City of Bend. Project/issue relates to: Council Goals and Priorities Bend 2030 Vision Not Applicable

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1 City of Bend ISSUE SUMMARY SUBJECT: Authorize an agreement with Tyler Technologies, Inc. for the acquisition of Munis software and business process and implementation services for the Enterprise Resource Planning (ERP) Leading Effective Applications and Processes (LEAP) Project in the amount of 2,223, with additional annual costs for on-going software services starting at 224,303. MEETING DATE: February 18, 2015 STAFF MEMBERS: Rob DuValle, Justin Finestone, Randy James, Eric King, Paul Rheault, Kevin Riper, Sharon Wojda DEPARTMENT: LEAP (Leading Effective Applications and Processes) Executive Steering Team ACTION REQUIRED: Motion Public Hearing Date: Ordinance 1 st Reading Date Ordinance 2 nd Reading Date Resolution (roll call vote required) Information/Direction Consent Agenda (adopted by motion) ADVISORY BOARD/COMMISSION RECOMMENDATION: Approval Denial None Forwarded Not applicable Comments: STAFF RECOMMENDATION: Staff recommends the Council adopt the resolution authorizing an agreement with Tyler Technologies, Inc. for the purchase of Munis software and business process and implementation services in the amount of 2,223, with additional annual costs for ongoing software services starting at 224,303. RECOMMENDED LANGUAGE FOR MOTION: I move for a roll call vote to adopt the resolution authorizing an agreement with Tyler Technologies, Inc. for software and services for the ERP project in the amount of 2,223, with additional annual costs for on-going software services starting at 224,303 in substantially the form as presented to Council. Project/issue relates to: Council Goals and Priorities Bend 2030 Vision Not Applicable ISSUE / COUNCIL DECISION & DISCUSSION POINTS: The necessary budget adjustments for this contract are presented in a separate agenda item.

2 The vendor was selected through a formal procurement process in accordance with the City s Purchasing Code. BACKGROUND: This action is part of a City Council goal established in 2013 and renewed in 2014 to replace the City s 25 year old financial software. The new product will modernize the City s system providing integrated Enterprise Resource Planning (ERP) modules addressing financials, human resources, inventory, fleet and facilities and utility billing as well as addressing interfaces to remaining existing systems. This contract will acquire the Munis product and cover business process and implementation services. The vendor will assist in providing pertinent industry advice on best practices and product configuration. The implementation will be a combined effort of City, the consultant Plante Moran and Tyler Technologies staff and the duration of the project is expected to take approximately 36 months. The choice of this vendor is due to an extensive selection and due diligence process. It involved a Selection Team of 11 members representing all City departments (Community Development, Engineering Infrastructure & Planning, Finance, Fire, Human Resources, Information Technology, Police, Public Works) and took place from October 2013 to July Extensive product demonstrations, technical interviews and a mix of long term use and newly implementing reference cities were contacted. Selection Team staff conducted a thorough interview process to gauge product strength, ease of use, training and implementation lessons learned, to name but a few, as part of this process. The Selection Team was unanimous in its recommendation to the Executive Steering Team. The negotiations for the contract and statement of work were held from August 2014 until February of The Negotiations Team, consisting of the City s IT Manager, Purchasing Manager, Assistant City Manager for Internal Services, and Plante Moran Project manager, was vigilant in ensuring that the best interests of the City were kept in focus. The Tyler Technologies Munis product will be paired with Kronos, Inc. WorkForce Central and Telestaff products (also appearing on this agenda) for time and attendance. The complex scheduling needs of Police and Fire require a solution beyond the basic timekeeping offered through Munis. Implementing Munis and Kronos at the same time adds additional complexity to the project; however, the Negotiations Team included language in each statement of work to address implementation and integration issues by both vendors. This project will touch every department at the City. In many cases, additional staff backfills have been hired or are being planned based on preliminary implementation schedules. These staffing resources and their allocated and committed time to this project is essential to execute it in a timely manner. The implementation of an ERP product is not linear but happens concurrently with many modules. Balancing the concurrent implementation schedules between two vendors, as well confirming staff will focus on the project, will ensure the City meets the implementation timelines. Internal service departments will bear a major workload of this project; however, operational departments will also have significant roles in a variety of areas (time and attendance scheduling, budgeting, purchasing, and fleet, to name a few). The contract with Tyler is a significant portion of the total ERP LEAP project costs. This contract along with the Kronos contract for time and attendance and the amendment to Plante Moran s project management contract for implementation covers the 1 st four phases of the ERP LEAP project. There will be later phases of this project to select, implement and integrate Municipal

3 Court and Community Development software and additional hardware and staffing which will come at additional costs in the future. CURRENT YEAR BUDGET IMPACTS IDENTIFIED BY DEPARTMENT: Funding for the Tyler contract will be funded by prior year reserves in the Information Technology Fund as well as a line of credit that will be issued by Bank of the Cascades. The necessary budget adjustments are presented in a separate agenda item. Refer to the financial perspective section below for additional information on the financing terms and timelines for this project. The following table includes: Product & Services costs including a breakout of the product list price, discounts, modifications and services. License 10% Discount Net License Implementation Data Conversion Phase Phase Total Phase 1 Core Financials 582,050 (58,205) 523, ,650 52, ,695 Phase 2 HR/Payroll 69,750 (6,975) 62,775 53,550 18, ,125 Phase 3 Extended Financials 99,000 (9,900) 89,100 48,450 23, ,250 Phase 4 Utility Billing 84,200 (8,420) 75,780 33,150 23, ,330 Total 835,000 (83,500) 751, , ,100 1,165,400 Other Tyler Services: Business Process Consulting 388,500 Estimated Tyler Travel, Meals & Lodging Expenses 283,443 Module Setup Assistance 63,750 End User/Post Go Live Training (On site) 63,750 Change Management Consulting 60,000 Utility Billing Contract Modifications for Integrations 28,600 Other 45,150 3rd Party Hardware, Software & Services 25,507 Total License and Services s 2,124,100 Optional Services 69,000 (6,900) 62,100 36,975-99,075 Total w/ Optional Services 904,000 (90,400) 813, , ,100 2,223,175

4 The following table details maximum annual maintenance and support costs. Optional Support Services include Tyler s Munis Disaster Recovery Service and Operating System and Database Administration (OSDBA) Contract Services. These future software maintenance and support service fees are in addition to the contract amount recommended for approval. These annual costs have been factored into the 5-year forecast for the Internal Service Fund: Information Technology Program, from which they will be paid. Per industry standard, the fees were negotiated as a fixed percentage of the software product s list price. Negotiations with Tyler were extensive regarding the number of years for which annual maintenance costs would be capped at a fixed percentage increase. % Increase Cap Maintenance (Base) Maintenance (Optional Services) FINANCIAL PERSPECTIVE & RECOMMENDATION: Reviewed by: Sharon Wojda Date: 2/7/15 Support Services (Optional) Total Annual Year 1 0% Year 2 0% 150,883 13,420 60, ,303 Year 3 3% 155,409 13,823 61, ,032 Year 4 3% 160,072 14,237 63, ,963 Year 5 3% 164,874 14,664 65, ,102 Year 6 5% 173,118 15,398 68, ,357 Year 7 5% 181,774 16,167 72, ,225 Year 8 5% 190,862 16,976 75, ,736 Year 9 5% 200,405 17,825 79, ,923 Year 10 5% 210,426 18,716 83, ,819 Over the last several years reserves have been built in the Information Technology (IT) Division of the Internal Service Fund in anticipation of the ERP LEAP project. Project costs not funded by reserves will be funded through a line of credit with Bank of the Cascades that will be converted to long term debt at the end of 3 years. A resolution authorizing the issuance of debt for this project is presented in a separate agenda item. The resolution on the 2/18/15 agenda will authorize the City to issue debt for the ERP LEAP project after a 60 day public comment period. At the end of the public comment period, the City will enter in to a loan agreement with Bank of the Cascades that allows the City to draw down funds over the next 3 years based on the project s payment schedule, with the outstanding balance converting to long term debt in Annual debt service payments will be paid out of the IT Division of the Internal Service Fund, which will be funded by interfund transfers from all operating departments. LEGAL REVIEW & RECOMMENDATION: Reviewed by: Gary Firestone Date: February 9, 2015 COMMUNITY INVOLVEMENT PROCESS: N/A POTENTIAL IMPACTS TO THE BUSINESS COMMUNITY: Updating the City s ERP is essential in the City s efforts to continue to provide excellent customer services to businesses. Today s business owners expect to be able to perform most

5 of their interactions with the City while sitting at their office desk. The product will offer citizen as well as vendor self-service portals. It will also offer enhanced analytics and reporting to help City staff in providing the community with the information being sought. PROS & CONS: Pros: Replaces a vital but outdated business tool Provides opportunity to review business practices and implement industry best practices and efficiencies Cons: Implementation will take a significant amount of time and resources ATTACHMENTS: Notice of Intent to Award Proposed Contract (includes Statement of Work) Additional LEAP Project Financial Summary (information prepared by Finance Dept.)