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Tuesday Jul 09, 2013

Soaring costs of Durban's billing system

Durban's new billing system continues to cost ratepayers an inordinate amount with it now emerging that an IT consultancy is being paid R650 000 a month by the eThekwini Municipality to oversee its implementation.

To date, the incomplete Revenue Management System has cost Durban ratepayers about R505 million to develop, far more than the cost estimates of between R90m and R150m approved by council in 2004.

Municipal spokesman Thabo Mofokeng confirmed that the project manager, IT Advisory, was being paid R650 000 a month as of January 1 this year for the next two years to oversee the implementation of the project.

Councillors were initially sold on the idea of an in-house billing system by then city manager Michael Sutcliffe, and were convinced that no commercially available product met eThekwini's requirements. Another advantage was that in-house development would negate the need to pay annual licence fees.

But Mofokeng also said that the city was forking out R1.1m annually in licence fees. And, the overall annual amount being paid to city works for maintenance was R14.7m.

IT Advisory was appointed after the city's executive committee recommended, in October last year, that an independent project manager be appointed to report directly and independently to council.

The Mercury was unable to trace the company, and requests for company details, as well as who owns it, remain unanswered by the municipality.

A number of modules of the new system have already gone live. These include revenue receipting, business support, community residential units, bulk electricity and the rates calculation model.

Mofokeng said the rationale for the city to pay maintenance fees was 'to support the five modules that have gone live'.

The municipality collects more than R20 billion a year in revenue.

The equivalent system in Cape Town cost R350m, and it is estimated that the cost of the billing component was about R120m.

Cape Town's system was developed during 2001 to 2002 and took 18 months to implement, according to the city's executive deputy mayor, Ian Neilson.

Cape Town's SAP system was not developed in-house; SAP is an enterprise IT system developed by a German company.

'Software maintenance is the norm for enterprise software systems such as this and, in the case of SAP, it amounts to approximately 22 percent of the cost of the software. It is paid annually and, because we did not only implement a billing system, I can only estimate the software maintenance for the billing component to be less than R10m per annum,' he said.

DA councillor Rick Crouch said it was astounding and unacceptable that Durban ratepayers would be paying an additional R14.7m a year in maintenance fees. He also said the city was supposed to own the software, therefore there should be no licence fees paid to a particular company.

'The main selling point to council at the time was that we should develop our own software package because we would then not have to pay the annual licence fees. And, if we bought an 'off the shelf' package we would have to pay licence fees to another company. So why are we now paying R1.1m a year in licence fees; was council lied to?' asked Crouch.

Minority Front councillor Patrick Pillay said the revenue management system had become a monstrous nightmare for the city and its ratepayers.

He said the costs of developing the system had escalated vastly, and ratepayers were being held to ransom.

'It seems we have to pay licence fees for the rest of our lives. There was no transparency in terms of the after-costs when the RMS was initiated. I'm concerned that the project cost of R650 000 (a month) is unacceptably high. We would have expected the process to be done inhouse,' he said.

The Mercury

 
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