1 STAFF REPORT
DAT
E: December 13, 2022
T
O: Justin Hess, City Manager
F
ROM: Dawn Roth Lindell, General Manager, Burbank Water and Power VIA: Sean Aquino, Assistant General Manager, Customer Service Operations
BY: Osvaldo Hernandez, Assistant Manager, Customer Service Operations S
UBJECT: Approval to Enter into a Professional Services Agreement with Enterprise Solutions Consulting Partners for Customer Cloud Service M igration Services
RECOMMENDATION
Approve and authorize the General Manager of Burbank Water and Power (BWP), as the designee of the City Manager, to:
1) Execute a Professional Services Agreement (PSA) with Enterprise Solutions Consulting Partners (ESC) to provide Oracle Utilities customer cloud service (CCS) migration services; and
2) E nter into any appropriate amendments to the PSA in connection with the CCS migration services for an amount not to exceed $110,000 (or 10%).
BACKGROUND
In 2014, BWP implemented the Oracle Customer Care and Billing (CC&B) customer information system (CIS) to manage Burbank customers’ electric, water, refuse and wastewater billing including service connections, meter reading, billing, rates, and payment processing. This system is an “on -premises” solution that requires BWP to manage maintenance costs for both the software and hardware necessary to maintain the system. Software and hardware assets require significant and expensive upgrade costs throughout their respective product lifecycles. The lifecycle of software or hardware is the period during which the vendor will provide support, fixes, or security patches.
Typically, this is a five-year period after which the vendor recommends an upgrade. BWP initiated the process to search for a solution that would reduce costs long- term for Burbank ratepayers. Through the process, BWP has decided to migrate from the current CIS solution to a “cloud” software as a service solution that would relieve the utility from performing costly hardware and software upgrades, thereby reducing long -term costs to our customers.
WATER AND
POWER
osvaldo hernandez (Dec 8, 2022 07:41 PST)
2 DISCUSSION
Since 2014, BWP has performed three of several suggested software upgrades to CC&B.
The hardware has also been upgraded or replaced three times over the same period.
Upgrades are not required but suggested by the vendor of the software and/or hardware due to improvements in technology, new features , and functionality, or in the case of hardware, replacement.
The current CC&B system has been operating on version 2.5, since 2017. As of July 1, 2023, Oracle will provide very limited support to the current version of the softwa re, creating potential risks for the utility. Unsupported software or hardware is more susceptible to ransomware attacks and business disruptions, and third-party integrations may no longer be supported. The current system has reached its full life cycle and has provided immense value to BWP and our customers.
In December of 2021, BWP engaged with Oracle to understand the level of effort required to migrate to a cloud- based system upgrade. The results of this assessment prompted BWP to release a request for proposal ( RFP) requesting that vendors submit proposals for both an on- premises technical upgrade from version 2.5 to version 2.9 which would be supported, or a full migration to the cloud version, CCS. The RFP was released in April 2022 and remained open for eight weeks. Five vendors submitted proposals and ESC was the selected vendor.
As part of the RFP review process, BWP determined which solution would provide optimal long-term value. After performing a five-year total cost of ownership (TCO) analysis, BWP concluded that migrating to CCS would provide savings close to $1,700,000 over a five- year period:
The five-year TCO for selecting the on-premises solution is as follows:
Year 1 Year 2 Ye ar 3 Year 4 Year 5
License costs 195,000$ 200,850$ 206,876$ 213,082$ 219,474$ Internal Labor
CS 89,750$ 91,994$ 94,294$ 96,651$ 99,067$ OT 80,000$ 40,000$ 30,000$ 30,000$ 80,000$ Hardware 225,485$ 52,000$ 52,000$ 52,000$ 52,000$ Software 68,000$ 70,040$ 72,141$ 74,305$ 76,534$ External labor:
Managed Services 372,000$ 180,000$ 180,000$ 180,000$ 180,000$ Integrations 105,000$ 260,000$
Change Management 50,000$ 50,000$ 50,000$ 50,000$ Additional Support 350,000$ 350,000$
Initial implementation 897,000$ 1,250,000$
2,382,235$ 684,884$ 685,310$ 696,038$ 2,617,075$ 5-year TCO: 7,065,542$
3 The five-year TCO for the selected option of cloud-based CIS:
The cloud- based solution will ensure the software remains up to date through three software upgrade releases per year which are included in the annual subscription fee and will replace software license, hardware, and internal support costs. There will no longer be hardware upgrades required. BWP will no longer be required to make costly capital investments to maintain the software and hardware for its CIS; these incremental upgrades can cost up to $1,000,000 every three to five years.
After a careful review of the submissions received, ESC was selected as the system integrator (SI) because of their extensive experience with prior CCS migrations. Their previous experience and familiarity with similar system implementations resulted in best practices which provided BWP with the confidence that their project implementation timeframe of fifteen months is reasonable and enabled their bid to come in as the lowest.
This is a shorter timeframe than other respondents due to ESC’s expertise. Their project management approach was clear and well-organized. Staff obtained and verified several client references and learned that customer satisfaction with ESC’s performance was consistently high. ESC will enter into the city’s standard professional services agreement for a term of 15 months. The scope of work will include a database upgrade, system configuration, migration, testing, change management, training, and support.
On December 1, 2022, the BWP Board voted 6 to 0 to recommend that the City Council approve and authorize the General Manager of BWP, as designee of the City Manager, to execute the proposed PSA with ESC.
Year 1 Year 2 Ye ar 3 Year 4 Year 5
License costs 315,000$ 450,000$ 450,000$ 450,000$ 450,000$ Internal Labor
CS 179,500$ 184,885$ 190,432$ 196,144$ 202,029$ OT 80,000$ 40,000$ 30,000$ 30,000$ 30,000$ Hardware -$
Software
External labor:
Managed Services 120,000$ 120,000$ 120,000$ 120,000$ Integrations 260,000$
Change Management
Additional Support 350,000$
Initial implementation 1,005,000$
2,189,500$
794,885$ 790,432$ 796,144$ 802,029$
5-year TCO: 5,372,990$
4 FISCAL IMPACT
Funds in the approved fiscal year 22-23 budget under capital improvement projects will be used for this project as part of the electric fund under customer service (496.PS42A.15042.0000.23739.10700).
CONCLUSION
Staff recommends that the City Council approve and authorize the General Manager of BWP, as designee of the City Manager, to execute a PSA with ESC to provide CIS migration services for an amount not to exceed $1,100,000. Staff also requests that the City Council authorize the General Manager of BWP to approve amendments to the PSA for an amount not to exceed $110,000 (or 10%).
ATTACHMENTS
Attachment 1 – P rofessional Services Agreement with Enterprise Solutions Consulting, LLC