HomeMy WebLinkAboutStaff Report 338-10TO:
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DATE:
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HONORABLE CITY COUNCIL
CITY MANAGER DEPARTMENT: UTILITIES
AUGUST 2, 2010 CMR: 338:10
INFORMATIONAL
Study Session on the SAP Enterprise Resource Planning (ERP) System for
the Finance Committee
This is an informational report and no Council action is required.
BACKGROUND
On July 19, 2010, Council approved a three year software consulting services contract with Sierra Infosys
Inc. in the amount of $250,000 per year ($750,000 over three years), on an as needed basis, for the
support and maintenance of the SAP Utilities and Financial systems. The approval also required the
scheduling of a Finance Committee study session on SAP cost benchmarking, cost benefit analyses on
SAP related projects, long-term strategic plan, and staffing resources. The study session will be scheduled
for the Fall timeframe.
Some of the costs that will be incurred in fiscal year 2011 and beyond are for regulatory mandates which
will involve development of reports or require changes to invoices. To meet the implementation deadlines
for these mandates development work may need to proceed prior to the completion ofthe study session.
DISCUSSION
At the study session staff will benchmark costs associated with the support and maintenance of SAP and
will include entities of comparable industry or size in both the public and private sectors. The
benchmark will provide an objective evaluation of the City's key business processes against industry best
practices for improvement opportunities.
Staff will also perform a cost-benefit analysis of each of the capital improvement projects related to SAP:
implementation of new rates, recurring credit card payment, utility bill information enhancements,
utilities customer billing system continuous improvements, and enterprise application infrastrus;ture
upgrade. The cost-benefit analyses will include the high level scope of the project, management
assumptions and constraints, estimated costs and benefits of different alternatives, and estimated
timelines. Information on internal staff resources and competencies will also be outlined along with
responsibilities that are assigned to internal staff.
I
Staff will propose a 5-year strategic roadmap for the SAP system with a listing of initiatives and an
implementation timeline. The roadmap will focus on initiatives that provide financial and efficiency
improvements from the SAP system.
Per the July 19th City Council meeting, Council requested that the 2011 funding for the following SAP
related Capital Improvement Projects (CIPs) not be spent until the study session with the Finance
Committee has been conducted and reviewed by the Council.
CMR: 338:10 Page 1 of3
o Implementation of New Utility Rates -$100,000
o Recurring Credit Card Payments -$150,000
o Utility Bill Information Enhancements -$750,000
o Utilities Customer Billing System Continuous Improvements -$350,000
o Enterprise Application Infrastructure Upgrade -$75,000
The Finance Committee will prepare an action item of its recommendations to be considered by Council.
As mentioned in the Background section, there are several legislative/regulatory mandates which may
require developmental work prior to the study session with the Finance Committee. The developmental
work will begin utilizing internal resources. There is the possibility that additional professional services
may be required along with associated funding from the Utilities Customer Billing System Continuous
Improvements CIP (listed above). Staff estimates that up to $100,000 of CIP funding may be required to
begin the development of the following legislative mandates:
• Solar Energy System -Net Surplus Electricity
o Senate Bill 1 (2006) Requires any solar electric customer's net metering credits to be
printed on the Utilities' bill. These changes to the invoice were required by January 2009
and staff is temporarily sending separate monthly letters containing credit balance
information until the bill can be modified. There are approximately 300-400 net
metering solar installations in the City.
o Assembly Bi1l920 (2009) Requires utilities to compensate customers for net surplus of
electricity produced through their solar and wind generation. For· any' net surplus
electricity generated in a 12-month period, customers will have the option to receive
monetary compensation or apply the kilowatt hours credit towards future usage. The
billing system in SAP will need to be modified to implement the required changes. The
deadline for completing these changes is January 1, 2011.
• Non~Residential Building Energy Data Consumption -Environmental Protection Agency (EPA)
Benchmarking
o Assembly Bills 531 (2009) and 1103 (2007) -These bills require electric and gas utilities
to maintain 12 months of historical energy consumption data for all non-residential
buildings in a format compatible for uploading to the United States Environmental
Protection Agency's Energy Star Portfolio Manager. The collection, format, and
submittal of consumption information will require changes in SAP. Such changes
include automatic identification of all consumption meters servicing a specific building.
The due date for this requirement was extended to Jan 1, 2011 from Jan 1,2010 by the
passage of AB 531.
• Residential Utility Service -Service Termination Notice
o Senate Bill 120 (2009) Requires Utilities to make every good faith effort to inform
residential occupants, by means of written notice, that service will be terminated in 10
days (when the account is in arrears). This legislation highlights the rights of residential
renters where one or more metered services are being paid for by a landlord or property
manager (for example, in an apartment complex). The written notice must be provided in
English and five other languages, and must inform the residential renters that they have
the right to become customers of the public utility without being required to pay the
amount due on the delinquent account. SAP system changes include the ability to capture
whether an account (or premise) is renter or landlord occupied. These changes became
CMR:338:10 Page 2 of3
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, effective in Oct, 2009. Until all system changes have been completed, interim business
process and manual'workarounds have been put in place.
RESOURCEDMfACT ,
The above mentioned ClPs have been funded as part of the Fiscal Year 2011 budget, and will be reviewed
by the Finance Committee and referred to the City Council for action based on recommendations made by
the Finance Committee. No additional funding is being requested. However, work on the SAP system, as
a result of mandate4 regulatory or legal requirements, may need to proceed in advance of the Finance .
Committee study session and Council review. In the event a contract for extern!l resources is needed for
the mandated work that exceeds $85,000, the contract will be brought,to the Council for review and
approval. Any work on the legislative mandates will be funded from the Utilities Billing System
Continuous Improvements project.
PQLICX lMPUCADONS
In ail effort to meet federal and state mandates, it may be necessary for some work to proceed in advance
of the Finance Committee and Council's review of the CIP budget for SAP IT projects.
PREPARED BY:
REVIEWED BY:
DEPARTMENT HEAD:
DEPARTMENT HEAD:
CITY MANAGER APPROVAL:
CMR.: 338:10
/JA KEVIN ENDERBY. P Senior Business Analyst, Utilities
. 'JENNIFER LEU
'V't. Manager; Information Technology
JAMl'OMM MARSHALL
(J.JP Assistant Director of Utilities ,
~ (t-'DA VID RAMBERG . .
Assistant Director of AdministrEqive Services
. ,
W
£: ~AMES KEENE T~ity Manager
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