HomeMy WebLinkAbout10 28 2013 City Council Work Session - Enterprise Resource Planning O � PRIp
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4646 Dakota Street SE
'�vxESO'��` Prior Lake, MN 55372
CITY COUNCIL WORKSHOP REPORT
MEETING DATE: OCTOBER 28, 2013
PREPARED BY: JERILYN ERICKSON, FINANCE DIRECTOR
JANE KANSIER, ASSISTANT CITY MANAGER
PRESENTED BY: JERILYN ERICKSON & JANE KANSIER
SETH HEDSTROM, BERRYDUNN
AGENDA ITEM: AGENDA ITEM 2- ENTERPRISE RESOURCE PLANNING (ERP)
SOFTWARE SELECTION
DISCUSSION: I ntroduction
The purpose of this meeting is to provide the City Council with an update on the
ERP software selection project.
H i StOry
The City maintains $187 million in total assets, along with an annual budget of
$26+ million. To effectively manage these assets and budgets, the ability to
track expenditures and revenues in real time, to identify trends, and to create
long term budgets and forecasts is imperative. The City's current financial
system is limited in some of these capabilities. Therefore, the City Council
authorized staff to begin the ERP software selection project in November, 2012.
The Council approved a tentative timeline in December, 2012, to assist staff as
we moved forward with the project.
The first step in the project was the selection of a consultant to assist staff in
the selection of the ERP software system. In April, 2013, the City Council
approved a professional services agreement with BerryDunn for this project.
The Scope of Services in this agreement included:
1. Assess current ERP software system and identify unmet needs as well as
identify future business objectives.
2. Provide functional requirements analysis of all City departments in regards
to new ERP software.
3. Prepare a Request for Proposal for new ERP software and implementation
services that allow for easy comparison between vendors. Core modules
should include General Ledger, Accounts Payable, Accounts Receivable,
Cash Receipts, Purchasing, Budgeting, Project Accounting, Grant Tracking
and Reporting, Capital Assets, Special Assessments, Human Resources
and Payroll.
4. Help guide City through the ERP software selection process and assist in
identifying risks and potential issues to help City make best decision. This
may also include facilitation of vendor demonstrations.
5. Assist with negotiating a contract with the preferred ERP vendor
Over the last several months, the first four tasks in the project scope have been
completed. An Assessment Report, analyzing the City's current system,
identifying the functional requirements of the future ERP, and identifying
challenges in meeting these needs, was completed and presented to the City
Council on June 24, 2013. At that workshop, there was a great deal of
discussion about focusing on only the functionality necessary in the core
modules.
A Request for Proposals (RFP) seeking proposals from qualified software
vendors was released on July 1, 2013, using these parameters. The RFP
focused on the need for two core modules: Financial and Human Resources.
The groupings within these modules included:
General Ledger, Budgeting, Purchasing,
Financials: Accounts Payable, Accounts Receivable,
Cash Recei ts, Pro�ect Accountin
Human Resource Management: Human Resources (Employee File),
Pa roll
These modules are necessary to address the most critical challenges in the
current environment. Future functionality and modules may be considered in
later phases.
Three vendors (BS&A Software, New World Systems and Tyler Technologies)
were selected to do product demonstrations in early September. Each vendor
had two days in which to demonstrate the functionality of their software.
An Evaluation Team, consisting of a cross section of City staff, scored each of
the products and narrowed the selection to two vendors. The team then called
references for each of the vendors to discuss software functionality,
implementation approach and ongoing customer service. At this point, the
scores were very close and the Evaluation Team asked the preferred two !
vendors to do an additional demonstration for very specific functional
requirements defined by the staff. Both preferred vendors were also asked to
walk through their respective cost proposals for software licensing,
implementation services and recurring maintenance to gain a greater
understanding of these proposals and to be certain we would only pay for those
functionalities we need at this time. These demonstrations and discussions
were completed on October 23, 2013.
Several City staff have been involved throughout this process. A Project
Management Team, consisting of Administration, Finance and Technical staff,
has been leading the project from the beginning. The Evaluation Team
includes the Project team and additional Finance, Community and Economic
Development and Engineering staff. In addition, up to 20 staff from all sectors
of the organization attended parts of each product demonstration and provided
their feedback that was considered by the Evaluation Team. This cross-sector
involvement is critical because, even though the ERP system is primarily a
financial system, one of the goals of this project is to ensure the system
provides efficiencies and process improvements wherever possible across the
entire organization.
Current Circumstances
The preferred vendors are BS&A and New World Systems (NWS). Both
vendors are experienced in municipal operations, and have a full set of
software services. Both vendors are headquartered in Michigan, but BS&A is
the smaller of the two, with a client base primarily in Michigan, Indiana,
Wisconsin, and other states in the Midwest and the eastern United States.
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They currently have no clients in Minnesota. NWS is a larger company, with
clients nationwide, including a large number of Minnesota cities.
The RFP listed the basis by which each proposal will be evaluated, measured,
and ranked as follows:
Criteria Description Maximum
Score
This criterion considers both the qualifications of
the personnel proposed to provide the services
solicited by this RFP and the products that are
Functional & proposed to be used in performing the services
Technical solicited by this RFP. In evaluating the 35 points
proposer's products, the City will consider the
business benefits and the business process
improvements as a result of implementing the
proposer's products.
This criterion considers the proposer's
understanding of the scope of work and the
Approach quality and clarity of the proposer's written 20 points
methodology and description of the proposed
approach to accomplish the work.
This criterion considers (1) the proposer's past
performance on any City contracts, (2) the
results of reference checks, and (3) the 20 oints
Experience proposer's experience in providing the services p
solicited by this RFP as set forth in the
proposer's response.
This criterion considers the price of the services
Cost solicited by this RFP. Proposers will be 25 points
evaluated on their pricing scheme as well as on
their price in comparison to the other proposers.
In each scoring round, the evaluation team considered each of these criteria.
The table below provides a comparison of each vendor in each of the four
areas.
����� Cri#�ria � � B ,� NWS��.�` �:
Functional & Technical 29.3 30.3
A roach 19.0 18.3
Ex erience 17.9 19.1
Cost 25.0 15.0
Total 91.1 82.7
NWS ranked slightly ahead of BS&A for functionality and experience. BS&A
ranked slightly ahead of NWS for approach. The cost points put BS&A above
NWS.
The following chart identifies the strengths/advantages and weaknesses/
disadvantages as provided by the Evaluation Team for selecting each of the
software vendors:
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� � � �'��_� �� � �STRE ,' �,ANTAGES �
BS&A NEW WORLD SYSTEMS
• Lower one-time cost; • Established presence in Minnesota
• Lower annual maintenance costs; and active regional user group
• Strong desire to gain presence in o(Blaine, Brooklyn Park,
Minnesota; Burnsville, Duluth, Plymouth,
• Responsive to recommendations West St. Paul)
during demonstration (incorporated • Finance/city staff have past
suggestions regarding security into experience with software;
future release); • Very strong security;
• Software updates available every 2 • Robust reporting capabilities
weeks; (dynamic reports and Business
• Current functionality can essentially Analytics);
meet the requirements. • Robust budgeting (multiple MN cities
• Base pricing included some are using biennial budgeting
functionality that staff would have functionality);
considered in the future; • 85 days of training & implementation
• Data conversion is proposed as a programmed (increased in response
not-to-exceed cost; to City Manager's comments during
• Perception of a lower learning curve demo about limited city resources);
for end users (staff outside of • Modern appearance of software
Finance Department); (dashboards, etc.);
• Additional modules (i.e. Community • Vendor-hosted option is available;
Development, Utility Billing) are at a • Experience in integrating with
lower cost. Cartegraph.
,.. �� �
BS&A NEW WORLD SYSTEMS
• Prior Lake would be their first client • Higher one-time cost;
in Minnesota; therefore, there is no . Higher annual maintenance cost;
local user group; • Warranty period begins upon
• Minnesota reporting requirements delivery of software;
would need to be developed ($5000 . Perception of high learning curve for
discount proposed to compensate for end users (staff outside of Finance
staff time needed); Department);;
• Finance/city staff have no experience . Additional modules (i.e. Community
with this software; Development, Utility Billing) are at a
• Software updates available every 2 higher cost.
weeks; how are IT resources
impacted?
• 27 days of training & implementation
programmed;
• Older (dated) appearance of
software;
• Vendor-hosted option is not available
but under develo ment .
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The proposed costs for each vendor are shown in the following table:
- Category BS&A New Difference Difference
Worid from as % of Total
S stems BS&A
Software $ 93,955 $125,400 $ 31,445 21%
(includes
discounts
Data Conversions 47,610 36,000 11,610 8%
Interfaces 12,500 30,000 17,500 12%
Project 8,750 32,000 23,250 16%
Mana ement
Implementation & 27,000 92,800 65,800 45°/o
Trainin
Post Go-Live 3,000 0 (3,000) (2%)
Assistance
Operation System 0 5,000 5,000 3°/o
Install
Travel 12,875 31,500 18,625 13%
Total $205,690 $352,700 $147,010 100%
Proposed vendor days:
Category BS&A New Worid Difference from
S stems BS&A
Implementation & 27 85 58
Trainin
The majority of the cost differential is due to proposed costs for implementation
and training, vendor project management and the associated travel costs.
Staff, as well as the City manager, has expressed concerns about unduly
burdening City staff with responsibilities for converting data, testing data,
parallel runs and training yet recognizing that City staff involvement is
necessary; therefore, it is imperative that the vendor commit sufficient time and
resources to ensure that this project is successfully implemented.
There are certain aspects of the project that we can only make assumptions
about at this point such as the amount or types of data we want to convert in
the various functional areas. We may decide that it is more cost effective to
manually enter certain data sets versus trying to develop a conversion script. If
we reduce the number/types of conversions, there would be a reduction in the
project costs.
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Proposed annual maintenance costs:
Year BS&A New World
S stems
Year 1 - -
Year 2 26,210 31,000
Year 3 26,996 31,000
Year 4 27,806 35,000
Year 5 28,640 38,000
Standard software maintenance agreements typically cover all updates to the
current licensed software.
When a city makes an investment in an ERP software system, they typically
keep the software for at least 10-15 years. With that in mind, the following chart
illustrates the cost of the software (including implementation and training)
amortized over 15 years plus the annual maintenance costs:
Year BS&A New World
S stems
Year 1 13,713 23,513
Year 2 39,923 54,513
Year 3 40,709 54,513
Year4 41,519 58,513
Year 5 42,353 61,513
Other Costs and Issues
1. Project Management. City Council directed staff to hire resources to
provide project management services that directly represent the city.
Staff issued an RFP in September and has received multiple responses.
Staff will be reviewing the responses within the next couple of weeks
and anticipates bringing a recommendation to the Council in November.
2. No additional staffing has been added. Existing staff will be stretched
during the implementation of the project, as they complete their regular
duties in addition to learning a new system. We don't expect this to
require additional staff in the long term.
3. Hardware. Any new ERP system will require a new server and some
miscellaneous hardware (e.g., cash drawer and receipt printer).
4. IT Resources. City staff has not identified the amount of IT resources
that will be needed during and following this ERP software
implementation. The City currently contracts with Computer Integrated
Technologies for 437.50 hours per year or approximately 8 hours of
service each week.
5. Future modules. City staff will be evaluating additional modules and
functionality in the future and will present that information to the Council
at the appropriate time.
The RFP included a request for costs for a vendor hosted solution. NWS has a
vendor hosted solution at an additional cost. BS&A does not currently offer this
but has indicated that it is in development.
Conclusion
Based on the point totals, the Evaluation Team recommends the City contract
with BS&A to provide the ERP system. The team members discussed this
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selection extensively. There were different perspectives from several members
of the team, primarily based on their expected user level as well as experience
with financial systems. For example, the super-users, such as the Finance
staff, viewed NWS as a more robust and more flexible system, while other end
users, or staff who will use the system for more limited purposes, viewed BS&A
as easier to understand and learn. Team members placed different values on
different functionality based on their perceptions.
We all agreed both systems would meet our basic needs, and are a great
improvement over the current system. Both vendors received good
recommendations, especially in terms of their customer service levels. Prior to
applying the cost points, NWS ranked slightly ahead of BS&A for functionality
and experience. BS&A ranked slightly ahead of NWS for approach. The cost
points put BS&A above NWS.
The purchase of an ERP software system is a significant investment not only in
terms of money but in the time commitment that is needed to select a system,
negotiate a contract, configure the system, convert data from a legacy system,
test the new system and train users. Consequently, the investment is the start
of a long-term partnership, typically 10-15 years (minimum). If history repeats
itself in Prior Lake, it could be another 30 years before city officials and staff
would consider a possible change.
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