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HomeMy WebLinkAboutStaff Report 14 12/16/2002CITY OF PETALUMA, CALIFORNIA AGENDA BILL DEC 16 14 Aeenda Title: Resolution Authorizing the Finance Director to Meetine Date: Negotiate and the City Manager to Sign an Agreement with December 16, 2002 Sungard-Pentaination to Provide a Financial Management Software and Hardware System Not -to -Exceed $900,000 Department: Director: Contact Person: Phone Number: Finance William Thomas William Th ma 773-4323 U, Cost of Proposal: Not -to -exceed $900,000 Account Number: 001-400-1610-7301 Amount Budeeted: $923,600 (General Find Appropriations) Name of Fund: General Fund/Water/Sewer Attachments to Aeenda Packet Item: Summary of Bid from Pentamation-Sungard and Eden Systems Resolution Summary Statement: The City, beginning in FY 2001, identified the need to replace the current Financial Management soffivare with a system that could provide the City with the financial and project management information that it desired. In addition, it was recognized that the City could not continue to operate the computer hardware that supported the sofilvare system. Dennis Vlaisch of Keary Consulting Group was retained to assist the City in identifying its needs, identifying its current business practices, identifying potential software vendors that could meet those needs and solicit proposals from the various identified vendors. These activities were completed over a 9 - month period that began last March. In September 2002, the City received three responses to our RFP. After reviewing those, one vendor was eliminated due to its inexperience in the California market. The remaining two — Sungard-Pentamation (Pentarnation) and Eden Systems were invited to demonstrate their products to City staff. This was done in conjrmetion with an extensive check of their references. Demonstration of their products was completed in November. Based on their demonstrations, reference checks and pricing considerations, Pentamation was identified as the prefer -red vendor. In early December Finance staff visited two sites that are using this software to further our understanding on what this product will offer the City. Based on all criteria, staff is recommending that the City proceed with negotiations with Pentarnation and if successful, sign an agreement with Pentaniation to provide the financial management software solution for the City. Council Prioritv: THIS AGENDA ITEM IS CONSIDERED TO BE PART OF, OR NECESSARY TO, ONE OR MORE OF THE 2001 PRIORITIES ESTABLISHED By THE CITY COUNCIL ON JULY 21, 2001. Priority(s): N/A Recommended Citv Council Action/Sueeested Motion: Adopt the Resolution authorizing the Finance Director to negotiate and the City Manager to sign an agreement with Sungard-Pentanration. Reviewed by Finance Director: h �ate: Todav's Date: ReviewedAnv itv,Attornev: Ir 0-DeVe Approveity Manaeer: 0�1 Date: Revision # and Date Revised: File Code: CITY OF PETALUMA, CALIFORNIA DECEMBER 16, 2002 AGENDA REPORT FOR RESOLUTION AUTHORIZING THE FINANCE DIRECTOR TO NEGOTIATE AND THE CITY MANAGER TO SIGN AN AGREEMENT WITH SUNGARD-PENTAMATION TO PROVIDE A FINANCIAL MANAGEMENT SOFTWARE AND HARDWARE IN AN AMOUNT NOT -To -EXCEED $900,000 1. EXECUTIVE SUMMARY: The City, beginning in FY 2001, identified the need to replace the current Financial Management software with a system that could provide the City with the financial and project management information that it desired. In addition, it was recognized that the City could not continue to operate the computer hardware that supported the software system. Dennis Vlaisch of Kerry Consulting Group was retained to assist the City in identifying its needs, identifying its current business practices, identifying potential software vendors that could meet those needs and solicit proposals from the various identified vendors. These activities were completed over a 9 -month period that began last March. In September 2002, the City received three responses to our RFP. After reviewing those, one vendor was eliminated due to its inexperience in the California market. The remaining two — Sungard-Pentamation (Pentamation) and Eden Systems were invited to demonstrate their products to City staff. This was done in conjunction with an extensive check of their references. Demonstration of their products was completed in November. Based on their demonstrations, reference checks and pricing considerations, Pentamation was identified as the preferred vendor. In early December Finance staff visited two sites that are using this software to further our understanding on what this product will offer the City. Based on all criteria, staff is recommending that the City proceed with negotiations with Pentamation and if successful, sign an agreement with Pentamation to provide the financial management software solution for the City. 2. BACKGROUND: The City currently utilizes a financial software package that was developed in the late 1970's and represented one of the first computer government financial packages developed for the governinent sector. This program was purchased by many cities as a means to go from manual accounting methods to utilizing automated accounting programs. In fact, many cities purchased this software when the developing company went bankrupt. Several companies sprung up over the years to support this software, the most notable was Pacific Software that was nm by a number of the original programmers of this software. Many cities contracted with Pacific Software to enhance the original programs and provide a user-friendly interface to the original software. In fact, I used this software at the City of Vallejo for a number of years until it was replaced in the late 1990's. Whereas the City of Vallejo was spending approximately $100,000 per year to maintain and enhance this software, the City of Petaluma never did so and made only minor modifications over the years utilizing a different programmer source to do so. In suummary, not only is this software representative of first generation "fund" accounting programming but also outlived it useful life, many times over. The government accounting business has become a niche business. It is generally broken down into three levels, or "tiers." The first, Tier 3, is for small cities and agencies — generally less than 20,000. This sector generally is not supported with programs that address all municipal needs would include water/sewer billing. Tier 1 is for the large cities and agencies — generally with populations exceeding 100,000 or more. This sector requires more robust systems to deal with the demand put on the system generally due to the number of transactions that occur in these cities. Tier 2 is the middle group of full-service cities that provide utility billing but also have an advanced accounting system that require sophisticated software to provide financial and budgetary inforniation that is greater than what is required by smaller entities. Petaluma falls into that group. Software developers who provide complete integrated systems have generally opted to target only one of the groups as the investment that is required to meet the individual needs of the various groups is a variable based on the needs. That is why the market contains several vendors that cater specifically to the low end user, several that cater to our user level and several that cater to the high-end user. The ultimate cost of the software is dependant on the users needs ranging from $10,000 for a small general ledger system to $10 million to address a large urban community. Because there is only a limited amount of potential customers for any one product, the cost is greater than what you may find in the public sector. For example, QuickBooks can market their accounting solution to small businesses at a relatively low price because their target audience consists of millions. However, the Tier 2 government accounting software market is only a few thousand nationwide and less than 1000 in California. Given the existing landscape, the City identified approximately 80 vendors that could supply one or all segments that the City required. However, only a small number of vendors were able to provide the City with an integrated package that met all of our needs. They were able to accomplish this either with their stand-alone package or with collaboration with third party vendors that were compatible with theirs. Of that group, only three responded to our request. They included InCode, Eden Systems and Pentaniation. After initial review of the proposals, InCode was eliminated since it had only one installed site in California and that site was significantly smaller than Petaluma. The City began this process based on the assumption that we did not possess the resources or the expertise to do accomplish a successful implementation of a new system. From prior experience the selection of the software vendor was the easy part whereas the successful implementation beginning with contract negotiations was the most critical parts and required outside expertise. The City hired Dennis Vlaisch of Kerry Consulting Group to assist us in the process. The first step was conducting "work -(low workshops" xvith City staff to determine how business is done in the City and what staff would like to see changed or enhanced with a new system. The results of these workshops were then condensed into "needs" and ranked based on what was required and what was desired. These needs where then incorporated into the RFP and vendors were asked to provide proposals based on both levels of needs. In addition to providing the City with software solutions, the RFP required that the vendors provide us with costs to assist in the implementation, which includes in-depth training. In addition costs for "process reengineering" were included which would provide the City the opportunity to reevaluate our current business practices to determine whether they should be changed to maximize the opportunities that the software application could afford us. As discussed above, the City did invite the two finalists to demonstrate their software. Both Pentamation and Eden Systems spent two days each at the City demonstrating their software. In addition to the demonstrations, reference checks were conducted by finance and information services staff. The consultant also conducted several reference checks. After the preferred vendor was identified, finance staff made two site visits to cities that are currently using Pentamation. If we are successful in our negotiations with Pentamation, we anticipate sending additional staff to locations that have been identified as successful users of the products to learn from them what might be done to make a smoother implementation. Pentamation was identified as the preferred vendor for a number of reasons, as follows: Stability and Completeness: Pentamation products have been used since 1969. The architecture of its software is considered stable and reliable. Whereas, Eden Systems is more "windows" based, it is not complete. They currently do not offer a business license system nor is the utility billing system out of "beta" testing. Their cashiering system, which is significant for up to date records, is a third -party source. That system was not provided for in their response. r Reference Checks: Although you can never satisfy all, the overall response that we were receiving from their user groups differed. The most significant problem that was uncovered for Eden Systems was that their "fixes" and/or updates may have resolved the identified problem but many times caused problems with other aspects of the system. Overall their quality control was questionable. Eden Systems represenatives admitted that they were having trouble keeping up with the demand for the specialized staff skills needed to maintain their expanding client base and ever -evolving product. On the other hand, Pentamation support was identified as much improved over the past two or three years since the Sungard Company acquired them. r Market Niche: Eden Systems, as it is the more advanced windows based system, is expanding its client base. However, this expansion is outside the Tier 2 group that they have normally catered to. They indicated that they are attempting to enter the high-end group since it would expand their client base. Based on what we were hearing about quality control and what was perceived as a dilution of their resources, it was felt that this might result in decreased service to our needs in the future. Pentanration, on the other hand, appears to be committed to their product and has continued to provide improvements. They are currently working on malting their product more windows compatible. i Price: Although this was not considered to be the ultimate factor, it has played a significant role in the decision malting process. Although there is an identified preference for a more windows based product, which Eden Systems would provide it couldn't be justified in light of the price difference between the two systems. The gross cost of the systems are as follows: 4 These numbers include estimated travel costs and liberal estimates for training and support consulting days, which is why Pentamation is more expensive in Implementation Support—they must send people out from Bethlehem, PA whereas Eden comes out of Seattle, WA. Pentamation has some additional modules that were not bid (such as a Work Order system) and there will be costs for "backfill' (i.e. hiring temporary staff to fill in for permanent staff while they are being trained) and other contingencies, which is why staff is requesting the $900,000 ceiling on the project. Based on the above, staff requests authorization to negotiate with Pentamation and if those negotiations are successful, authority to sign an agreement with Pentamation to provide the software and hardware solutions to meet our financial accounting and reporting needs. If we are unsuccessful in our negotiations with Pentamation, staff will return to Council for direction. Time is somewhat of the essence. It is anticipated that implementation could begin as early as February to meet several target dates. Although the exact implementation dates will be identified in the contract, it is anticipated that the "Rind" accounting portion of the new system will be operational by July 1, 2003 and the payroll system fully operational by January 1, 2004. The other modules will be implemented in sequence with the use of the budget module expected to be fully utilized for the fiscal year 2005 budget. Information Services continues to stress the instability of both the current software programs as well as the computer hardware that runs it. The latter is an old Hewlett Packard mainframe unit that is no longer being supported by its manufacturer. The payroll system is so unstable that it requires intervention each payroll cycle. ALTERNATIVES: Do not proceed with purchasing the Pentamation product. The alternatives would be to stay with the current system or identify other potential solutions to our current financial accounting and reporting needs. 4. FINANCIAL IMPACTS: The City initially funded this project with $200,000 of seed money in FY 2001. Since that time, additional funds have been either encu nbered from savings within Finance and additional appropriations. At the end of FY 2002, $623,900 has been encumbered for this project. An Pentamation Eden Systems Software Implementation Support $ 198,000 $ 156,415 Finance 174,475 308,940 Payroll 32,600 102,150 Human Resources 87,250 113,950 Utility Billing 121.150 345.456 Sub -Total 613.475 1.026.911 Hardware System Software 70,423 49,023 Server Hardware 57,458 28,315 Sub -Total 127.881 77.338 Total System $ 741.356 $ 1.1n4249 These numbers include estimated travel costs and liberal estimates for training and support consulting days, which is why Pentamation is more expensive in Implementation Support—they must send people out from Bethlehem, PA whereas Eden comes out of Seattle, WA. Pentamation has some additional modules that were not bid (such as a Work Order system) and there will be costs for "backfill' (i.e. hiring temporary staff to fill in for permanent staff while they are being trained) and other contingencies, which is why staff is requesting the $900,000 ceiling on the project. Based on the above, staff requests authorization to negotiate with Pentamation and if those negotiations are successful, authority to sign an agreement with Pentamation to provide the software and hardware solutions to meet our financial accounting and reporting needs. If we are unsuccessful in our negotiations with Pentamation, staff will return to Council for direction. Time is somewhat of the essence. It is anticipated that implementation could begin as early as February to meet several target dates. Although the exact implementation dates will be identified in the contract, it is anticipated that the "Rind" accounting portion of the new system will be operational by July 1, 2003 and the payroll system fully operational by January 1, 2004. The other modules will be implemented in sequence with the use of the budget module expected to be fully utilized for the fiscal year 2005 budget. Information Services continues to stress the instability of both the current software programs as well as the computer hardware that runs it. The latter is an old Hewlett Packard mainframe unit that is no longer being supported by its manufacturer. The payroll system is so unstable that it requires intervention each payroll cycle. ALTERNATIVES: Do not proceed with purchasing the Pentamation product. The alternatives would be to stay with the current system or identify other potential solutions to our current financial accounting and reporting needs. 4. FINANCIAL IMPACTS: The City initially funded this project with $200,000 of seed money in FY 2001. Since that time, additional funds have been either encu nbered from savings within Finance and additional appropriations. At the end of FY 2002, $623,900 has been encumbered for this project. An additional $300,000 is included in the Finance Department's appropriations for this project. A total of $923,900 is therefore available to cover the total cost of this project. A portion of this project relating to Utility Billing will be the responsibility of the Water and Sewer Enterprise finds and a mid -year budget adjustment will be made to account for the actual cost. 5. CONCLUSION: The City has long identified the need to replace the existing financial accounting software. After an in-depth study of our needs, identification of those vendors that are able to provide solutions to our needs, evaluating the software and visiting sites which the preferred vendor's software is operating it is staff recommendation that Council provide the necessary authorizations for staff to proceed with successfully bringing this project to an operational level. OUTCOMES OR PERFORNIANCE MEASUREMENTS THAT WILL IDENTIFY SUCCESS OR COMPLETION: Successful negotiation of a contract and the successful transition to the new system. 7. RECOMMENDATION: Adopt the resolution. gAnf s/2001 agenda bill RESOLUTION AUTHORIZING THE FINANCE DIRECTOR TO NEGOTIATE AND THE CITY MANAGER TO SIGN AN AGREEMENT WITH SUNGARD- PENTAMATION TO PROVIDE A FINANCIAL MANAGEMENT SOFTWARE AND HARDWARE SYSTEM IN AN AMOUNT NOT -TO -EXCEED $900,000 WHEREAS, The City of Petaluma desires to replace the existing finance accounting and management sofrivare progranls; and WHEREAS, The City followed established formal bid procedures by identifying potential vendors and soliciting proposals from known vendors for a government financial accounting and management software system; and WHEREAS, the City received three proposals in response from their request; and WHEREAS, the City determined that Sungard-Pentamation and Eden Systems would provide systems that would meet the City's needs; and WHEREAS, the two vendors provided demonstrations of their products and staff conducted reference checks of each vendors customers; and WHEREAS, based on those demonstrations, reference checks and pricing of the products the preferred vendor was identified as Sungard-Pentamation; NOW, THEREFORE BE IT RESOLVED, by the City Council of the City of Petaluma that the Finance Director is authorized to negotiate with Sungard-Pentamation for the purchase of the software and hardware as identified in the bid proposal. BE IT FURTHER RESOLVED, that the City Manager is hereby authorized to execute a contract with Sungard-Pentamation in an amount not -to -exceed $900,000.