Finance minister Pravin Gordhan earlier this year lashed government departments and agencies for spending just R178 billion of a planned R260 billion for the 2010/11 tax year. Technology was one of the areas where many government departments struggled to spend their allocated budgets for the year.
The result is that the IT industry has lost out on substantial revenue from a sector that is one of the largest customers for its products and services. Government accounts for around a quarter of IT spending in SA, according to market researcher IDC. Worse still, projects key to improving public service efficiency or enhancing service to citizens have faltered over the past few years.
Although grandiose megaprojects such as the national e-government strategy and the complete revamp of the Department of Home Affairs core systems have been in the works for years, progress has proven to be maddeningly slow. There is money available for the projects, but the political will and capacity to make them happen seems to be missing.
"What we're seeing is that procurement cycles have become very long," says Gerald Naidoo, CEO of Logikal Consulting. "Contracts that would normally take six months to be awarded are now taking 18 months. By and large, there aren't many large deals in the market. The budgets are there, but [government departments] are under-spending."
The Department of Communications, for example, recently drew criticism in the National Assembly for under-spending on IT to the tune of R352 million since the 2000/2001 financial year. Constant delays in implementing the country's 112 call centre as national emergency number accounted for much of the shortfall.
And the Department of Home Affairs recently drew flak from the Parliamentary committee for its slow progress in a systems modernisation project that commenced in 2008. This resulted in the department under-spending on IT systems for the first quarter of the 2012/3 tax year, indicating it will struggle to meet targeted deadlines for refreshing its systems.
Maladministration
Where government does manage to spend its budget on technology, there are often questions around the value it is getting in return or around the procurement processes it followed. One reason Home Affairs fell behind in its systems revamp was a protracted dispute with supplier Gijima over a contract to replace its core legacy systems in the Who Am I Online? project.
The legal wrangling over the project has not only delayed the modernisation scheme, but also related projects such as the replacement of the country's ID books with a smart ID card. More recently, a high court judge ruled that a R10 billion tender awarded to a subsidiary of Net1 UEPS Technologies for the payment of social grants was illegal and invalid.
The news isn't all bad. There is some traction on and surprisingly little controversy about the Integrated Financial Management System - a project that has been in the works for over a decade and a half. This complex and important project run jointly by the State IT Agency (SITA), the National Treasury and the Department of Public Service and Administration (DPSA) will see legacy financial, payroll and logistics systems replaced with newer technology.
Part of the problem is a lack of coordination between government departments. Perhaps the biggest challenge facing government departments is that IT still operates in silos, says President Ntuli, government account manager for HP South Africa. Each department and agency has an ICT unit that procures IT hardware, software and services to cater for its own immediate requirements without much future planning.
There should be more focus on consolidation and standardisation to reduce IT operations costs, he adds. If banks can deliver a full range of transactional services to your handset, despite the silos in their businesses and the information security challenges they face, there is no reason government should not be able to do the same, says Ntuli.
Lack of leadership?
Vendors say constant churn of leadership in the institutions and departments that are meant to guide national IT strategy is a major problem in SA. SITA was created more than 15 years ago to drive standards for ICT security and interoperability throughout government departments, as well as eliminate duplication of infrastructure and procure goods for government departments.
But to date, it has not been able to meet the anticipated cost-savings, partly because it has been plagued by constant changes in its leadership. Instead, it has found itself under fire from its government clients for weak tendering processes and poor client service.
The agency appears to have stabilised its management team under CEO Blake Mosley-Lefatola and is drawing close to the end of a three-year turnaround strategy. The DPSA - the department that oversees SITA - claims the agency's turnaround strategy is bearing fruit.
Deputy public service and administration minister Ayanda Dlodlo told the National Council of Provinces earlier this year that SITA achieved cost savings of R250 million and reduced tender backlogs by 97% in the last financial year. Unfortunately, SITA is just one link in a complex chain - although an important one.
Even if government is right in that it has mostly turned the agency around, SITA still needs to align government departments behind its strategies and standards. The situation is not helped by the fact that the seat of the government CIO within the DPSA has been vacant since April 2011, a role that is critical for national IT strategy.
But the IT situation in government isn't all bad, says Ntuli. There are a few agencies, such as the South African Revenue Service, that are constantly innovating in their use of technology to drive efficiency and offer better services to taxpayers, and some signs that government is looking to use technologies such as cloud computing and document management systems to boost its efficiency.
Next priorities
So, what's next on the agenda for IT in government? Vendors close to public sector projects point towards plans to set up a National Health Insurance (NHI) system and a shift towards cloud computing among the next major areas of spending for public sector IT. These projects could, in the long-term, be worth billions of rand to the IT industry, according to industry sources.
Cloud computing - in the form of private cloud infrastructure - is already on government's mind. SITA issued a call for tenders for a cloud infrastructure solution in August, drawing interest from most of the country's large integrators and infrastructure vendors.
Benefits of cloud computing in its various forms for government could include faster provisioning of IT services than is possible when procuring new hardware and software, as well lower costs and better efficiencies, says Ntuli. For example, rather than taking three months or more to issue and evaluate a tender for a new server, government departments could access processing power as a cloud service when they need to.
Leon Wolmarans, business development manager at Health System Technologies, says the country's public health care sector is beginning to gear up for the NHI. If and when the NHI takes flight, it will require hefty investment in technology to support its complex reporting needs, as well the management of patients' electronic records.
Standards and costs for services will be tied to a uniform patient fee schedule that will probably work on a means test calculation for each patient. Getting the billing and financial reporting right will be critical to the success of the NHI, whichever model the government ends up following in its implementation.
Just as importantly, the government will need to create an electronic patient record system with a central database that any clinic or hospital around the country can access for patient data, says Wolmarans. Provincial health departments have invested in their own health information systems over the years, but an umbrella patient record will be central to the success of the NHI.
Weak systems
South Africa's municipalities are struggling as much as national government to put the right systems in place to deliver services to their constituents, many constrained by a lack of funding for IT. With the exception of large metros and secondary cities, most local authorities run archaic IT systems that do not provide a sound foundation for financial and revenue management or for providing electronic government services.
Weak systems are widely regarded as one of the many reasons for poor service delivery and lack of corporate governance among many local government authorities. Only 5% of SA's 343 municipalities and municipal entities obtained clean audit reports from the Auditor General for the financial year 2011/2012.
Brian Brougham-Cook, GM of Samras at Bytes Systems Integration, says one of the biggest challenges municipalities face in revamping their systems is a lack of accounting and enterprise resource planning expertise. With many municipalities losing administration staff that ran their businesses for years and replacing them with inexperienced people, they lack skills to implement the systems and controls they need for functions such as billing and financial management.
"People underestimate the effort it takes to run a municipality," says Brougham-Cook. "It is far more complex than the average business in the private sector." The transaction volumes that councils need to manage bring massive challenges with them, he says.
The only way local authorities will find their way out of their malaise is by appointing CFOs with experience in municipal accounting and systems, adds Brougham-Cook. With the right accounting leadership in place, departments will also be better placed to keep up with legislative changes such as Grap Compliance and the introduction of Standard Charter of Accounts and Economic Reporting Format structures across government.
Connecting citizens
With tight budgets across most local government entities, the industry and government are throwing in ideas such as providing applications through the cloud and infrastructure-sharing among the smaller municipalities to accelerate systems modernisation. Such approaches could create economies of scale for cash-strapped authorities, making it possible for them to put in place better systems than they would be able to by themselves.
Some projects - such as an effort to bring most of the Western Cape's municipalities on to the City of Cape Town's SAP platform - are in their early stages. But the political will and trust required to make such projects work mean it won't be easy for municipalities struggling with legacy technology.
One role that many municipalities see for themselves is to bring ICT services and connectivity to the communities they serve, both to provide broadband as a public service to disadvantaged communities and as a revenue stream from businesses and residents who could afford to pay for broadband. Knysna and Johannesburg are examples of municipalities that are investing in broadband strategies.
The City of Johannesburg signed a deal with Ericsson-backed BWired around two years ago to build a 940km fibre-optic network spanning the city. This next-generation network is to connect government buildings and businesses in the Johannesburg metropolitan area; capacity will also be sold wholesale to other service providers and operators.
The network is on track to be completed on schedule during 2013, says CTO of BWired Broadband, Willie Olivier. The model that BWired and the City of Johannesburg have adopted will not only allow the city to boost the performance of its own network, but also benefit residents and businesses, he adds.
The network is a vital piece of city infrastructure - like its roads and highways. It will enable residents to access services such as health, e-learning, e-governance and e-commerce on a high-speed link, says Olivier. But broadband services will not reach South African communities on a large scale without government intervention.
"The City of Johannesburg is driving this very hard and we will see other municipalities jumping on the bandwagon," Olivier says, adding that BWired is looking to replicate this model in other towns and cities.
Under terms of the contract with Johannesburg, BWired is to build, operate and eventually transfer the network on behalf of the city. The benefit of this approach is that the city didn't need to spend any money on the project upfront, says Olivier.
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