Lower Cost Increased Productivity Citizen Convenience Security BEE Enablement Reduced Duplication Economies of Scale Interoperability Government Architecture

6. Services to Government Transversal Infrastructure … and related Services as per BA (e.g Consult, Train, Support) Transversal Systems Acquire ICT Solutions ICT Research Standards & Certification IS Inventory IS Convergence Strategy Disaster Recovery Strategy

7. SITA FINANCIALS

8. Consolidated Statement of Financial Performance 2007/8 2006/7 2005/6 Budget Unaudited Actual R'000 R'000 R'000 Gross Revenue 3,475,000 3,324,327 2,935,506 Retained revenue 3,475,000 3,324,327 2.935,506 Cost of sales 2,663,774 2,550,982 2,371,909 Gross surplus 811,225 773,345 563,596 Operating expenses 588,940 581,242 483,299 Net operating income 222,285 192,103 136,743 Other income 48,490 61,329 39,859 Other expenses 128,147 60,856 61,842 Surplus before taxation 142,628 192,575 114,760 Gross surplus % 23% 23% 19% Operating surplus % 6% 7% 3% Surplus before taxation % 4% 6% 3% Opex % 17% 16% 15% Note: Higher Budgeted Opex % due to increased budgeted labour costs, planned SITA rebranding, as well as planned building refurbishments. These are once off costs.

9. Revenue per Business Unit (06/07)

10. SITA TRANSFORMATION

11. 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.

12. 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](6%) GovTech • Public Sector ICT Conference • Thought Leadership

13. Transformation status • Procurement Services • SPPP updated, tender-award authority restored to Accounting Officers/DG’s; incorporates SCM procedures & processes as per NT Regulations. • Management Structure reconstituted & cleaned up; built-in tender-results review mechanism – no proven corruption case, fewer complaints. • Tender turnaround times reduced from over 240 to 76 days. • Significant cost reductions for government realized – 40% reduction on some SMS equipment. • Share of BEE procurement revenue up to 60%. • Corporate Governance • Continuous efforts made to adhere to PFMA regulations in all mgt spheres with strong Board oversight. • Initial lapses in mgt responses to audit queries attended to. • Corporate governance made a performance assessment factor.

14. SITA Structure

15. SITA Employment Equity Notes: Overall the Company performed well with regards to the achievement towards the set Employment Equity targets in the first year (06/07), however with the commencement of the 2nd year (07/08), Management must make rational decisions when appointments are made in the future. When analysing the progress made to date with regards to the attainment of the set Employment Equity targets on each occupational job level, there are, however, still concerns that the Company is lagging behind with regards to race representation on specialist and lower management job levels, as well as gender (Female) on advanced specialist and senior management job levels. To this end the Company will implement the integrated employment equity strategy which will address these areas of concern. The overall IT skills shortage in the market, combined with a very high demand for EE candidates, will remain a serious constraint in the short and medium term.

16. DOD Business Unit EE Statistics Notes: The DOD’s Unique application portfolio requires embedded DOD knowledge critical for resources that are difficult to source. The ring fenced Infrastructure (Network & Data centers), current lagging technology baseline also serves as a constraint to attract resources The overall IT skills shortage in the market, combined with a very high demand for EE candidates, will remain a serious constraint in the short and medium term.

17. STRATEGIC OBJECTIVES

18. Strategic Focus • Reposition for Public Sector ICT Leadership • Accelerate the Implementation of e-Government. • Provide Thought Leadership. • Develop Appropriate Partnerships and Alliances. • Manage Operations • Radically Improve Customer Experience of SITA. • Focus on Operational Efficiency and Effectiveness.

19. Trends and Drivers • Communication Convergence • Service Oriented Architecture • eGovernment Maturity • Identity Management • Open Source Movement • Strategic Out Tasking • Consolidation and Partnerships

20. 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

21. The Future SITA • Integrated Solution & Service Delivery (Client Centric) • Skills Development • Black Economic Empowerment • Intellectual Property • Strategic Partnering • Facilitate Government-wide Architecture

22. Future Role of SITA 2008 2006 Defence Influence Manage Execute SITA’s total involvement Influence activities (Standards, Certification & Architecture) • Outsourced entities requires a different mix (DOD, SAPS, etc) as per BA’s • Alienable / Inalienable defined Services Management activities Execution activities 2010

23. DOD / SITA Relations

24. SITA / DOD RELATIONSStrategic Alignment Defence STRATEGIC SYNERGY 1999 – SITA Creation Buss Agreement Incorp Agreement CMIS D Convergence Sec Def & C SANDF Armscor Role Defense Review update DOD Strat Guidelines Amendment Act SITA Regulations SITA Transf 2010 Operating Model / Struct IFMS Strategic Resonance Technology Convergence , Net Centric Warfare Other Dept’s, GITOC, Industry Silver Bullets

25. SITA / DOD Regulatory Bodies Defence Requirements Solutions Executive Forums Exco, Divcom CBU Forums DEIS Board Business Management Level SITA / DOD Board Steercoms SLA CCB IS Planning Forum Functional Level SLA Management CMIS Ops Forum Serv Del Forums

26. Serv & Div GITO & CMIS SITA / DOD Engagement Model SITA Army SAAF SAN MED Ops Log Fin HR . . . Industry Defence Service Agreements GITO “SD” D ICT “Acquire” GOC Sup “Sustain” Business Agreement, Business Model & Service Level Agreements SLA 1 SLA 2 SLA 3,4 Contracts Service Level Agreement Series (21 SLA’s in total)

27. Relationship summary Defence • Formal engagement channels that are duly constituted. • Strong contract management (SLA) • Excellent financial controls and payment record (debtor) • Strategic partner/relationship • Embedded knowledge of DOD IT business. • Quality Embedded System approach (ISO9000 Certified) • SITA’s 2nd largest client.

28. DOD ICT Expenditure (SITA) Defence

29. DOD SLA Values 2007/08 Defence

30. DOD – Some statistics Defence • Approximately 500(120 major) Information Systems (excluding embedded C2 information systems)… • used by over 720 organisations … • supporting over 30 000 “business” & “military” users … • in Land, Maritime, Air & Information operations … • that are deployed nationally & internationally.

31. DOD Application Portfolio* Defence Management Applications Integrated Intelligence, Planning, Tasking and Control Defence Computer Aided Manufacturing Procurement HR Recruitment Resource Sustainment e-Learning HR Supply Resource Supply HR Sustainment Finance Admin Language Translation Crime Administration Integrated Military Health HR Service Terminating Resource Disposal Common Applications Messaging, Document Management, Office Automation 41 25 6 23 95 8 3 6 18 1 4 1 4 1 1 28 1 3 1 80 12 6 3 3 * Current Information Systems in use in the DOD

32. DOD Project Portfolio (07/08) Defence

33. SITA DOD Business Unit Defence

34. DEFENCE ENTERPRISE INFORMATION SYSTEM MASTER PLAN (DEIS MP) Defence

35. The purpose of the DEIS Master Plan is to provide an integrated ICS Departmental view and a realistic single execution mechanism of all ICS&S initiatives, programmes, projects and requirements, in terms of both the investment and maintenance portfolios. Defence Enterprise Information System Master Plan (DEIS MP) Defence

36. Defence Enterprise Architecture Defence Common Applications Core Shared Infrastructure Non-Shared ARMY, NAVY, SAAF, SAMHS, LOG, FIN, HR, etc Log, Fin, Pers, (IFMS) & Corp IS / ICT Network & Data Centres (static) Defence Enterprise Information Systems Plan

37. Business Drivers for the DEIS Master Plan Defence Transformation of Business Objective into ICS solutions DEIS SD DEIS MP BUSINESS DOD Information Strategy Defence Enterprise Architecture Defence Management Applications Business Converted into Info Req Defence Functional Applications ICS Enablement of Info Req BUSINESS DRIVERS ICS Business drives ICS design drivers Defence Common Applications Defence Information and Communication Infrastructure DEIS Framework Defence Data/information Resources

38. Resolving The Primary Problem Defence Integrated ICS Departmental View Information Integrated State-wide Initiatives Integrated ICS for DOD Business: Converged Tels & IT ICS enabling All Capability Portfolios Weapon System Embedded ICS Fragmented Paradigm CMIS IT Diverse State Initiatives CMIS Tels IW Service-Unique Tels Service-unique IT Documentation Services SITA & ARMSCOR as primary enablers

39. Application Software & Data projects Defence • Defence Management Applications • Command and Control Apps: 5 • Planning & Control (Defence Admin) Apps: 51 • Military Intelligence Apps: 7 • Business Intelligence Apps: 28 • Functional Applications • Resource Management Apps: 47 • E-Learning Apps: 17 • Military Health Apps: 8 • Organisational Design Apps: 4 • Support Apps: 7 • Common Applications • Messaging Apps: 23 • Electronic Content Management Apps: 44 • Data projects: 23

40. Infrastructure Projects Defence • Telecommunications: 87 • Computing Platforms, Peripheral and Sensors: 27 • Database Management: 6 • System Collaboration Services: 3 • Application Delivery Services and Portal: 20 • Info and Comms Security System: 17 • Infrastructure Element Management: 13

41. Defence

42. Funding Requirement for DEIS MP Defence NOTE: This excludes Item 10 Funds

43. Benefits of DEIS MP Defence • Integrated ICS Departmental viewand a realistic single execution mechanism of all Information and Communication Systems • Funding will be managed corporately • Mission critical capabilities of the DOD have adequate ICS support and enablers • Mission-critical information for decision making is available • Compliance to the DOD Regulatory Framework and National Legislation • Secure Information and Communication Systems

44. Conclusions (DEIS MP) Defence • Priorities are determined by the DOD as guided by the DEIS Master Plan • All acquisition and partnerships will follow the transparent procurement processes. • This event is the start of a long process, pursuing a cooperative engagement of 4 parties (DOD, SITA, Armscor, Industry).

45. Thank YouQ & A Defence Peter Pedlar Acting CEO Cel no 083 450 6596 (012) 482 3321 Tau Mashigo Head: Business Performance Femke Pienaar Head: Client Business Units Cisco van Schaik GM: DOD business Unit Web: www.sita.co.za “A man who does not think and plan long ahead will find trouble right at his door.” - Confucius