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Home My WebLink AboutStaff Report 2511-5394CITY OF PALO ALTO CITY COUNCIL Monday, December 08, 2025 Council Chambers & Hybrid 5:30 PM Agenda Item 8.Approval of Contract Amendment Number 5 to Contract Number C14151181 with SAP Public Services in the Amount of $334,355 for SAP Maintenance and Support for One Year, ending December 2026; CEQA Status – Not a Project. City Council Staff Report From: City Manager Report Type: CONSENT CALENDAR Lead Department: IT Department Meeting Date: December 8, 2025 Report #:2511-5394 TITLE Approval of Contract Amendment Number 5 to Contract Number C14151181 with SAP Public Services in the Amount of $334,355 for SAP Maintenance and Support for One Year, ending December 2026; CEQA Status – Not a Project. RECOMMENDATION Staff recommends that the City Council approve and authorize the City Manager or designee to execute Amendment Number 5 to Contract C14151181 with SAP Public Services (Attachment A) for SAP Maintenance and Support for 2026 in an amount not to exceed $334,355. This amendment results in a revised total contract not-to-exceed amount of $1,920,867. BACKGROUND Over the past two decades, the City Council has approved multiple renewals and amendments to ensure continued maintenance, compliance, and modernization of the City’s Enterprise Resource Planning (ERP) environment. In July 2002, the City selected SAP Public Services through a competitive Request for Proposals (RFP) process as the enterprise-wide ERP platform. The SAP ERP system was implemented across all major departments to support Citywide financial, human resources, and utility operations in 2003. Since then, contracts have been approved in 2007, 2013, 20151, 20182, 20193, and 20214 for continued licensing and maintenance services for the ERP system. 1 November 2, 2015 City Council Staff Report # 5955: https://www.paloalto.gov/files/assets/public/v/1/agendas- minutes-reports/reports/city-manager-reports-cmrs/year-archive/2015/cmr-5955.pdf 2 December 17, 2018 City Council Staff Report # 9827: https://www.paloalto.gov/files/assets/public/v/1/agendas- minutes-reports/reports/city-manager-reports-cmrs/year-archive/2018/id-9827.pdf?t=53847.98 3 October 7, 2019 City Council Staff Report # 10033: https://www.paloalto.gov/files/assets/public/v/1/agendas- minutes-reports/reports/city-manager-reports-cmrs/year-archive/2019/id-10033.pdf 4 March 8, 2021 City Council Staff Report # 11810: https://www.cityofpaloalto.org/files/assets/public/v/1/agendas-minutes-reports/reports/city-manager-reports- cmrs/year-archive/2021/id-11810.pdf SAP has announced that support for the current SAP ERP platform will end on January 1, 2028. Running the system beyond this date would introduce increased risk, including the loss of vendor support, potential security vulnerabilities, and limited access to future enhancements. The Finance Committee heard staff’s recommendation at its meeting on September 16, 2025, and unanimously recommended City Council approval of the recommendation to migrate to SAP S/4HANA – SAP’s latest cloud-based ERP platform. City Council approved the upgraded licensing costs for five years of $6.6 million unanimously on September 29, 20259 and are scheduled to consider the implementation costs on December 1, 202510. The Committee review and Council approval acknowledged the total cost of $13.3 million once implementation, transition costs, and additional temporary staffing costs were included. ANALYSIS Delivery of legally mandated updates (e.g., payroll tax table and compliance changes); Security patches and critical system corrections; Ongoing functionality enhancements; and Access to SAP’s technical assistance center for issue resolution. 9 September 29, 2025 City Council Report: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16240 10 December 1, 2025 City Council Report: https://cityofpaloalto.primegov.com/Portal/Meeting?meetingTemplateId=16332 FISCAL/RESOURCE IMPACT STAKEHOLDER ENGAGEMENT ENVIRONMENTAL REVIEW Quality Act (CEQA) under CEQA Guidelines section 15061(c)(3).  ATTACHMENTS APPROVED BY: Amendment Issued January 1, 2026 to Amendment Issued January 1, 2021 to Appendix 1, as amended, effective July 22, 2002 Appendix 2, effective July 22, 2002 Appendix 7 effective July 25, 2007 Appendix 10 effective December 18, 2012 Amendment effective October 6, 2015 Amendment effective December 17, 2018 Order Form 11 effective October 12, 2019 (collectively “the Appendices”) to Software End-User License Agreement (the “Agreement”) C14151181 effective July 22, 2002 between CITY OF PALO ALTO ("Licensee") and SAP Public Services, Inc. ("SAP") As of the issuance date of January 1, 2026, this Amendment modifies the Agreement, as amended by the above-referenced Appendices, all of which are incorporated herein by reference, between the parties. In any instance in which a provision of this Amendment contradicts or is inconsistent with the provisions of the Agreement, as amended by the Appendices, the provisions of this Amendment shall prevail and govern and the contradicted or inconsistent provisions of the Agreement, as amended by the Appendices, which shall be deemed amended accordingly. SAP and Licensee agree that the Agreement, as amended by the Appendices, is hereby modified by this Amendment as follows: 1) The attached two-page document entitled “SAP 2026 Maintenance & Support Renewal” for January 1, 2026 – December 31, 2026, for SAP maintenance and enterprise support services is added to the Agreement, as amended by the Appendices. The maintenance and support fees and dates provided in the Agreement, as modified by the Appendices, are modified and/or extended as provided in the attached document entitled “SAP 2026 Maintenance & Support Renewal”, except, in event of a conflict, the following shall control over the attached document entitled “SAP 2026 Maintenance & Support Renewal” Contract Year * Provided Licensee does not acquire additional licenses in 2026 beyond what is contemplated in the attached document entitled “SAP 2026 Maintenance & Support Renewal.” Docusign Envelope ID: ADE2A4C6-12C4-4A9E-8C71-759E70C82A0B EXCEPT AS HEREIN PROVIDED, NONE OF THE PROVISIONS OF THE AGREEMENT, AS MODIFIED BY THE APPENDICES, SHALL BE AFFECTED BY THIS AMENDMENT. SAP Public Services, Inc. CITY OF PALO ALTO By: ____________________________ By: ____________________________ APPROVED AS TO FORM: By:_____________________________ City Attorney or Designee Attachment: “SAP 2026 Maintenance & Support Renewal” Docusign Envelope ID: ADE2A4C6-12C4-4A9E-8C71-759E70C82A0B Assistant General Counsel 11/19/2025 Cameron Loyal SAP 2026 Maintenance & Support Renewal October 30, 2025 SAP Public Services, Inc. Ronald Reagan Building International Trade Center 1300 Pennsylvania Ave., N.W., Suite 600 Washington, DC 20004 City of Palo Alto USA 250 Hamilton Ave PALO ALTO CA 94301 United States Dear Customer, The purpose of this letter is to provide you with a projection of estimated fees in advance of your 2026 support invoice(s) from SAP, to assist you when preparing new purchase orders for your next term of maintenance. The projection below estimates your fees to be invoiced under your support contracts with SAP. The net values include any CPI price increase, where applicable and consistent with terms of your contract(s). Order ID Settlement Settlement Base Start End USD MT%*Net Value USD Tax Amt USD Total Amt USD CMS ID Old PO No: New PO No: C14151181 CMS ID Old PO No: New PO No: C14151181 CMS ID Old PO No: New PO No: C14151181 CMS ID Old PO No: New PO No: C14151181 Docusign Envelope ID: ADE2A4C6-12C4-4A9E-8C71-759E70C82A0B 13609096 01.01.2026 31.12.2026 227,503.39 24.761 56,332.11 0.00 56,332.11 CMS ID 3061175970 Order Form 11 - Eff. 12 Oct, 2019 Old PO No: New PO No: C14151181 TOTAL 334,354.95 0.00 334,354.95 Need a purchase order to appear in your next invoices? SAP now offers a new self-service portal called SAP for Me. In it you can find all the information you need to submit your PO number or select no PO number required*: Provide PO Information *Subject to 3 decimal rounding. **If you need to update your PO information and for any reason you cannot access SAP for Me, please reply to po.collection.na@sap.com, For the billing team to be able to add it in the system and match it with the correct contract, we would like to request the following basic data to be provided: CMS/Case ID (Contract Management System) 10-digit case number (information located in the Header/ Footer of your contract and/or in your previous invoice) Quote ID (information located in the footer of your contract) or attach a copy of the contract if you can’t find the CMS/Case ID or Quote ID or SAP Order number (you can find this reference in your previous invoice) If you require the help of our team, you can submit your question or supply an alternative contact for future PO Projections via the Get Assistance button in SAP for Me. This document and the attached projection are non-binding, are provided for your information only and do not alter or amend your agreements with SAP, including your duties to pay maintenance fees to SAP. This projection covers software maintenance/support details with regard to software licensed under your agreements in place with SAP at the time of this projection only. Any other license types such as subscription fees are excluded from this projection. SAP reserves all rights under its agreement(s) with you. This document is subject to all Confidentiality and/or Proprietary Information provisions of the Software End User License Agreement between Licensee and SAP. The projection may include applicable taxes that may be due, based on the tax rates and other information available to SAP at the time of the projection. With respect to your Tax/VAT ID, a valid direct pay permit or tax-exempt certificate must be provided to SAP no later than before invoicing. Your invoice(s) from SAP may vary from the projection due to a number of factors including but not limited to licensing of additional software from SAP, changes to taxes, CPI increase and correction of errors. In the event of any variance between the projection and your invoice(s) from SAP, the invoice(s) shall prevail. All fees are to be paid in accordance with your agreements with SAP. Kindest regards, SAP Finance Copied to: SAP Account executive - SAP AR Analyst: Mary Lou Gamba Docusign Envelope ID: ADE2A4C6-12C4-4A9E-8C71-759E70C82A0B