City staff recommends that the City Council approve a services agreement with CherryRoad Technologies, Inc. for the replacement of SunGard's Integrated Financial Accounting System (IFAS) with Oracle Cloud Enterprise Resource Planning (ERP) System in the amount of $5,880,955, and adopt a resolution authorizing the City Manager to execute the service agreement and any related forms.  $106,225.60 will be funded from the FY 2016/17 CIP budget, ERP Replacement Capital Improvement Project (CIP).  Additionally, staff requests authorization for the Chief Financial Officer to approve change orders up to an additional 10% (approximately $329,000) of the implementation costs of the service agreement, to cover the costs of unexpected changes to the project scope or schedule.

The City has been using SunGard’s IFAS system as its legacy financial system since 1989. This project aims to replace IFAS with an Enterprise Resource Planning (ERP) system. A fully integrated ERP system will help manage the core Budgeting, Finance, Accounting, Human Resources, Payroll and Procurement functions across the City. This project will enable staff to become more efficient, productive and responsive to the needs of one another and the community by enabling widespread sharing of data from a single source. This is a large enterprise-wide project which will impact every department and every employee at the City and will require several years to fully implement. 

In May 2016 a Request for Proposals (RFP) was issued for an ERP system, and 14 proposals were received. Proposals were evaluated by an interdepartmental project team comprised of staff from the Finance, Human Resources, Electric, Central Services and Information Technology departments as well as outside experts. The City worked with the division of the Government Finance Officers Association (GFOA) that specializes in assisting municipalities in the selection of ERP products.  GFOA provided various services including business process analysis, project planning, Request for Proposals development and vendor selection. As a result of this comprehensive evaluation process, the project team recommends authorization to enter into a contract with CherryRoad for providing access to the Oracle Cloud ERP system as well as consulting services for the successful implementation of this project. 

CherryRoad consultants will help guide city staff through our system implementation with their experience and knowledge of industry standards and best practices. In addition they will be providing the employees of the City access to the Oracle Cloud applications through annual software licenses. During the implementation CherryRoad will focus on business process analysis, requirements development, project planning and successful implementation of the new system. 

Total estimated cost for this contract is $5,880,955.00. This amount includes $2,586,755.00 for the funding of five years of software licenses and $3,294,200.00 for consulting services and travel expenses. Funding for this project will come from a variety of funds and is included in the FY 2016/17 CIP budget, ERP Replacement Capital Improvement Project (CIP). $106,225.60 will be funded from the FY 2016/17 CIP budget, ERP Replacement Capital Improvement Project (CIP). $2,967,994.00 is expected to be funded in the 2017/18 budget pending approval, $1,340,907.00 is expected to be funded in the 2018/19 budget pending approval, $517,351.00 is expected to be funded in the 2019/20 budget pending approval, $517,351.00 is expected to be funded in the 2020/21 budget pending approval and $431,126.00 is expected to be funded in the 2021/22 budget pending approval.  Additional costs related to implementing this project will include internal staff labor and integration/interfaces with current software systems such as payroll and billing, and are not included in this request.  

The California Environmental Quality Act (CEQA) does not apply to activities that will not result in a direct or foreseeable indirect physical change in the environment (CEQA 15061(b) (3). The implementation of the ERP Systems does not include the potential for a significant environmental effect, and therefore is not subject to CEQA.

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Rob Jensen, City Manager