Securities and Exchange Commission of Pakistan is an independent and effective regulator. Its primary role is concerned with the regulation of Corporate Sector and the Capital Market, supervision and regulation of insurance companies, non-baking finance companies and private pensions as well as supervision of various external services in Pakistan. In 2001, SECP's IS&T Division just worked as a support department having limited responsibilities. The Director of the IS&T Department, Mr. Arshad Javed Minhas took initiative of evolving the IT department. Because of limitation of resources and technology there were many problems at the organization including time relating issues, communication gaps, task complexity, data irregularities, technology gaps and task completion delays. In order to overcome the problems, the Director now wants to launch the project of eServices. 'The objective of the project is to establish and implement online systems, which will improve the efficiency and effectiveness of the business processes of SECP, making it easier for clients such as companies, individuals and investors etc. to interact with the commission. Main features of the system will include online registration system for companies, online submission of annual, quarterly, and monthly returns by companies, online registration and tracking of complaints, etc. The system will also aim to reduce undue paper work and improve various processes within SEC. The features of the system which will enhance the internal workings of the commission include implementation of workflow environment, business process analysis, document analysis, and business activity monitoring and tracking etc.' [1] The Chairman of the commission is the head whose approval is required for every act at the organization. The Director held meeting with the Chairman and the Commissioners in order to convince them for approving the project. He explained all the benefits that SECP was going to gain after the implementation of this project. But the Commission rejected the proposal and disagreed to finance it. After many futile attempts, the Director decided to consult me for suggestions regarding how to get the Chairman see the positive side of the project and to get the approval for funding of the project.
My Understanding of the Problem:
After a detailed conversation [2] with the Director, I gathered that there were some major hurdles in the implementation of the project. Firstly, the Chairman and the Commissioners failed to realize the importance of the project. They did not seem to be well equipped with the IT technologies which kept them from understanding the advantages of the project. They wanted to carry on with their traditional manual file systems and had fear of everything shifting to online systems. All this was because of lack of IT knowhow. So, there was communication gap between the higher Commission and the IS&T Division. Secondly, because of being unable to understand its importance, the higher Commission was not willing to take risk in financing the project. So, the problems were: (i) how to get approval for initiating the project and (ii) how to arrange for the funding.
Tools and Techniques:
In order to resolve these problems, I chose some tools and techniques which could help me build a better understanding of the situation and that could provide me with a broader vision to get done with the problems.
Firstly, I scheduled meetings with the Managers of different departments of SECP in order to understand their current system and then be in a position to clearly draw a comparison between the flaws of the existing system and advantages of the proposed system (exhibit 1) which could then be presented to the Chairman to clearly make him understand the scenario. Submission of documents through traditional as well as electronic file system is represented in figure 1 and figure 2 below, respectively.
Secondly, a formal meeting with the employees and the Chairman enabled me to figure out some risks associated with the project (exhibit 2).
Then I held a meeting with the IS&T Department to figure out the costs that were supposed to be incurred in the project implementation. (Exhibit 3) Preparing a detailed cost sheet was going to let us know the approximate estimate of the expenses so that finance could be arranged accordingly.
Analysis:
After holding meetings and understanding the current system, I created a chart (exhibit 1) in which I mentioned side by side the results of both the traditional manual file system usage as well as the proposed online system usage. The most prominent advantages of the online system include avoidance of money wastage in posting forms, convenience both to the client and the commission, on time delivery of required forms, accuracy of data, human-error free data, quick decisions by the management because of no manual data entry requirement at the Commission and many more. Currently many objections are raised against the project not only by the higher authority, that is the Chairman and the Commissioners but also by other employees of different departments. In order to win unanimous approval the strengths of the online system will have to be amplified.
However, some risks are also there in the implementation of a totally new system (exhibit 2). The employees might not be able to utilize the new system properly and thus might be resulting in more problems than before. But this could be overcome by providing training about the new system to the employees of all departments by hiring proper trainers. This would involve additional cost as trainers would have to be paid for but this would be one time expense which would be fruitful for the future endeavors of the organization.
The funding of the project was rejected by the Chairman. In order to convince financer to provide funding for the project a better approach was to make a breakdown of the costs in addition to an overall cost estimate so that it becomes easier to make our claim acceptable. Total expected cost to be incurred was divided into cost of hardware, cost of services/ software/training, salaries, operating expenditures and miscellaneous costs (exhibit 3 - 3.5).
Recommendations:
After an in depth analysis of the whole situation, the following recommendations were made to resolve the issues hindering the implementation of the new project:
1. Instead of burdening the Commission for the whole cost, the IS & T Division could obtain support of the Ministry of Information Technology through its Electronic Government Directorate (EGD) for the implementation of the project. The EGD could cover the capital cost of the project, including the cost of Software Licenses, Hardware, and implementation of the project. The Commission could help in covering the recurring cost of the project which included maintenance and software license renewal. The maintenance could be taken care of exclusively by the IS & T Division through its annual profit budget. The only recurring cost was going to be of software license renewal which would be supported by the Commission. This breakdown would be helpful in getting approval for the funding.
2. For successful implementation of the eServices project, special training should be provided to all the employees so that they utilize the system properly yielding positive results for the organization.
3. Since the higher management and other departments find it difficult to understand why there is need for so many hardware products etc. for the IT department, especially for this project, the IS & T Division could let the Commission hold a detailed audit which could prove that no fraud is being done and in case something negative is found out, the IS & T Division would then have to bear a penalty to compensate for it.
4. As employees of other departments are not well equipped with IT knowhow, regular training sessions about the breakthroughs in the IT industry should be held at the Commission in which presence of every employee should be made mandatory. This would keep them abreast of the advantages of latest technologies and would thus be helpful in getting approval for the current as well as future projects. Communication gap between the IS & T Division and other departments would be reduced this way.
Conclusions:
The project of eServices is going to be a major breakthrough in the history of SECP as it would ease out the clients in getting their companies registered through online system and would also reduce workload at the SECP enabling the management to take decisions timely. The Director now feels that the above recommendations would increase the interest of the higher management towards the implementation of the new project. Also, the division of costs and getting funds for different divisions from different sources would make it easier in getting approval as it would not put the entire load on the Commission or any one source. It is hoped that the above suggestions would also help in reducing communication gap between the IS & T Division and other divisions of the organization.
Exhibit 1:
SECP's Task:
45 forms to be filled and submitted to the commission at regular intervals after company registration
Currently 46,000 registered companies with a constant increase in number
Management through current manual file system
Management through the proposed project
1. Registered companies are required to courier/ mail these forms. This causes time delay in postage as well as adds on the postage costs.
1. Mailing costs and delays would be finished as companies would be able to get themselves registered online. No delay as online entry would be reflected at the commission as soon as the client hits the submit button of the form.
2. Forms are manually read which involves risk due to human-errors.
2. Online entry would help lower the chances of human-errors as no reading from manual files would be required anymore.
3. The large volume of data is entered into the system by data entry operators. Because of large number of forms and tremendous data, risk of error is there. It is also very time consuming.
3. In the online system, the client himself would be entering data, not some data entry operator at the commission. This would reduce chances of errors and much of the time will be saved.
4. Delayed response by the management because of time consuming and tedious activity of manual file reading and entry into the system.
4. Quick decisions by the management expected as loads of time would be saved in the proposed system.
5. As forms come through post, these could go in the hands of unauthorized people.
5. Forms are directly received by the authorized person.
6. Misplacement of documents is evident.
6. Documents cannot be misplaced in the online system.
7. Tracking of documents is difficult.
7. Tracking of documents would become easier.
8. Manual workflow does not allow parallel processing.
8. Concurrent processing of two or more tasks will be possible.
3
Figure 1: Traditional (Manual) File Submission:
Figure 2: Electronic Submission Process
Exhibit 2:
SN No.
Risk
Alleviation
1
Employees might not be able to utilize the software properly after its deployment.
This risk would be reduced by providing training to the employees of SECP. Also the training will be conducted at various organizations to make them learn the electronic procedures of company registration and electronic returns submission.
2
Requirement specification might not be prepared on time.
To finalize the requirement specification without any delay, EGD would hire a project manager who would dedicatedly work on requirement specification.
Moreover, an employee from SECP would help in its preparation.
3
Project implementation might be delayed because of coding requirements
Coding requirements would be monitored and taken care of by the project manager. He would also make sure that the firms where this project would be implemented get the required resources.
4
Documentation of the new software might not be proper.
Software documentation according to industry standards is necessary. The project manager will take care of it.
Exhibit 3:
SUMMARY OF OVERALL EXPENSE
S.N.
Description
Rs. (in million)
1
Cost of Hardware
7.800
2
Cost of Services/Software/Training
13.500
3
Staff Salaries
0.910
4
Operating Expenditures
0.800
5
Miscellaneous costs
1.826
TOTAL CAPITAL EXPENSE (Rs.)
24.836
Exhibit 3.1:
QUARTERLY PHASING OF FUNDS
Phase I
Phase II
Phase III
Phase IV
Phase V
Phase VI
S.N
Description
Jul-Sep
FY (2010-11)
Oct-Dec FY (2010-11)
Jan-Mar FY (2010-11)
Apr-Jun FY (2010-11)
July-Sep FY (2011-12)
Oct-Dec FY (2011-12)
(In Million)
(In Million)
(In Million)
(In Million)
(In Million)
(In Million)
1
Cost of Hardware
0.78
5.46
1.560
2
Cost of Services /Software/Training
0.080
0.560
2.065
3.810
4.445
2.540
3
Staff Salaries
0.040
0.270
0.170
0.195
0.195
0.040
4
Operating Expenditure
0.150
0.150
0.150
0.150
0.150
0.050
5
Miscellaneous costs
0.548
0.274
0.274
0.365
0.274
0.091
TOTAL (Rs.)
0.818
1.254
3.439
9.980
6.624
2.721
Total FY 2010-2011 (in millions) = Rs. 15.490
Total FY 2011-2012 (in millions) = Rs. 9.345
Exhibit 3.2:
COST OF PRODUCTS / SERVICES
TO BE PROVIDED TO SECP
S.N.
Description
Qty
Unit Cost (Rs)
Total Cost (Rs.)
Hardware
Scalable Server (For High-availability Online applications)
1
1,000,000
1,000,000
Scalable Server (For internal MIS applications, workflow, complaint management system)
1
1,500,000
1,500,000
NAS Storage Device
1
2,500,000
2,500,000
Scanners
4
700,000
2,800,000
Sub Total
7,800,000
Services/Software/Training
RS Development Cost
800,000
Workflow Management System
Client licenses for 150 users
150
18,525
2,778,750
Workflow Server
1
1,653,000
1,653,000
Online Companies Registration and Returns Management System
500,000
Online Complaints and Inquiries Management System
400,000
Training Cost
568,250
Web Content and Document Management Systems
Client licenses for 150 users
150
15,000
2,250,000
Web Content Management, Document Management Systems
1,000,000
Customization and Training Cost
800,000
Digital Certificates
2000
600
1,200,000
Educational Campaigns / Workshops / Seminars
--
--
1,550,000
Sub Total
13,500,000
Grand Total
21,300,000
Note: Even though reasonable and representative costs for hardware and software are mentioned, however, these estimates may be revised to some extent based on actual solutions proposed by the software applications implementation vendor.
Exhibit 3.3:
STAFF SALARIES
S.N.
Description
No.
Monthly Salary Package per Employee
Months for which provision is being made
Total Expenditure
1
Project Manager
1
40,000
14
560,000
2
Trainer / Workshops Consultant
1
25,000
8
200,000
3
Legal Advisor / Consulting Firm
1
50,000
3
150,000
TOTAL (Rs.)
910,000
Exhibit 3.4:
OPERATING EXPENDITURE DURING LIFE OF PROJECT
S.N.
Description
Months
Monthly Expenditure
Total Expenditure
1
Stationary & Office Expenses
16
25,000
400,000
2
Utilities, phone, fax, Internet
16
25,000
400,000
TOTAL (Rs.)
800,000
Exhibit 3.5:
ANNUAL RECURRING EXPENDITURE FOR 2012-13 AND ONWARDS
S.N.
Description
Annual operating Cost for FY 2012-13
(Rs.)
1
Hardware Maintenance (10%)
780,000
2
Software Maintenance (10%)
995,000
TOTAL (Rs.)
1,775,000
