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HomeMy WebLinkAbout1996-11-07 City CouncilCity of Palo Alto City Manager’s Report TO:HONORABLE CITY COUNCIL FROM:CITY MANAGER DEPARTMENT: ADMINISTRATIVE SERVICES DATE:NOVEMBER 7, 1996 CMR:455:96 SUBJECT:CHANGE IN DIRECTION FOR THE UTILITIES INFORMATION SYSTEM PROJECT TO SOLICIT FROM SOFTWARE VENDORS CUSTOMER PROPOSALS REQUEST The purpose of this report is to inform Council regarding a proposed change in direction for the Utilities Customer Information System (CIS) project from in-house software development to the pursuit of a purchased software solution. RECOMMENDATION This is an informational report; no Council action is required. POLICY IMPLICATIONS This report does not propose any change to existing City policies. BACKGROUND The Customer Information System (CIS) project was initiated by the Utilities Department’s requirement to provide quality customer service, while remaining efficient and effective in an increasingly competitive, deregulated environment. The new system must support the processing of information for multiple utilities, receive meter readings and service charges, generate customer utility bills, and maintain accurate utility revenue accounting. In addition, it will serve as an important management decision tool for forecasting, planning, and analyzing the current and future needs of the Utilities Department. In 1991, a needs assessment was initiated to identify the requirements of the new system. A Request for Proposals (RFP) was issued for acquisition of a customer information system. CMR:455:96 Page 1 of 4 The RFP process resulted in two alternatives: development of an in-house .application, or purchase of software from an outside vendor. At that time, the proposed vendor application would have been more costly than in-house development efforts, and its functionality was not sufficient to consider its implementation. The proposed package would have required extensive effort from staff and the vendor for system modification; staff estimated that 50 to 70 percent of the software would have to be modified or enhanced to satisfy the requirements of the Utilities organization. Due to the cost, functionality limitations, and required modifications for the purchased package, the City decided to pursue in-house development. In 1993, a Capital Improvement Project was adopted to fund the CIS project. Initial in-house development efforts consisted of determining the system architecture, the software development tools to be used, and obtaining training in those tools. Efforts to date have focused mainly on establishing the framework for a new customer information system: documenting requirements; acquiring computer hardware and operating system software; performing data base modeling and conversion; and developing acceptance test criteria. The new two-sided utility bill format was implemented (including methods for printing, folding and stuffing the bills) and a five-year customer history was established. Actual programming of the core on-line system for maintaining customer information has yet to begin. DISCUSSION The CIS project has suffered from the loss of key staff, the inability to fill vacant positions, insufficient staff training in new programming tools, and a lack of continuity due to the number of contract programmers brought in to work on the project. Contract personnel have been hard to recruit and even more difficult to retain. Although the contractors are paid comparatively high wages, only one has continued on the project for more than a three month period of time. Consequently, while in-house development efforts proceeded, staff has continued to monitor the vendor marketplace for applications that could be purchased. In the interim, vendors with experience in application development, new technologies, and utilities processes and procedures have been enhancing and expanding their offerings. Recently, two vendors have upgraded their software to contain many of the features and functions required for the Utilities organization to remain competitive. These applications are consistent with the computing architecture used within the City. Staff was given a demonstration of one application and was favorably impressed; therefore, staff is encouraged that a review of the current application software market could result in finding an "off-the- shelf" package containing many of the features and functions required by the Utilities Department. CMR:455:96 Page 2 of 4 Analysis of Alternatives The alternate approaches of in-house system development or the purchase of vendor software both offer advantages and disadvantages for the City. Software developed in-house would be designed to fit exactly the specific requirements for Palo Alto. System modifications could be made at any time and completely under the control of City staff. However, the disadvantages mentioned above including small staff, high turnover, and a lack of training in new technologies and software, result in difficulties that have prevented successful advancement for the project. Purchase of a packaged system offers several advantages. The vendors of these software solutions expend a great deal of time, effort and money to develop state-of-the-art applications capable of addressing the functional requirements of utility organizations. The resources available to these vendors are far greater than the personnel and funding available to the City for such an effort. The vendors have extensive experience in utilities application development; software is tested and revised before it is installed on the City’s computer. In addition, these vendors may deliver some functionality beyond that defined for the City as part of their basic software. Enhancements would continue to be provided to the City as the vendors upgrade their software to keep utilities competitive. The disadvantage with purchased software is that it would not be developed specifically for Palo Alto. Some of the requirements identified by the City may not be met, or solutions may be addressed in a manner different from that to which the City is accustomed. In light of the difficulties experienced with in-house development attempts, and the improvements made to packaged utilities software, staff plans to re-direct the Customer Information System project to evaluate purchased software to address the remaining requirements of the CIS project. Staffplans to develop an RFP and evaluate responses from software vendors. Based upon preliminary investigations, the cost and schedule for purchasing the CIS system appear to be the same as for continuing in-house system development. Both the Utilities and Information Technology staff support the vendor approach. They believe the purchased approach will be less risky, and the final product will have incorporated the elements necessary in a competitive utilities environment. CIS project management is now focusing efforts on tasks that need to be performed, regardless of whether development continues in-house or software is solicited from vendors. FISCAL IMPACT This report does not propose changes to the funding level of the Utilities Customer Information System project. The CIS is a Capital Improvement Project (CIP 9357) funded by the six City utilities. Costs for the project will remain the same whether the software is developed in-house or purchased from a vendor. CMR:455:96 Page 3 of 4 The original Capital Improvement Project requested $700,000 for the development of a CIS. In 1995-96, a Budget Amendment Ordinance of $256,000 was added to the project to provide computer hardware and memory, staff training, and contract programming support. The CIP budget also allocates approximately $510,000 for the project in FY1996-97 and FY1997-98. To date, funds have been used to acquire the necessary computer hardware, operating system, data management tools, and consulting services. Consulting services have included business process re-engineering, data base modeling, data conversion, requirements definition, and application prototyping and development. The majority of efforts and expenditures to date would have been required with either the in-house development effort or the acquisition .of vendor software. The existing CIP .supports either approach. For in-house development, funds would continue the contract systems analysis and application development efforts. In the purchased software alternative, the funding would acquire the computer software, provide implementation and data conversion support, and some degree of customization. Either approach is expected to cost approximately $500,000; the proposed CIP budgets contain adequate funding. ENVIRONMENTAL ASSESSMENT This is not a project for the purposes of the California Environmental Quality Act (CEQA); no environmental assessment is required. PREPARED BY:Libby Dame, Sr. Financial Analyst, Administrative Services Rob Pound, Manager, Information Technology Services E~ Harrison Deputy City Manager, Administrative Services DEPARTMENT HEAD APPROVAL: CITY MANAGER APPROVAL: Related report: CMR:510:95 Utilities CMR:455:96 Page 4 of 4