Costs rise for DOL-Siemens deal

The cost of the public-private partnership (PPP) between Siemens and the Department of Labour (DOL) for the implementation of new IT systems has increased.

This is despite the many challenges that still plague the systems, according to a National Treasury review.

CIO of the Compensation Fund at the DOL Vikash Sirkisson briefed the parliamentary portfolio committee on the status of the PPP and the IT systems, saying the initiative had initially been costed at R1.2 billion, but has now risen to R1.3 billion.

He explained that this is due to the increase in the consumer price index, services relating to the annual report, and an increase in end-user devices. He also said there were still 25 months of the contract left to run. The projected cost at the end of the contract is R1.9 billion.

The reasons for establishing the PPP that began in 2002 include the high turnover of IT staff in the public sector; difficulty in reaching IT objectives; the automation of services towards e-government initiatives; the department's need to improve its IT capacity and expertise; and the need to exploit international best practice, according to Sirkisson.

He added that the deliverables comprised of data centre services, local area network services, IT help-desk, office productivity, customer satisfaction, end-user access, and the deployment of end-user devices, such as desktops, laptops and printers.

Systems development included training services for new systems; the design, construction and implementation of new systems; and maintenance, support and enhancement.

The treasury's review of the system found several flaws in the PPP, including that there was insufficient monitoring and contract management by the DOL.

There was no consistent change management implemented by the department for integration of the business into the new IT environment, and delays were encountered in implementation of the improvement services due to inadequate detail of business processes.

The treasury also found that a lack of contract understanding by DOL stakeholders resulted in contractual remedies not being utilised when Siemens' performance was inadequate.

Sirkisson also listed some of the challenges in the PPP, including the transfer of all DOL IT staff to Siemens and a lack of organisational change. He said the contract had also not been structured according to the deliverables.

Other challenges he highlighted were delays and backlogs in procurement, outdated desktops in the DOL environment, delays in cabling of offices, an increased demand for laptops, and lack of an architectural plan to address data centre consolidation.

From 16 projects within system development only one has been completed, two are yet to begin and four are on track. The other nine are behind schedule, according to Sirkisson.

The UIF is one of those projects that are not on track and Siemens has indicated the fund owes it R8.5 million, which the fund disputes.

The CIO outlined the department's way forward in the development of a future ICT strategy. This includes the appointment of the State IT Agency for the development of the ICT strategy.

Parliament previously accused Siemens of delivering “a less than excellent product” in terms of its contract with the DOL.

Democratic Alliance deputy shadow minister of labour Ian Ollis said Siemens designs software for each department within the DOL, and it is only the software for the Compensation Fund that is not being used, as it is inadequate. He says clients' details could not be accessed and so the money there was wasted.

DOL director-general Jimmy Manyi explained that the DOL paid a unitary fee to Siemens every quarter, regardless of whether the software was used or not.

“This means that the labour department has agreed to a ridiculous contract. It's just not workable. It's like putting a gun to your head if you have to pay whether you're using the software or not,” said Ollis.