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This report provides an update on the current status of piloting municipalities, including outcomes, achievements, and challenges. It highlights the progress made in implementing minimum business processes and system specifications, and discusses the lessons learned from the piloting process. The report also outlines the requirements for compliance with the regulation and the necessary hardware and software infrastructure.
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ICF 8 & 9 September DurbanFeedback site visits & Minimum Business processes Presented by National Treasury: Chief Directorate Local Government Budget Analysis
ICF 8 & 9 September DurbanWhat is the current status of piloting municipalities?
OUTCOMES AS AT 15 AUGUST 2015 Where is this work stream going Final Stage Research • We are now at the Rubicon that require the issuing of minimum business process and system specifications. • External review and publish. Next Cycle Deliverables • The business process engineering in most systems is at an advance stage to accommodate the accounting cycle with specific reference to: • Integral budget tools accommodating the IDP and Projects, • Seamless 3Rd party integrations based on the segments. • Removal of suspense accounts. • Non financial reporting. Achieved • System vendors have gone through modernisation through investment to achieve the core objectives of the regulation. • They are able to submit the segmental transactional data strings.
Summary position on piloting 4. 3. 1. 2. Metro’s Hybrid with definite plans to migrate Delayed pilots Accounting Cycle Number of Municipalities Position Initial shock due to change in environment were experienced but they all extremely proud and report great uptake from management due to their ability to show their alignment with service delivery. Pilots = 8 Total Municipalities = 82.5 The pilots all have implemented to a high degree all segments with costing and region limitations. High instance of projects have been observed but all indicated that piloting were meant to complete their charts and thus virement is used. Pilots = 7 Total Municipalities = 161 • These are municipalities that discontinued the piloting attempt and their clients had to be flagged as risks as clear mitigation plans need to be brought to the table at the end of piloting to ensure that the non-piloting municipalities are not placed on risk • Pilots = 4 • Total Municipalities = 34.5 The metro’s that we have engaged so far all have conceptually engaged with the requirements and are targeting 2017 for full compliance, Close milestone management will need to be followed to ensure that they do comply in time. SAP(3), Oracle(1) BCX(3) microMEGA(1).
Piloting Lessons Learned . • Pilots indicated that their biggest single risk were institutional change management requirements and that this should be highlighted to non piloting municipalities. • They found disparate systems in their environments that were duplications and even some triplications of work most of those processes needed to be and were centralised into the ERP solution. • That systems should not be defined as the software, but the processes required. “Manual is also a process”. • That where municipalities elected to minimize the change by using short codes it appears that additional effort is required to manage transactions. • Project originating systems had the biggest change management requirement but functionally support the local government accountability cycle. • That All vendors is close to finalizing their configurations and in essence will have ungraded their systems to accommodate for mSCOA: at varying levels. • The mSCOA classification framework is structured in support of the local government accountability cycle IE proof of concept achieved. • That even though transacting on the segments has been achieved at varying levels, further independent evaluation is required. • The numbering and structure change of the long code will create extensive configuration and historical data issues.
Segments used • The above self assessment by vendors as indicated above indicate probable compliance but is not necessary shared by our observations at pilots and as such is an indication of ability versus actual.
ICF 8 & 9 September DurbanWhat constitutes compliancy to the Regulation?
Minimum Business Processes (Back to basics) Regulation No 37577) Hardware ICT InfrastructureMust have access to Hardware that need to be sufficient to run the software. Financial and Business Applications or Systems must: 1) Provide for hosting GL structure. 2) Be able to accommodate and operate 3) Portal / Report Extraction? At a Minimum the municipal chart must: 1) At a transactional level accurately record against segments. 2) Must contain the segments as per schedule. 3) May not map, extrapolate or otherwise do not reflect.
Minimum Business Processes ( Draft outline) IDP – Project based BudgetsProjects Linked to the IDP as defined in the schedule of the regulations. In the piloting we found that where a matrix that start with project and then function allows for easy arrival at the cost Centre or vote. 1 Integration If the system is not a full ERP (Disparate systems not allowed) integration is non negotiable 2 Due to the historical non focus on integration it seems to be an issue for most systems for the Project based integration of IDP, Performance management (SDBIP) Asset management inclusive of PMU with resultant under spending of grants. This will need to be addressed very quickly. 3 Business processes Business process as described in the regulation is understood to include non financial information and as can be seen from the self assessment we are grappling with the processes due to historical system configurations. 4 The main focus for us during the next engagement cycle will be on asset management that is closely augmented by the grant, land and real estate business processes. For this purpose we are distributing in addition to circular 2 required submissions detail business process template assessment tools. 5 ERPThe regulation consistently hinted that an enterprise resource management solution would be the basis of measurement when minimum system specification are to be released. Based on the self assessment most vendors are close to achieving this requirement, be it through integration or 3rd party systems. 6
External consolidation and review • The steering committee resolved that after this extensive engagement framework that an external party will review and compile the final business process and requirements. • You input and responses to the questionnaire as well as contributions in the follow up engagements will guide the final output.
Circular 57 • Circular 57 is problematic and regular attempts are made to bypass it. • Section 5(2)(d) of the MFMA to be institutionalised in addition to the supply chain regulation to ensure the systems market remains stable post mSCOA and circular 57. • Due to vendors not attending to non pilots and their systems at these non piloting municipalities are aged and based on legacy architecture, municipalities are therefore worried not only for the purpose of mSCOA but also due to functional and physical constraints and are therefore looking at the market for modern solutions. (This is exasperated by unfavourable audit comments about systems.) • Small to medium sized municipalities cannot afford an ERP type system in both operational as well as original capital and configuration outlay. (This includes both the monetary as well as the requisite expertise) • Follow up on circular 57 giving minimum business process. • Independent assessments not Treasury.
