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HomeMy WebLinkAboutIR 9356INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9356 To the Mayor and Members of the City Council February 15, 2011 �,v►.tAro Page 1 of 3 y SUBJECT: ENTERPRISE RESOURCE PLANNING (ERP) PROJECT - ,;,s PHASE II The purpose of this Informal Report is to provide an update on the current status of the Enterprise Resource Planning (ERP) Phase II: Finance /Procurement/Budget and to provide a description of the two M &Cs for City Council consideration on February 15, 2011. ERP Phase II Background and Status: Background: The ERP Phase II Project is the second part of a city -wide effort to replace aging systems that lack functionality, sufficient integration, and appropriate internal controls. The reliance on out -of- date technology has contributed to the City's Independent Auditor (Deloitte) finding of material weaknesses and other deficiencies for the City over the last few years. Material weaknesses have been found in several functional areas slated for implementation in Phase II of the ERP Project: Capital Asset Accounting, Grant Management, Cash Management, Financial Reporting and others. In addition, the auditors have also determined through their testing that they cannot rely sufficiently on controls within the current systems for their testing and thus have to "test around the system," which leads to a more expensive audit. While manual processes and work arounds have been established to address weaknesses, these are temporary in anticipation of the implementation of ERP Phase II — a subject for which the rating agencies have continually monitored and have used in establishing the City's current rating. On February 9, 2010, M &C C -24088 City Council approved the purchase of PeopleSoft Financials /Procurement software suite. This allowed the City to take advantage of the significant discounts negotiated during Phase I. This followed a thorough review and assessment by subject matter experts from all departments regarding the financials /purchasing /budget software fit with the needs of the City. Current Status: During the pre - implementation phase and the experience with Phase I, three factors have been identified as necessary for the success of Phase II: 1. Use a 24 -month implementation schedule (vs. 15- months) to allow more organizational readiness; 2. Align schedules and provide backfill resources necessary to allow departments and their key fiscal staff to meet current operating obligations and provide necessary input in the design of the system; and 3. Provide additional time to transition from current departmental business practices and to identify, discuss, clarify, and decide the policies to be configured in the system. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS �'11Ttq� u r « x To the Mayor and Members of the City Council No. 9356 February 15, 2011 Page 2of3 SUBJECT: ENTERPRISE RESOURCE PLANNING (ERP) PROJECT - PHASE II Based on the factors above and current organizational focus on stabilization of Phase I, staff recommends that the implementation of Phase II begin in the summer of 2011 and the anticipated go -live of the financial /procurement software be set for October 2013. Discussions with the implementation vendor have confirmed that the key contractual safeguards are still in place. Staff will continue to work with the vendor for any necessary adjustments to scope and timing. Staff has several activities underway and planned for the next few months to make additional progress during this pre - implementation period that will assist the City in being successful during implementation. ERP Phase II M &Cs: There are two M &Cs on today's agenda for Council consideration related just to the pre - implementation of ERP Phase II project. They are: 1. M &C C- 24740: Renewal option with Oracle America, Inc. for continued annual maintenance and support of PeopleSoft Financials /Procurement software suite and to maintain the level of discount for maintenance negotiation with the vendor for $332,227.48 annually; and 2. M &C C- 24741: Extension of independent project consultant service contract with Salvaggio, Teal and Associates to provide pre - implementation services for $440,832. This is in addition to the $1,218,512.00 authorized with M &C C- 23563. About Salvaggio, Teal & Associates (STA) The City initially contracted with STA in May of 2007 for consulting services for Phase I. The decision to use STA was based on the evaluation of a Request for Proposals (RFP), which was issued in November 2006. The City received seven responses to the RFP, and the scope of the procurement was to engage the services of a consultant to provide guidance, oversight, planning assistance, and recommendations to achieve the overall goal. Implementation and configuration services were not included in the RFP; rather, these services, by design, were provided entirely by another firm. An RFP evaluation team was created with representatives from the City Manager's Office, Human Resources, Finance, Budget and IT Solutions. STA was the highest ranked proposer based on references, presentation, experience, and overall qualifications. STA has provided an unbiased, third -party perspective throughout Phase I and during Phase II preparation. They are independent from all software and implementation vendors, which is critical to an objective opinion and analysis. Their senior -level consultants focus primarily on the public sector and are experienced in operations, information technology, and project management. STA's counsel is necessary in the continued success of Phase II preparations as City staff does not possess the breadth of experience relative to ERP projects. Their tenure with ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS .x rats To the Mayor and Members of the City Council No. 9356 February 15, 2011 Page 3 of 3 SUBJECT: ENTERPRISE RESOURCE PLANNING (ERP) PROJECT - PHASE II the City increases their importance on the team because they possess organization knowledge and understanding that is not readily available with any other firm. Next Steps: As a continuing part of the pre - implementation, staff will brief the Audit and Finance Advisory Committee of City Council in the April to June 2011 timeframe. Additionally, staff anticipates that the M &Cs related to implementation services, training, staffing, and fund transfers will be presented to City Council in early Summer 2011. For questions or further information, please contact Lena Ellis, Financial Management Services Director /CFO at 817 - 392 -8517 or Pete Anderson, IT Solutions Director at 817 - 392 -8781. Higgins Interim City Manager ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS