Managed Services Contract for Finance and Procurement (FMS) Enterprise Systems.

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1 AGENDA ITEM:XX 28 th March 2017 The report is not Exempt Teitl yr Adroddiad/Title of Report: Managed Services Contract for Finance and Procurement (FMS) Enterprise Systems. ARWEINYDD: LEAD: AWDUR: AUTHOR: SWYDDOG ADRODD: REPORTING OFFICER: MANYLION CYSWLLT: CONTACT DETAILS: Andrew Naylor, Assistant DOF Aneurin Bevan uhb (Chair of Contract Re-tender Group) Bethan Jenkins Procurement Lead Said Shadi (Service Manager)/ Andy Butler (Director of Finance and Corporate Services) Pwrpas yr Adroddiad: Purpose of the Report: Brief description of purpose of the report: This report focuses on the renewal of an established All Wales contract for the provision of Managed Services for Oracle E-Business Suite (Finance, Procurement and Warehouse Management modules), QlikView, BI reporting and V1 products (output documents, mail, bacs, and OCR scanning), collectively referred to as FMS Enterprise Systems. The solutions are hosted by NHS Wales with the Managed Service provider undertaking remote monitoring and support. NHS Wales have implemented a Common Operating Model ensuring standardisation of interfaces and system settings across the product suite. The approach has been agreed with appropriate NHS Governance Groups to include Directors of Finance (DOF s) as well as the Oracle Strategy & Development Board (STRAD), on behalf of all NHS Heath Boards, Trusts and hosted organisations. Page 1 of 8

2 Ministerial approval has been sought in respect of commencing a contract renewal process and this was ratified on 22 February Llywodraethu/Governance Amcanion: Objectives: Explain how the contract contributes to achieving NWSSP s strategic objectives: The existing All Wales Framework for FMS Enterprise Systems has delivered a number of benefits which are detailed fully in the Background section of this report, for example: The framework provides an integrated financial system which has eliminated multiple legacy systems for General Ledger, Accounts Payable, Accounts Receivables and the Warehouse. This approach has provided a One Wales common platform for reporting, business intelligence, user interface and user support. A common multi org system has allowed the development of better All Wales finance, procurement intelligence and buying. A robust governance process has been developed to manage the current FMS contract to include the banker s role. One of the benefits of the existing contract is that there is no direct contractual or invoicing arrangement between the supplier and the Health Boards and Trusts and the banker s role is critical to achieving this outcome. Such an approach also meets the NWSSP objective of reducing bureaucracy & duplication as well as improving financial compliance and of strengthening partnership working. In addition, to ensure greater value for money from the future service, STRAD has recommended that the BACS bureau service be brought in-house and managed by the NWSSP Central Team ebusiness Services, if this proves cost effective. Bidders will be asked to tender a price for this service in order to provide a benchmark. This will enable the NHS to make a decision as to whether an in-house service is more cost effective. Early market engagement has indicated that this is likely to be the case. Tystiolaeth: Supporting evidence: Outline any supporting documentation, legislation, guidance etc (add web links where possible) See section entitled Cefndir/Background Ymgynghoriad/Consultation : Page 2 of 8

3 Who has been consulted on the details of the report The FMS Strategy and Development Group (STRAD) is chaired by the NWSSP Director of Finance and Corporate Services and were appointed as the main decision making Group with strategic and affordability decisions referred to Directors of Finance. Any decision in respect of the procurement strategy or contractual relationships and responsibilities have been approved and recommended by STRAD & DOFs. In addition STRAD have established a Contract Re-tender Group consisting of senior stakeholders who support a recommendation for NWSSP to undertake a banking role. In respect of the contract renewal, a briefing paper has been submitted to STRAD and also to Welsh Government and approval has been received. Adduned y Pwyllgor/Committee Resolution (insert ): DERBYN/ APPROVE ARNODI/ ENDORSE TRAFOD/ DISCUSS NODI/ NOTE Argymhelliad/ Recommendation Outline the recommendation of the report ABM UHB currently undertake the responsibility for administrating this contract. Their primary role is to process invoices on behalf of Suppliers (Managed Service provider and software vendors) They also facilitate the recharging of costs to each of the Health Boards and Trusts on a quarterly basis as well as prepare a service balance sheet; manage the development fund and provide cash management arrangements. As previously indicated this role is also likely to include the BACS bureau services. Currently, Central Team ebusiness Services support ABM UHB with the management of the financial registers, change control registers and maintaining the period payments register for contract payments. This support will also apply to the BACS bureau services should this become an in-house service. ABM UHB will continue to provide this service until 30 th May 2018 however dual responsibility will be required from 1 st November 2017 whereby NWSSP will need to manage any invoices raised during the contract transition phase and from thereafter for the term of the new contract. (Annex 1 sets out the proposed contractual relationships and responsibilities). Crynodeb Dadansoddiad Effaith: Summary Impact Analysis: Page 3 of 8

4 Cydraddoldeb ac amrywiaeth: Equality and diversity: Cyfreithiol: Legal: Iechyd Poblogaeth: Population Health: Ansawdd, Diogelwch a Profiad y Claf: Quality, Safety & Patient Experience: Ariannol: Financial: A number of questions have been included in the Pre- Qualification Questionnaire on Equality & Diversity to ensure the new Supplier is compliant with policy and understands their responsibility. This has also been included in the Terms & Conditions of the contract. This procurement will be advertised in the Official Journal of the European Union as a Restricted tender procedure. The tender process will be undertaken, principally, through NWSSP Procurement Services & Central Team ebusiness Services, supported by the Contract Re-tender Group. Advice will be provided by NWSSP Legal & Risk Services and the Crown Commercial Services Model Contract will be utilised as a template. N/A N/A Funding will be from the existing recharge arrangements with Health Boards and Trusts. No separate funding is being sought. Risg a Aswiriant: Risk and Assurance: Safonnau Iechyd a Gofal: Health & Care Standards: Gweithlu: Workforce: Deddf Rhyddid Gwybodaeth/ Freedom of Information There have been no risks recorded or raised by AMB uhb during the last 8 years in respect of the administrative role. N/A N/A Open or closed (i.e. is the information exempt) Assess if the information can be disclosed into the public domain, if not it will need to be presented as a part 2 agenda item. This information is Open TEITL YR ADRODDIAD/TITLE OF REPORT Managed Services Contract for Finance and Procurement (FMS) Enterprise Systems and its impact on NWSSP Page 4 of 8

5 1. CEFNDIR/BACKGROUND Add a brief background or introduction for the report here. The current contract with Version 1 was signed by Abertawe Bro Morgannwg Trust (ABM) as known in 2008 on behalf of the ten Health Boards and Trusts in Wales (Consortium Members). At the time ABM hosted Welsh Health Supplies who were the contracting entity. All Members signed an enabling agreement to facilitate the award of this contract. The Consortium also agreed the financial recharges developed through the Central Team ebusiness Services (CTeS) who were established to work with NHS finance & procurement communities and Suppliers to deliver, manage and support strategic corporate services, monitor the contract and also manage the delivery of an agreed programme of transformational changes for the corporate benefit of all members. In addition to the Version 1 contract, ABM also managed the contracts for Oracle licences from McKesson on behalf of the Consortium. This also included the Enterprise Wide Licence Agreement (EWA) for Oracle E-Business Suite which ABM already held on behalf of NHS Wales. The Consortium also agreed to host the Oracle FMS system through Cardiff and Vale University Health Board IT Data Centres. Throughout the contract, a partnership approach to enable the achievement of the Consortium strategy has been emphasised and this has delivered a number of benefits as follows: An integrated financial system which has eliminated multiple legacy systems for General Ledger, Accounts Payable, Accounts Receivables and the Warehouse. This approach has provided a One Wales common platform for reporting, business intelligence, user interface and user support. An electronic procurement system has been established allowing an iprocurement system with 10,000 users across Wales requisitioning electronically from an e catalogue of products. A common multi org system has allowed the development of better All Wales finance, procurement intelligence and buying. Common data coding structures also assists better procurement through better information. Opportunities to realise economy of scale benefits and take forward a modernisation agenda through greater process and system standardisation In addition a number of additional strategic initiatives have been progressed to deliver corporate benefits for all members such as the delivery of a Common Operating Model (COM) initially focused on aligning system settings and configurations across all members. This has reduced the number of variances in interfaces built to third party systems, ensuring wherever possible the same interface can be reused by any Consortium member. Page 5 of 8

6 Since the original Oracle ebusiness Suite implementation, the Consortium s use of enabling technologies has continued to evolve and is no longer limited to the Oracle ebusiness platform. To date the core system also comprises of a large national QlikView Business Intelligence (BI)/Reporting platform and the OCR intelligence document scanning service for the processing of paper based invoices and electronic processing and storing of document images. Separately, there has been an increase in the number of ancillary services the Oracle platform now interfaces with, for instance to Basware/Procserve for etrading and to Omnicel for electronic cabinets. The present FMS service landscape and support arrangement for the business therefore is more complex and comprises of a number of heterogeneous technology solutions working seamlessly together. Oracle ebusiness Suite is now viewed primarily as a transaction system, with BI/reporting now undertaken in separate solutions. In turn this has resulted in the use of the term FMS enterprise services being used to capture the range of solutions that form part of the services being delivered to the business. In addition to the technology landscape changes, the FMS service has evolved to support two business models: shared system (for Health Boards and Trusts) and shared services (for NHS Wales Shared Services Partnership and the Procure to Pay process cycle). As a result, any technology platform, solution design and support arrangements have needed to remain agile in order to cater for and support the needs of the two business models. A robust governance process was developed to manage the current FMS contract to include the following: The FMS Strategy and Development Group (STRAD) were appointed as the main decision making group with strategic and affordability decisions referred to Directors of Finance. ABM has administrated the contract with a primary role of processing invoices on behalf of Suppliers (managed service provider and software vendors), They also facilitated the recharging of costs to each of the health boards and trusts on a quarterly basis; they prepared the service balance sheet; managed the development fund and provided cash management arrangements. It is important to note that under the current arrangements there are no direct contractual or invoicing arrangements between the supplier and the health boards and trusts. In the present arrangements, the BACS service is managed by the Supplier. This Contract will be awarded on 1 st November 2017 and will include a transition phase for a hardware refresh which must be completed to allow the new Managed Services contract to commence on 1 st April 2018 The contract term will be 7 years with options to extend for up to three years ( ). The service will also require the provision of new or updated hardware at agreed intervals as defined in the contract. Page 6 of 8

7 Maximum Expected Total Value of Contract excluding and including VAT (if contract renewal, please provide justification of difference in value from previous contract). 6,500,000 for ten year term excluding VAT 7,300,000 for ten years including VAT CRYNODEB/SUMMARY ABM uhb will continue to administer the existing contract until 30 th May 2018 (latest expiry date of current contract) however dual responsibility will be required from 1 st November 2017 whereby NWSSP will need to manage any invoices raised during the contract transition. They will need to fulfil the full banking role with effect from 1 st April 2018 and thereafter for the duration of the contract term. LLYWODRAETHU A RISG/ GOVERNANCE & RISK Provide information on what legislative, regulatory or procedural information is relevant. Is the issue linked to a risk on the corporate or directorate risk registers, should the matter be considered for inclusion on the risk register? The existing Procedure for FMS Contract Management which highlights roles and responsibilities and governance arrangements with regards to the support provision of the FMS Managed service will be updated to include the NWSSP role as banker 2. ARGYMHELLIAD/RECOMMENDATION The Committee are asked NOTE the progress being made in respect of the retender of the FMS contract. Page 7 of 8

8 Annex 1 Proposed Contractual Relationship and Responsibilities Page 8 of 8