4.2 The Case Study
4.2.3 The business case: background and rationale
The City of Cape Town management had an ERP system business case. This section details this business case and the scenario under which the ERP system was proposed and implemented. It also elaborates the rationale for the ERP system implementation. The Municipality of Cape Town has implemented one of the most successful ERP systems recognised not only in South Africa but worldwide (City of Cape Town, 2013). It is also referenced as Project Ukuntinga in the business case proposal and implementation duration.
The business case for implementing an ERP at the Municipality was based on three issues.
Firstly, the Cape Town Municipality ERP aimed to merge seven previously independent municipal councils into the unified City of Cape Town. The figure also summarises the size and population of the ―mother city‖. This meant integration and standardisation of the Municipality systems as each council had its own different system. Secondly, the ERP was implemented to transform the Municipality to international standards as tried and tested international software was introduced. Finally, the implementation was meant to unlock financial value for the City of Cape Town by replacing the legacy systems that lacked transparency because of duplication and redundancy of business processes (City of Cape Town, 2013: Online; CIO, 2011).
0 20 40 60 80 100 120 140
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
R Billions
0%
1%
2%
3%
4%
5%
6%
7%
% Growth
GGP (R Billions) % Growth
84
The motives of the City of Cape Town for implementing an ERP system, as gleaned from a presentation by the City of Cape Town (2002) that was used to motivate the business case, can be summarised as follows:
Technically – to integrate disparate departments and systems and transform the obsolete legacy systems.
Operationally – to enable current and reliable information sharing among stakeholders.
Strategic – to ensure sustainability through envisaged growth.
Performance – to improve service delivery through improved effectiveness and efficiency.
The ERP system implementation project accelerated organisational transformation, taking into consideration business principles, processes and a solid economic platform. Though not documented in any study, the success is evident. For example, the Municipality won internationally recognised awards such as the African Achiever‘s and the E-government Award of 2002, The Bill and Melinda Gates Foundation Access to Learning Award, The 21st- Century Achievement Award from the Computerworld Honours programme (Cape Town, 2011: Online).
According to the Cape Town Municipality authorities, the ERP (SAP) implementation project started in 2002 and went live in December 2002 (Phase One) and September 2003 (Phase Two) (CIO, 2011). Phase One was the enterprise transactional system that enabled the back office day-to-day business processes as the ERP‘s main component. The actual systems involved were the financial systems, the asset accounting systems, the revenue systems, the Human Resources systems and the logistical systems. The second phase included additional modules and included dealing with the legacy systems to achieve a complete transformation to the new ERP system. The implementation period and the cashflow associated with the ERP system is demonstrated by the following Figure 4.4.
85
Figure 4.4: ERP implementation dates at Cape Town municipality (Source: Stelzner, 2008)
It is evident that the actual cash position of the Municipality has been continuously improving since it started utilising the system. The Municipality management attribute this improvement to the ERP system utilisation and further hinted that, prior to the implementation, the Municipality‘s cash flow was unpredictable and always unfavourable (Stelzner, 2008). This means that the return on investment is already benefitting the Municipality.
The Municipality‘s ERP system spans across departmental boundaries enabling residents to access departmental services from any point within or outside the resident‘s district or point of registration. This further enables sharing of common repositories and other resources within the whole Municipality. Local Government is about service delivery with special emphasis on bringing services to the people in the most cost effective way and as efficiently as possible. Often ERP systems are implemented to provide benefits to organisational management and internal processes. The ERP system in public institutions makes a difference as it extends direct benefits to the main stakeholders, the citizens who fund it.
With the ERP system implemented, the Municipality of Cape Town launched a ―Smart City Initiative‖, which is based on a policy framework from planning to co-ordinated implementation to transform the way in which its administration runs its ―internal processes, conducts business and interacts with its customers‖ (City of Cape Town, 2002). This is done
86
in line with the Municipal Systems Act of 2000. The framework proposes the use of a ―smart card‖ system that will be an integral part of the City‘s new Integrated Rapid Transit (IRT) network. This system will be required to capture information about all individuals who intend to use the public transport and all their transactions. It is clear that the Municipality is aware of the benefits of investing in an ERP system to increase the efficiency of its information management (Van der Walt & Du Toit, 2006) and to improve its service delivery. Thirty-eight independent municipal systems were amalgamated into a single super system. This system encompassed all the different departments that are found in an operational municipality making it very complex, given the way public institutions operate.