SAN IPSE CAPITAL OF SILICON VALLEY

Transcription

1 CITY OF 2 SAN IPSE CAPITAL OF SILICON VALLEY TO: HONORABLE MAYOR AND CITY COUNCIL SUBJECT: SEE BELOW COUNCIL AGENDA: 6/23/15 ITEM: 3.19 Memorandum FROM: Julia H. Cooper Jennifer A. Maguire Joe Angelo Vijay Sammeta DATE: June 11, 2015 Approved " Vfr/zT- SUBJECT: AGREEMENTS FOR THE PURCHASE AND IMPLEMENTATION OF HUMAN RESOURCES, PAYROLL, TIMEKEEPING AND BUDGET SYSTEMS RECOMMENDATION Adopt a resolution for the purchase and implementation of Human Resources (HR), Payroll, Timekeeping, and Budget systems (the "Systems") and authorize the City Manager to execute the following Agreements: 1. Authorize the City Manager to negotiate and execute an agreement with CherryRoad Technologies, Inc. as the project integrator for the implementation, training, ongoing hosting services, and Oracle Taleo cloud subscription services, for a term commencing on or about July 6, 2015 and ending on or about September 30, 2021, with a maximum compensation not-to-exceed $6,713,699, subject to the appropriation of funds. 2. Authorize the City Manager to negotiate and execute the necessary documentation with Mythics for the purchase of Oracle Hyperion software licenses, and annual software maintenance and support and subscription services for up to five years ending on or about September 30, 2021, in an amount not to exceed $806,664, subject to the appropriation of funds. 3. Report on Request for Proposal (RFP) and authorize the City Manager to execute an agreement with Leckey Consulting, Inc. (Roseville, CA) to provide overall project oversight and quality assurance on implementation of the Systems, for a total amount not to exceed $489,860, inclusive of all time, travel, and expenses, for a fourteen month term starting on or about June 24, 2015 and ending on or about September 5, Approve a project contingency of $917,740 that may be applied to the proposed agreements to fund any unanticipated costs associated with the implementation of this project.

2 Page 2 5. Approve amendments and change orders to any of the proposed agreements, not to exceed the contingency amount of $917, Authorize the City Manager to transfer funding between the aforementioned agreements, not to exceed the $8,010,223 aggregate not-to-exceed amounts listed above, plus the contingency amount of $917,740 for a total of $8,927,963, and purchase additional or alternate software solutions to those listed above in the event that a different solution(s) better meets the City's requirements as determined during the discovery phase of the Project. OUTCOME Approval of the recommendation would enable the Administration to (1) replace earlier versions of systems that are no longer supported by the manufacturer or beyond the useful life in meeting the needs of the City, and (2) introduce new state of the art recruiting and budgeting solutions to the organization. EXECUTIVE SUMMARY The proposed agreements are necessary for the purchase, implementation, project management, training, and ongoing hosting, maintenance and support services to upgrade the City's current Human Resources and Payroll Systems from PeopleSoft version 8.9 SP1 to Oracle/PeopleSoft version 9.2, and implement new Oracle/PeopleSoft systems for Budget (Hyperion), Recruiting (Oracle/Taleo), and Timekeeping (PeopleSoft HCM). These new or upgraded systems will allow the City to upgrade the City's existing Oracle/PeopleSoft Human Resource applications, and implement new timekeeping, budget, absence management, and talent acquisition management systems; Oracle Hyperion and Oracle Taleo. Given the interdependence of the human resources, budget and financial management functions, the integrated systems will streamline operations, significantly reduce the amount of time necessary to share information among systems, and help ensure data integrity. The expanded capacity and enhanced workflow processes will also reduce the staff time necessary to perform various functions, such as development and production of the annual budget; assist departments in recruiting and managing staff resources; and will allow for more transparency and data analytics. BACKGROUND On April 14, 2015, the City Council approved staffs report on the RFP for a Human Resources, Payroll, Timekeeping, and Budget Systems, and recommendation to negotiate an Agreement with CherryRoad Technologies ("CherryRoad") in the amount of $7,520,363 for the purchase of all software and services required to implement the aforementioned systems (the "Project"). This amount included the initial implementation costs of $4,479,890 plus an additional $3,040,473 for hosting, maintenance and support costs for five years. In addition to the

3 Page 3 agreement costs, City staff costs, consulting services costs, and a project contingency of $2,689,000 were identified. The total project implementation costs of $7,168,890 consisted of the initial agreement costs of $4,479,890 and the other City costs of $2,689,000. The Budget included funding of $6,287,000 for the project implementation, which was $882,000 below the estimated cost. To address the funding gap identified at that time, the Proposed Budget included additional funding of $882,000. The ongoing costs were to be included in future operating budgets. As part of the agreement negotiation and development process, staff has continued to evaluate the resources needed to successfully implement this complex project that will impact the entire organization. Additional project implementation costs totaling $526,000 have been identified and include project management consultant costs to fully fund a project manager for the 14- month implementation period, optional training costs for training of the Project Team on the various systems to help facilitate a more efficient implementation, and a slight increase to the project contingency. To address these additional costs, expenditure savings in the Human Resources, Information Technology, and Finance Departments and the City Manager's Office have been identified and these funds are recommended to be allocated to the project in as part of a separate year-end clean-up action on the June 23, 2015 City Council Agenda. These funds are then recommended to be rebudgeted to as part of Manager's Budget Addendum #27 that has been incorporated into the Mayor's June Budget Message for Fiscal Year With this adjustment, the project cost totals $10,735,363, including implementation costs of $7,694,890 (inclusive of project contingency) and the maintenance costs for the first five years of $3,040,473. ANALYSIS In April 2015 staff issued a competitive Request for Proposal (RFP) to select a program manager for the Project. Five proposals were received and two firms, ERP Analysts (Dublin, OH) and Leckey Consulting Inc. (Roseville, CA) were selected to participate in oral presentations/interviews with the City's Executive Steering Committee (ESC) 1. Proposals were evaluated for their experience and both proposals included not-to-exceed estimates based on hourly rates ranging from $175 to $200 per hour. The ESC determined that Leckey Consulting submitted the most advantageous proposal and directed staff to conduct a Best and Final Offer (BAFO) process. The BAFO resulted in an 8.4% reduction in price from the initial proposal. CherryRoad's proposal for the project was "turnkey" as required under the City's RFP, and included all subscription and licensing costs for Taleo and Hyperion, respectively. During negotiations with Cherry Road, staff determined it would be in the City's best interest to purchase 1 Executive Steering Committee includes the Directors of Finance, Human Resources and Information Technology and the Assistant Budget Director. The Senior Deputy City Manager/Budget Director is the Project Sponsor.

4 Page 4 Hyperion through a third party, Mythics. Mythics is an Oracle value added software reseller. Buying the software through Mythics allows the City to retain ownership of the license which can be advantageous in the event the City's agreement with CherryRoad is terminated. As a software reseller doing business with government agencies, Mythics version of Oracle license agreements have terms that are more favorable to the City. The software will be purchased from Mythics at the same price that was being offered through CherryRoad. In their proposal, CherryRoad outlined optional staff training for City project team members designed to provide the necessary knowledge to more effectively carry out their project job assignments, such as initial system configuration and Fit/Gap analysis. During discussions with CherryRoad, staff determined that this training would be beneficial to project team members for not only the new applications, but for the upgraded applications as well. This training is available directly from Oracle through their Oracle University, or through an Oracle re-seller. Staff determined that Oracle reseller Maverick Solutions offered the best combination of on-site course offerings, at prices significantly lower than Oracle. Therefore, staff is establishing a sole source agreement with Maverick Solutions, not to exceed $268,400, for the aforementioned training. This order is within the $270,000 amount that is delegated to the City Manager and therefore does not need Council approval. The following summarizes the material terms and conditions of the agreement with CherryRoad: Project duration is fourteen months inclusive of both "go-live" for all applications and a stabilization period. Compensation is fixed price with a not to exceed amount of $6,713,699. CherryRoad will be required to absorb any additional project costs in the event of any project overruns. The cost to implement the system is $4,080,690 and cost to host the database and applications for five years after "go live" is $2,633,009. Payments for approximately 60% of the project implementation cost will be tied to the successful completion of key project milestones. Acceptance criteria for each deliverable shall be established during the planning and analysis phases of the project. There will be a 10% withhold against the key project deliverables that will be paid upon final system acceptance, which will be at the conclusion of the aforementioned stabilization period. Payments for the ongoing hosting services will be made on an annual basis, in advance. With the exception of Taleo which is a Cloud subscription service hosted by Oracle, CherryRoad will provide ongoing hosting services for the databases and all applications for a period of five years after final system acceptance. The scope of services for hosting includes a service level agreement and key performance indicators to ensure system performance is monitored and measured. In the event that the City terminates the agreement, there is a disentanglement provision that protects the City and provides for continuity of service to these mission critical applications.

5 Page 5 Key personnel that were presented in CherryRoad's proposal have been identified by name in the Agreement. Personnel changes are subject to review and approval by the City. The following summarizes the material terms and conditions of the agreement with Leckey Consulting, Inc. for Project Management Services: The Agreement term is fourteen months at a not to exceed compensation amount of $489,860 inclusive of all labor and expenses. Payments shall be made in fourteen equal payments during the contract term of $34,990. Additional funds are being added to the project budget to fully fund this agreement for the 14 month implementation period. Project management services is anticipated to require the Consultant to be available, and provide services for an average of 40 hours per week during the 14 month implementation period. If the project implementation exceeds 14 months, the City will need to amend the Agreement to extend the term and add compensation for the extended term. Each additional month of full-time program management services would be at an all-inclusive flat fee of $34,990. Partial months will be pro-rated to the number of business days worked. The Consultant shall provide oversight and quality assurance for the entire project. Specifically, the Consultant is responsible for the final design of the applications, and deciding what (if any) customizations will be brought forward to the ESC for final review and approval. The Consultant is a key advisor in all Leadership Team (LT) 2 meetings, and will report directly to the City's Executive Steering Committee on project status for cost, schedule, and budget. A copy of the agreement will be posted to the City website on or about June 15, The following summarizes the material terms and conditions of the agreement with Mythics for the purchase of Oracle Hyperion software: Generally, licensing through a reseller who resells to other government agencies would provide the City with more favorable terms then to directly license with Oracle. The fixed price amount for the initial purchase of Hyperion plus five years of maintenance and support ending on or about September 30, 2021 is $806,664. Payment for Oracle Hyperion, a licensed application, will be paid to Mythics on a one time basis in the amount of $399,200. Payment for five additional years of Hyperion maintenance and support in the amount of $407,464 will be paid on an annual basis. 2 Leadership Team will include executive level management staff from the Finance, Human Resources and Information Technology Departments and from the City Manager's Budget Office.

6 Page 6 EVALUATION AND FOLLOW-UP No follow-up is anticipated. PUBLIC OUTREACH This item will be posted on the City's website for the June 23, 2015, City Council agenda. COORDINATION This memorandum has been prepared by the Finance Department in coordination with the Human Resources and Information Technology Departments, City Manager's Budget Office and the City Attorney's Office. FISCAL/POLICY ALIGNMENT This action is consistent with the following General Budget Principles and City Service Area (CSA) Strategic Support Mission: To effectively develop, manage and safeguard the City's fiscal, physical, technological, and human resources to enable and enhance the delivery of City services and projects. COST SUMMARY/IMPLICATIONS The following outlines the elements of the agreement and other project-related costs. Necessary budget actions are included in the Operating Budget to support the implementation costs. 1. PROJECT COSTS: The following chart summarizes the implementation costs ($7.7 million) as well as the five-year maintenance and hosting costs ($3.0 million) 3, for a total project cost of $10.7 million. 3 The five year maintenance and hosting costs are exclusive of the $422,000 in non-personal/equipment funding budgeted annually to maintain the existing HR/Payroll system. The City will need to continue to make this annual payment to Oracle.

7 Page 7 5-Year Implementation Maint./Hosting Total Agreement Costs-. CherryRoad Technologies, Inc. $4,080,690 $2,633,009 $6,713,699 Mythics 399, , ,664 Leckey Consulting, Inc. (Project 489, ,860 Manager) Maverick (Staff Training 268, ,400 Sub-Total Agreements $5,238,150 $3,040,473 $8,278,623 City Staffing Costs Finance/Human Resources $578,800 $578,800 Budget 525, ,000 Information Technology 436, ,000 Sub-Total Citv Staffing Costs $1,539,000 $1,539,000 Project Contingency $917,740 $917,740 TOTAL $7.694,890 $ $ A detailed breakdown of the cost by year is provided as an attachment. 2. CITY STAFFING The Administration plans to reassign permanent positions to the Project Implementation Team for implementation the new HCM and Budget applications, and temporary positions will backfill the staff assigned to the Project Implementation Team accordingly to ensure continued service delivery during system implementation and stabilization. When the Request for Proposal was developed, a total of full-time equivalent (FTE) positions were identified to provide support for the implementation of the new systems. Based on a revised estimate of the City resources necessary for successful implementation, it is anticipated that 12.0 positions spread among the Human Resources, Finance, and Information Technology Departments and the City Manager's Budget Office will need to be backfilled. Following is a breakdown of backfilled staffing by department:

8 June 11, 2015 Page 8 Human Resources # of FTE Analyst I/II 2.5 Finance Department Accountant I/II 1.0 Senior Accountant 1.0 Program Manager I 1.0 Budget Office Assistant to the City Manager 1.0 Analyst I/II 1.0 Senior Executive Analyst. 1.0 Information Technology Information Systems Analyst 3.0 Supervising Applications Analyst OA Total 12.0 The estimated cost to fund 12.0 FTE temporary positions in is $1.54 million. With a staggered 14-month implementation period, it is anticipated that a small amount of funding for temporary staffing may also be necessary in FISCAL IMPACT/PROJECT FUNDING The Adopted Budget includes a total of $7.7 million for the implementation costs associated with this project. This amount is sufficient to fund the agreement costs for database and software licenses, professional services and hosting services, training, and project management of $5.2 million. The remaining funds of $2.5 million will be used to cover staffing costs and project contingency as detailed on the chart above. As illustrated in the attachment the ongoing costs to host and support the applications ranges from approximately $599,000 to $626,000 annually over the first five years of operation. This is in addition to the $422,000 in non-personal/equipment funding currently budgeted annually to maintain the existing HR/Payroll system. These ongoing costs will continue to be included in the City's operating budget for maintenance and support. The total five year cost of ongoing maintenance and support to CherryRoad and Oracle is approximately $5.2 million.

9 June 11, 2015 Page 9 BUDGET REFERENCE The table below identifies the fund and appropriation proposed to fund the costs, which includes the agreement and other project-related costs, recommended as part of this memorandum. Fund # Appn # Appn. Name Total Appn. Amount for Agreements Proposed Budget Page Last Budget Action (Date, Ord. No.) Human Resources/Payroll/Budget Systems Upgrades* $7,695,000* $5,238,150 IX-22 6/23/15 * Includes the Proposed Budget amount of $882,000 and a rebudget of $6,813,000 brought forward in Manager's Budget Addendum #27; amount contingent on adoption of the budget on June 23, CEOA Not a Project, File No. PP (a) Agreements and Contracts. /s/ JULIA H. COOPER Director of Finance JENNIFER A. MAGUIRE Senior Deputy City Manager/ Budget Director /s/ JOE ANGELO Director of Human Resources /s/ VIJAY SAMMETA Chief Information Officer Attachment For questions, please contact Mark Giovannetti, Deputy Director of Finance at (408)

10 Attachment SUMMARY OF PROJECT COSTS FOR HUMAN RESOURCES, PAYROLL, TIMEKEEPING AND BUDGET SYSTEMS CherryRoad Technologies Mythics Other Related Costs 1 Total IMPLEMENTATION COSTS Integrator Implementation $3,738,990 Project Manager (Leckey) Hosting Services 240,000 Taleo Purchase Hyperion Purchase Staff Training (Maverick) City Staff (backfill) Project Contingency TOTAL IMPLEMENTATION COSTS $3,978,990 ANNUAL COSTS Oracle Database Year 1 Year 2 Year 3 Year 4 Year 5 Total Oracle Database $900,000 Hyperion Maintenance & Support Year 1 Year 2 Year 3 Year 4 Year 5 Total Hyperion M&S Taleo Subscription Year 1 Year 2 Year 3 Year 4 Year 5 Total Taleo Data Center Hosting Year 1 $240,000 Year 2 240,000 Year 3 240,000 Year 4 240,000 Year 5 240,000 T otal Hosting $ 1,200,000 TOTAL ANNUAL COSTS $2,100,000 TOTAL PROJECT COSTS $6,078, , , , ,400 1,539, ,740 $500,900 $3,215,000 $77,493 77,493 79,822 82,217 90,439 $407,464 $101, , , , ,916 $533,009 $940,473 $0 $1,441,373 $3,215,000 $3,738, , , , , ,400 1,539, ,740 $7,694,890 $900,000 $77,493 77,493 79,822 82,217 90,439 $407,464 $101, , , , ,916 $533,009 $240, , , , ,000 $1,200,000 $3,040,473 $10,735,363 1 Includes Project Manager consultant, implementation team training, costs to backfill City staff assigned to the project implementation team, and project contingency funds.