279

MEMORANDUM OFFICE OF THE

AUDITOR-CONTROLLER COUNTY OF PLACER

TO: Board of Supervisors DATE: February 21 , 2017

FROM: Andrew C. Sisk, Auditor-Controller

SUBJECT: Enterprise Resource Planning Project - Workday, Inc. and Sierra-Cedar Inc.

ACTION REQUESTED Approve the following recommendations regarding the acquisition of subscription licensing, implementation services, proposed funding approach, and project staffing plan for the Enterprise Resource Planning Replacement Project:

1. Approve the award of a Master Services Agreement with Workday, Inc. of Pleasanton, CA for subscription licensing, training, and related services in the not to exceed amount of $4,719,282 for the term of March 1, 2017 to February 28, 2022 funded by the Countywide Systems Fund.

2. Approve the award of a Master Services Agreement with Sierra-Cedar, Inc. of Alpharetta, GA for professional services to support the implementation of the new Enterprise Resource Planning system in the not to exceed amount of $4,950,204 for the term of March 1, 2017 to February 28, 2019 funded by the Countywide Systems Fund.

3. Approve the proposed Enterprise Resource Planning Project Funding Plan. 4. Approve a Budget Revision in the amount of $8,263,554 from the Infrastructure

Reserve Fund ($5, 157,801 ), the Automation Reserve Fund ($622,037), and the Capital Projects Fund ($2,483, 716) .

5. Approve the addition of the appropriate components to the Master Fixed Asset List. 6. Approve the proposed Enterprise Resource Planning Project Staffing Plan. 7. Authorize the Auditor-Controller to execute change orders for the project up to a

twelve percent contingency amount of $1,722,833. 8. Authorize the Auditor-Controller to sign all required documents, subject to the review

and approval of County Counsel and Risk Management, and take the appropriate action necessary to fully implement the project.

BACKGROUND The Auditor-Controller's Office and the Human Resource Department are requesting the acquisition of an Enterprise Resource Planning (ERP) system to replace the County's legacy financial system and current human resource/payroll system.

The Auditor-Controller's Office oversees the financial operations of Placer County. The Auditor­Controller's Office utilizes the Performance Accounting System (PAS) to provide accounting, budgeting, and financial services to County departments, school districts, special districts and cities as defined under Government Code.

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The PAS system was initially implemented in 1999 as an enterprise solution accessible by all County departments for submitting financial transactions, making inquiries and running reports in a real-time environment. The existing system is at the end of its useful life and does not support new hardware or software enhancements. As a result, support costs for maintaining the PAS legacy system have increased annually. In addition, new business functionalities and reporting capabilities necessary to comply with federal and state regulatory or statutory requirements are being performed manually with non-standardized business tools.

The Human Resources Department provides high quality human resource services to attract, develop, motivate, and retain a skilled workforce. The Human Resources Department utilizes Oracle's PeopleSoft Payroll & Personnel Management System (ACORN), an ERP System class of software that is comprised of functions and capabilities including, but not limited to: Human Resources, Time & Labor, Payroll , Benefits Administration, and Employee Performance Management.

The ACORN system serves as the system of record for human resources, benefits, time and labor, payroll-related activity for the County. It is a valuable asset that supports and benefits all County departments and eleven special districts by providing timely and accurate data for use in fiscal planning and effective benefit program administration. It also provides employees with self-service access to timesheets, payroll information, and benefit enrollment.

The ACORN system was implemented in 2004 and has proven to be complex, expensive to maintain and enhance. Because of this, implementing new functionalities has been limited and as a result, the system is not serving the County's needs.

In November 2011, your Board adopted the County's Information Technology Strategic Plan. Both the PAS and ACORN systems were identified as enterprise initiatives and direction was provided to develop a Feasibility Study Report to determine the business requirements and costs for a replacement of the PAS system and to document enhancements to the ACORN system for approval and prioritization by the Information Technology Executive Steering Committee.

In 2013, twenty-six requirements with an estimated cost in excess of $3 million were identified as desired features and functionalities to enhance the County's ACORN System's Human Resource Data Tracking and Reporting functionality. Of the twenty-six requirements , the top six initiatives with an estimated cost of $2 million were prioritized by the ACORN Executive Steering Committee as follows:

1 . Employee Self Service 2. Driver's License Data Management 3. Emergency Contact Information Data Management 4. Centralized Leave of Absence Management 5. Centralized Employee Educational Level Database 6. Employee Professional Standards Database including licenses, certifications

registrations and continuing education requirements to maintain professional standards

In 2016, a business case evaluating the feasibility of replacing the County's PAS financial system with an ERP system was completed and presented to the ERP Executive Sponsor Team by Leckey Consulting, Inc. The ERP Executive Sponsor Team is comprised of executive members from the County Executive Office, Auditor-Controller's Office, Human Resources and the Administrative Services Departments. The business case identified the following four alternative solutions for the County's consideration :

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1. Remaining on the current legacy systems 2. Replace the PAS financial system only 3. Replace the PAS financial and ACORN human resources/payroll systems 4. Replace the PAS financial system and outsource the ACORN human resource/payroll

system

Subsequently, the four alternatives were reviewed and evaluated by members of the Auditor­Controller's Office, County Executive Office, Human Resources Department, Administrative Services and the County's Information Technology Executive Steering Committee to identify the overall cost, benefits, and return on investment of the proposed alternatives, which best met the County's current and future needs.

At the conclusion of their review, it was determined that a single ERP solution that has the ability to support the functionality identified below would best meet the County's Finance, Human Resources and Department needs:

A. Enhance internal communications through the use of information technology and improved business processes.

B. Support continual innovation to encourage implementation of best business practices (i.e. encourage streamlining and automation of standard business transactions, enhanced processing and on-line capabilities, etc.).

C. Obtain enhanced features and functionality to support increased automation and operational efficiencies (i.e. workflow, self-service, document imaging , personnel actions, recruitments , accounts receivable , cashiering , refunds, grant management, etc.).

D. Develop centralized, integrated budgeting and planning process with automated workflow and scenario analysis to support "what-if' budget analysis.

E. Obtain flexible closing architecture (ability to have multiple periods open at the same time), ability to select encumbrance to be rolled forward , ideally operating on a cash basis for easier posting .

F. Encourage the implementation of standard functionality and best business practices embedded in the solution to reduce long-term maintenance impacts, and avoid or minimize customizations.

G. Improve quality and accessibility of information through standard reports, ad hoc tools and the ability to create new reports . Information access must be perceived by the County's average user as intuitive and efficient.

H. Reduce redundant data entry, storage, and paper processing .

I. Ensure that the ERP platform remains viable and is supported by an achievable product roadmap

J. Utilize technology investment to reduce cost, waste and duplication while increasing productivity, workflow efficiency overall and return on investment.

K. Promote a system that provides for self-service to the general public, other agencies, County departments, and County employees.

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The proposed ERP system should provide integrated functional ity, meaning that the individual components of the system utilize a shared repository of information and processes to ensure all users have access to the same information, redundant data entry is not required , reduces departmental reliance on stand-alone systems, and that each of the components has a similar "look and feel".

PROCUREMENT PROCESS The Auditor-Controller's Office enlisted the assistance of the Procurement Division to develop a Request for Proposal (RFP) for the selection and procurement of a new ERP system. The RFP was issued in October of 2016 and notices were sent out to approximately 2,000 firms and individuals advising them of the RFP. More than two-hundred firms reviewed the requirements and the Procurement Division received eight responsive proposals.

An evaluation panel comprised of representatives from County Executive Office, Administrative Services, Auditor-Controller's Office, Department of Public Works and Facilities, Human Resources, and the Community Development Resource Agency reviewed the responses in accordance with the evaluation criteria contained within the RFP.

Based on the evaluation of the proposals received , the panel determined that four firms best met the County's requirements and were recommended for interviews. These firms included CherryRoad Technologies, Inc. of Sacramento, CA; Workday Inc. of Pleasanton, CA; CGI Technology and Solutions Inc., of Sacramento, CA; and Quintel of Greenwood Village, CO.

Following an extensive interview process, the top two firms were requested to return for a final interview with the evaluation panel to answer additional clarifying questions. At the conclusion of the final interviews, Workday, Inc. and their integrator Sierra-Cedar's proposed ERP solution was identified as the application that best met the County's requirements.

RETURN ON INVESTMENT The selection of Workday's Cloud ERP solution will enable Placer County to achieve measurable return on investment outcomes by migrating from the current on-premise legacy ERP systems to a software as a service (SaaS) model. Placer County anticipates achieving a lower total cost of ownership including the reduction of costs attributable to on-going support, acquisition of hardware, and software maintenance agreements no longer required with a Saas solution.

The proposed Cloud ERP solution meets current County Information Technology standards, ensures all County data resides in the continental United States, and meets or exceeds government information security requirements.

In addition, soft costs would be realized through improved business processes, workflow automation, the elimination of duplicate data entry into multiple systems, self-service functionalities , advanced reporting capabilities, and mobile features and functionalities.

STAFFING METHODOLOGY Implementation Team: An ERP Replacement Project team comprised of subject matter experts from various County Departments has been identified and is consistent with best practices and prior implementation strategies for the deployment of enterprise class solutions. The ERP Replacement Project team is responsible for meeting the County's business needs, planning and executing tasks including data migration and integration with other systems, and ensuring deliverables are in accordance with the project's goals and objectives. The staffing plan includes

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17 dedicated positions that will support the implementation of the project over an estimated 18 to 30 month period.

The staffing plan includes the ability to backfill positions during the duration of the project to ensure the continuity of operations within Departments that are allocating project resources. The backfill strategy includes part-time, extra-help, work-out-of-class assignments, and managed services agreements.

Post-Implementation: In accordance with industry best practices, a post-implementation ERP system support model has been identified as a requirement to provide sufficient staff to maintain and support the newly implemented system. The post-implementation support model provides the organizational structure to transition from an existing technically oriented and infrastructure centric support environment to a functional support model with an emphasis on business process improvements and application support services.

For example, in a hosted environment, technical support and upgrades are performed by the application manufacturer and functional responsibilities including system configurations, business process improvements, and testing are defined as customer responsibilities. Under this new support model, it is anticipated that fewer technical allocations would be required as part of the post-implementation support model based on the shift of technical support responsibilities.

Therefore in order to proceed with the award of two Master Service Agreements for the acquisition and implementation of a new ERP system, your Board's approval of the recommended actions being requested above is required.

FISCAL IMPACT Funding for the acquisition and implementation services of the Enterprise Resource Planning Project in the amount of $16,079,778 is included in the Infrastructure Reserve Fund ($5, 157,801 ), Automation Reserve Fund ($622,037), Capital Projects Fund ($5,865,401 ), FY2016-17 Countywide Systems Fund ($596,577), and Countywide System charges to departments in subsequent fiscal years in the amount of $3,837,962 as outlined in the attached ERP System Project Funding Plan.

ATTACHMENT($)

Budget Revision Master Fixed Asset List Attachment A - ERP System Project Funding Plan Attachment B - ERP System Maintenance Plan Attachment C - ERP System Replacement Project Team Attachment D - ERP System Post-Implementation Support Model

cc: David Boesch, County Executive Officer Lori Walsh, Director of Human Resources Jerry Gamez, Director of Administrative Services

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FOR CASH TRANSFERS & RESERVE CANCELLATIONS PLEASE PROVIDE THE FOLLOWING Fund/subFund - OCA - PCA - G/L - Sub G/L

POST DATE· -DEPT DOC TOTAL

PLACER COUNTY I PAS DOCUMENT NO. I BUDGET REVISION

NO. TYPE Total S Amount LINES I ,/ -] Cash Transfer Required Fund: _3...;6...;5 ___ _

f I Establish Reserve Required II ,/ I Reserve Cancellation Required GL: ...c2 __ 4.;;c2.;;..0 __ _

10 BR $ 22,903,523.00 1 SUB Fund: 806

GL: SUB GL: SUB GL: 556000 ------

ESTIMATED REVENUE ADJUSTMENT APPROPRIATION ADJUSTMENT DEPT

T/C Rev Fund Sub

OCA DEPT Sub PROJ. PROJ. DTL AMOUNT NO. Fund

PCA OBJ 3 PROJ. PROJ. DTL AMOUNT NO.

T/C Rev Fund Fund

OCA PCA OBJ 3

10 6 I 250 104 NEWFIN NEWFN 8779 8,135,400.00 10 14 250 104 NEWFIN NEWFN 4461 4 ,365,225.00 ~

10 6 L 250 104 NEWFIN NEWFN 8780 128,154.00 10 14 250 104 NEWFIN NEWFN 2555 4,494,906.00 -L 10 14 100 999992 99992 3780 5,651 ,684.00

...__ I

L 10 14 110 991102 91102 3780 \

3,903.00 -D D

\

11 14 110 992171 92171 3780 124,251 .00

[ D D D - ..----

- ..----

- ~

D D TOTAL ( $ 8,263,554.~ TOTAL $ 14,639,969.00

REASON FOR REVISION: I Budget revision for the acquisition of an Enterprise Resource Planning (ERP) system to replace the County's legacy financial system and current human resource/payroll system. The funding will be used for expenditures to aquire the new ERP software and licenses from Workday, Inc. (not to exceed $4,719,282) and for expenditures for professional services to support the implementation of the new Enterprise Resource Planning system provided by Sierra-Cedar, Inc. (not to exceed $4,950,204 ). Funding will be provided by the following sources: $493,883 (GF Automation Reserves; GL Acct# 2420 681000), $128, 154 (PS Automation Reserves; GL Acct# 2420 681000), GF cash transfer from the GF Capital Trust Fund in the amount of $2,483,716, $596,577 (GF Capital Asset Reserves; GL Acct 2420 546000), and $5, 157,801 (GF Infrastructure Reserves; GL 2420 556000).

Department Head: r /'""W\IM.I v,..r ~ , · - f'"'.t ~

Auditor: v', p • - - - - ~ A

County Executive Office: X .. ":"Jc!:'.'.:_ .. ;;:,'._ 'r!u'::!'.:.-::-: n-:LK:J.g:<1< 'P'' <iC/ . '/ t I

Approved by Board of Supervisors: -,---,.,..------------------­c1erk of the Boord of Supervisors Office

Board Date: 02/21/17

Page:_

Technical Revision : D of

Rev I 1 / 16/2004

285

ADD:

QTY

1

MASTER FIXED ASSET LIST

DESCRIPTION

Enterprise Resource Planning System

Total Fixed Asset

TOTAL COST

$4,365,255

$4,365,255

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COUNTY ~ OF .... ~ .,Placer· ------

ERP System Project Cost:

Workday - Hosting/Licensing (5 year)

Workday - Training/Delivery Assurance

Sierra Cedar - Implementation Services

Leckey Consulting-- Project Management Services

County Project Team - Staffing Resources

Project Office Space

NeuBrain Board Integration

Contingency (12%)

Project Total

$ $ $ $ $ $ $ $ $

Attachment A

Enterprise Resource Planning (ERP) System Project Funding Plan

4,365,255

354,027

4,950,204

1,278,000

2,950,209

259,250 200,000

1,722,833

16,079,778

ERP Project Funding Sources:

Infrastructure Reserve Fund

Automation Reserve Fund

Capital Fund

Countywide System Charges to Departments (FY16/17)

Countywide System Charges to Departments (FYl 7 /18)

Departmenta l Charges (FY18/19 thru FY20/21)

Funding Total

Current Departmental Charges (Annually):

Performance Accounting System (PAS)

HR/Payroll (ACORN)

Total

$ (5,157,801)

$ (622,037)

$ (5,865,401)

$ (596,577) $ (1,230,012)

$ (2,607,950) $ (16,079,778)

$ 570,834.00

$ 1,852,408.00

$ 2,423,242.00

-------------------------------------------------------------------------------------Proposed Funding Schematic

ERP System Project Costs 5-Year

FY 2016-17 FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 Tota l

Expenses:

Five Year Funding Plan $ 16,079,778 $ 16,079,778

Workday - Hosting/Licensing (5 year) $ 436,528 $ 873,051 $ 1,018,560 $ 1,018,558 $ 1,018,558 $ 4,365,255

Workday - Training/Quality Assurance $ 301,693 $ 26,167 $ 26,167 $ 354,027

Sierra Cedar - Implementation Services $ 816,000 $ 2,448,000 $ 1,686,204 $ 4,950,204

Leckey Consulting-- Project Management Services $ 255,600 $ 511,200 $ 511,200 $ 1,278,000

County Project Team - Staffing Resources $ 525,842 $ 1,730,001 $ 694,366 $ 2,950,209

Project Office Space $ 182,888 $ 38,181 $ 38,181 $ 259,250

Budget Software Updates $ 100,000 $ 100,000 $ 200,000

Contingency (12%) $ 250,000 $ 879,986 $ 592,847 $ 1,722,833

Sub Total $ 2,868,551 $ 6,606,586 $ 4,567,525 $ 1,018,558 $ _1,Q18,558_ t __ 16,079,778

Funding:

Infrastructure Reserve Fund $ (1,649,937) $ (3,507,864) $ $ (5,157,801)

Automation Reserve Fund $ (622,037) $ (622,037)

Capital Projects Fund $ (2,483, 716) $ (3,381,685) $ (5,865,401)

Countywide System Charges to Departments (FY16/17) $ (596,577) $ (596,577)

Countywide System Charges to Departments $ (615,006) $ (615,006) $ (1,230,012)

Departmental Charges via Countywide Systems Fund $ (570,834) $ (1,018,558) $ (1,018,558) $ (2,607,950)

Toto/: $ $ $ $ $ $

287

COUNTY ~ OF ~ ~

~ Placer· -----Attachment B

Enterprise Resource Planning (ERP) System Maintenance Plan

-------------------------------------------------------------------------------------Proposed Funding Schematic ERP System Maintenance Costs 5-Year

FY2016·17 FY 2017-18 FY 2018-19 FY 2019·20 FY 2020·21 Total Expenses:

ERP System Support Team · Six FTE's $ $ $ $ 895,000 $ 895,000 $ 1,790,000

ERP System Support Team · Training $ $ $ $ 26,167 $ 26,167 $ 52,334

Office Space $ $ $ $ 38,181 $ 38,181 $ 76,362

Post Production Support $ $ $ $ 50,000 $ 50,000 $ 100,000

$ $ $ $ $ $ $ $ $ $ $ $

Sub Total $ $ $ $ 1,009,348 $ 1,009,348 . $ 2,018,696

Funding:

Departmental Charges $ $ $ $ (1,404,684) $ (1,404,684) $ (2,809,368)

$ $ $ $ $ $ $ $ $ $ $ $

" Sub Total: $ $ $ $ {395,336} $ (395,336}_}_ ... (72_(),§.!_ll

288

COUNTY ~ OF ~ --..........

~ Placer· -----County ERP System Project Team

Leckey Consu lting

Auditor-Controller

County Executive Office

Human Resources Department

Administrative Services Department

Attachment C

Enterprise Resource Planning (ERP) System Project Project Team

Position

Project Manager

Managing Accountant Aud itor

Payroll Manager

Sen ior Accountant Auditor

Accountant Auditor 1/11

Accounting Technician

Information Technology Analyst 1/11

Business Process Analyst

Budget Analyst

Senior Personnel Analyst

Senior Information Technology Analyst

Buyer 1/11

Senior Information Technology Analyst Information Technology Technician

FTE

Consultant

1

2 2 1

2

1

1

1

2 1

17

Backfill Re..9.uirement

N/A

0 0 3 2 1

0 1

1

1

0 0

11

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COUNTY ~ OF .... --..._,__

~ Placer· -------Attachment D

Enterprise Resource Planning (ERP) System Post-Implementation Support Model

Proposed

-------------------------------------------------------------------------------------Performance Accounting System (PAS) Support Model Current Proposed

Technical Functional Technical Functional Salary County Deportment: FTE's FTE's FTE's FTE's Information

Information Technology 1 0 0 0 $ (106,291) Auditor-Contoller's Office 1 0 0 0 $ (145,000)

Sub Tot al 2 0 0 0 $ (251,291)

HCM/Payroll (ACORN) Support Model Current Proposed

Technical Functional Technical Functional Salary County Deportment: FTE's FTE's FTE's FTE's Information Information Technology 5 0 0 0 $ (895,773) Auditor-Contoller's Office 1 0 0 0 $ (145,000) Human Resource 0 2 0 0 $ (290,000)

Sub Total 6 2 0 0 $ (1,330,773)

Workday ERP System Post-Implementation Support Model Current Proposed

Technical Functional Technical Functional Salary FT E's FTE's FTE's FTE's Information

Application Support Team 0 0 2 4 $ 895,000

Sub Total 0 0 2 4 $ 895,000

290