1. INFORMATION AND COMMUNICATIONS TECHNOLOGY UPDATE 12 February 2014 PRESENTATION TO THE SELECT COMMITTEE ON LABOUR AND PUBLIC ENTERPRISES

2. BACKGROUND : PUBLIC PRIVATE PARTNERSHIP -The Department of Labour (DoL) entered into an Information Technology (IT) Public Private Partnership (PPP) with Siemens Business Services in 2002 for a period of ten years -This was the first IT PPP and was facilitated with the assistance of National Treasury -The purpose of the PPP was to provide a full range of IT services to the DoL -70% of the PPP was for IT operations and infrastructure, and 30% for systems development -Prior to the end of the PPP, EOH bought Siemens and continued to deliver the PPP services to the DoL

3. BACKGROUND : TERMINATION SUPPORT -When the PPP ended in November 2012, a Termination Support period was initiated, in terms of the PPP contract, for a handover back to the DoL -The termination support ran for a period of 12 months ending 30 November 2013 -During the termination support, EOH were to finalise all outstanding deliverables from the PPP and handover the environment back to DoL including information, licenses, contracts etc.

4. ICT Future Strategy -Parallel to the EOH/Siemens Contract, a 5-year ICT strategic plan was drafted and approved by the DG -Implementation of components of the strategy have commenced, these include : -Staff augmentation -Implementation of a governance framework -User education and awareness sessions -ICT Policies update -Infrastructure update (Datacentre) – through the refresh programme

5. 5 Challenges identified towards end of the Termination Support Contract. Legal opinion confirmed that in terms of the Labour Relations Act, the Department was COMPELLED through Section 197 TO TAKEOVER the service provider employees. SITA was not ready to take over ICT support services The new ICT 5 year strategy was in its initial implementation stages and appointment of staff in line with the newly approved structure was discontinued. EOH had not completed some of the enhancements in line with the Exit and Transfer Strategy due to a suspension that occurred earlier during the year. DOL was not going to have ICT support beyond 30 November 2013. The CIO resigned and a new Acting CIO had to be appointed

6. Transfer of staff under Section 197 of the LRA -The process of transferring staff to the DOL became protracted due to various disagreements on several matters, including, which staff to transfer -This was further hampered by the lack of information provided by the service provider -The negotiations broke down to an extent where the DoL approached the Pretoria High Court for a declaratory order -The matter was settled out of court with the agreement that only the IT operational services staff would be transferred.

7. IT Future Strategic Direction During Mid November 2013, DOL had a consultative meeting with SITA, National Treasury and The State Law Advisors to: -Map a way forward given the pending end date of the contract and other identified challenges. -Determine readiness of SITA to take on some current EOH ICT support services and their future role in the DOL ICT. -To map a way forward given the Court Process that was underway and to: -Clarify procurement process and any form of assistance that Treasury can provide -

8. Key Agreements from the Consultative Meeting DOL will have to make its own judgement on other internal matters SITA was not ready to take over however advised on need enter into a short term and very tight contract with EOH. That the DOL has a legal obligation to take over staff that were working on the DOL contract under the LRA Section 197 of the contract and this process needed to be completed. That Treasury will support the DG’s procurement for a very focussed New Contract with EOH. That the Department of Labour will provide SITA with a list of external additional services to be procured once it has completed the staff transfer process and Services Gap Analysis

9. ICT EMERGENCY INTERVENTION A Six Month agreement ending 31 st May 2014 was negotiated and concluded with EOH with CCMA’s assistance on the 29 th November 2013 covering: Completion of outstanding IT application by EOH without additional payment Transfer of identified staff from EOH commencing from 1 st December Submission of receipts and other documentation and Payment of outstanding debts Additional services to be rendered by EOH post transfer of staff

10. PORTFOLIO MANAGEMENT Project Management, Business analysis, Systems Analysis, IT Architecture IT OPERATIONS -Datacentre -Telecomms -IT Security -Networks -Desktop support -Provincial IT Operations SOLUTIONS AND MAINTENANCE -Application support and maintenance -SAP support -Custom software -Off-the shelf -Systems development STRATEGY, GOVERNANCE & COMPLIANCE -IT Strategy -Governance and compliance -Audits -IT Risk management IT SERVICE MANAGEMENT -ITIL Service Management -Quality Assurance BUSINESS RELATIONSHIP MANAGEMENT Business Relationship Management (DoL, CF, UIF), ICT Communications, Systems Integrator CURRENT STATUS – OPERATING FRAMEWORK

11. 11 CONTRACT EXTENSION - GOVERNANCE -a formalised and defined governance has been implemented to manage the contract extension -These structures include business representatives, DoL Exco and service provider representatives -Governance structures for oversight : -IT Programme and Portfolio Committee – weekly -IT Steering Committee – biweekly -IT Exco – monthly -DoL Exco - biweekly CURRENT STATUS

12. CURRENT STATUS – GOVERNANCE FRAMEWORK

13. 13 STAFF TRANSFER -a total of 96 staff were transferred to the DoL -These staff have been integrated into the Department through orientation and briefing sessions -Morale of staff is very high due to finalisation of the process and job stability -Staff transferred are currently providing the majority of IT services to DoL -Management workshop completed to define processes, standards, operating framework, financials etc. CURRENT STATUS

14. 14 CURRENT STATUS Section 197 -Employees transferred were all employees who were directly involved in providing IT services to the DoL -Contract employees, shared employees of the service provider and employees not providing IT services were not transferred -Terms and conditions of employment of each employee remained substantially the same -Leave accruals and pension funds transferred to DoL -Employees have employment continuity (ie. years of service carried over to DoL)

15. 15 OPERATIONS -Seamless transition of IT operations during the transfer and transition process -IT service gaps identified and mitigated – direct service contracts signed with service providers, where necessary -No impact to end users or clients of the DoL -IT operating framework agreed, based on the approved ICT strategy CURRENT STATUS

16. 16 OPERATIONS – Service Desk -the State Information Technology Agency was appointed to host and manage the IT service desk -Service desk staff transferred from the service provider to DoL are based at the SITA offices -No disruption of services or impact to end-users was experienced in transitioning the service desk from the service provider to SITA -An SLA with SITA is in place to monitor and manage performance CURRENT STATUS

17. 17 OPERATIONS -Migration of the Sheltered Employment Factories is in progress -This will benefit the Sheltered Employment Factories in the following manner : -allow for economies of scale eg. licensing -benefit from the already stable DoL IT infrastructure -reduce IT costs by using DoL contracts, infrastructure and licenses -improve IT security -assist in addressing SEF IT audit findings CURRENT STATUS

18. FINANCING THE ICT STRATEGY During the 2012/13 ENE processes, the DoL unbundled the ICT allocation from that of an operational lease to cater for the transfer of staff. Allocations of R30m were therefore reflected in respect of Compensation of Employees, and Goods and Services to cater for these expenses. During the 2014/15 allocation process however, the allocations made by the DoL through the unbundling exercise were removed from the budget due to the fact that the positions created to absorb staff in terms of LRA S197 remained vacant.

19. An allocation has been provided for the 2016/17 financial year to cater for this. The DoL has however absorbed the staff as from 1 December 2013. This matter has been brought to the attention of the National Treasury, but has not yet been finalised. An amount of R100m becomes available in 2016/17, but does not address the current requirement. FINANCING THE ICT STRATEGY

20. NEXT STEPS -Finalise Human resource processes : -Functional structure -Organisational structure -Develop job profiles -Job evaluation process - Finalise and implement operational plans for IT service delivery - Refine and roll-out of the IT strategy - Address service gaps post end of the contract extension - Continue change management programme for transferred staff - Reach an agreement with SITA on the additional services to be procured before end of February 2014 and embark on the procurement process.

21. THANK YOU 21