PURPOSE

To request Council approval to proceed with the implementation of Human Resources / Payroll, Budget,  Work Order/Asset Management software applications, including an upgrade and retrofitting of the current Oracle Financial applications to version 12,  and to request approval of a System Implementation Agreement between the City of Burbank and Application Software Technology Corporation (AST); a License and Services Agreement between the City of Burbank and Oracle Corporation; and to amend the budget for fiscal year 2006-07.

BACKGROUND

The current Human Resources/Payroll (HR/Payroll) and Work Order/Asset Management (WOAM) systems are more than 25 years old, outdated, and running on mainframe technology.  The annual budget is currently processed using Excel spreadsheets and some mainframe applications and reports.  Staff has determined that replacement of the HR/Payroll, Budget, and WOAM functions are merited based on numerous shortcomings of the current system including:

• Inability to address the additional functionality required for growing business needs of the City of Burbank, as well as not having the ability to meet all mandated reporting and compliance requirements.

• Inability to support technological advances.

• Limited capability for managers to access needed data across departments.

• Unavailability of a well-functioning information platform to improve business insights and management efficiencies.

• Inability to address �audit� requests seamlessly without going through extensive research.

These shortcomings will adversely impact the services provided to and by City employees and ultimately the citizens.     

In 1997, staff went through a Request for Proposal (RFP) process to replace the existing mainframe financial system to address impending Y2K issues. Oracle Enterprise Resource Planning (ERP) was selected to address business applications for core Financials (General Ledger, Accounts Payable, Accounts Receivable, Project/Grant Accounting, Fixed Assets, and Inventory), HR/Payroll, and Budget and was to be implemented using a phased approach.  The final go-live for Financials was March 1, 1999 and HR/Payroll and Budget was ultimately scheduled for October 1, 1999.  However, due to ongoing challenges with the financial implementation and staffing issues, the HR/Payroll and Budget modules were not implemented.  To continue issuing payroll on the existing mainframe system, enhancements were completed on the mainframe to make it Y2K compliant. 

The Financial system implementation did not address the City�s utility (BWP�s) accounting and financial reporting requirements.  The City needs to implement utility accounting and financial reporting to provide:

�        standard utility financial statements and reporting;

�        standard utility data for rate-making;

�        standard utility operating comparisons;

�        easy and useful access to utility operational data to utility operational management; and

�        adequate accounting of assets.

Since the 1999 go-live, a number of consultants have been engaged to identify and evaluate the shortcomings of the financial modules.  In November 2000, Council directed staff to stabilize, upgrade, and enhance the current Oracle system.  This option was selected from among several as the most cost effective, functional, and long-term solution and included many objectives and recommendations to be addressed over subsequent fiscal years.  These included, but were not limited to:

• Preparing a detailed business requirement study (this was not performed prior to the 1998 selection of Oracle due to time constraints with Y2K);

• Hiring additional support staff;

• Procuring new hardware (specifically new servers);

• Providing training to IT technical staff supporting Oracle financial applications;

• Upgrading the current version of Oracle from 10.7 to 11i; and

• Preparing a RFP to solicit qualified vendor bids to provide recommendations and implementation of the currently unutilized HR/Payroll, Budget systems and purchasing a WOAM system.

In September 2002, Oracle Consulting was hired to conduct a business needs assessment to determine the status of the ERP applications and to assist in developing a plan for addressing current and future needs.  Based on their findings, the recommendation was to upgrade the current Oracle applications from 10.7 to 11i to address many of the critical issues the City was facing, and to implement the HR/Payroll and Budget applications which were already owned.  Further, it was suggested that a WOAM system be purchased and implemented, in addition to the Oracle procurement applications to enhance the Purchasing module.  The estimated cost at that time was $6.5 million to complete all of the above.

During the 2004-05 budget process, Council directed staff to go forward with the 11i upgrade for core financials (General Ledger, Accounts Payable, Accounts Receivable, Inventory, Projects/Grants, Fixed Assets and the Human Resources piece that supports  Purchasing and Projects).  Council also requested staff evaluate both the fiscal and practical impacts to outsource HR/Payroll/Benefits and Time Management. 

In March 2005, Council was presented with the results of the investigation of outsourcing.  Outsourcing is defined as contracting with a vendor to run the HR/Payroll/Benefits/Time Management software on their computer hardware, with their technical support while administrative processing remains in-house.  Staff worked with the leading provider of HR outsourcing, ADP, Inc., to identify the City�s requirements, current challenges and opportunities.  Systems demonstrations along with site visits were conducted.  The evaluation found that the ADP application was unable to address the City�s business requirements for activities such as retroactive pay and working out of class, proved to be more expensive (especially over five and ten years), provided less data control and security, and would not integrate with other City systems.

In August 2005, a successful technical upgrade of the Financials from Oracle�s version 10.7 to 11i was completed using both in-house staff and consultants.  The estimated cost for this upgrade in 2003 was $1,787,400; however with in-house staff from different City departments doing most of the work, the total cost was less than $460,000.  

During the upgrade, a parallel effort to select a consulting firm to document our business requirements commenced.   After an extensive process that included on-site interviews and thorough reference checks, the Government Financial Officers Association (GFOA), with a utility specific sub-contractor (Virchow Krause & Company � VK) were selected.  In addition to gathering business requirements, the scope of services included:

• Creation of a comprehensive RFP for HR/Payroll, Budget, Financials and WOAM applications (with optional Financials);

• Participation in vendor demonstrations and discovery sessions; and

• Work as middle-men for contract negotiations with the chosen vendors.   

The Invitation to Propose was sent to 71 software vendors and implementation consultants.  The title of the RFP clearly stated Software and Implementation Services for a Payroll-Human Resources Management System, Budget Planning, Development and Forecasting System and For a Work Order and Asset Management System.  Additionally, the RFP stated the City was (in the process of) evaluating its current financials applications as part of the comprehensive systems analysis project.  Vendors were instructed that the proposed software should integrate with the current Oracle 11i financials but were encouraged to provide separate proposals for the procurement and implementation of financial systems independent from the procurement of the HR/Payroll, Budget and WOAM systems.  Per the instructions in the RFP, we would only accept combined responses from a software vendor and their chosen implementation partner. 

Twenty-six companies requested the RFP document.  A mandatory pre-proposal teleconference was held with twenty-six (26) participants representing thirteen (13) vendors/implementers. Thirty written questions were received prior to the teleconference as well as eighteen (18) received during the conference.  An addendum answering all questions was sent to all those that requested the RFP.

The criteria detailed in the RFP were:

1. To procure an integrated solution across the functional needs of HR/Payroll, Budget and WOAM to support the needs of both the municipal government and BWP;

2.  Integrated software products (e.g., common and relational database,                           application, and interface) with enterprise-scalability for HR/Payroll, Budget and WOAM;

3. Experienced vendors that have implemented software in organizations similar to the City;

4. An out-of-the-box software package implementation for HR/Payroll, Budget and WOAM with limited amount of customization and interfaces; and

5. A solution that included development tools that will enable it to meet future needs (such as new legislative mandates and changes to MOUs) without becoming heavily dependant upon programmer consultants.  

Four proposals were received representing five vendors as follows:

• AST Corporation implementing Oracle HR/Payroll/Budget and Enterprise Asset Management (Work Order/ Asset Management)

• AST Corporation implementing Oracle HR/Payroll/Budget and SPL World Group (Work Order/Asset Management)

• AST Corporation implementing Oracle HR/Payroll/Budget and Enterprise Asset Management with Kronos for time entry

• Tyler Technologies implementing MUNIS Financials, HR/Payroll/Budget and Work Order/Asset Management

Representatives from various departments (i.e. Management Services, Financial Services, BWP, Fire, Police, Parks and Rec., Public Works, and Information Technology), along with GFOA and VK undertook an extensive effort that included, but was not limited to: thorough review and documentation of the City of Burbank�s business requirements; attending and evaluating vendor software demonstrations and follow-up discovery sessions; and site visits and conference calls to cities currently using the software. 

Based on the evaluations received from the participating departments, the ERP Sub Committee made the final recommendation to the Information Systems Steering Committee (ISSC) to select Oracle HR/Payroll and Enterprise Asset Management, not only because it met the City�s business requirements, but also because it will integrate most seamlessly with the current Financial application.  Oracle�s budget preparation module has been thoroughly evaluated by Finance staff and several department budget liaisons.  The decision was made to go forward with the implementation of Oracle budget with required extensions to meet our business requirements. 

The proposed implementation will provide the City of Burbank with robust HR/Payroll/Budget functionality and WOAM business applications.  The implementation will extend the City�s existing Oracle financial applications resulting in an integrated environment while eliminating redundant data entry and duplication of effort.

ANALYSIS

Upon extensive analysis, research, comparison, and deliberation, Oracle was selected as the applications provider and AST for full implementation services. The Oracle application suite was found the most suitable product for the City, and AST was determined best qualified as the implementation partner, based on evaluation criteria set by staff and consultants.

• The RFP included 2,062 functional requirements for HR/Payroll, Budget and WOAM and an additional 1,635 for the optional Financial RFP response  

• 93% of the requirements were designated as �required� by staff

•  7% as �optional�

• Based on AST and Oracle�s response to the RFP and the independent analysis by GFOA, Oracle applications meet 96% of City�s requirements:

• 82% provided �out-of-the-box�

• 5% provided with reporting tools

• 9% with configuration using built-in toolsets

Staff�s intent was to implement out-of-the-box software package for HR/Payroll, Budget and WOAM to minimize the amount of customizations (i.e., changes to source code) made to each application and Oracle applications will facilitate this requirement.

Oracle offers the following in their ERP package which will be beneficial to the City:

• An integrated software product (e.g., common and relational database, application, and interface);

• Enterprise-scalability for HR/Payroll, Budget and WOAM, and the existing Financials; and 

• An �open� technical architecture that enables quick responses to customers� (users�) needs (we currently own and run our major applications on the Oracle technical infrastructure). 

An integrated solution across the functional needs of HR/Payroll, Budget, WOAM, and existing Financials will:

• satisfy the functional needs of both the general City departments and BWP;  

• offer a fully integrated self-serve solution to replace the outdated existing payroll and HR systems; and 

• the new applications will enable the City to identify opportunities to increase process efficiencies. 

Oracle has Workflow capabilities that will enable the City the ability to electronically route documents, obtain approvals and assign tasks.  This will reduce paper flow and expedite processes.  Paper-based processes have become obsolete; this system will eliminate inefficiencies inherent in those old processes.

The WOAM application will allow the City to initially implement a well running Work Order system with functionality and flexibility available for future refinement of Asset and Maintenance Management.  With this flexibility, various departments within the city will be able to tackle asset maintenance to the degree and detail each determines is needed to meet various requirements, schedules and future goals.

The new HR/Payroll, Budget and WOAM applications will allow staff more time to analyze information, quickly generate real-time reports and develop solutions to problems. With Oracle E-Business Suite, the City will have timely access of synchronized information across all departments. Staff can spend more time on critical interaction with data, with confidence that their processes and analyses are based on data shared by the rest of the City.

The upgrade to version R12 will provide BWP with the ability to capture information and produce reports to satisfy regulations and standards surrounding utility accounting.  This will enable BWP to produce:

• standard utility financial statements and reports;

• standard utility data for rate-making;

• standard utility operating comparisons; and

• easy and useful access to utility operational data to utility operational management. 

Oracle implementation will be the City�s entry to simplification of current processes and elimination of redundant activities.  The implementation will offer the City:

• Ability to effectively manage projects and programs and measure their success;

• Ability to track staff time, materials and other costs by capital or operating projects and work orders from inception through completion and processing of fixed asset records; and

• Improvements to fixed accounting, procurement and material management processing.

Oracle will give staff the best tools available to do their jobs as efficiently as possible. The Oracle system allows each department to have access to real-time, accurate information.  In addition, duplication of effort, a problem under existing systems, will become a thing of the past due to the ability of the new system to provide comprehensive, global data to all users. One of the hallmarks of the Oracle system is its ability to provide the executives timely information needed to make good business decisions.

Automation of business systems can dramatically improve the way local government functions.  By integrating our business processes with Oracle E-Business Suite, the City can garner greater efficiency and improved service that will benefit employees, citizens, and local businesses.

In addition, choosing AST as the implementation partner is beneficial to the City because:

• They have implemented software in organizations similar to the City;

• They have extensive public sector experience, combined with industry experience that will help the City incorporate industry best practices suited for the environment; 

• Their unique �Package Enabled Business Process Re-Engineering� approach will enable the City to fully utilize the best practices already incorporated in the Oracle E-Business suite; and

• Their methodology will ensure that the City�s business objectives and process flows can be met. 

GFOA filled the role as the �middleman� for the contract negotiations working with Oracle and AST.  Negotiations were extensive, thorough, and included the following:

• Software and implementation costs

• Phases of implementation

• Methodology used for implementation

• Time, effort, and duration of implementation

• Statement of Work (SOW)

• Consulting and City staffing requirement for all phases of implementation

• Approaches to process re-engineering

• Change management

• Training

• Change orders

• Production go-live

• Post production support

PROJECT PHASES & STAFFING

Project Phases

This project will be a multi-year project with following tentative time lines and phases:

Executive Sponsors

The Information Services Steering Committee (ISSC) will serve as the Executive Sponsors for the project.

City Staffing

The project will require staff from the City�s business departments, Information Technology (IT), and consulting staff.  HR, Finance and IT are currently staffed at the minimum levels required to accomplish day-to-day operations and respond to the needs of the citizens, employees and other City departments.   However, these same departments will need to re-assign and dedicate existing key staff to the implementation project.  As a result, in order to maintain day-to-day operations, HR, Finance and IT will need to hire new temporary employees to backfill for those existing employees who will be assigned to system implementation or backfilling the vacated positions.   The following summarizes each department�s estimated requirements:

HR � The department plans to dedicate 1.0 full-time equivalent (FTE) employee as project coordinator, as well as other employees as needed during implementation.  As such, HR staff estimates that 1.5 FTE will be needed to backfill existing staff.  Backfill staff would be needed for generalist duties; administration of FMLA functions; budgeting; and special projects.

Finance � The department will be dedicating a total of 3.0 FTE to the project.  In addition, significant time will be spent on the project by the Director and two Assistant Directors; however, no backfills are required for these management level positions.  Therefore, the department would need 3.0 FTE as backfills.   Positions are needed to maintain workload processing and to make sure the City produces the bi-monthly payroll on time.

BWP � The department will dedicate 1.0 FTE to assume project coordinator duties during the entire duration of the project.  Additionally, during the WOAM phase of the project, BWP will require 1.0 FTE backfill for a one year duration for asset and work order system related tasks for the Magnolia Power Plant. BWP will also require 3.0 FTE

backfills for the Electric, Water and Finance Divisions for a six month period during the implementation of the Work Order system.  Other staff will also be involved to a lesser extent during implementation. 

IT � The department will be dedicating different resources for different phases of the ERP implementation (HR/Payroll/Budget vs. Work Order/Asset Management vs. additional functionality for Finance modules).  IT will need to backfill 2.0 FTE positions for the duration of the project: a Data Base Administrator (DBA) and an Application Development Analyst.  Additionally, IT will dedicate 2.0 FTE to the project for a Project Manager and Project Administrator.  These positions will also require backfilling.

One of the reasons that the City has not been able to take full advantage of the existing Oracle system is due to lack of appropriate and adequate resources.  The ERP team is in agreement that the City must not make the same mistakes it has in the past; the new system must be adequately supported in order to make use of its functionality.  Having adequate technical IT support, as well as technical-administrative support in the user departments (Finance, HR) will enable the City to be successful with this ERP implementation. 

Consulting Staff

Consulting staff requirements will vary for each phase of the implementation.  One constant staff, for the entire project, will be a dedicated full-time project manager who will oversee all consulting and project related activities.  Another part-time independent consultant will be hired to conduct periodic reviews of the ERP implementation and help the project management team with all project and management related activities.

Phase I - HR/Payroll � This phase of the implementation will require:

• two full-time functional consultants to address HR/Benefits, and Self Service HR (SSHR);

• one full-time functional Payroll consultant; 

• two functional consultants will be assigned to address Learning Management and Time and Labor modules for eight months;

• one consultant for four months for implementing the Daily Business Intelligence (DBI) module; 

• one full-time technical consultant will be dedicated to implementation of fast formulas and elements; and

• one full-time technical staff will be dedicated to data conversion and interfaces. 

Phase II - Oracle Upgrade to Version 12, including Utility Accounting and Reporting � This phase of the implementation will require:

• two functional consultants for six months to upgrade Oracle version 11i to version 12 and to address the utility accounting and reporting needs; and

• one technical consultant for a six and half month period.

Phase III - WOAM � There will be a need for one part-time (forty hours a month) consultant for six months for data source identification and collection in advance of commencing the implementation.  The implementation will require:

• one functional consultant for six months to address WOAM specific items;

• one functional consultant for four months to address Self Service Work Orders;

• one technical consultant for six months to work on data conversion and interfaces; and

• one technical consultant for three months to address WOAM specific work flow requirements.  

Phase IV - Budget - [S1] This phase of the implementation will require:

• one functional consultant for 11 months to address Public Sector Budgeting (PSB) requirements; 

• one functional consultant for four months to address Enterprise Planning and Budgeting (EPB) requirements; 

• one technical consultant for seven months to address all budget related technical and interface requirements; and 

• one technical consultant will be needed for three months to address Budget specific work flow requirements 

FISCAL IMPACT

The total cost of the project is $9,974,370 estimated as follows:

• Phase I � HR/Payroll $4,959,519

• Phase II � R12 Upgrade       $1,295,143

• Phase III � WOAM                 $2,137,907

• Phase IV � Budget                $1,581,802

Currently, the Info Systems Replacement Fund 537 (Internal Services Fund) has $3,465,172 of appropriation authority in two separate accounts.  Therefore, the net appropriation that is needed is $6,509,198.  This figure includes contingency funds to cover any unanticipated items.  The funding for all of the phases noted above will be allocated based on various methodologies unique to each phase.  For example, the HR/Payroll portion will be allocated based on the number of budgeted employees by fund; the WOAM portion to the user departments (primarily BWP and Public Works) and not all funds; and the version R12 upgrade and budget portion based on operating and capital budgets.

The total funding impact by fund is attached (Attachment C), and as detailed, implementation costs to the General Fund (001) is $2.1M, the Electric Fund (496) is $2.9M, and the remaining amounts spread among 22 other funds.

Staff requests Council approval to appropriate $6,509,198 to the Info Systems Replacement Fund 537 holding account number 537-IT01A-62970 from the funds as noted in Attachment C to be allocated to the project accounts as established for the various phases of the implementation project.  Finance staff will continue to investigate other funding options, if available, for this type of project.

RECOMMENDATION

Staff recommends Council approval of the resolutions of a System Implementation Agreement between the City of Burbank and Application Software Technology Corporation; a License and Services Agreement between the City of Burbank and Oracle Corporation; and amending the budget for fiscal year 2006-07.

Attachments:

Attachment A � Implementation Costs

Attachment B � Oracle License Cost Detail

Attachment C � Net Allocation by Fund

Attachment D � System Implementation Agreement

Attachment E � Software Licenses and Services Agreement

go to the top