Revenue Transformation:Achieving Your Optimal Potential

Identifying, visualizing, correcting and securing current and additional municipal revenue

Defining Revenue Transformation0

Revenue

Security

Revenue

Alignment

Revenue

Information

• Securing current revenue• Alignment of all stakeholders, departments, policies and procedures that influence revenue chain.

• Continuous improvement of underlying information• Generating dynamic exception reports

• Achieving optimal potential = Revenue Transformation

Revenue

Transformation

Revenue

Exceptions

Establishment of a Dedicated, Focused Revenue Transformation Unit

RTU- Revenue Transformation Unit

+ + + =

Key - Stakeholder Management

Local Government Challenges – “Case for RTU”

1. Rapid Development and Growth

2. Lack of resources

3. Increasing Bad Debts

4. Insufficient Funding

5. Rising Number of Indigents

6. Unfunded mandates

7. Meeting development objectives including LED

8. Balancing an unfair scorecard

1

Establishment of a Dedicated, Focused Revenue Transformation Unit

RTU- Revenue Transformation Unit

Revenue

RaisedRevenue

Needed

Balancing ActMeasuring Success

Typical reactions to revenue challenges

Focus on Turn Around Strategy

1) Identify Need for Revenue Enhancement Strategy

2) (A) Collection of Debt and (B) Cleansing of Data

A) Debt Management Initiative

• Appoint Debt collection company

• Focus on “Lost Income”

• No Focus on underlying Issues

• No Impact on “Future Collection Rate”

B) Data Cleansing Initiative

• Appoint Data Cleansing company

• No Focus on underlying Issues

• Time based, and not sustainable

• No Focus on “Value Chain”

2

Establishment of a Dedicated, Focused Revenue Transformation Unit

RTU- Revenue Transformation Unit

Excellence is not skill it’s an attitude. Ralph Marston

Billable Revenue Potential - 100%Rates, Water, Refuse, Sewer, Electricity

90% 10%

Budgeted Revenue1 100%

Billed Revenue2 90%

Revenue ForegoneDiscounts / Rebates

Unbilled Revenue& “Internal usage”Revenue LeakagesAdjustments

A B

*

*

*

**

Collected Revenue

Bad DebtsPotential Fraud

3

Over-Billing

80% DC

**

Key R

evenue R

isks

Key R

evenue S

tages

Latent Revenue

Revenue growthCorrecting Data & find Missing Data Increasing overall potential

Revenue leakages

Dedicated RTU - Increasing Billable Revenue Potential

Secure Current Revenue and Unlock additional billable revenue& “New” Revenue

B & B StrategyVacant LandAgriculturalInterims

110%

100% Revenue potential is based on assumption that all information is correct and all properties are accounted for.

100% Budgeted Revenue based on 90% accuracy of underlying information

Stakeholder Management

110%

Revenue Reservoir4

0

Revenue Leakages

Revenue Security

Establishment of a Dedicated, Focused Revenue Transformation Unit

RTU- Revenue Transformation Unit

100

50

25

75

Rates

Leakages

Rebates Forgone

100 %

50 %

Income Tank

Basic Services / Availabilities

Leakages

Stakeholder ManagementMeasuring Success100 %

50 %

Establish Dedicated Revenue Transformation Unit

Unique PwC Solution

Our experience tells us that a one size fits all approach to revenue transformation will not succeed.

Supported by innovative use of PwC technology - VIM

VIM - A location based methodology1

SHIFT THE FOCUS TO“LOCATION BASED

ACCOUNTING”& EXCEPTION REPORTING

ADDING A COMMONKEY TO ENTIRE DIGITAL

FOOTPRINT

BENEFIT:Increased Accuracy

& Revenue

GOAL:INCREASED REVENUE

International Support

National Support

Senior Off-Site Manager

Local Office with 2 Full-time staff members

Dedicated local team with a global reach

Establishment of a Dedicated, Focused Revenue Transformation Unit

Aerial Layer

Bulk Deeds Layer

Cadastral Layer

Financial Layer

TP Application

SG Approval

Deeds Registration

Interim Valuation

Building Application

Interim Valuation

Integrated Truth

Unique PwC Solution

a b

VIM – Key features2

Unique Technology Revenue Process Alignment

c dIntegrated Decision-making Increased Revenue

Integrated window into existing systemsA common key approach to all erven allows VIM to extract information from all your current systems.

Align strategy and operationsEnables operations to be effectively aligned with organisational strategy.

Reduced decision making cyclesConstant involvement of various cross-departmental staff and the visual features of VIM enables reduced decision making cycles.

Increased Revenue The fundamental benefit to any municipality is increased revenue as depicted inthe table below in the Knysna Municipality example.

Establishment of a Dedicated, Focused Revenue Transformation Unit

STEP 2ASSESSMENT

(Revenue Footprint)

STEP 1IDENTIFY NEEDS

(Apply Revenue Lens)

STEP 3PRESENT FINDINGS(Revenue Potential)

STEP 5RESOURCES

(People & Technology)

STEP 4APPOINTMENT(Establish RTU)

STEP 6CONSTANT REVIEW(Find New Revenue)

VIM – Step by Step process4

Establishment of a Dedicated, Focused Revenue Transformation Unit

• Focus on Revenue Security

• Holistic Data Integration

• Revenue Transformation Management

• Establishment of a dedicated focused Revenue transformation Unit

• Dynamic stakeholder engagement

• Revenue process improvement

• Sustainable solution

• Accurate and complete billing and debt collection

• Location based methodology tried and tested

• Transfer of skills

• Assistance towards a clean audit outcome

Why is PwC VIM Solution so Unique

What is difference and Benefits of PwC solution

FOCUS ON MUNICIPAL PROPERTY RATES ACT 6, 2004

ACT 6, 2004

EGOV WEBSITE

Objection FormsSec 49 Notice

INFOMATE SYSTEMVALUATION ROLL

Valuer's Notice

Appeal Forms

RATES IS ABOUT PEOPLE & NOT JUST PROCESSESCommunication & PR are vital components for a successful GV

Sec 52 Notice

Our national footprintPietersburg

Kimberley

Bloemfontein

Ladysmith

Durban

De Aar

Saldanha

Mossel

Bay

Port

Elizabeth

PRETORIA

IndianOcean

ac

Cape Town

d

d

e

i

j

h

f

g

a

ce

b

a

Upington

Johannesburg

b

Richards

Bay

a. Bitou

b. Amahlathi

c. Inxuba Yethemba

d. Khara Hais

e. Great Kei

a. Khara Hais

b. Drakenstein

c. Makana

d. Ndlambe

e. King Sabata Dalindyebo

f. Sol Plaatjie

g. Ga Segonyana

h. Govan Mbeki

i. Mkhambathini

j. Big 5 False Baya. Greater Kokstad

b. KwaDukuza

Implementation -

MunicipalitiesAssessment -

Municipalities

Data Cleansing -

Municipalitiesb

STEP 6

Find New

Revenue

“Continuous

Change”

Belo

w t

he L

ine

Above

the L

ine

STEP 1

IDENTIFY NEEDS

Apply Revenue

Lens

Show “Case

for Change”,

STEP 2

ASSESSMENT

Focus

Revenue

Footprint

“Need for

Change”,

STEP 3

Focus on

Revenue

Potential

“Potential

for Change”,

STEP 4

Apply

Common Key

“Committed to

Change”

STEP 5

Maintain

Revenue

“Implement

Change”

Policy Review,

Interview key

personnel,

and High level

Rates Overview

Quick Wins

Key findings

Department

Analysis

Added Value

APPOINTMENT

11

2233

4455

FINDINGSRESOURCES

Tariff Review

Policy Review,

Rates Modeling

Compliance

checking,

Unique View

Hands on daily

analysis, deal

directly with

ratepayers,

secure

revenue,

change forms

Innovation,

ideation,

advanced

visual

information

management

66

Bench Marking,

Case Study,

Financial Model

and Revenue

Enhancement

Initiatives

Revenue enhancement never happens by accident you need resolve, vision and be willing to make a long term commitment to quality information management

REVIEW

Where to from here : - You have already taken the first step are you ready for Step 2

“Commitment to change”“Case for change”

PwC VIM Solution

• Questions & Answers

• The way forward

Revenue Transformation never happens by accident you need resolve, vision and be willing to make a long term commitment to quality information management

Contact details

We thank you for providing us with the opportunity to present to you. We will provide any additional information you

may require and will gladly discuss any of the items contained herein.

19

Andrew Fick

Associate Director

E mail: andrew.fick@za.pwc.comTelephone: +27 (0) 21 529 2363Mobile: +27 (0) 82 446 4390