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ERP Project Update
Presented to City Council
May 3, 2011
1
Purpose of Presentation
Topic Presenter
Provide Funding Overview, Progress and Timeline of Phase I
Gary Goforth
Provide Funding Overview and Proposed Timeline of Phase II
Greg Jordan
Summarize information presented to the Audit and Finance Committee regarding Cost-Benefit Analysis
Mitt Salvaggio
2
ERP Phase I Budget History
ERP Phase I Costs Budgeted ExpendituresRemaining
Balance ContributionsValue of
EffortOriginally Anticipated
eVerge Implementation 8,650,000$ 8,650,000$ - - 8,650,000$ STA Consulting Implementation Oversight 2,735,000 2,735,000 - - 2,735,000 PeopleSoft Software Maintenance and Training 2,070,000 2,028,000 42,000 - 2,070,000 Hardware Infrastructure 1,225,000 943,000 282,000 - 1,225,000 City Project Team 3,180,000 2,539,000 641,000 - 3,180,000 City Project Team Expenses 664,000 625,000 39,000 - 664,000
Sub-Total Originally Anticipated 18,524,000 17,520,000 1,004,000 - 18,524,000 Not Originally Anticipated
eVerge Additional Stabilization 3,249,000 1,967,000 1,282,000 146,000 3,395,000 STA Additional Stabilization Mgmt & Oversight 464,000 277,000 187,000 161,000 625,000 Extended Backfills - Hudson 301,000 301,000 - - 301,000 Project Assessment - MiPro 61,000 61,000 - - 61,000
Sub-Total Not Originally Anticipated 4,075,000 2,606,000 1,469,000 307,000 4,382,000 Total ERP Phase I Costs 22,599,000$ 20,126,000$ 2,473,000$ 307,000$ 22,906,000$
(1,004,000) 1,469,000$ Total Available to Allocate
As of 04/25/2011
Less funds restricted to Capital
Note: This does not include some internal cost such as staff time that are being charged to departmental operating budgets.
3
STA Consulting • Provide expert oversight for the City’s ERP
implementation that is independent from Implementer and Software Provider
• Facilitate ERP vendor selection process• Supplement City project management• Supplement City functional team• Identify and manage risks
eVerge Group of Texas• Provide system implementation services• Lead design, development, testing of the ERP
software• Lead change management activities • Lead training activities to dept users• Lead knowledge transfer to CFW • Provide post implementation support• Identify and manage risks & issues
Contractor Roles
4
ERP Project Coordination Overview as presented to Audit and Finance Committee March 24, 2011
Program CoordinatorGary Goforth
Police Time KeepingPete Anderson
Police Back LogSTA – Harry Anderson
Fire ReconciliationRichard Neuhaus
ERP Support & NewPolice Reconciliations
Mai Tran
TrainingGary Goforth
CommunicationsDeborah Cuffee
Human ResourcesKaren Marshall
PayrollLena Ellis
Employee Self ServiceGary Goforth TBD TBD TBD
Project Communication Chart
ACM ExecutiveSponsor
5
ProjectCoordinatorGary Goforth
Police Time KeepingPete Anderson
(MIPRO Recom.)
PoliceCommunication Back Log
STA – H. Anderson(MIPRO Recom.)
Fire Reconciliations& Holiday Pay
Richard Neuhaus
TrainingGary Goforth
CommunicationsDeborah Cuffee
(MIPRO Recom.)
PayrollLena Ellis
Employee Self ServiceGary Goforth(MIPRO Recom.)
e-LearningTBD
e-RecruitingTBD
e-PerformanceTBD
Executive SponsorCity Manager’s Office
STA ConsultingProject & Resource
Management
PeopleSoftSoftware Maintenance
& Version UpgradeTBD
User FriendlyFront End
TBD(MIPRO Recom.)
Business ProcessDocumentationGary Goforth(MIPRO Recom.)
Legend:
– External resources not required
– External resources required and allocated
– External resources required but not allocated
– Effort placed on hold
Leave Balance Audit(Tools and Procedures)
TBD(MIPRO Recom.)
TransitionTime KeepingBack to Police
TBD
Grants Accounting &Account Mapping
Lena Ellis
New PoliceReconciliations &
ERP SupportMai Tran
New PoliceReconciliations &
HumanResources
Karen Marshall(MIPRO Recom.)
Phase I Project Responsibilities
6
New Police Paycheck Inquiries
2 2 1
19 4
12 6
6 4
162 6
7 4
18 3
0
50
100
150
200
250
1/ 7/ 11PP01
1/ 21/ 11PP02
2/ 4/ 11PP03
2/ 18/ 11PP04
3/ 4/ 11PP05
3/ 18/ 11PP06
4/ 1/ 11PP07
4/ 15/ 11PP08
ITS Time Entry Team covers three divisions
ITS Time Entry Team covers entire department
Police Time KeepingPete Anderson
(MIPRO Recom.)
ITS Time Entry Team begins entry with part of a division
Sworn officers drive timesheet collection
7
Police Communication Backlog Status
Status as of May 02, 2011
196 Folders Remaining,
21%
729 Folders Completed,
79%
PoliceCommunication Back Log
STA – H. Anderson(MIPRO Recom.)
Backlog based on 925 folders as of mid-March, 2011
8
New Police Reconciliations
Status as of April 25, 2011307 Folders Complete,
100%
0 Folders Remaining,
0%
New PoliceReconciliations &
ERP SupportMai Tran
New PoliceReconciliations &
9
ERP Support Accomplishments
IT Help Desk Tickets related to ERP issues (other than reconciliations) have continued steady downward trend
Examples of tickets include log-in assistance and understanding transaction error messages
New PoliceReconciliations &
ERP SupportMai Tran
New PoliceReconciliations &
Month Help Desk Tickets
October 2010 660
November 2010 555
December 2010 378
January 2011 258
February 2011 165
March 2011 111
April 2011 70
ERP Support Team members continue to attain the knowledge and experience to support steady state operations. Areas of upcoming focus are:
Functional and Technical Support in Time & Labor and Absence areas
Installation of maintenance updates to the software
Implementation of upgrade
10
Fire Department Reconciliations Accomplishments
Paycheck research and corrections brought up to date
Continued testing of Fire Department system changes
Continued training of Fire Time and Leave Administration personnel
Fire Reconciliations& Holiday Pay
Richard Neuhaus
11
Human Resources Team Accomplishments
Documented procedures to:
improve efficiency of benefit processing
ensure completeness and timelines of data for payroll processing
Implementation of procedures is in process
Significant progress toward resolving data sharing issues with third parties (e.g., Aetna)
Significant progress made toward knowledge transfer to Benefits Staff
Began identification of policy and procedure documentation requirements
HumanResources
Karen Marshall(MIPRO Recom.)
12
ERP Phase I Post 90 Day Timeline2012
April M J J A S O N D J F M A M J J A S O N D
Implement & Test 5 Maintenance
Bundles
ERP Phase II
Begins
October 2012
Go Live
October 2014
Complete StabilizationGrant Accounting
__GL Account Mapping
__Process
Documentation__
Leave Balance Audit__
Police Time Keeping Transition
__Prioritized Issues
2011
Employee Self Service – On Going
Employee Training – On Going
Implement 9.1 Upgrade
Build In-House ERP Support Capability
13
Estimate of Future Work Efforts
Post 90 Day Cost(to be funded by existing appropriations)
Estimate
Complete Stabilization Efforts – ERP Support $865,000Grant Accounting & Account Mapping $60,000Police Time Keeping Transition $514,000Employee Self Service & Employee Training $50,000
Total - Post 90 Day Costs $1,489,000
FY2012 Maintenance Efforts(to be funded in FY12 Operating Budget)
Estimate
Implement Maintenance Bundles $1,300,000Implement 9.1 Upgrade $1,500,000
FY2012 Maintenance Effort Sub-Total $2,800,000
14
ERP Phase II Update
15
ERP Phase II Overview
ERP Phase II Recent Developments
Guiding Principles
Schedule and Scope
Budget
Next Steps
16
Guiding Principles used to Assess Alternative Strategies
Risk Mitigation
Eliminate Unsupported Systems
Improve Reliability & Dependability of Systems & Information
Address Audit Findings
Cost/Value
Manage Risk/Reward
Achieve a Meaningful Return on Investment
Timeframe
In scope, on time, and on budget
Manage impact on organization
Organizational Change Readiness
End-User Satisfaction/Motivation
No Loss of Functionality
Create Efficiencies and Improve Effectiveness
17
Phase II Schedule and Scope Phase by Function, FY2012 start
Phase IIA – Core Finance and Procurement
Oct 2012
Oct 2014
Phase IIB – Budget Development Module
Jul 2014
Apr 2015
Phase IIC – Enhanced eProcurement & Capital Projects
Jan2015
Nov 2015
Pre - Implementation
Jun 2009
Sept2011
18
Phase II BudgetJun 2009 - Sep 2011
Oct 2012 - Nov 2015
ERP PHASE II PROJECT COSTS Pre-Implementation Implementation TOTALImplementor (TBD) -$ 15,835,000$ 15,835,000$ Salvaggio, Teal and Associates (STA) 1,659,000 4,441,000 6,100,000 PeopleSoft Software License 1,510,000 - 1,510,000 PeopleSoft Software Maintence 664,000 664,000 1,328,000 PeopleSoft Software Training - 650,000 650,000 Hardware Infrastructure - 2,040,000 2,040,000 City Project Team and Operating Expenses 626,000 7,506,000 8,132,000 Facility 47,000 735,000 782,000 Policy Development (Crowe Horwath) 590,000 - 590,000 Data Cleansing 836,000 - 836,000 Backfills - 3,764,000 3,764,000
Contingency 794,000 6,375,000 7,169,000 Total Project Costs 6,726,000$ $42,010,000 $48,736,000
FUNDING SOURCESOct 2010 M&C G-17074 (CO Issue) $31,256,000
TBD (FY11 Enterprise Fund Transfers) 14,180,000TBD (Enterprise Fund Transfers) 3,300,000TOTAL 48,736,000$
19
Next Steps
May 3, 2011 – Brief City Council on Phase II
Summer, 2012 – Consideration of Implementer Contract
20
Cost Benefit Analysis
21
Background Information Why ERP?
Standardized processes based on best practices
Improved budgeting and analysis tools
Strengthened Internal Control
Enhanced reporting across City government
Real-time data update and enhanced budgetary control
Automated workflow
Integration across all system modules
Employee and Vendor Self-Service
Regulatory Compliance
22
Background Information “Single Source of Truth”
ERP
PACSCLASS
Red
Light
Enfo
rcem
ent
Courtview
Water Billing
Perm
its P
lus
FireHouse
23
Cost / Benefit Analysis Overview
Cost of New System
Software
Hardware
Implementation
Upgrades
Ongoing Maintenance & Management
Training
Benefits/Avoided Costs
System Savings
Not Implementing Planned Systems
Replacing Current Systems
Process Improvements
Efficiencies
Cost Avoidance
vs.
24
Cost / Benefit Analysis Assumptions
Expected life of the ERP system is a minimum of 20 years
STA focused on major benefit opportunities
STA work efforts will minimally impact City staff
Used standard 10 year planning horizon for accumulating costs and benefits
Assume that upgrades will occur every 3-5 years.
Every 4 years used for costing purposes
Consulting support for upgrades will be 15 percent of project implementation costs
Other assumptions were made regarding staff and consulting costs
25
Cost / Benefit Analysis Summary of Major Quantified Benefits
Phase I – HR/Payroll
Benefit Estimated Average Annual Savings
Estimated Average Annual Savings - 10
year planning horizonConsistent Application of Overtime Policy $491,000 $4,910,000
Employee Self-Service Efficiencies $221,000 $2,210,000
Reduction in Other Payroll Errors $660,000 $6,600,000
Total $1,372,000 $13,720,000
26
Cost / Benefit Analysis Additional Savings from Phase I Implementation
Decreases in:
Time spent in various payroll processing activities (processing extra pay, researching history and accounting across multiple systems, etc.)
Time spent entering/changing employee data, as well as researching and responding to employee inquiries
Time spent in various HR-related activities (processing Personnel Action Requests, projecting the impacts of changes in salaries or benefits)
Payroll costs due to effective dating of raises and longevity (they can start at any time during the pay period, not just the first day)
Time spent administering benefits and decreases in the employer costs of benefits due to improved technology (effective dating, ease of reporting)
Time required each year to generate custom reports that historically required retrieving data from multiple sources
These benefits and others have not been quantified
27
Cost / Benefit Analysis Breakdown of Annual Support Cost Increases – Phase I
Cost Component Average Estimated Annual Cost
Anticipated Cost Increases
Consulting Support – Ongoing Maintenance $198,000
Average Annualized Upgrade Support
(15 % of Implementation Costs every 4 years)
$383,000
Ongoing PeopleSoft Maintenance $281,000
Ongoing Infrastructure Maintenance $16,000
Unanticipated Cost IncreasesOperating Budget – City Support Staff
(7 Authorized Positions beyond previous levels)
$733,000
Operating Budget – Additional Operating Costs $221,000 Total - Annual Support Cost Increases $1,832,000
28
Cost / Benefit Analysis Summary of Major Quantified Benefits
Phase II – Finance/Procurement
Benefit Estimated Average Annual Savings
Estimated Average Annual Savings over 10 year planning horizon
“In-Sourcing” the CAFR $698,000 $6,980,000Decommissioning of the Mainframe $836,000 $8,360,000
Total $1,534,000 $15,340,000
29
Other Phase II Benefits Additional Savings from Phase II Implementation
Reduction in:
Accounts Receivable (AR) balances and carrying costs
Carrying Costs for inventories
Time spent performing year-end close and preparing the CAFR
Time required to process grant draws
Time spent reconciling bank accounts
Time required to enter assets into the financial management system through integration with procurement and accounts payable
Time spent calculating and maintaining asset depreciation, as well as manually entering the resulting accounting entries into accounting and tracking systems
Reconciliations between separate administrative systems
Improvements in:
Revenue collection efforts
Vendor pricing due to improvements in analytical capabilities
These benefits and others have not been quantified
30
Cost / Benefit Analysis Breakdown of Anticipated Annual Support Cost Increases – Phase II
Cost Component Average Estimated Cost
Consulting support – ongoing maintenance $200,000
Average Annualized Upgrade Support
15 % of Implementation Costs every 4 years
$570,000
Ongoing PeopleSoft Maintenance $523,000
Ongoing Infrastructure Maintenance $15,000
Operating Budget: City Support Staff (beyond previous levels) $0
Operating Budget: Operating Costs $0
Total - Anticipated Annual Support Costs Increases $1,308,000
31
Annualized Project Costs and Benefits
Project Costs Phase I Phase II Total
Project Costs $22,599,000 $48,736,000 $71,335,000
Divided by Life of System 20 years
Annualized Project Costs $1,129,950 $2,436,800 $3,566,750
Annualized Support Costs Phase I Phase II Total
Annual Operating Costs $1,832,000 $1,308,000 $3,140,000
Benefits Phase I Phase II Total
Annual Benefit $1,372,000 $1,534,000 $2,906,000
32
Concluding Comments
Risk Avoidance vs. Return on Investment
Decision of “when” not “if”
Comparable External Project Costs
Internal Cost Factors for Phase II
Higher support for departmental participation
More Change Management
More Training
Increased Internal Controls Focus
33
Questions?