SITA Quarter one Corporate Performance Report as at 30 June 2015.

SITA Quarter one Corporate Performance Reportas at 30 June 2015

1. FY2015/2016 Quarter 1 Performance Report

2. FY2015/2016 Financial Performance Report

3. Performance focus areas for Quarter 2

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Outline

SITA Strategic Programmes

333

SITA 22 Transformation Initiatives

Service delivery: The purpose of this programme is to provide high-quality IT services to enable government to deliver efficient and convenient services through the use of ICT.

Procurement: The purpose of this programme is to address all issues relating to delayed procurement turnaround times, removing customer pain points, and transforming the procurement function.

Organisation: The purpose of this programme is to build and maintain organisational capability to enable SITA to achieve its strategic imperatives.

Governance and administration: The purpose of this programme is to provide leadership, strategic management, governance, risk and resource management, in line with Government’s accepted norms and standards.

Financial sustainability: The purpose of this programme is to ensure effective and efficient financial management and to ensure financial growth and sustainability.

Infrastructure: To optimise the provisioning of SITA’s IT infrastructure services in order to increase availability, flexibility, scalability, predictability and security.

Financial Sustainability

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Strategic Objective

Performance measure/ indicator

2014-2015 Actual performance against target Reason for variance

Estimate Target Q1 Actual status

Achieve revenue growth

% increase in revenue (year-on-year)

R5.086bn Q1: 654 126 739 AchievedR951 297 544

Mainly due to higher than expected agency and fully managed IT operations transactions

Achieve sound financial management

% profitability 3.1% Q1: 3% surplus after tax

Not achieved12.6% deficit

Mainly due to low margin agency transactions and higher than expected service delivery expenditure

Liquidity ratio 3.1:1 Q1: 1.2:1 Achieved2.2:1

Due to high opening cash balance at the beginning of the quarter under review

% expenditure against approved Capex budget

18.2% Q1: 10% of approved 2015/16 Capex

Achieved16.7% Budget: R1.152bnSpend: R191 845m

Due to delivery of some commitments from the previous financial year

Financial Sustainability

• SITA achieved three of the four performance indicators measured in the organisations APP

• The deficit before tax for the quarter under review is currently at R215,3m from a revenue of R1,235bn – translating into a negative effect of 17,4%

• The actual revenue of R1,235bn is 31,5% above the budgeted amount of R939,4m and the cost of sales of R1,316bn is 17,7% above the budget of R1,118bn for the quarter ended 30 June 2015

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Procurement (1)

Strategic Objective


Target Actual performance against target Reason for varianceEstimate Target Actual status

Review and improve performance of SCM

% of tender awards completed within the targeted turnaround time

63% 65% of tender awards completed within the targeted turnaround time

Achieved69% (45/65) Total tenders: 65Completed: 45

Intense monitoring of transactions progress status by supervisors.

% of tender contracting completed within the targeted turnaround time of 30 days

18% 20% of tender contracting completed within the targeted turnaround time

Achieved62% (8/13) Total contracts: 13Completed within timelines: 8

Intense monitoring of transactions progress status by supervisors

% of tenders published completed successfully/ awarded

70% 75% of tender published completed successfully/ awarded

Not achieved60% (6/10) Published tenders: 10Completed: 6Cancelled: 4

This measure has not been achieved due to various issues such as failure of specifications, budget and preference point system that resulted into a number of cancellations.Corrective action: Business case to appoint a service provider to review specifications has been developed and procurement process will commence before the end of July. Furthermore, the revised SCM policy will increase the control measure in terms raising the approval of bid specification of a level of line executive for higher value transaction.Impact on next quarter performance target: Corrective action will not have full effect in the next quarter since it will not be fully implemented, however improvement is expected.

Procurement (2)

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Strategic Objective


Target Actual performance against target

Reason for variance

Estimate Target Actual status

Drive economies of scale in the acquisition of large ICT goods and services

% savings on acquisition of ICT goods and services with major OEMs

12% 12% savings on acquisition of ICT goods and services with major OEMs

Achieved25% Total spend: R9 942 587.37Total savings: R2 232 060.48

The organisation and its clients are realising cost benefits from the negotiated Microsoft framework agreement.

Drive transformation agenda

% of ICT acquisition spend through SMME entities

5% 7% of ICT acquisition spend through SMME entities

Not achieved6% Addressable spend:R942 545 987.11SMME spend:R53 368 105.52

There is no structured approach to drive spend against SMMEs as the strategy is currently under development. Corrective action: Comprehensive SITA economic transformation strategy is currently being developed. An interim programme with focus areas has been developed with immediate focus on enterprise development and SMME development through preferential development. Impact on next quarter performance target: Corrective action will not have full effect in the next quarter since it will not be fully implemented, however improvement is expected.

% of ICT acquisition spend through BBBEE-compliant entities

50% 55% of acquisitions spend through BBBEE level 1-4-compliant entities

Achieved86% Addressable spend:R942 545 987.11BBBEE spend:R808 173 295.28

Naturally, the majority of suppliers that SITA is doing business with are level 1-4, however, there is no current initiative to enhance spend against BBBEE level 1-4 entities.

Procurement (3)

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Objective Performance measure/ indicator



Curb fraud and corruption in procurement process related activity

Number of findings per interim external audit with respect to fraud and corruption in procurement process-related activities

0 findings 0 findings Achieved

0 findings Based on internal audit report on bids adjudicated for this quarter, no finding on incident of fraud and corruption identified, however, there were certain shortcomings in controls that need to be enhanced to avoid occurrence of fraud and corruption.

Controls have been put in place and there is close monitoring and reporting by Internal Audit.

Procurement

• SITA achieved five of the seven Procurement performance indicators measured in the organisations APP the two are currently being addressed through key strategic initiatives underway

• The development of the integrated procurement strategic plan will provide SITA with a road map to address key Procurement challenges

• SITA’s approved transformation development programme will target enterprise development, preferential procurement on targeted entities and black industrialists/manufacturing

• Procurement’s revised approved policy enhances controls with respect to root challenges such as cancellations, poor specifications and technical evaluations

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Procurement

• SITA achieved five of the seven Procurement performance indicators measured in the organisations APP the two are currently being addressed through key strategic initiatives underway

• The development of the integrated procurement strategic plan will provide SITA with a road map to address key Procurement challenges

• SITA’s approved transformation development programme will target enterprise development, preferential procurement on targeted entities and black industrialists/manufacturing

• Procurement’s revised approved policy enhances controls with respect to root challenges such as cancellations, poor specifications and technical evaluations

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Service Delivery (1)

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2014-2015 Actual performance against target Reason for varianceEstimate Target Actual status

Enhance efficiency of government business processes

No of e-government services implemented

90% (on 5 vertical e-Services)

90% of milestones completed as per plan

Not achieved49% (20/41 milestones achieved)

1) Client buy-in not yet secured for all e-services. 2) Implementation action for 2014/15 services required a lot

of attention. 3) Cancelling of Java platform delayed planned

development. Corrective action: Steercom to be reinstituted as oversight for CSM, SMS

and STM deliverables. CEO had meeting with e-Gov role players on 26 Jun 2015

to get programme back on track. Meeting held with DPSA and DTPS on 25 Jun 2015.Impact on next quarter performance target: Milestone will

have to be postponed. (Re-planning already presented by some project managers.)

% implementation of e-Cabinet lead site implementation

98% achieved on planned deliverables

90% of milestones completed as per plan

Not achieved0% milestones None of the 11 planned milestones for the quarter were completed fully. Work-in-progress is 68% against milestones.

1) LAN installation at Tuynhuys: The Department of Public Works delayed construction work at the server room and installation of new cable way ducting. After intervention by The Presidency, Public Works is completing the work with an updated plan to be approved by the e-Cabinet Steercom.

2) The procurement planning was based on a deviated shortened process; however the normal procurement process was advised by SCM. The revised plan has been tabled for discussion and approval by the client. The help-desk will only be activated prior to pilot implementation.

Corrective action: The impact of the delays experienced as

indicated above have been discussed with the client in detail. A project change proposal will be tabled for approval at the next Executive Steercom.


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Approval of award recommendation for the new IFMS project

Award Recommendation

Finalised contract for IFMS RFP1282 – software licences

Not achieved0% The contract has not yet been finalised. Commencement of the contracting with the winning bidder is dependent on the award being made.

Waiting for software tender to be awarded Corrective action: The delay in awarding the tender adversely impacted this target and other APP targets related to IFMS. Therefore, the APP targets will have to be revisited Impact on next quarter targets: An impact analysis and project timeline review is planned to be done once the tender has been awarded and meetings with the winning software bidder have been conducted.

Approval of the award recommendation for the new IFMS project

RFP for hardware published RFP for system implementation services published

Not achieved0% RFPs have been drafted and are undergoing reviews. However, finalisation and publication is dependent on IFMS software tender award and input from winning software bidder.

Waiting for software tender to be awarded Corrective action: The delay in awarding the tender adversely impacted this target and other APP targets related to IFMS. Therefore, the APP targets will have to be revisited. Impact on next quarter targets: An impact analysis and project timeline review is planned to be done once the tender has been awarded and meetings with the winning software bidder have been conducted.


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% implementation of infrastructure upgrades and modernisation plan

Hosting 100% Bandwidth Upgrades 100% DR Services 92%

90% of milestones completed as per annual plan

Not achieved87% (39/45 milestones achieved) 1)DC modernise: 32/33 MoUs with RHDDV for DC modernisation not signed yet; meeting with the supplier is scheduled for 13 July 2015.2)Hybrid Cloud: 3/6 BC and RFB technical specs not yet approved for hybrid Cloud.3)Network upgrade: 4/6 NGN VPN migration assessments not completed; WC VPN: 502 sites not achieved.

1) Scope review negotiations delayed signing of MoUs with RHDDV.

2) Rework required on BC and specification delayed submission for approval.

3) NGN provincial VPN migration cost assessment delayed due to internal capacity.

4) Neotel not able to deliver on volume of work contracted - letter of consent issued.

Corrective action:1) BC approved for additional broadband

resources. 2) NGN assessment will be delayed until

capacity is acquired.3) If Neotel cannot remedy situation,

alternative capacity will have to be sourced.

Impact on next quarter performance

target: Project plans will be updated.

% implementation of process automation and integration

91% 90% of milestones completed as per annual plan

Achieved 100% The declaration of interest (companies and gifts) process has been automated.

Intensified efforts were made to complete the system in time to enable SITAzens to complete and finalise the declarations online.


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% level of performance against signed SLA metrics contracted

95% 95% performance against contracted SLA metrics

Achieved98% The SLA metrics calculation uses the weighted scoring, and the performance measurement is for1)responsiveness,2)WAN services, availability3)Hosting Services – mainframe availability, and service management availability.

CSI initiatives are yielding positive results.

Improve security of government data assets

% of ICT controls implemented according to plan

97% 90% of security (ICT controls) plan implemented

Not achieved78% (7/9) milestones achieved) Cybersecurity: 6/7Employee vetting: 0/1Physical security: 1/1

Due to delays by SSA and DI to finalise the clearances. Corrective action: Letters were written to both the SSA and DI requesting feedback on clearances that were completed and forwarded more than 12 months ago. DI has provided feedback and confirmed that the majority of the clearances are still being processed. Impact on next quarter targets: Overall performance will be tracked on a monthly basis in order to ensure that the target is achieved by 31 March 2016.

Service Delivery

• SITA achieved two of the seven performance indicators measured in the organisations APP

• To accelerate the customer centricity initiative, SITA’s has started a process to institutionalise a new way of working that addresses structures, tools, processes and access to the right skills for improved service delivery to customers

• 289 out of 307 SLAs (94,14%) have been signed. Outstanding SLAs are mainly due to negotiations still in progress with customers or awaiting sign-off from customers

• The relevant Governance structures to ensure success of e-Government are in the process of being instituted

• The e-Cabinet solution has been designed and configured

• The organisations infrastructure modernisation programme is on track

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Organisation

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Objective Measure/ indicator

2014-2015 Actual performance against target

Reason for

variance


Build a performing organisation % Improvement on HPO baseline

N/A New Measure 1. Establish the HPO baseline

Achieved

100%

The HPO baseline was determined and HPO improvement plan approved

N/A

N/A New Measure 2. Development and executive approval of an HPO improvement plan

Governance and Administration

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Establish effective governance practice

Compliance with internal control framework

91% of 2013/2014 MLP’s resolved

Internal control framework approved

Not achieved0% ICF draft is available and will be tabled for approval.

The framework will be tabled before the broader Exco on 13 July 2015.

Maturity level of risk management implementation

3+ Approved risk management policy, framework, strategy and implementation plan

Achieved100% All documents have been approved.

N/A

Organisation and Governance

• All displaced employees have been placed in the organisation

• SITA’s approved integrated talent management strategy will guide the integrated management of talent across the business

• The organisation has embarked upon an employee value proposition programme to energise and re engage employees

• SITA’s litigation procedures are monitored and tracked on a weekly basis

• The organisation is in the process of reviewing commercial contracts, with the primary focus on avoiding and eliminating contractual pitfalls and enforcing performance and legal compliance in terms of contractual obligations

• All Auditor-General findings have been automated and are regularly monitored

by Internal Audit, Exco and the Audit, Risk and Compliance Committee

• The external audit for FY2014/15 is in progress

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Quarter 1 Performance Summary

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QUARTER 1 Targets Achieved % Achieved Not Achieved% Non-Achievement

Financial 4 3 75.00% 1 25.00%Customer 12 6 50.00% 6 50.00%Internal Process 5 2 40.00% 3 60.00%Learning & Growth 1 1 100.00% 0 0.00%Total 22 12 54.55% 10 45.45%

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5

1

3

6

211

6

3

0

Finance Customer Internal Process Learning & Growth

QUARTER 1Targets Achieved Not Achieved

Figure 1 - Quarter 1 performance results against planned targets

Statement of Financial Performance

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Statement of Financial Position

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Statement of Financial Position (2)

Statement of Cash Flows

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Working Capital Management Ratios

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Accounts Receivable Age Analysis

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Capital Expenditure: Original budget

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Capex Budget Revision

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• Flaws discovered in the originally approved budget:– Operational budget was unrealistic

– Calculated cash flow from operations was done incorrectly and could not be substantiated

– This resulted in significant uncertainties that affected SITA’s ability to accurately forecast cash flows

– To manage the risk relating to the financial sustainability of SITA, the capital

expenditure budget had to be revised

– The revised capital expenditure budget was approved by the Board on 29 July 2015

• Measures implemented to manage budget related challenges:– Budget review committee instituted

– Additional resource to assist with managing the process

Revised Capital Expenditure Budget

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Growth Maintain Refresh

Prog 1: Infrastructure Sub-Prog 1.1: Network 126 649 770 72 458 200 17 950 000 36 241 570 Sub-Prog 1.2: Switching Centres 214 110 656 177 600 000 15 100 000 21 410 656 Sub-Prog 1.3: Data Centres 294 411 679 111 216 021 156 909 658 26 286 000 Sub-Prog 1.4: Modernisation 5 467 000 - - 5 467 000

Prog 1: Infrastructure Total 640 639 105 361 274 221 189 959 658 89 405 226 Prog 2: Solution Development Sub-Prog 2.1: Transversal 31 291 339 31 291 339 - -

Sub-Prog 2.2: IFMS - - - - Sub-Prog 2.3: Cust Unique 22 495 679 20 131 393 232 000 2 132 286 Sub-Prog 2.4: Modernisation 33 972 940 33 972 940 - - Sub-Prog 2.5: Integration 5 000 000 5 000 000 - - Sub-Prog 2.6: R&D Capex 36 000 000 36 000 000 - - Sub-Prog 2.7: Security 55 200 000 13 700 000 34 000 000 7 500 000

Prog 2: Solution Development Total 183 959 957 140 095 671 34 232 000 9 632 286 Prog 3: Service Management Sub-Prog 3.1: Contact Centres 4 665 000 600 000 500 000 3 565 000

Sub-Prog 3.2: DSS & 1st Line 16 629 140 - 16 629 140 - Prog 3: Service Management Total 21 294 140 600 000 17 129 140 3 565 000Prog 4: Operational Support Sub-Prog 4.1: Internal IT 64 198 705 - 3 979 273 60 219 432

Sub-Prog 4.2: Facilities 25 380 917 - 2 303 247 23 077 670 Sub-Prog 4.3: Production Toolsets 1 455 000 1 435 000 - 20 000 Sub-Prog 4.4: Integrated Security Management Solutions 19 338 002 - - 19 338 002

Prog 4: Operational Support Total 110 372 624 1 435 000 6 282 520 102 655 104Grand Total 956 265 826 503 404 893 247 603 317 205 257 616

CAPEX Budget allocation per CateroryProgramme Sub-Programme

Revised Cash Flow 17 July

2015

Performance Focus Areas for Quarter 2

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• Finalise FY2014/2015 Performance Assessments

• Finalise FY2015/2016 IBSC contracting

• FY2015/2016 Organisational alignment assessment against the approved

CBSC

• Intensify efforts in the implementation of projects and initiatives as per

approved FY2015/2016 APP -(Quarter 1 non-achievements and quarter 2

targets)

• Address Challenges / Lessons learned from FY2014/2015 external audit

SITA Quarter one Corporate Performance Report as at 30 June 2015.

Documents

Transcript of SITA Quarter one Corporate Performance Report as at 30 June 2015.