www.capetown.gov.za

Enterprise Resource
Planning (ERP) and Change
in the City of Cape Town




                          ...
Introduction
                                                                                                             ...
Background
                                                                                                               ...
The City of Cape Town in Context
                                                                                         ...
The City of Cape Town in Context
                                                                                         ...
Cape Town’s Smart City Strategy
                                                                                          ...
Cape Town’s Smart City Strategy
                                                                                          ...
The strategy encompasses many projects that drive
the city to the smart city
                                             ...
The strategy encompasses many projects that drive
the city to the smart city
                                             ...
Project Ukuntinga: Implementing SAP in record time
                                                                       ...
www.capetown.gov.za

Enterprise Resource
                                                         Driving change in large ...
Change is tough!!!!
                                                                                                      ...
1st Tip
                                                                                                                  ...
2nd Tip
                                                                                                                  ...
3rd Tip
                                                                                                                  ...
Business Case
                                                                                                            ...
Business Case
                                                                                                            ...
There are many other financial benefits that we see
from the ERP implementation
                                          ...
Business Case
                                                                                                            ...
Business Case
                                                                                                            ...
4th Tip
                                                                                                                  ...
Delivery & Change Management
                                                                                             ...
Change management starts early!!!
                                                                                        ...
5th Tip
                                                                                                                  ...
www.capetown.gov.za

         Message from the Mayor of the City of Cape Town at the first Council meeting of 2003



    ...
Conclusion
                                                                                                               ...
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Enterprise Resource Planning (ERP) and Change in the City of Cape Town

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Enterprise Resource Planning (ERP) and Change in the City of Cape Town.

A presentation given as part of the CESPAM Executive Training Programme titled "Implementing E-Governance in Public Sector Organisations", held in Cape Town, South Africa, 26-28th February, 2003

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Enterprise Resource Planning (ERP) and Change in the City of Cape Town

  1. 1. www.capetown.gov.za Enterprise Resource Planning (ERP) and Change in the City of Cape Town E-Government Award winner CESPAM Executive Training Programme quot;Implementing E-Governance in Public Sector Organisationsquot; Cape Town, South Africa, 26-28th February, 2003 Nirvesh Sooful Chief Information Officer (CIO) – City of Cape Town nirvesh.sooful@capetown.gov.za
  2. 2. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  3. 3. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  4. 4. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  5. 5. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  6. 6. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  7. 7. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  8. 8. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  9. 9. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  10. 10. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  11. 11. 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.
  12. 12. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  13. 13. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  14. 14. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  15. 15. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  16. 16. 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 quot;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
  17. 17. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  18. 18. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  19. 19. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  20. 20. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  21. 21. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  22. 22. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  23. 23. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  24. 24. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  25. 25. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003
  26. 26. 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 quot;Implementing E-Governance in Public Sector Organisations“ Cape Town, South Africa, 26-28th February, 2003

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