www.capetown.gov.za
Enterprise Resource
Planning (ERP) and Change
in the City of Cape Town
E-Government Award winner
CESPAM Executive Training Programme
\"Implementing E-Governance in Public Sector
Organisations\"
Cape Town, South Africa, 26-28th February, 2003
Nirvesh Sooful
Chief Information Officer (CIO) – City of Cape Town
nirvesh.sooful@capetown.gov.za

Introduction
www.capetown.gov.za
The City of Cape Town is the first local authority in South Africa to perform a
large scale SAP implementation
Driving change in large organisations needs the active sponsorship of very senior
people. Project Ukuntinga, which was the “SAP ERP” programme in the City of Cape
Town saw the establishment of a special relationship between the roles of key Exco
members (senior politicians), EMT members (senior officials) and IT Leadership in
catalyzing, sponsoring and achieving meaningful and sustainable change.
This presentation focuses on a number
of key factors that were instrumental in
ensuring the sustainable success of the
Project Ukuntinga.
These factors have been presented
as five “tips”. Before they are
introduced, let’s understand the
context of the change programme.
2
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

Background
www.capetown.gov.za
The City of Cape Town in Context
On December 5th 2000 a single Unicity Council (the City of Cape Town)
which amalgamated the seven separate Councils in the Cape Metropolitan
Area was created. This new city is a key city in the economy of the country
(with approx. 11% of the national GDP) and the economy of the province
(approx. 75% of provincial GDP). Other key statistics are:
Population 3.2 million
Area +/- 215 900 ha
Staff 30 000
Capital Budget R 1.9 Billion
Operating Budget R 7.2 Billion
Rateable Properties 800 000
3
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

The City of Cape Town in Context
www.capetown.gov.za
Our City has many Strengths ……
Diversified and growing economy
High concentration of tertiary educational institutions
Beautiful and unique natural and built environment
Vibrant cultural mix that can serve as bridges between communities and
people and lead to novel fusions
Great potential in the new knowledge economy growth sectors
Widespread civil society membership, activism and volunteerism
Resilience in the face of persistent hardship
Good infrastructure and manageable backlogs in terms of basic needs
Widespread and significant levels of managerial skills in both the public
sector and private sector
Modern technological infrastructure (hardware and software)
4
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

The City of Cape Town in Context
www.capetown.gov.za
However it also has many challenges - Salient Trends shaping the city
Unemployment likely to increase in medium term (3-10 years) as regional
economy repositions
Poverty will deepen and spread amongst a larger section of the population as
economic restructuring kicks in (note: 53% of Coloured community just above
PDL)
Income inequality likely to increase as job growth is restricted to highly skilled
areas
Aids/HIV infection rate to increase in tenfold in just 8 years affecting largely
poor households and especially black women
Limited prospects for job creation and social integration amongst the youth
will reinforce and further entrench vicious cycles of violence and criminality
Spatial divisions will continue to undermine optimal economic productivity and
prospects for social integration
Exacerbates social division & community disintegration
5
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

Cape Town’s Smart City Strategy
www.capetown.gov.za
What is the Smart City Strategy?
Strategy borne out of a sober understanding of the trends facing the city.
It is a strategic framework that aims to reposition Cape Town as a leading
player in the new global knowledge economy.
It is not only focused on transforming the way that local government works
and delivers its services, but transforming the the way that the entire society
operates.
However, its primary interventions are based on what local government can
enable and how local government can ‘lead by example’ by changing the way
that it interacts with citizens, businesses, other government departments and
other stakeholders
It is not an IT strategy or the “property” of the IT Directorate, but is instead
something that cuts across all City departments and strategies.
6
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

Cape Town’s Smart City Strategy
www.capetown.gov.za
Encompasses these 5 questions/ issues
1. What leadership is necessary to establish competitive advantage in a digital
economy and society (smart city leadership)?
2. What must be done to ensure that our policy and regulatory environment
supports the development of a smart city?
3. How will information technology lay the foundation for the building of a new
flexible and responsive organization and enable the organisation to continually
improve in its efficiency and effectiveness in delivering its programmes and
services? (administrative/ e-government strategy)?
4. How do we use IT as an instrument to foster the economic and social
development of the city (development strategy)?
5. How can IT be used to ensure/ enhance good governance (digital democracy)?
7
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

The strategy encompasses many projects that drive
the city to the smart city
www.capetown.gov.za
Integration, alignment and the 5 year strategic vision is key
Some of the smart city projects currently underway
Project
PC’s for Interactive and
Ukuntinga –
Councilors transaction
e-Project Suite
SAP ERP enabled web
Digital
Internal Smart
infrastructure
signatures Architecture,
City Work
Learnerships/
standardisatio
Group Council
co-operative
n and
Legislation Agenda’s and
training
External Smart consolidation
Review reports online
City Steering Projects Bursaries
Committee Content
DSP
Open Management
Innovative BEE
Partnership Democracy
Electronic
Strategy Intranet and
Tourism e-
Project
agendas and
(Government, Portal
Business
registry
NGO, Private, development
project
E-Transactions
community)
Bandwidth
IT service
Bill
Barn
provider
E-Government
Cape On Line
strategy
Centre of Cape On Line
Excellence
Training e-City
strategy
Digital City
Centre
Internal
Project
City/People
e-Government
Policy & e-
Leadership
Development
External Regulatory Governance
Projects
Environment
8
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

The strategy encompasses many projects that drive
the city to the smart city
www.capetown.gov.za
Integration, alignment and the 5 year strategic vision is key
Some of the smart city projects currently underway
PC’s for Project Interactive and
Councilors transaction
Ukuntinga
e-Project Suite
enabled web
Digital
Internal Smart – SAP ERP infrastructure
signatures
City Work
Learnerships/
Architecture,
Group Council
co-operative
standardisatio
Legislation Agenda’s and
training
External Smart n and
Review reports online
City Steering consolidation Bursaries
Committee Content
Projects
Open Management
Innovative BEE
Partnership DSP
Democracy
Strategy Intranet and
Tourism e-
Project
Electronic
(Government, Portal
Business
agendas and
NGO, Private, development
project
E-Transactions registry
community)
Bandwidth
Bill
IT service
E-Government Barn
Cape On Line
provider
Centre of
Cape On Line
strategy
Excellence
e-City
Training
Digital City
strategy
Internal Centre
Project
City/People
e-Government
Policy & e-
Leadership
Development
External Regulatory Governance
Projects
Environment
9
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

Project Ukuntinga: Implementing SAP in record time
www.capetown.gov.za
18 month implementation of mySAP.com including HR and Payroll,
Financial Accounting, Management Accounting, Asset Management
(FI/CO), Materials Management and Procurement, Real Estate, Plant
Maintenance, Revenue Management and Billing (SAP ISU-CCS).
Cost: R300 Million +
Number of SAP users: 6000
First Release: 10 months (HR and Payroll, Financial Accounting,
Management Accounting, Asset Management (FI/CO), Materials
Management and Procurement)
Project UKUNTINGA is staffed with approximately 270 resources
from City of Cape Town and our implementation partners
(Accenture, Maseco, EPI-USE, SAP and Cornastone)
One of the largest and most aggressive SAP implementations in
the world. Also leading edge (ISU-CCS) This must rank as one of the largest Local
Government initiatives in the world - I have
been unable to identify any other project at
a Local Government level anywhere in the
world to match this programme in size
Donovan Muller – Accenture Partner
10
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

www.capetown.gov.za
Enterprise Resource
Driving change in large organisations
Planning (ERP) and Change needs the active sponsorship of very
in the City of Cape Town senior people. Project Ukuntinga, which
was the “SAP ERP” programme in the
City of Cape Town saw the establishment
of a special relationship between the roles
of key Exco members (senior politicians),
EMT members (senior officials) and IT
Leadership in catalyzing, sponsoring and
achieving meaningful and sustainable
change.
This presentation focuses on a number of
key factors that were instrumental in
The City of Cape Town is the first local authority in ensuring the sustainable success of the
South Africa to perform a large scale SAP Project Ukuntinga.
implementation. This project was focused on
aggressively driving transformation in the City These factors have been presented as a
of Cape Town. It was large, complex, difficult and number of “tips” to people contemplating
extremely high risk. Change management was projects like this. For lack of a better name,
critical to the success of the project – and had to be I will call this group the IT Leadership
considered even before the project had started.

Change is tough!!!!
www.capetown.gov.za
Years ago, Machiavelli described the leadership difficulties of bringing about
a serious change in government:
. . . there is nothing more difficult to plan, more uncertain of
success, or more dangerous to manage than the
establishment of a new order of government; for he who
introduces it makes enemies of all those who derived
advantage from the old order and finds but lukewarm
defenders among those who stand to gain from the new
one. [i]
Niccolo Machiavelli
We experienced this in this process and at times it seemed like we ‘went to war with
our organisation’
It is important to understand this and be prepared for this.
12
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

1st Tip
www.capetown.gov.za
The IT Leadership today has a responsibility to be more than a custodian of IT
Tip 1:
infrastructure and to ‘run IT’
The IT Leadership needs to be the conduit of new ideas from outside the organisation.
The IT Leadership must be able to:
Translate new ideas and make them relevant to the organisation.
Be a business person first and a technologist second, so as to communicate
with the organisation in a language they understand.
Transform ideas into sound business principles:
Business case
Executive (sponsorship) control: phased delivery
Organisation-wide programme governance approach
Select the best external partners to complement internal skills
The IT Leadership role demands leadership skills, business acumen and a new
mindset, as well as technological competence
13
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

2nd Tip
www.capetown.gov.za
Build credibility by consistently delivering and following through
Tip 2:
Need to be able to deliver – on-time, on-budget and according to quality standards:
Delivery builds credibility.
People listen to you (whether they like you or not)
Helps to justify applications for more money and or resources
Delivery is a core differentiator. Good ideas can get you only so far, consistent
delivery will allow you to push the envelope and really drive transformation
People (especially key politicians) know who can deliver, and you will be
surprised at the how they will open doors for you
Deliver, Deliver, Deliver!!!!
Delivery is the only thing that really gets you in the game, and
Consistent delivery is the only thing that keeps you there!!!
14
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

3rd Tip
www.capetown.gov.za
“Show me the money!”
Tip 3:
There must be commitment to a tangible business case.
The business case must be real and show achievable benefits not hard to
quantify productivity gains. At least some benefits need to be quantified
Need to explain how the benefits will be extracted
Need to explain how success will be measured
The business case must be aligned to the strategy of the organisation
Ability to prioritise and Deliver
Dialogue with Exco/ EMT
sequence initiatives Value Proposition
Applied across
portfolio of new
Sustainable results
projects
and buy-in
Sound business case
Any programme, IT or otherwise, will only be sustainable if it delivers a
value proposition.
15
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

Business Case
www.capetown.gov.za
An ERP indirectly and directly enables the delivery of a wide array of benefits
* VCO = value creating opportunity
Quantified, financial VCOs,
that are directly attributable to SAP (3)
Those financial VCOs that we have managed to quantify (10)
Those VCOs that have a Those VCOs that have a
direct financial benefit (45) non financial benefit (29)
Those VCOs that we have documented (74 unique of the127 identified)
Those VCOs that are known to the City of Cape Town due to a vision and strategy having been defined
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28thcan be2003
All value creating opportunities (VCOs) that February, enabled by an ERP 16

Business Case
www.capetown.gov.za
The Financial Case is Compelling
Even with conservative assumptions and the “tip of the iceberg” quantified,
the financial case is compelling
The Three areas of
Cumulative Discounted Cash Flow (2002 – 2006)
Benefits are:
IT: R60 million p.a. saved
due switching off legacy 600
systems that are replaced
by SAP. Payback* 27 or 42 months
Best Case
Procurement: R40 million 400
p.a. saved due to Worst Case
consolidated and
standardised procurement, 200
as well as improved stock
R millions
holding.
0
Staff: R20 million p.a. will
be saved through natural Jan-02 Jan-03 Jan-04 Jan-05 Jan-06
attrition of staff, reducing
-200
duplication on roles,
increased productivity.
-400
17
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

There are many other financial benefits that we see
from the ERP implementation
www.capetown.gov.za
Note: Business case was built only 3 of 10 quantified VCOs. Here are the other 7:
Description Value
Note that these quantified benefits were not
Fleet Reduce fleet size to ensure optimal utilisation On the extrapolation of previous success, a further
included in the cash flow analysis
R 26m p.a. could be saved
Land Ensure accurate billing of rates by ensuring After a required investment of R 12m, cumulative
that all approved building plans are filtered annual benefits of R 25m of increased rates billing can
through for the calculation of rates be achieved
Assets Identify additional properties from which rent Revenue increases will occur linearly and reach R 50m
in the 4th year of achieving this benefit
/ sales revenue can be earned and adjust
rental and sales values toward market prices
Roads Improve the quality of the road network, by In the long term, either a greater % of the network (2.5
transforming from reactive to proactive x) can be maintained at the same cost, or significant
maintenance annual savings (R 150m) can be achieved
Arrears Increase earnings by increasing rate of R 1.5m to R 2.2m p.a. can be saved by proactively
collection and decreasing cost of collection alerting customers of disconnections and by having a
consolidated view of customers across administrations
Treas-ury Minimise cash on hand through improved R 0.75m p.a. can be made by holding high interest
forecasting of cash requirements investments for longer due to more accurate cash
forecasting
Water Consolidate and improve knowledge of water R 5.9m p.a. can be saved by reducing water loss (from
infrastructure 23% to 17%) through proactive maintenance.
18
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

Business Case
www.capetown.gov.za
Social and Organisational Benefits
The broad array of benefits unlocked by ERP enablement will assist in Social
Upliftment and Improve Service Delivery
Rands extracted, used to improve …
Create
financial
value Preferential procurement
Employment equity
Rands extracted, used for … Socially
Supports …
conscious
policies
Advance social
Rands extracted, used to
upliftment Improve
educate staff and provide better lower cost, more pervasive
service delivery
working environment … service delivery supports …
improved decision making
allowing matching of supply and demand …
Information
transparency
Enhance motivated, better educated
human employees …
Enabled by SAP
performance
19
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

Business Case
www.capetown.gov.za
ERP is an critical enabler to “smart city” strategy
An ERP will provide the
solid foundation on which
the eGovernment strategy
can be deployed.
_________
eGovernment flip flops
relationships:
Citizen Citizen
Official IT
IT Official
20
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

4th Tip
www.capetown.gov.za
Use techniques to manage change, ensure sustainability and get people to
Tip 4:
work together.
In the dialogue between Senior Politicians, Senior Management and IT Leadership,
the IT Leadership must:
Bring new ideas
Deliver them
Show the benefits
… in a way that will create a sustainable legacy for the organisation.
Important IT Leadership qualities include their ability to listen, to influence, to
collaborate, and to get people motivated and working well together.
Deliver something that will remain and continue adding value, long after the
project team has walked away.
21
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

Delivery & Change Management
www.capetown.gov.za
Integrating an intensive change management process into Project Ukuntinga ensured successful
delivery.
The “business preparation” stage focuses on sponsorship and communication; “deployment”
focuses on training and performance support; and, finally, the “sustainability” stage includes
performance management activities.
Focus on adoption of new
Initial focus on Management
behaviours and attitudes
and Leadership
• Concept absorbed as core part of the
• Communicate the vision
organisation
• Involve senior executives
• Leading by example not directive
• Define milestones and measures
Navigation Leadership
Performance
Ownership
Shift from Leadership
to Enablement
• Involve and educate the users
• Strong management support
still required
Leadership
Transition from
Management to Ownership
• Long term business user must
Enablement
accept responsibility
Enablement • Continued support and focus on
training / education
Time
22
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

Change management starts early!!!
www.capetown.gov.za
The Four Enterprise Systems Projects (before the Project Ukuntinga)
Blueprint Planning Phase Objectives:
• Confirm the Business Architecture
Unicom recommendations (Feb-Nov 2000) +
(organisation, process, application views)
IT Assessment (June-Nov 2000)
• Develop an implementation plan
• Develop a business case that quantifies ERP-
enabled business benefits
and implementation costs
• Ensure stakeholder support and buy-in.
Project # 1 Project # 2 Project # 3 Project # 4
Consultant Selection Software Selection SI Selection The systems
(Mar – April 2001) (April - June 2001) (July - Nov 2001) implementation
blueprint and
Gartner was chosen to SAP was chosen as one Accenture was chosen
planning phase
assist with software and of the two potential ERP as the preferred system
(Nov 2001 - Jan
systems integrator software providers integration
2002)
selection processes partner
2000 was the year of Strategy, 2001 was the year of Selection
2002 is the year of Implementation, 2003 will be the year of Benefits
23
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

5th Tip
www.capetown.gov.za
Tip 5: Obtain visible, committed and hands on Executive Sponsorship
Key role for Executive Sponsors
• minimizing customization,
• Getting best resources (people),
• keeping officials on track,
• driving change/ transformation in the organisation,
• ‘bulldozing’ opposition,
• Securing funding
• Shorten decision making processes
• etc.
Executive Sponsors need delegated authority. This implies that they need
to be senior, trusted and political ‘heavy-weights’ (if you really want to get
things done).
24
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

www.capetown.gov.za
Message from the Mayor of the City of Cape Town at the first Council meeting of 2003
In-house we have successfully launched the city''s Enterprise Resource
Planning system using the world-class SAP system. The system is
transforming our administration from an old-fashioned over the counter run
system to an effective on-line operation.
I am very pleased that the initiative aims to tackle the digital divide that
exists within Council, as well as the wider community. Cape Town can be
proud that it is one of the only councils where every councillor has an e-mail
address and access to a computer. We are also transforming our libraries
into information and technology hubs, with the installation of computers in all
105 municipal libraries.
25
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

Conclusion
www.capetown.gov.za
Conceiving, delivering and sustaining change:
The IT leadership today has a responsibility to be more than a custodian of IT
Tip 1:
infrastructure and to ‘run IT’.
Build credibility by consistently delivering and following through
Tip 2:
“Show me the money!”
Tip 3:
Use techniques to manage change, ensure sustainability and get people
Tip 4:
to work together
Obtain visible, committed and hands on Executive Sponsorship
Tip 5:
26
CESPAM \"Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003