Treasury splurged R2.4bn on inactive financial system, MPs told
The finance committee is concerned that nothing concrete has been achieved after more than 10 years’ planning
10 May 2023 - 19:39
byLinda Ensor
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
The attempt by the government to modernise and integrate a financial management system across national and provincial government has so far cost R2.4bn, taken more than 10 years’ planning and has yielded no concrete results, parliament heard on Wednesday.
As technology has advanced rapidly in this time, the government is now looking at a cloud solution for its integrated financial management system (IFMS), which will replace the outdated, fragmented system in use.
National Treasury issued a request for information on this to guide its procurement strategy. It is at an advanced stage in its review of the request, with the State Information Technology Agency (Sita).
Licences acquired from service provider Oracle in 2016 cost R448m but the software has not been used, with other costs being incurred for software support and maintenance, project management, professional services, implementation planning and audit fees.
Cabinet decided in 2013 on the basis of advice to ditch the first phase of the IFMS, which cost R779m, and to move to a new solution. Since 2013, R1.6bn has been spent on the project, bringing the total to R2.4bn.
The parliamentary finance committee expressed concern at a meeting on Wednesday that there is nothing concrete to show for this expenditure. They want a breakdown of how the money was spent to determine whether value was derived from it.
With deputy public service and administration minister Chana Pilane-Majake, they expressed frustration at the long delay in implementing the system. Finance minister Enoch Godongwana has instructed National Treasury to proceed with the implementation as soon as possible.
Three presidents
“IFMS has been a frustration over years. It has taken too long and delayed the digitisation, modernisation and connectivity across government,” Pilane-Majake said. The technological initiatives of other departments were stopped because of IFMS, delaying the government’s technological advancement.
She asked why the project’s completion has been taking so long. It has been continuing for about 20 years under three presidents — Thabo Mbeki, Jacob Zuma and Cyril Ramaphosa.
Treasury, the department of public service & administration and Sita updated the committee on work under way on the IFMS that accountant-general Shabeer Khan said is critical for government as the service provider, Oracle, might be unable to support the current, outdated technology systems in use in future.
Treasury chief director of IFMS Dikeledi Lebea said the evaluation of the outcome of the request for information will determine the procurement strategy for the system.
Treasury is negotiating with Oracle on the possibility of a cloud solution. Engagements are under way with the auditor-general on a possible real-time audit of the programme’s transition to cloud before implementation.
“Cloud provides scalability, cost efficiency (pay per use) and a high availability environment ensuring business continuity,” Sita CEO Bongani Mabaso said. It can also be implemented faster.
No fees
An IFMS project management office will be set up in the CEO’s office.
Treasury is also discussing with Oracle the payment of the 2023 fees for licence support and maintenance of the software it has. As no fees were paid in the 2022/23 financial year, Treasury will not be hit with a finding of fruitless and wasteful expenditure by the auditor-general as in the past on the grounds that it was paying for software that was not in use. In 2020/21 this cost was R67m.
Lebea said that implementation of the pilot cloud system at selected departments will start in 2023/24 after the appointment of a service provider with rollout planned for 2024/25.
Priorities for IFMS functionality are the automation of government’s recruitment, public procurement and budgeting processes. As each module is ready it will be implemented nationally without waiting for the entire project to be completed.
The committee plans another meeting on May 30 to delve deeper into the IFMS debacle and wants to get the investigative reports of the Special Investigating Unit, public protector, Deloitte and Nexus.
Committee chairperson Joe Maswanganyi said the committee is worried about the delays in the project and the money spent on it
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Treasury splurged R2.4bn on inactive financial system, MPs told
The finance committee is concerned that nothing concrete has been achieved after more than 10 years’ planning
The attempt by the government to modernise and integrate a financial management system across national and provincial government has so far cost R2.4bn, taken more than 10 years’ planning and has yielded no concrete results, parliament heard on Wednesday.
As technology has advanced rapidly in this time, the government is now looking at a cloud solution for its integrated financial management system (IFMS), which will replace the outdated, fragmented system in use.
National Treasury issued a request for information on this to guide its procurement strategy. It is at an advanced stage in its review of the request, with the State Information Technology Agency (Sita).
Licences acquired from service provider Oracle in 2016 cost R448m but the software has not been used, with other costs being incurred for software support and maintenance, project management, professional services, implementation planning and audit fees.
Cabinet decided in 2013 on the basis of advice to ditch the first phase of the IFMS, which cost R779m, and to move to a new solution. Since 2013, R1.6bn has been spent on the project, bringing the total to R2.4bn.
The parliamentary finance committee expressed concern at a meeting on Wednesday that there is nothing concrete to show for this expenditure. They want a breakdown of how the money was spent to determine whether value was derived from it.
With deputy public service and administration minister Chana Pilane-Majake, they expressed frustration at the long delay in implementing the system. Finance minister Enoch Godongwana has instructed National Treasury to proceed with the implementation as soon as possible.
Three presidents
“IFMS has been a frustration over years. It has taken too long and delayed the digitisation, modernisation and connectivity across government,” Pilane-Majake said. The technological initiatives of other departments were stopped because of IFMS, delaying the government’s technological advancement.
She asked why the project’s completion has been taking so long. It has been continuing for about 20 years under three presidents — Thabo Mbeki, Jacob Zuma and Cyril Ramaphosa.
Treasury, the department of public service & administration and Sita updated the committee on work under way on the IFMS that accountant-general Shabeer Khan said is critical for government as the service provider, Oracle, might be unable to support the current, outdated technology systems in use in future.
Treasury chief director of IFMS Dikeledi Lebea said the evaluation of the outcome of the request for information will determine the procurement strategy for the system.
Treasury is negotiating with Oracle on the possibility of a cloud solution. Engagements are under way with the auditor-general on a possible real-time audit of the programme’s transition to cloud before implementation.
“Cloud provides scalability, cost efficiency (pay per use) and a high availability environment ensuring business continuity,” Sita CEO Bongani Mabaso said. It can also be implemented faster.
No fees
An IFMS project management office will be set up in the CEO’s office.
Treasury is also discussing with Oracle the payment of the 2023 fees for licence support and maintenance of the software it has. As no fees were paid in the 2022/23 financial year, Treasury will not be hit with a finding of fruitless and wasteful expenditure by the auditor-general as in the past on the grounds that it was paying for software that was not in use. In 2020/21 this cost was R67m.
Lebea said that implementation of the pilot cloud system at selected departments will start in 2023/24 after the appointment of a service provider with rollout planned for 2024/25.
Priorities for IFMS functionality are the automation of government’s recruitment, public procurement and budgeting processes. As each module is ready it will be implemented nationally without waiting for the entire project to be completed.
The committee plans another meeting on May 30 to delve deeper into the IFMS debacle and wants to get the investigative reports of the Special Investigating Unit, public protector, Deloitte and Nexus.
Committee chairperson Joe Maswanganyi said the committee is worried about the delays in the project and the money spent on it
ensorl@businesslive.co.za
Treasury’s long-delayed financial management system finally set for use
MPs roast Treasury for being late with its annual report
How Treasury is one of the top offenders in wasteful expenditure
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Most Read
Related Articles
Treasury’s long-delayed financial management system finally set for use
MPs roast Treasury for being late with its annual report
KHAYA SITHOLE: Treasury’s haste undermines its credibility
Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.