HomeMy WebLinkAboutIR 9495 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9495
To the Mayor and Members of the City Council June 5, 2012
Page 1 of 2
r
SUBJECT: UPDATE ON ENTERPRISE RESOURCE PLANNING (ERP)
rF PROJECT - PHASE II
The purpose of this Informal Report is to provide an update on the status of the Enterprise
Resource Planning (ERP) Phase II and advise the City Council of upcoming M&Cs.
ERP Phase II Project Details:
Background: On February 9, 2010 (M&C C-24088), the City Council authorized an interfund loan
to fund the purchase of Oracle PeopleSoft Software and Oracle Hyperion Budget Planning
Software for ERP Phase II. Shortly after, on October 5, 2010, the City Council authorized the
issuance of Combination Tax and Revenue Certificates of Obligation (CO), Series 2010A, in part
to fund a portion of the implementation cost as well as repay the aforementioned interfund loan
(M&C G-17074). This $31.3 million CO obligation formalized the City's commitment to replace its
antiquated financial systems and to proceed with ERP Phase II. The General Fund began paying
debt service on the obligation in FY2011; and therefore, there will be no new incremental impact
on the FY2013 budget.
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. Staff is reliant on out-of-
date technology that has contributed to material weaknesses and other deficiencies, which have
been noted by the City's independent auditor (Deloitte) over the last few years. In addition, the
auditors have also determined through their testing that they cannot rely sufficiently on system-
related controls and thus have to "test around the system," which leads to a more expensive
audit. While manual processes have been established to address weaknesses, these are
temporary solutions.
Recent Updates: In March 2012, a status update was provided to the Audit and Finance
Advisory Committee. At that time, staff advised that, according to other municipalities as well as
its consultants, the procurement module is reported to be one of the most stressful undertakings
during an implementation. Consequently, the lack of success during an implementation is often
attributed to the replacement of procurement systems.
Due to the risk level of replacing the procurement system and immediate need to replace core
financial systems, staff suggested delaying the procurement implementation, which has an
estimated cost of $4.8 million in Phase IIA. This strategy, which was endorsed by the Committee,
will help to increase the likelihood of a successful core financial implementation while deferring
the cost.
Upcoming ERP Phase II M&Cs (June 12, 2012): City Council action is needed to engage in 1)
implementation services with CIBER Inc., 2) training services with Oracle University for project
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS
INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 9495
To the Mayor and Members of the City Council June 5, 2012
Page 2 of 2
r
SUBJECT: UPDATE ON ENTERPRISE RESOURCE PLANNING (ERP)
rF PROJECT - PHASE II
team members, 3) consulting and advisory services with STA, 4) interface development with
Periscope Holdings, Inc., and 5) to appropriate transfers from various funds to the project.
ERP Phase II Timeline
Phase II is divided into three distinct sub-phases to minimize organizational disruption, maintain
continuity of service delivery, and increase the likelihood of a successful organization.
An illustration of the phase-by-function approach is outlined below.
$29,900,000
Oct Phase IIA— Core Functionality Oct
012 General Ledger, Accounts Payable, 014
Accounts Receivable, Treasury,
Project Accounting, Grants Accounting
$3.200.000
Apr Phase IIB — Mar
2014 Budget Dev. 2015
$6,900,000
Phase IIC —
Oct Dec
014 Procurement 015
($5,400,000)
Capital Projects
($1,500,000)
By shifting the Procurement component from Phase IIA to IIC and further budget analysis, the
cost to replace core financials was reduced by $4.8 million. These costs appear later in Phase
IIC and increase scope to include a comprehensive study to evaluate the effectiveness of the
PeopleSoft/Buyspeed interface. The current estimate for these services is $5.4 million; however,
staff is continuing to seek efficiencies to reduce total project cost.
For questions or further information, please contact Greg Jordan, Financial Management
Services Assistant Director at 817-392-8843.
Tom Higgins
City Manager
ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS