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Date : 27/11/2002
Source: Department of Labour
Title: Ramashia: Signing of IT deal with Siemens


STATEMENT BY THE DIRECTOR-GENERAL OF THE DEPARTMENT OF LABOUR, ADV RAMS RAMASHIA, ON THE SIGNING OF THE GROUNDBREAKING INFORMATION TECHNOLOGY PARTNERSHIP WITH SIEMENS BUSINESS SERVICES

It is my pleasure and privilege to announce today, on behalf of the Department of Labour, a groundbreaking information and technology partnership deal being entered into between the Department of Labour and Siemens Business Services today.

This contract deal, concluded under the umbrella of a Public Private Partnership (PPP) and worth a total of over R1.2 Billion over a period of 10 years, is the first of its kind in South Africa. The PPP contract being signed will revolutionise the way the Department of Labour does its business and if this revolutionary pilot works well - as we all expect it to - will most likely be replicated by other departments.

What are the objectives of this partnership?

A question most likely in your minds is what is it that the Department of Labour specifically aims to achieve through this partnership deal with Siemens Business Services? Simply, our goal - and expected outcome from this partnership - is the improved service delivery to the beneficiaries of our services and stakeholders through the most cost effective means. To this goal, we set ourselves the following set of objectives:

* to ensure an integrated approach to service delivery
* to enhance the utilisation of information as a strategic resource
* to integrate our IT systems more effectively
* to ensure that our information is digitalised for more accessibility and various usages.

The fundamental objective of the Department of Labour is to transform and regulate the landscape of the labour market and the Department adopted the following key strategic interventions to achieve that:

* the promotion of economic efficiency and productivity;
* the improvement of the levels of relevant skills in the labour market;
* the promotion of collective bargaining and stable labour relations;
* the promotion of equity in employment and the elimination of workplace discrimination;
* the ensurance of reasonable wage levels and the prevention of the exploitation of labour in line with the level of development in the country;
* ensuring health benefits for occupational diseases;
* and finally, the provision of a social safety net for the unemployed) remains our destination.

Why emphasis on Information Technology and how will the Department benefit from the IT PPP?

In 2000 I addressed the Portfolio Committee on Labour on the Department's programme and budget, emphasising service delivery. Subsequent to that, we conceived our Information Technology Strategy to support such service delivery.

The PPP agreement we are signing today translate that vision into action.

A strategic analysis of the Department's ability to effectively deliver on its mandate led us to identifying Information Technology (IT) as a key enabler in achieving its strategic objectives. However, to fully capitalise on the value to be derived from a world-class IT system, the Department decided to explore the uncharted route - the formation of a strategic alliance with the private sector through a Public Private Partnership (PPP) arrangement.

The option of the PPP provided the Department with an ingenious way of achieving its objectives against the background of budgetary constraints and the requirement of specialised knowledge and expertise needed to manage a modern information technology service. A cost analysis and comparison indicate that it would have cost the Department about R 250 million more had the Department of Labour implemented its Information Technology itself - thus this partnership represents a huge savings on the fiscus.

The partnership further makes the following comparative edge that immediately available to the Department:

* opportunities for business process improvements
* upfront capital investment
* access to private sector skills and expertise
* possibilities of effective and rapid alignment to e-government

How will the public benefit from this PPP?

Whilst the above are the benefits the Department will accrue from the effective implementation of this PPP deal, the public will be the ultimate benefactors in terms of improved benefits, new services being provided, easier access to services as well as speedier services.

The phenomenal advances in technology provide us with a plethora of opportunities to improve service delivery through amongst others, integrating service delivery electronically and this IT PPP is intended to leverage this, benefiting our clients and stakeholders of the Department in the following manner:

* the public not having to necessarily visit our offices to get the services they need
* Over time the Department being able to service our clients via call centres and information kiosks on a 24 hours, 7 days basis
* Online access being able to facilitate digital transactions and provide the Department with the means to render a user-friendly and cost-effective service
* The principle of delivering services in a speedy, seamless, simple and accessible way will being applied to a wider range of services by harnessing the full potential of electronic delivery.

What is expected of Siemens?

Siemens Business Services, through this deal, will deliver the Department's vision of an Integrated Electronic One Stop Infrastructure (IEOSI), making the following technological transformation possible:

* Digital linking of information systems with operational systems
* Self service digital transactions between the Department and its clients
* The shifting of human involvement in routine, low value tasks to high value personal consultancy on important issues
* Turning staff into knowledge workers and providing them with digital information tools to communicate with clients and manage relationships
* Providing access, to clients and staff, to appropriate and real-time knowledge and information with a few simple commands.

Why the deal took so long to sign?

Siemens Business Services (SBS) was selected as the Department's IT partner through a competitive, rigorous, painstakingly thorough, fair and transparent process, This partnership deal, as the first IT PPP project to proceed under the new PPP Regulations, represents a landmark for PPPs in South Africa.

The four years this PPP took to unfold is indicative of the cautionary steps the Department took in designing the project and due processes, probing every minute relevant detail, ranging from SBS empowerment requirements to the leveraging of profits SBS may make out of the project. In designing the deal, the Department ensured that:

* SBS will assume full responsibility and the associated risks for the design, build and operation of the Department's IT systems. SBS will not take ownership of the current IT assets. The Department will, however, transfer the beneficial use of the assets to Siemens, who will use these assets to provide the service as stipulated in the contract. SBS will, over time, replace those assets that become absolute at their cost. SBS will take ownership of all assets they procure during the lifetime of the contract
* excessive profits Siemens may make out of this deal are re-invested into a special fund for the development and implementation of additional services identified later
* That the Department's IT staff will be transferred into Siemens where they will also be given appropriate skills.

Why Siemens

Siemens has international experience and expertise not only in the IT environment, but also in the development and implementation of PPP projects internationally. As our new partner, Siemens will also provide strategic direction on new information technologies based on their experiences in working on IT projects in other labour market systems worldwide.

In line with government's approach to black economic empowerment, the Department required of Siemens to partner with an black empowerment group, and the target set for this was 30%. Siemens has not only fulfilled this condition, but surpassed it, having an incorporated a 37,6% black empowerment component in its bid. Sifikile Consortium being a main black shareholder in the deal (30%).

The PPP aspect of that strategy is in line with the President's call for the development of partnerships between the public and private sector towards enhancing the growth and development of the economy.

Thank you.

27 November 2002
Source: Department of Labour
(http://www.labour.gov.za)

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