Date: 12/06/2003
Source: Gauteng Provincial Government
Title: Moleketi: Gauteng Shared Service Centre Prov Budget Vote 2003/2004


ADDRESS BY FINANCE AND ECONOMIC AFFAIRS MEC, JABU MOLEKETI, ON THE TABLING OF THE GAUTENG SHARED SERVICE CENTRE BUDGET VOTE, Thursday, 12 June 2003

Today's Budget Vote needs to be put in the context of the progress made by the GSSC since the department became operational in September 2002. In facing the challenging task that has been set for us, I will outline the steps that have been taken over the past year and highlight some of the achievements to date - with a view to creating a context for describing our objectives for this year.

I will then present our objectives and plans for the financial year ahead, outlining what needs to be achieved before the GSSC can become fully operational. I will then demonstrate how these developments form a key component of the long-term vision of this province.

Allow me to briefly remind you of the motivation that led to the establishment of this new department. In line with the provincial priority of improving service delivery, promoting economic development and improving levels of good governance in Gauteng, the establishment of the Gauteng Shared Service Centre (GSSC) sets out to fulfil this mandate through the consolidation and development of the province's administrative support functions.

The GPG's vision in establishing the GSSC, was to develop a customer-centric, fully operational, service organisation that specialises in superior transversal services. We were to focus on Human Resources, Technology Support Services, Procurement, Internal Audit Service and Finance - with a view to achieving optimum benefit and return on investment for the Gauteng Provincial Government. This was to be done by improving the quality of the services provided - explore new services within the functions mentioned above - and ensure that the level of service meets the needs of the province.

In order to become fully operational, the GSSC will rely on a skilled and motivated workforce that is able to take on the function of running and developing a world-class customer-focused service organisation. It was planned that most of these staff would be sourced from within GPG, with the aim of reaching a total staff complement of 1 700 by July 2003.

However, due to skills gaps and specialised requirements, this looks like it will be more difficult to achieve than we had hoped. To date 69 of the 94 planned entities have migrated their finance and HR functions and only 37 have migrated their procurement functions. We currently employ around 900 people within the GSSC. One of our most pressing challenges has been to adequately staff the GSSC with the range and level of skills that are required. A key challenge in the coming year - will be to find the staff required to allow us to meet the objectives that have been set - to bring the GSSC to the point where it is fully operational.

For the 2003/4 financial year, the GSSC has budgeted R160 million - and because Corporate IT has now been transferred over to the GSSC - a further R238 million has been budgeted for these activities. These budgets have been split between our key service areas: Financial Services, Gauteng Audit Services, Human Resource Services, Procurement Services and Information Technology Services. I will talk through each of these areas in turn, and highlight some of our key targets and the programmes we have planned for the year.

Infrastructure and Operations

Infrastructure and Operations constitutes the back-office of the GSSC and all the costs of providing these activities have been divided amongst the various services the GSSC provides. This approach allows us to determine the true cost of providing these services, which is obviously crucial as we move towards a model that charges departments per service provided.

In the operational arena, good progress has been made to date, with the Contact Centre and the Document Management Centre both becoming fully operational. These are the nerve centres of the GSSC, and allow for effective communication and processing management between the GSSC and the GPG, and within the GSSC itself. While these centres have been established, they are still far from operating at the levels we have aimed for. Various challenges have emerged during the last few months - which have all impacted on the flow of information and services between the GSSC and the various client entities within the province.

During the current year, these operations will be stabilised and streamlined with the introduction of an electronic fax solution. We will be employing additional staff as and when the demand arises and, as a result, additional personnel training and development will need to take place during this financial year. As a result, we will be able to increase efficiencies in document management processing - with the gradual progression to 24-hour continuous operations. During this year we also aim to significantly improve the performance tracking and reporting mechanisms within both these operational units.

During this year, we will be further developing the systems and infrastructure of these units, and most importantly, building and maintaining the levels of administrative and customer service skills that they require. To give one example, our call centre staff have all been sourced from within the province and while we have put them through intensive training courses - we still face important challenges in building their 'client service' skills to the levels required. The Contact Centre went from handling around 1 000 calls a week when we started - to handling in excess of 1 300 calls per day currently. We will be employing additional staff this year, and introducing further channels of communication within both the Contact Centre and the Document Management Centre (DMC) - including fax and email.

Since January 2003 the number of documents processed by the DMC has increased dramatically - from 393 per day in January, 783 per day in February to 1 533 per day in March and 2 099 in April. This has obviously put enormous pressure on the DMC, which has processed 65 000 documents in 6,5 months. This coming year that number is set to increase to 600 000.

Documents are sorted, registered, indexed, scanned and then routed for processing in the GSSC. During the past year we employed additional people and introduced two shifts a day - to cope with the load the centre faces. We also upgraded the systems and hardware, and during the current year, this upgrading and improvement of both systems and skills will continue.

This year we also aim to bring the performance tracking and reporting mechanisms to the point where we can track every document - at every point in the processing chain. A fax-server based solution will be installed to allow documents that are currently couriered to the GSSC to be faxed directly into our production environment with no delays.

Being mindful of our role as a centralised service provider to the GPG, we will be introducing customer satisfaction surveys that will allow us to monitor and improve service levels. The existing Customer Relationship Management unit will be further developed during the current year - to improve our communication with clients - ensuring their needs are met and their problems are timeously resolved.

Financial Services

With an annual budget within GPG of R26 billion, sound financial management and bookkeeping are critical to the functioning of the government. Assets and liabilities need to be accurately reflected, and minimum use should be made of suspense accounts that result in incomplete bookkeeping records.

In order to develop and maintain these services for the province, a budget of R40, 7 million has been allocated.

In order to achieve this, it is essential to eliminate all accounting backlogs. During the past year, the GSSC cleared 35% of the GPG accounting backlogs, and we aim to clear the remaining 65% during the current year. We also aim to reduce the turnaround time for processing of new cases - to a maximum of 30 days.

During the past year we also reduced the turnaround times for the investigation of unknown transactions - from 90 to 30 days - and we aim to reduce this to 15 days during the current year. We have also cleared a backlog of unknown cases, from 600 cases six months ago, to 40 cases, which is the current average.

GPG currently has approximately R114 million invested in debts. To address this, we aim to phase-out old debts completely over the next three years. By the end of the last financial year we had already reduced the debts within entities that had migrated by 10%. We have implemented controls and procedures to ensure a better turn-around on the collection of debts in future - but the key issue is to cut down on the levels of new debt - by improving controls within the areas that result in employee debt. We have already put some measures in place to deal with this - but during the current year increased controls in the employee payments area will impact directly on these high levels of new debt.

We are implementing systems and procedures to ensure that all GPG staff are paid accurately and on time, and we are developing controls that will ensure that late payments, over-payments and under-payments are eliminated. There has been a lot of controversy in the past about "ghost employees", and our improved systems and controls will ensure that only GPG employees who are alive and in service - will be paid.

In the area of financial services, a key objective this year is to adapt our payment and processing systems to work with - and support - the SMME sector. In the past, erratic payment terms have made it difficult for this sector to work with Government.

In the past we have awarded contracts to SMMEs - and then driven some of them out of business by not paying them timeously. While we have made significant progress in reducing turnaround times on payments - down to 30 days on new cases - there is still room for improvement. We will improve payment systems during the current year - by ensuring accurate, timeous payments and acceptable turn-around times on payment queries.

In order to ensure the medical cover of our staff, we are developing systems that will ensure that monthly medical aid contributions are paid accurately and timeously. Similarly, we are helping our staff to submit tax returns on time - by ensuring that IRP5 certificates are issued on time. For the tax year-ended February 2003, all IRP5's were issued within a month of the year-end. This is a great improvement on the three-month period of past years.

Internal Audit Services

Although it only employs around 100 staff, the Internal Audit function has been allocated R28 million, reflecting the serious light in which we view good corporate governance in the province.

The past year was a watershed one for Internal Audit Services, as the function became fully operational, and audits are now being conducted according to a 3-year audit plan.

The audit plans were drawn up to cover all the high-risk areas identified by the departments themselves.

Two specialised units - Computer Audit and Forensic Audit - also became operational during this period. This function will further implement various personnel development programmes this year - that will help equip GPG departments with adequately trained staff in the financial and internal auditing environment.

During the year the unit will perform more than 150 risk and computer audits on areas identified as high risk by the various departments. Areas that have already been highlighted by the Auditor General will be targeted. We hope to ensure that no department gets an AG qualification in respect of an area that has been audited by Internal Audit Services during the year.

During the year, the internal audit unit will not only assist in updating the risk assessments of departments, but will be extending the scope of such assessments - so that responsible officials can have a risk profile per programme - as well as per entity. It is vital that large entities, such as some of our hospitals, be equipped with their own risk assessments - rather than being absorbed into the overall assessment of a department. Their budgets, of many hundreds of millions each - surely warrant focussed attention on each of these institutions.

Approximately 15% of Internal Audit funds will be spent on Forensic audit activities. During the previous year, the Provincial "Fraud Prevention" programme was developed. The Fraud Hotline has been revitalised and the details regarding this service have been broadly publicised as part of the new Fraud Prevention drive.

This year, funds will be allocated to administering the hotline facility and rolling out a communication strategy for on-going Fraud prevention. This communication strategy is driven by the Office of the Premier - which will provide the bulk of the funding, with the Forensic unit adding specialised skills to the process.

The Forensic unit aims to help departments recover R28 million this financial year through empowering them to take civil action, disciplinary action or negotiation with involved parties. By doing this, the unit will have - in effect - recovered the full cost of the entire Audit Services unit.

In the interests of good governance, it is essential that our officials are informed about their responsibilities and are equipped to measure their performance against peers in similar organisations. Internal Audit Services will be introducing a specialised tool, Control Self Assessment, to allow managers to measure their own levels of risk, and to measure their performance relative to their peers in similar areas such as hospitals, schools and pension pay-points.

A Performance Audit unit will be set up during the year, to allow managers to assess both the effectiveness - and the cost efficiency - of any specific system or project.

Some Public Entities governed by the PFMA have requested assistance from Internal Audit Services. These entities are required to have their own internal audit units, and for many of them, this is not viable. During the year, this unit will pilot a project to provide an internal audit service to at least one such entity, and the viability of this service will be measured in the process. This will not have an impact on the budget of the unit, as in each case, it will aim to recover the full cost from the client entity.

Human Resource Management

The HR Services unit is now 67% resourced, and is delivering services (with some difficulty) to more than 85% of its clients. This function has been allocated R35, 5 million within the current budget. Service Level Agreements governing HR services have been agreed with almost all of the migrated entities, and GSSC staff are learning and mastering the new HR processes and systems. During this year, the HR Services team will begin to deliver effectively against these Service Level requirements.

I know my colleagues are often confused about what the various HR units actually do - so let me describe some of the functions to you. The Reward and Retain units (or R&R as they are known) deal with the following activities:

* Appointment of personnel
* Benefits administration (pensions etc)
* Employee transfers
* Overtime management
* Promotions and general salary reviews

This team will handle approximately 600 000 transactions during the course of the year. They have also been dealing with many backlogs that were passed on to them by the migrated units, and they will, during the course of the year, entirely eliminate these backlogs in areas such as leave processing - some of which go back to 1999. This will eradicate the liability associated with leave that was credited and taken, but not reflected as such on the system. During this year we aim to process all HR administration activities within three days.

The Terminations unit deals with the following activities:

* Retirements
* Resignations
* Dismissals
* Deaths

This team will ensure accurate final salary settlements, when staff leave us. This service will deal with about 7 000 normal terminations during the year (this does not include any retrenchments that may arise). Our aim is to ensure that people leaving the public service receive their retirement benefits within 60 days - a two month improvement on a process that has taken up to four months in the past.

The Recruitment and Selection unit deals with the following:

* Advertising of vacancies in the media
* Short-listing candidates for the employing entity
* All 'response handling' to the applicants
* Managing specialised 'large-scale recruitment' for Gauteng Department of Education (GDE) and Gauteng Department of Health (GDH)

This team will be responsible for handling more than 1 million applications and up to 10 000 vacancies, during the year under review. Savings within the advertising of vacancies - due to economies of scale - will also be effected during the year.

The Centre of Excellence (or COE) service units aim to provide high-level HR support in areas where there is a scarcity of skills and often an over- reliance on external consultants. We need to raise the standard of HR practices in the province, we need to improve how people are employed, and we need to improve on the working environment and conditions of all our staff. If we do this effectively, we raise the capacity of our staff to deliver. The COE units exist to provide support within these areas.

For more information contact Nici Columbine on (011)-689-6550/084-305-1872
Issued by Gauteng Shared Services Centre, Gauteng Provincial Government
12 June 2003