HomeMy WebLinkAboutStaff Report 384-08City of Palo Alto
City Manager’s Report,
TO:HONORABLE CITY COUNCIL
FROM:CITY MANAGER DEPARTMENT:ADMINISTRATIVE
SERVICES
DATE:
SUBJECT:
OCTOBER 6, 2008
SAP Project Status
CMR:. 384:08
This is an information report and no Council action is requi~ed,.-
OVERVIEW
Effective July 2002, the City chose SAP as its.preferred +¢endor for anEnterprise ResourCe
Planning system consolidating multiple disparate systems: in isupp0rt of .the Information
Technology Strategic Plan. On July 22, 2002, Council approved acontract with .ca consulting,
inc for the implementation of SAP in the amount :of $3,168~328. In-. 2002,200.3, the
implementation of SAP was completed which accomplished the primary objectives,, to replace
aging financial, personnel and payroll systems and to .implement new functionality such as
project management, work order, and service order systems. This pr0j.ect laid tlie foundation for
the City’s enterprise-wide application systems. "
BACKGROUND ... ....
The purpose of this report is to inform the City Council Of the, ~t~tus of the. sap Project. On
October 29, 2007, the City Council approved a contract wi~h Axon Solutions, Jne. for the SAP
upgrade and implementation services for SAP’s Utility Billing system known as Industry-
Specific Solution for Utilities (IS-U). The upgrade was necessary in order to Stay compliant with
SAP’s support and maintenance schedule. Additionally, ’ the upgrade was necessary in order to
implement IS-U. " .
The IS-U system will replace the existing Utilities Department’s Customer Information System
(CIS) which is used to generate revenue through billing, as well as collect customer data on
commodity consumption, and to develop rates for the following utilities in the City: electric, gas,
water, waste water, refuse, storm drain, and fiber optics. This data is also used extensively in
mandated reporting to various official agencies. Approximately 360,000 utility bills are
generated annually and invoicing an estimated $198,500,000. This system therefore is an integral
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part of the operations of the City. The CIS climate is such that the current version is no longer
supported by the software vendor. Being on an unsupported version has increased normal
maintenance costs and caused a .drastic increase in processing and turnaround times for vendor
service requests.
DISCUSSION
SAP Upgrade
Effective April 20, 2008, a technical upgrade of the SAP system was completed. Professional
services costs for the technical upgrade were approximately $1,372,540. The upgrade required 6
months of work by staff from Administrative Services, Human Resources, Public Works, and
Utilities. SAP is used to perform financial, human resources, payroll, materials management,
project systems, and plant maintenance activities. The upgrade to the SAP system represents a
standardization on the SAP platform, which yields substantial benefits, such as reduced
maintenance costs and legacy-system support costs, reduced staff training costs due to
standardized multi-departmental platforms, and reduced Information Technology (IT) support
costs. Other benefits include establishing a framework for e-Government, with a customer Web
portal and other functionality such as data warehousing and document management. Many public
and private organizations such as the City of Dallas, Marin Municipal Water District,
Sacramento Municipal Utility District, PG&E, City of Tacoma, Sacramento County, Suffolk
County Water, and Waste Management have also standardized on SAP as an integrated system.
The SAP upgrade also included improved efficiencies such as s~reamlining the year-end carry
forward process resulting in staff time savings and increased productivity. Staff of 10 (3
Accounting, 2 Budget, 2 Purchasing, 2 SAP Functional and 1 Basis) are no longer required to be
on-site for year-end processing and users are no longer required to be locked out of the system
during this process. Instead, the SAP Functional will run,the carryforward process remotely.
Additionally, Human Resources’ processing time for new hires is reduced by 20% due to a
reduction in processing screens and auto-population "of key fields. The SAP upgrade also lays
the foundation .for future "green" initiatives such as electronic paystubs and notifications
preventing the need to print payroll checks, postage, and mailing services.
SAP Enhancements
In addition to the SAP upgrade, key enhancements were implemented such as Employee Self
Service (ESS) and Manager Self Service (MSS). These modules are web portals, allowing City
staff to easily enter timecard data, review benefits informatio.n, and manage staff time. Other
modules that were implemented, effective July 7, 2008, include Budget Control System (BCS),
Actual Labor Costing (ALC), and Organizational Management (OM).
The SAP Enhancements included efficiencies such as automatically calculating actual labor and
overhead costs that are currently done manually by Accounting staff. This also will enable the
City to more accurately track and charge for projects and cost recovery programs.
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SAP Industr~ Specific Solution for Utilities (IS-U)
A further initiative of the SAP upgrade project is to migrate~the existing, legacy Utility Billing
system to SAP’s Utility Billing system known as Industry Specific Solution for Utilities (IS-U).
The implementation of SAP’s IS-U will be integrated with previously implemented modules
with a single database platform and tools, which will facilitate financial integration and
reporting. IS-U will consolidate data into one system and convert this data to useful formats that
will benefit not only the City, but residents and businesses of Palo Alto by making data more
accessible. This improved service will be achieved with functionality such as accessing one’s
utility account through secured, online access with functions such as on-line bill payments and
usage history.
The IS-U implementation has the following five phases: project preparation, blueprint,
realization, final prep, and go live. Currently, the project is halfway through the Realization
phase and staff expects the system to go live in early 2009.
A significant investment of time by staff beyond their regular daily responsibilities to address the
SAP upgrade, enhancements, and implementation of IS-U has allowed this project to be on
schedule and within budget.
RESOURCE IMPACT
Of the total amount ($6,921,280) approved by the Council on October 29, 2007 for the SAP
project, a total of $2,766,844 has been processed for payment based on completion of
deliverables.
POLICY IMPLICATION
The upgrade to the SAP system addressed Palo Alto Municipal Code, Section 2.30.900, Part l0
(Standardization), as staff standardized on the SAP platform.
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PREPARED BY:
DEPARTMENT HEAD APPROVAL:
DAVID RAMBERG
Assistant Director, Administrative Services
Director, Administrative Services
CITY MANAGER APPROVAL:
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