Expensive Municipal IT solution under fire

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douglasc's picture
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Expensive Municipal IT solution under fire


This article was posted by Editor on Jun 17th, 2011 and filed under News. You can follow any responses on: http://www.techcentral.co.za/expensive-it-solution-under-fire/23873/

An e-government revolution in municipalities, which was championed by cooperative governance & traditional affairs minister Sicelo Shiceka as part of the state’s much-vaunted local government turnaround strategy, is floundering at its pilot site in a small Gauteng municipality.

The Special Investigations Unit has confirmed that it is considering an investigation into the Westonaria local municipality, which comprises a clutch of small towns on the West Rand.

This follows allegations that an IT company irregularly landed a multimillion-rand contract to install a Belgian software system and that millions have been spent with very little to show for it.

Lefatshe Technologies is well connected but controversial, not least because its CEO, Coltrane Nyathi, is awaiting trial for allegedly bribing two officials in an attempt to prevent the cancellation of a separate contract it had with the department of home affairs.

IT shopping in Belgium
Shiceka and a large delegation travelled to Belgium in January last year to “investigate how information communication technology solutions can be leveraged to improve service delivery and accountability at local government [level]“, according to a release from his department at the time.

Three days into his trip, Shiceka said in another statement that IT systems were “one of the key interventions” needed to achieve success with the local government turnaround strategy, which was approved by cabinet the previous December.

In an interview with Beeld he waxed lyrical, saying that he aimed to replicate the Belgian experience of using IT to give citizens insight into their municipalities’ finances, personnel issues, council resolutions, tenders and service delivery.

“I had a discussion with the president. He feels that it is imperative that the turnaround strategy be successful at all costs. He said: ‘Go to Belgium and find out how much money is needed and we will see to the rest,’” Shiceka said in the interview.

During his trip, Shiceka met representatives of Cipal, a nonprofit Belgian government agency responsible for local government IT solutions. By that time Cipal already had a foothold in SA through a 2002 partnership with its SA counterpart, the State Information Technology Agency (Sita), to distribute Cipal’s solutions locally.

In January 2008, two years before Shiceka’s trip, Lefatshe announced that it, too, had obtained rights to distribute “the powerful municipal software management suite from Cipal”. A company press release quoted then-CEO Noedene Isaacs-Mpulo saying that the Cipal solution would help municipalities to improve service delivery, a “prime focus of government”.

Plan comes together
A confluence of events during that period placed Lefatshe in pole position to benefit from a roll-out of Cipal systems across municipalities. Seamlessly, an opportunity that might have accrued to Sita was parlayed into private hands. Had the wider roll-out occurred, Lefatshe could have made immense profits.

Neither Lefatshe nor Cipal responded directly to questions about the way in which Lefatshe was appointed the agency’s distributor. Lefatshe claimed it could not give details without Cipal’s consent, whereas the agency said to “maximise the possibilities of knowledge transfer” it entered into agreements with more than one distributor.

But part of the answer appears to lie in the fact that Isaacs-Mpulo had joined Lefatshe as CEO after leaving Sita, where she was chief operating officer, just two months before Lefatshe announced the Cipal deal. A spokesperson for Lefatshe confirmed that “Isaacs-Mpulo was responsible for securing the agreement”.

A telling sequence of events included:

  • November 2007: Isaacs-Mpulo leaves Sita for Lefatshe and the Gauteng department of local government allegedly suggests Cipal to Westonaria as a pilot site.
  • January 2008: Lefatshe announces publicly that it had obtained rights to distribute Cipal in SA and at about this time Westonaria contracts Lefatshe to install Cipal.

Key players were Isaacs-Mpulo and George Seitisho, then the municipal manager of Westonaria.

Isaacs-Mpulo, like Lefatshe founder and chair Cheslyn Mostert, was well connected. Mostert, previously coordinator of the ANC’s economic transformation committee, helped design black economic empowerment policies; Isaacs-Mpulo chaired Blue IQ, the Gauteng government’s business incubator agency.

Asked whether she had used her Gauteng government connections to get Cipal pushed on to municipalities because she was negotiating its software rights for Lefatshe, Isaacs-Mpulo said this week that the “question is vague and I don’t understand which contacts you are referring to. However, in the normal course of business people build and nurture relationships and networks.”

She added: “I believe that we need strong corporate governance in business and institutions in our country and have always conducted myself accordingly in all my professional roles.”

A whistleblower report on the saga, written by a member of Westonaria’s finance unit, claims that the Gauteng department of local government promised the municipality R5m in November 2007 to install Cipal’s municipal solution. TheMail & Guardian obtained the report from a union official and knows the identity of the whistleblower.

The report claims municipal officials were “surprised to hear this as they knew nothing of this system and expressed concern internally that due process … [had] not been followed”. However, Seitisho assured them “this is a provincial government initiative and that [Westonaria] will be the Gauteng pilot site before it eventually goes into all municipalities”.

Lefatshe’s answers to the M&G confirmed that it regarded its installation of Cipal’s software in Westonaria as a “pilot … commissioned by the Gauteng department of local government”.

Due process?
Seitisho, as municipal manager, introduced Lefatshe’s Cipal offering to Westonaria as an unsolicited bid, which allows deviation from ordinary tender processes. The whistleblower report claims that this was done without a critical requirement: advertising Lefatshe’s bid so that other suppliers could offer competitive bids.

This week Seitisho denied anything untoward had taken place, saying all his decisions as municipal manager had been “in line with applicable regulations, policies [and in] consultation with and approval of council”.

He also said “not a single decision or activity was done … by me as an individual”, adding that records would show the municipal council had approved the contract and the bid had been openly reported as unsolicited.

Wider roll-out
Seitisho played down his role in plans for a roll-out beyond Westonaria, saying that, as municipal manager, “I would not have had powers to instruct or ‘want’ a Cipal roll-out in a province”. But he confirmed joining a subsequent trip by Gauteng officials to Belgium “looking at municipal IT systems”.

In December 2009, Seitisho resigned his position at Westonaria to join Shiceka’s department. He is now portfolio head of the local government turnaround strategy — the very programme to which Shiceka said IT systems such as those he saw in Belgium were “key”.

Because of his new position, Seitisho appears to have been involved with Shiceka’s Belgian trip — the whistleblower report says he had called Westonaria to gather information for the trip, saying he would accompany Shiceka to Belgium.

By this year, according to the report, well over R8m had been spent on the Cipal system in the Westonaria municipality, with more than R70 000 added to the bill each month. The report also claims that “very little value [has been] received to date” and only one of three modules is functional. The Lefatshe spokesperson countered: “This is not true. The system works.”

The M&G has learnt that the report has been handed to the Special Investigations Unit. SIU spokesperson Marika Muller confirmed that the unit was considering an investigation after receiving complaints.

Muller said in a text message that Westonaria’s new, acting municipal manager “had requested a meeting with the unit to look [at] formalising the relationship with us. It is very early in the process, so I am unable to give details of what issues may be under investigation.”

Acting municipal manager Thabo Ndlovu would not comment and referred theM&G back to the SIU.

Despite Shiceka’s exuberance in Belgium, plans for a wider Cipal roll-out appear to have stalled.

A spokesperson for Shiceka’s department, Vuyelwa Vika, distanced the department from the intended roll-out, telling the M&G: “Only the municipalities that use such a system would be able to help you; municipalities do not share information about their IT systems with the department. This is not in the department’s programmes, so I do not have an answer for you.”

Lefatshe spokesperson Mbuso Thabethe confirmed that there had been no wider roll-out thus far, saying “the pilot has been successfully installed in Westonaria only”.

Isaacs-Mpulo left Lefatshe in May last year and was replaced by Nyathi. He was arrested three months later for allegedly paying a R200 000 bribe to two home affairs officials to avoid the cancellation of a R20m contract with that department. He and one of the officials are out on bail awaiting trial and the other one has turned state witness.

Home affairs director-general Mkuseli Apleni released a statement after the arrests in which he said the department had cancelled Lefatshe’s contract because it had failed to deliver the necessary standards beyond the first phase of the project.

Responding at the time on behalf of Qedani Mahlangu, then Gauteng’s local government minister, spokesperson Mandla Sidu said she had nothing to do with the project.  — Nelly Shamase, Mail & Guardian


Nino's picture
Last seen: 3 years 9 months ago
Joined: 2011-06-01 20:29
Re: Expensive Municipal IT solution under fire

And why I am not surprised....

Can you imagine how effecient municipalities will operate, if we all use the same systems... All the possiblities, just think of the solid support structure... Guys on Forums helping one another, thus service providers can't charge us ridiculous support prices...etc. etc.

The problem with this however, is the age-old SILO MENTALITY!

Look at City of Cape Town with their SAP system... I went to a demonstration of the system and it was quite well structured. If they approached ALL municipalities 10 years ago, would it really have resulted in spending millions on the system?

As long as we continue to implement systems in silos, especially on the financial side, we will never reach a point of excellent service delivery. The problem herein lies with applying this...

But how difficult can it really be, if you look at huge international companies with hundreds of branches across the world and still they use one system...

I might sound optimistic, but when you start something on a small scale its easy to flow out... If they looked at SAP 10 years ago with this optimism, I think by now all municipalities could have used the same system.

(Only using SAP as an example)

Start by implementing and testing at 1 municipality, then a second, then a third..... then continue to do the district municipality.... Continue to the next district until you do the metro... etc, etc, etc.

Is the concept so far fetch that it is unreachable?

nirvesh's picture
Last seen: 4 years 10 months ago
Joined: 2011-08-04 14:23
Nino, I agree with you. This

Nino, I agree with you. This was the original concept behind what we did at Cape Town. The idea was that if we could transform this one municipality utilising ICT, we would have the brueprint for other municipalities. In my opinion, this would have worked. However, no one was prepared to listen. We banged on this drum as hard as we could. For example in 2006, we had a presentation by City of Cape Town to the South African National Department of Provincial and Local Government (DPLG) in May 2006. It was presented by Mehboob Foflonker and Andre Stelzner, the 2 city Directors responsible for this project (Andre is now CIO at the City). See http://www.slideshare.net/nsooful/presentation-to-dplg-may2006. We thought that the discussions we held at the meeting would take the concept of shared services for local government further, but it didn’t proceed beyond this presentation.

I also met with the CIPAL people from Belguim when I was CIO of the City, and when we showed them what we had done, they were impressed and wanted to pursue a partnership to learn from us. When the Minister went to Belgium and started making all of these pronouncements, I met with various representatives from the Department, including the Deputy Minister. My message was that I did not understand why we needed to be looking at Belgium (or anywhere else in the world) for a solution, when we had a local case study right here in South Africa. This local case study was being used across the world, but was being ignored in SA. All we needed to do was expand the model to all municipalities. We should start with a pilot in one district/ province and expand from that. I was told that this would not work, as the Minister had made up his mind.

I still beleive that this is the solution. It is the thinking behind the EOH Municipal Solution. All we have now done is take the similar idea - for all of the benefits that you (Nino) have outlined, and put the muscle of one of the biggest ICT players in this country behind it.

It is not far fetched and is entirely reachable. I see a local government all over the country working on the same systems, with the same level of complexity, utilising modern technology and processes to deliver consistent services to its people. As I said at the conference, size and cost should not be a barrier to entry anymore. Muncipalities must be given the systems that they deserve and funding, etc. will flow from the value that is generated.

Nirvesh Sooful
Divisional Director: EOH Local Government Services


eKhaya ICT
eKhaya ICT's picture
Last seen: 6 years 5 months ago
Joined: 2011-05-30 17:32
Re: Expensive Municipal IT solution under fire

Nino, great comment - mental silos and technical silos need to be bridged.

Regarding the plan of "piloting change", from the ground upwards - replicating the pilot (there TWK is a contender) - to several other sites: who is the driver? As you said in another thread [1] - people are not going to change their ways unless you "motivate" them to do so. The same applies to LG. Municipalities are not going to run the pilot unless forced. A trustworthy piece of the puzzle is missing - can SALGA perform this task?

The reason that global companies can use one IT system is because they have clear business processes in place, clear control structures that work, and they hire and employ people who focus on translating these processes and structures into IT solutions. Besides that there are also standard solutions out of the box. Quality assurance is lived in many companies and not just paid lip service. I think this is a key difference between LG and business IT projects. It is the reason why the success stories are relegated to metros, or to individual business processes in limited line departments or attached to particular individuals.

The point I want to make is that pilot ICT projects often only work at one location and don't make it across to others because of management issues. People don't realise how important individuals and local companies at the pilot site are in making that pilot work. Heeks (2005) and Dias&Brewer (2009) all make the point that you need several local organisations that are dedicated to making sure that things work. So we need a stronger involvement by local enterprises, who can work in the open source manner (not tying government into expensive contracts, and abusing the relatively weak situation of government here) and we need these kinds of links to be forged in a way that does not lend to corruption/abuse and that produces real effects.

[1] see the thread: http://lgict.org.za/forum/findings-municipal-website-review-200910  

Dias, M. B. & Brewer, E. How Computer Science Serves the Developing World Communications of the ACM, 2009, 52, 6, 74 - 80

Heeks, R. ICTs and the MDGs: On the Wrong Track i4d - Information for Development, 2005, 3:3

Anonymous's picture
Re: Expensive Municipal IT solution under fire

as long as IT professionals collude with gravy train politicians for personal gain, service delivery using ICT will remain a pipe dream and be a non-critical entitty in medium to small sized municipalities .

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