Customer Information System (CIS) Replacement Initiative Update Staff Report FCS Highlights. September 9, 2013

Transcription

1 Customer Information System (CIS) Replacement Initiative Update Staff Report FCS Highlights September 9, 2013

2 Background Launched in 2010 following assessment of CIS and recommendation to pursue SAP tax and utility solutions First report to Committee in Mar 2012 Confirmed ability of SAP CR&B to meet City requirements Implementation cost higher than initial estimate Second report to Committee in Nov 2012 Established detailed implementation cost estimate of $22.8M through SAP CR&B Blueprint 2

3 Council Resolution Nov That final approval to proceed with the acquisition and implementation of an SAP Customer Relationship & Billing (CR&B) solution to replace the Customer Information System (CIS) be referred to the 2014 budget process; and further, That staff be directed to undertake the following additional due diligence prior to Council's consideration of the 2014 budget: a) continue to monitor the City of Toronto s initiative to acquire and implement SAP CR&B to replace its property tax and utility billing systems; b) develop funding options for a future SAP CR&B implementation; c) evaluate in further detail the option to re-architect CIS as identified in the 2010 CIS Assessment; and, d) investigate the implications and feasibility of outsourcing the City s utility billing functions, and/or other means to separate the City s utility billing function from the property tax billing system. 3

4 Outsourcing (EPCOR) 12-month project, 3 full-time EPCOR resources One-time systems setup cost of $2.7M Monthly operating cost of $5.02 per utility service per bill $18.1M annually Business functions not provided Meter reading Rental water heater administration Stormwater category code administration Stormwater credit approval 4

5 Re-Architecting CIS Significant effort required 4-year project, resources depending on project phase $12.4M total estimate including $400K infrastructure cost Significant project risks Availability of senior resources with industry knowledge and PowerBuilder experience Limited in-house expertise High probability of rework due to new or changes in business requirements Fatigue within project team and organization 5

6 Re-Architecting CIS (cont.) Weaknesses of custom applications continue to exist Slow adoption of new technologies Slow delivery of new functionality Lack of broad user and vendor community support Low probability of adopting best practices Likely to need replacement in 10 years Not aligned with City s Corporate Business Technology Strategy and industry trends to buy rather than build ERP systems 6

7 City of Toronto SAP CR&B Initiative Update Latest estimate in $20-30M range $15M initial estimate to replace existing tax and utility systems Systems integrator engagement for Total Cost of Ownership (TCO) assessment Similar to City of Kitchener s CR&B Blueprint Request for Proposal (RFP) approach under review Decision by end of

8 SAP CR&B Revised Estimates Reduction of $2.9M to $19.9M through: Use of Sparta-specific accelerators Use of SAP Business Intelligence (BI) Full-time availability of core project team 3.82% when expressed as percentage of annual revenue Costs Revenue % London Hydro $10M $337M 2.97% Hydro One (in progress) $180M $5,124M 3.51% City of Kitchener $19.9M $521M 3.82% EnWin (after blueprint) $16M $400M 4.00% Enbridge $120M $2,900M 4.14% 8

9 SAP CR&B Cost Allocation $19.9M implementation project costs allocated to utility enterprises and property tax using same funding split as CIS Funding Component Funding Split Allocated Amount Gas 53% 10,553,711 Water 11% 2,190,393 Wastewater 11% 2,190,393 Stormwater 11% 2,190,393 Tax Base 14% 2,787,773 Total 100% 19,912,663 9

10 SAP CR&B Project Funding Funded through existing CIS balances and projected capital Reserve Fund balances from utility Enterprises Guiding principles for funding model Contributions from each enterprise limited to funding split allocation identified Adherence to minimum balance requirements of Reserve funds Property Tax share funded through existing capital balances ensuring no impact to existing tax base 10

11 SAP CR&B Project Funding Funding Component Funding Available Allocated Amount Component Shortfall Gas 12,256,514 10,553,711 - Wastewater 220,000 2,190,393 (1,970,393) Stormwater 220,000 2,190,393 (1,970,393) Water 2,090,529 2,190,393 (99,864) Tax Base 2,788,000 2,787,773 - Total 17,575,043 19,912,663 (4,040,650) Shortfall of approximately $4.0M (20%) primarily in Wastewater and Stormwater Utilities 11

12 SAP CR&B Funding - Next Steps Review of alternatives to address shortfall Review of existing capital balance closeouts Adjustments to other capital projects Potential utility rate adjustments Budgeting for shortfall in reserve funds in future years when funding possibly available Report back to Council as part of 2014 budget process 12

13 Conclusion Outsourcing not cost-effective, would exceed implementation cost of SAP CR&B within first year Re-architecting CIS less costly that SAP CR&B but significant project risks, not aligned with City s buy vs. build strategy, replacement likely in 10 years SAP CR&B better long-term option, cost as % of revenue within industry range of % Options to address funding shortfall reviewed during 2014 budget process 13

14 Questions? 14