New IT system for company office

The Companies and Intellectual Property Commission (CIPC) is set to overhaul its legacy IT systems.

This comes in the midst of mounting criticism from consumers battling to register new company names, and organisations complaining they cannot lodge annual returns.

The commission, which came into being in May, has a large queue of more than 30 000 applications from companies wanting to register, or reserve names.

Its call centre is battling to deal with the more than 50 000 incoming queries it receives on a monthly basis, while its Web site still needs to be developed further.

However, the CIPC is working at solving the issues, and is set to overhaul its legacy IT systems, a process that will largely be completed by next October.

The commission's plan to overhaul legacy systems, which are more than a decade old, come in the midst of an ongoing legal battle between the Department of Trade and Industry and Valor IT over a system that was meant to be implemented at the CIPC's predecessor, the Companies and Intellectual Registration Property Office (Cipro).

The CIPC was born after the Companies Act came into effect in May. It is the result of a merger of Cipro and the Office of Companies and Intellectual Property Enforcement.

However, it has come under fire as companies complain they cannot use its systems to file annual returns, which has led to firms being deregistered and being unable to trade. Under the Companies Act, every corporation must file a report each year, or be deregistered.

There have also been complaints that it takes too long for firms to register company names, which leads to entities being unable to trade.

Cipro was also heavily criticised after its database was abused last year, which led to the South African Revenue Service paying out fraudulent tax refunds worth at least R51 million, after companies' details were illicitly changed on Cipro's database.

In addition, at least 11 firms were reportedly hijacked in 2010, as fraudsters removed legitimate directors and replaced them with others on the agency's database.

Cipro also failed to install a new enterprise content management system, after a R153 million contract, awarded to Valor IT, was canned when irregularities were picked up in the tender process. The system was set to introduce more stringent security measures, which would prevent hijackings and abuse of its database.

Although Valor IT is fighting trade and industry minister Rob Davies' decision to can the deal, the CIPC is moving ahead with an overhaul of its IT systems and is gearing up to go out on tender for a new IT system to replace its current outdated infrastructure by the third quarter of this year.

Davies cancelled the deal after a forensic investigation revealed irregularities in the awarding of the tender. Valor IT fought the decision and claims to have reached a R28 million settlement with the department, an agreement that is in dispute and yet to be ruled on by the court.

Commissioner Astrid Ludin says the bulk of the new IT system will be in place by October next year. The ongoing dispute between the department and Valor IT will not affect the CIPC's plans to implement a new IT framework, she adds. “The contract wasn't with us anyway.”

Ludin says the CIPC is facing many challenges, but the biggest issue is its legacy IT systems, which date back to 1997. “We are alive to the impact that this [CIPC's technology challenge] is having outside.”

The CIPC will have the “basics” of the new organisation in place within the next year-and-a-half, although she cannot promise it will be “perfect”. None of the changes the CIPC is implementing will happen overnight as it has to continue with its mandate. “We can't get off the bus and have a break to strategise.”

Ludin says the commission must still establish its IT needs and go through a proper scoping process before deciding what system to implement. She says “there are no shortcuts”.

Recently appointed CIO Robert Hill, who is on a one-year contract, says he will spend the first three months in his new position understanding what is required and coming up with a strategy to create a roadmap, which will dictate the timeframe. Hill joined the commission on 12 July.

Acting commissioner advocate Rory Voller says the CIPC's first two months were difficult as it faced system challenges, as well as an inherited backlog of company registrations and name changes, and new requests that have to be dealt with.

The CIPC is working its way out of a difficult beginning, but is still under pressure, says Voller. Among the issues it faces are teething problems after it came into being, he explains.

The navigation of its Web site is also difficult, and functions such as online name reservations have not yet been developed, Voller adds. Most of the major issues with the site have been addressed, but some problems are still being tackled and the CIPC is developing new functionality, he says.

Voller notes the commission has seen an increase in the use of its electronic system, which now accounts for about 9 000 of the 10 000 corporate applications the CIPC receives on a weekly basis. The increase in the number of electronic lodgements is the result of people becoming more aware of its Web site, he says.

The CIPC's call centre is also handing an “extremely” high number of enquiries, with as many as 60 000 incoming calls a month. The current 35 agents are not coping with the high levels and the organisation needs to almost double up its current capacity, which could include outsourcing some calls, notes Voller.

Voller says the agents are dealing with queries around how the new law works, as well as how far applications are in the system. He says calls are very long, each taking about 15 minutes to finalise.

The CIPC processes between 2 500 and 3 000 applications a day, which range from name reservations to company amendments. However, the turnaround time is too long and the commission wants to get it back down to acceptable levels, says Voller.

The commission has about 3.5 million companies on its database and is in the process of restoring 1 966 companies and CCs. A database cleaning process last July and this February resulted in 900 000 firms being deregistered because they did not file annual returns. So far, 21 163 companies have been restored, says Voller.

The average time to register a company is 40 days, and more than 2 400 firms have already been registered, with another 2 707 in the queue, says Voller. It has a backlog of more than 30 000 companies and CCs that need to have names reserved and be registered.

Voller says the CIPC is taking several steps to speed up the process, including its IT and companies departments working over time. The office is also reviewing several of its processes, such as director changes, and has brought in additional resources.

The South African Institute of Chartered Accountants has finished the first part of helping the commission with backlogs and is now helping it clear delays in name reservations.