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Home My WebLink About0104.091January 10, 1991 The Honorable City CounCIl Palo Alto, California ATrENTION: Finance and Public Works CCDl!niUe< PAYROLLIHL'MAN RESOURCES sySTEM -SELErnQ~EVELOPMENT ME'lHOD AND HIRING OF A CONTRACT PROGRAMMER Members of the CounCIl: Reoon In Brief 1 This report requests CounCIl approval of a budget amendment for Li]e Information Resour;:es operational budget to hiTe a contract programme-r. This contract will allow assignment of a. fun time person to work on the selection, modification and integration of a new payroll/human Icsourccs S"iStem. The money for this additiona1 appropriation would come from the Reserve for c...pitaI Projects. BadgroJmd In 1985, CounCIl •• 1abllshed a capital improvement project to replace the City·. exi.,ting accounting systems with a new Fmancial Data Base. The new sys1em provided fully-integrated core accounting modules including general ledger~ budget preparation, accounts payab!e~ accounts receivable, purcl1asing and expenditure controL A later phase of the project allowed for system expansion to include payroll/human resources, fu:ed assets, investments., stores inveniory and other modules capable of bandling the Cily'. financial record keeping and reporting needs. The initial modules of the FmanciaJ Data Base were implemented in fis<:al year 1988-89. During the following: year. the Finance Department undertook the preparation of a needs as....~ssment, descnbing technical and performance specifications required of a new payroIljhuman resources system. The analysis entaIled a review of the current payroll system, additional functions and features required in a municipal payrolljhurnan resources software package, a departmentaT questionnaire to solicit feedback as 10 additional user needs, and a survey of local municipalities regarding comparable payroU software solutions. The needs assessment was to serve a' background information for • Request for Proposal that would be sent to selected vendors. However. it proved CMR:104:91 ". '--.. , . o o 10 be • springboard for disrussion with regard to the avallabili\)' of municipal payron ')'Stems capable of meeting the City's needs and specifications, adequacy of current personnel resources 10 spearhead the installation and customization of this significant software package, an~ future maintenance issues. Resounz Cnmmitment Initial delays in conducting the needs analysis (or the new payroD/human resources 'S}'Sterr.. by rllllll!<e staff resulted from the implementation of the financial data base (IF AS) system. purchased from Bi-Teen, In<-in tile IT 1988-89. The philosophy concerning S-jstem software in FY 88·89 was that the user department took fuU ownership or 1he software, managed Its implementation and worked directly with the software vendor in effecting program modifications.. Although the entire Accoonting and Budget Division staffs worked closely with Bi-Tech programmers, all maintained their individual job duties. There was no "dedicated" project manager wt.o could be retieved of regular duties 10 devote fun time to the IFAS implementation. Temporary staff were utnized tD assist at a cost of over $96,000. Programming modifications and data base reconciliations had to be performed by permanent staff. Difficulties with the heavy wOIklo.d, high turnover, and eroding employee morale coDtnbuted to IFAS implementatioll problems. In addition 10 overtime costs of $35,000 in the AccouotLllg area alon!!. Fmance management personnel worked excessh'ely long hour; 10 ensure tbat adequate financial reports could be generated fnr the June 3D, 1989 clo<ing. Once the 1988 fiscal year was closed on the WAS system and the external audit was completed, Fmance staff began to identify program modifications needed for the IFAS system 10 better suit the specific needs of the City. The product of such efforts sbould be rea!ized in the cunent fiscal year with the i:nplememation of HAS 6. However. once again.. it was determined thai existing staff resou!Ct:s were not suffident to oversee the implementation of the upgraded so!tv.rare and at the same time maintain the heavy workload ()( the Accounting and Purcbasing Djvisions. It was also recognized that many of the issues around which problems in IFAS 6 revolved were technical programming issues rather than aC(;ounting or finance-related issues. Consequently, a separate contract has been procured v.-ilh Hi-Tech for programmer/consultant assistance in the testing and implementing process. Although a new payroll/buman resources system was contemplated as an obvious fonow-lip of the IFAS system. it bas beoome evident since the impJementatioo. ofIFAS that the procurement o!this key module should not be undertaken without a thorough understanding of how pertinent data would be integrated into the Financial Data Base, and wit.."'lout an adc:quate resource commitment from the r>nance. Human Resou,ces and Information Resources Departments. Because of the broad impact of a new payroll system throughout Ci\)' operations, the notion of a Iengtlly installation/modification process silllllar I() that of IF AS would be unacceptable. The most critical resource needed is the assignment of a fuU time -dedicated" project manager. Slim!'! or Mpnklpal Payroll Systems 1be needs assessment prepared for tbe new payroD/human resources system reflects currently unmel requirements of the system in regard I() the accounting and repening of payroll dollars, the CMR:104:91 2 • , • / -'-------------- need for flOlibility due 10 e.er-changing go,"rnmental, ,egul.tOl)' and employment developmen~ and additio..-w features in pcs.iOOD control Such needs ate s.inular to those of other munkipalities. In • swvey of the software solutions utilized by cities of comparable size and administrative complexity. staff noted little sansfaelion by payroll administrators with their payroil/hu= resourees systems, All re'poudents uuUzing a Hewlett-Packard system (approximately 1/3 of the survey sample) had purchased software, and 80 percent of tbese users r,oeured their software in the past six years. A further romparison to these sites W-65 limited in tbat few had required interlaees to other financial systems, wlu1e the City's payroll/human resources system will need to inlerface to current modWes of the accounting systerr .. the position control system in Budget, and a future job-rosting (work order) 'Y'tem. It was interesting to note that. of the 16 cities which processed their own payron (2 cities utilized a" outside service bureau)' 4 were In the process of developing or procuring. new payron system. The largest sinularity to Palo Alto could be drawn with the City of Sunnyvale. Staff there, three years after tbe irutial installation. now feels the sy.)tem will meet anticipated needs.. The Sunnyvale success is attributed to constant suppon from and interaetion with the software rompany in Canada. Sxmm Development Methods Because of tbe concerns voiced in the payroll/human resources system planning meetings and because of the impact on the Finance Department in the implementation of IF AS, the Information Resources Department (IRO) looked at various methods which could be used 10 implement a new system. Three methods were investigated: 1) purchase software from vendors with the vendor providing fun support for maintenaoce and modifications; 2) initiate and develop a payroDjhuman resources system nsing in-house resources; and 3) purchase software and program Source code from a vendor and provide in-house support. 1) Third-Paw Software. The purchase of software from a third-parI)< vendor. with the vendor providing full support for maintenance and modifi<:ations, follows the direction ",t by tbe City in 1986 when il was decided that the lRD programming staff size would not increase; and, when a programmer position was eliminated in the 1988·89 budget budget leductions. Insteac3 of hiring additional staff. IRD LT11plemented a dis.tnbl.lf .. ed proce~ing strategy in acquiring any new software systems. A distnbuted processing strategy places the ownership and maintenance of the software with the acquiring department This is the process that was foUewed in purchasing the Bi-Tecb IFAS financial system. Although di5tributed processing can be an effective method roc l'<gulating programming staff growt.; aod giving more roOlro! ofrhe program to the depanment. it creates additional worklood on rhe aequiring department; and when modifi<:atioll of the program is required. it can be expensive. Beca~ the p.yronjhuman resources system is • vital system and because of the experie nee gained during the IFAS implementation. Finance, Human Resources and IRD believe tbat a system purchased from a third-party venda< and maintained and modified by rhe veodor would no! provide the best solutio, fur the City in meeting the constantly changing reporting and payment requirements, tax law changest emptoyee contIact provisior.. grantee CMR: 104:9 I 3 o . o requirements, etc. Moditkations and change. 10 the system could cost as much as 535,000 10 550,000 per year, based on the lFAS experience and the experience of IRD staff on the lime required in modifying the CUTTent payroll system. 2) In-house J)eyek>pmcnt. Anotht.r alternative discussed was the <kveiopment of a customized pay,oll/buman resource. system written by in-houoe programming staff. IRD evaluated the needs assessment completed by the Finance Department and determined that writing the $)'Stem in-bouse would require five. years to comp1ele, and would require the hiring of • full time programmer during that time. Human Resources also was concerned that even though there is a programmer cn staff who supports the existing payroll system, this person does not have a hUl'i1an resources background. These concerns were further complicated by the CiiJet that Human Resources staff has never wor-ked with a compu lerized system and would need guidance from the technical staff in developlng a system. The cost 10 hire a full-time programmer would be 564,219 (this includes benefits) per year. 3) Customized Third:bny $ofM"'. A third alternative would be 10 purcbase a third-party software system and the program source code which would allow in-llOuse staff to modify and maintain the system, and interface the system with the ",ber financIal S)-"ems. This alternative would allow \.'1e City to purchase the best payroll system on the market rJnning on the Hewlett-Paclcard S)-'Stem while retaining the flexibility to modify the S}~tem to meet the City's needs and to provide technical assistance directly to the user deparunents. JRD contacted nine vendors who have developed payroTI/human resources systems running on the Hewlett-Packard system. Of the niue, five of Ibe vend"" will .. n the source code to their system. This alternative will add approximately 10 percent more to the purchase price of the system, but would eliminate the maintenance and vendor progra,nming costs discussed under the Third-Party Software alternative, which could run fifteen percent or more annually. This alternative would require IRD to commit a full time programmer to work -on t.':!e selection. modification and interface of the new system. IRD would then bave to replace the programmer position with a contract programmer for approximately 18 month>; at an annual cost of $50,000. The contract programmer would support the existing payroll system and other systems that the in-house programmer now supports. DiSCDSljon Full ownership of the IF AS system has h:.d a large impact on Finance Department staff unlization. User access/security updates require constant maintenance. as do cbart-of-account modifications, project irtitiations, establishment of new forms and proce ... ., organizational cbanges, report definitions and various data base adjustments and program enhancements. Training of departmental users is an ongoing task,. and information storage reqLdrernents are being dealt ",,'it'lL Finance staff continues to work closely with the IF AS sofn.vare vendor to ensure the financial infonnation needs of the City are addressed. However, working with. vendor means the Citv', priorities for programming will be subordinate to the vendo.-', overall work agenda, and nccckd modifications may be delayed due to requirements of the vendors other clients. As a consequence of the eoq>erien<:e gained during the IF AS implementation. Finanee seeks • payrol1fhuman CMR:l04:91 ',',< ;;.,~ ;;::::;;.'1' ./' " ,- TCSOUr<cs system that meets the needs and objecti\'s identified, which can be maintained and modified by City staff rather than by an outside vendor. Conotantly changing reporting and paymen! requirements, wlaw cbanges, employee contract provisions, grantee requirements, etc. will necessitate & high degree of program modification az:d adaptability to the City's speciiicstions. Such needs will best be met through tho pr0ce55 of use" working with programmers on a dally basis. IRD professionals can serve a crucial role as the technology specialists of the payroll/human raources system where such issues as file stonge, S)'jtem interface and future programming modifications are concerned.. System maintenance and expansion ~anning in the are83 of memOJ)'. disk, and peripbera15 can also be more efficiently addre ... d when on-hand technical assistance is available. In addition 10 prcwiding ;ignificant technical competence, in-bouse prognanune" Vol11 be more suited to acoommodating the changing needs of the end user than a vendor maintenance contract could be expected to provide. FInance, Hu~~ Resources and IRD recommend alternative three, Olstomized TnInj·Party Software. By p:ll'cbasing an existing system and its source code and modUying the system to meet tile City's needs, the City will own a system already te;;ted in other jurisdictions, plus have the capability of modUying the syslem to meet current and future needs. The system can be selected, modified and integrated in an estimated 18 months. Aitllough tile initial cost would be slightly higher, the C05t cl ownel'5hip over the projected ten year Ufe of the system would he significantly lower compared to the other alternatives. RemmmendatioPf Staff recommends that Council apj>rove tile attacbed Budget Amendment Ordinance ~ppropriating S75,OOO from the Reserve for Capital Projects to bire a contract programmer for 18 months to replace an lRD senior prognanuner, wbile the lRD programmer dedicates fuU time efforts to the seleetion, modification and integration of a new payronjbuman resou roes system. Respectfully submitted, fJl~ lk/f Dian.ah Neff DiredOr, Information Resources ~ City ~fanager Attachment: Budget Amendment Ordinance CMR:l()1:91 5 ~ j 11.0-,-,4) Errury Harrison Director, Finance • ORDINANCE NO. ORDINANCE OF THE COUNCIL OF THE CITY OF PALO ALTO AMENDING THE BUDGET FOR THE FISCAL YEAR 1990-91 TO PROVIDE AN ADDITIONAL APPROPRIATION FOR CONTRACT PROGRAMMER SERVICES RELATED TO THE SELECTION, MODIFICATION AND IMPLEMENTATION OF THE NEW PAYROLL/lIUMAN RESOURCES SYSTEM: WHER.£AS" pursuant to t,he pro·/isions of section 12 of Article III of the Charter of the City of Palo Alto, the Council on June 18, 1990 did adopt a budget fo~ fiscal year 1990-91; and WHEREAS, a capital Project was approved in the 1989-90 Capital IMProvement Budqet to fund the needs assessment and selection of an 3.utOllated payroll/pers-oMlel system; and WHEREAS, the needs assessment has been completed by City staff and it bas been determined that the City should purchase a third party sDftware system and a proqram source code so that in-house staff could modify and maintain the system; and WHEREAS, this would require the City's Inf~rmation Resources oepa~~ent to commit a full-time Senior Programmer to work on the •• lection, modification and interface of the nev systelD .. and would have to back-fill the proqram:er position with a contract programmer for approximately 18 months; and WHEREAS, it is estimated this cost will be $75,000, and no funds have been bUdqeted for this expense in the 1990-91 budqet; NOW, THEREFOP.E, the Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. The SUlI of seventy Five Thollsand Dollars ($75,000) is hereby appropriated to Employee services in the Information Resources Department, and th!!. Reserve for Capital Projects is correspondingly reduced. SECTION 2. This transaction will reduce the Reserve for capital Projects from $4,715,512 to $4,640,512 as of October 31, lUO. ~ECTION 3~ The Cour~il of the City of Palo Alto hereby finds that the enactment of this .ordinance is not a project under the CAlifornia Environmental Quality Act and, therefore, no environmen tal ~pact assessment is necessary. '.~ " 0,. StCTION 4. As provided in Section 2.04.375 of the Palo Alto Municipal Code" this ordinance shall become e-tfective upon a.doption. DITROOOCED AND PASSED: AYES: NOES: ABSTENTIONS: ABSENT: APPROVED: city Clerk Mayor APPROVED AS TO FOIUI: Asst. city Attorney APPROVED: city Manager DIrector of Finance Director of Information Resources 90-1.2] .,.1