City of Joburg on the hunt for SAP contractors

Kimberly Guest
By Kimberly Guest, ITWeb contributor
Johannesburg, 07 Jul 2021

The City of Johannesburg (COJ) is inviting service providers to bid for its three-year SAP support contract.

Earlier this year, reports suggested the city had opted not to go out to public tender, but instead released a request for quotation to a closed panel of service providers.

However, the municipality has apparently had a change of mind, advertising its tender, A874, on National Treasury's eTenders portal, its own Web site and in newspapers.

In April, ITWeb reported that EOH, which has been working the city’s SAP system for 12 years, will not participate in the new process to select a service provider.

The tender comes amid controversy surrounding EOH’s relationships with the public sector, ANC and key individuals. This includes contracts with COJ worth R1 billion to support and get its SAP system working properly.

EOH's woes extend back to 2018, when reports suggesting questionable corporate governance started circulating. In response, independent law firm ENSafrica was contracted to conduct a forensic investigation.

The investigation outcomes caught the attention of the State Capture Commission, resulting in EOH group CEO Stephen van Coller and ENSafrica being called to testify. This saw the company's relationship with Johannesburg mayor Geoff Makhubo scrutinised, with Makhubo alleged to have received payments from EOH for city tenders that went its way.

Another chance for EOH?

Meanwhile, EOH employees working on the COJ's SAP system sent a letter to the board and management, appealing for the company to leverage their skills and experience to request COJ to withdraw its closed group invitation and go out on a public tender. This would allow EOH to bid for the contract, they said, and potentially save their jobs.

Now that the COJ tender has been put out for open participation, EOH is technically allowed to bid for the contract. Whether it will, remains to be seen, however, as the company yesterday disclosed that it had received a letter from the State IT Agency (SITA) that “intimated SITA would consider restricting EOH from doing business with the public sector”.

While the company has rushed to assure shareholders that its legal counsel believes it has a strong case against any blacklisting, SITA executive caretaker Luvuyo Keyise toldITWeb that while government should be mindful of the work the new EOH management has done, it should still be held accountable for the wrongdoing, or criminal conduct in the acquisition, award or execution of contracts.

Until such time National Treasury formally blacklists the company, EOH is still free to participate in government tenders.

Poisoned chalice

Meanwhile, other companies in the ICT support sphere are likely to consider the new COJ tender with some trepidation. The SAP installation has been beleaguered with problems almost from its inception.

In 2009, Masana Technologies filed for liquidation, stating the municipality owed it up to R90 million for work done. The company had been providing IT outsourcing services for the city since 2005, including a SAP R/3 ERP financial implementation, a human resources program and involvement in the then ongoing implementation of a SAP revenue system.

In 2010, the Johannesburg Attorneys' Association threatened to take the city to court over delays in issuing rate certificates, which it said had been outstanding since it started upgrading its computer systems to SAP.

Later the same year, COJ admitted a “technical glitch” had resulted in some customers not receiving monthly statements, but that internal processes had been put in place to deal with the problem.

What followed was years of significant problems, which resulted in what is often referred to as the city's “billing crisis”.

SAP upgrades in progress

What's more, COJ's tender documentation reveals it is in the process of upgrading its numerous versions of SAP software to SAP HANA. This is being done in a phased approach, it says, and as such, the city is “encouraging” bidders to provide cost-effective and efficient proposals that provide “resources that are multi-skilled in most/all environments”.

Given the phased approach, the city says payment for supporting modules will be adjusted as and when they have been commissioned. Nevertheless, bidders are expected to cost on the total support, although the payments will be based on modules supported.

As for the scope of work, COJ says it has multiple expectations, which include:

  • Provision of first-line support services.
  • Provision of second-line support services.
  • ABAP development support.
  • SAP authorisation services, reporting, data replication and SAP HANA database support and management services.
  • Integration of SAP systems into other systems utilising SAP PI/XI.

The deadline for submissions is 30 July.