CITY OF MENIFEE
SUBJECT: Agreement Amendment with Tyler Technologies, Inc. for the Enterprise Resource Planning Financial Management
Software Solution
MEETING DATE: March 20, 2024
TO: Mayor and City Council
PREPARED BY: Margarita Cornejo, Deputy Finance Director REVIEWED BY: Travis Hickey, Chief Financial Officer
APPROVED BY: Armando G. Villa, City Manager
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RECOMMENDED ACTION
1. Approve and authorize the City Manager to execute Amendment No. 1, updating the scope of work and terms and conditions to the Software as a Services Agreement (”SaaS”) with Tyler Technologies, Inc. for comprehensive Enterprise Resource Planning Financial Management Software Solution (“MUNIS”) in the amount of $29,722.50; and
2. Authorize the City Manager to execute future contract amendments to the SaaS Agreement with Tyler Technologies, Inc. contingent on project budget availability.
DISCUSSION
On February 15, 2023, the City Council formally approved the addition of CIP 23-14: ERP Project Implementation as part of the Capital Improvement Program (CIP) and award of a Software as a Services (“SaaS”) agreement with Tyler Technologies, Inc. Through this two-year project the City will ultimately replace the existing financial management system, Eden (set to sunset by March 2027), with a more robust and comprehensive Enterprise Resource Planning (“ERP”) system, the Munis ERP.
Since award of the SaaS agreement and beginning with the spring of 2023, city staff has continued working through the implementation process month over month, with a targeted go-live date of July 1, 2024 for the Financials component of the system, and January 1, 2025 for the Human Resources component. The project is guided by an Executive Steering Committee (represented by the Executive Office, Finance Department, Information Technology, and Human Resources/Risk Management Departments), in collaboration with the various departments and Tyler Technologies, Inc. As the project continues to move forward, staff identified some modifications recommended to the existing SaaS agreement. The total SaaS agreement
City of Menifee Staff Report
Amendment to (SaaS) Agreement with Tyler Technologies, Inc.
March 20, 2024
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compensation amount of $947,867 would increase by $29,722 for a new revised total of $977,589.
The proposed agreement modifications would be as follows:
1.Terms and Conditions: Acceptance of Deliverables and Control Points & Other. Within the executed Statement of Work (“SOW”), clarification on existing terms and conditions indicating the City shall have ten business days from the day of delivery to accept each deliverable or control point. If the City does not accept, the City shall notify Tyler in writing, within ten business days and with reasoning. Additionally, the amendment provides for clarification on the Initial Term of the agreement, the timing of billing for the project, as well as provides some applicable terms and conditions for third party components of the ERP; and
2.Time and Attendance & Advanced Scheduling modules/components: Addition and/or expansion of the Time and Attendance and Advance Scheduling module to accommodate Menifee PD personnel migrating from existing timesheet/scheduling system to ERP solution.
The additional cost for this would be $87,588.50 and would increase licenses from 100 to 350.
The $87,588.50 includes one time licensing and implementation costs of $68,687.50, and annual SaaS costs of $18,901, subject to an annual adjustment up to 5% beginning with Year
4. By including Menifee PD as part of the Time and Attendance & Advanced Scheduling the City will be able to fully consolidate time and attendance management within one unified system and eliminate the current solution used by the PD, resulting in costs savings and operational efficiencies. Since the department was established in 2020, the City has used a separate Time, Attendance, and Advanced Scheduling solution (“POSS”), from the current EDEN system due to the more complex nature of PD schedules and shifts. With the consolidation of the time and attendance system through Munis, there will be savings of just under $12k per year for the current POSS system.
3.Removal of Inventory Module and Purchasing Integration: In review of the City’s current operations and other software solutions specific to inventory and procurement, staff has determined the Inventory Module and purchasing integration would not be needed at this time.
Therefore, it is recommended to remove these components from the scope of work. This would result in decrease to the existing contract of $57,866. The $57,866 includes savings of one-time licensing and implementation costs of $17,053, and annual savings of SaaS costs of $40,813, estimated in Table 1 beginning with Year 4 with the maximum annual adjustment.
City of Menifee Staff Report
Amendment to (SaaS) Agreement with Tyler Technologies, Inc.
March 20, 2024
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7 2
If approved, the revised SaaS agreement with Tyler will be revised as follows:
Table 1: SaaS Agreement for Munis System
Proposed Contract
Amendment No. 1
Future Years One Time
Costs
On-Going
Costs (1)
Original
Total
Annual
Costs Additions
(Item #2)
Deletions
(Item #3)
Total Revised
Annual Costs
Year 1 Costs(2) $657,843 $290,024(3) $947,867 $87,588.50 ($57,866) $977,589.50 Year 2 Costs N/A 290,024 290,024 18,901 (40,813) 268,112 Year 3 Costs N/A 290,024 290,024 18,901 (40,813) 268,112 Year 4 Costs N/A 304,525 304,525 19,846 (42,854) 281,517 Year 5 Costs N/A 319,751 319,751 20,838 (44,996) 295,593 Year 6 Costs N/A 335,739 335,739 21,880 (47,246) 310,373 Year 7 Costs N/A 352,526 352,526 22,974 (49,608) 325,892 Year 8 Costs N/A 370,152 370,152 24,123 (52,089) 342,186 Year 9 Costs N/A 388,660 388,660 25,329 (54,693) 359,296 Year 10 Costs N/A 408,093 408,093 26,596 (57,428) 377,261 TOTAL $657,843 $3,349,518 $4,007,361 $286,976.50 ($488,406) $3,805,932 (1) Beginning Year 4, Annual Software Subscription Costs will be subject to an annual increase adjustment not-to- exceed 5%. Table 5 reflects maximum annual increase of up to 5% to provide estimated maximum amount(s). (2) Year 1 (Implementation Year) commenced February 2023 and includes one time implementation costs and annual licensing costs.
(3) Includes $40,813 of recurring costs included as part of Deletion (Item #3).
Additionally, as the City moves forward in the upcoming months, to maintain continuity in project implementation, staff is requesting the City Manager be pre-authorized to approve any future contract amendments to the SaaS agreement, provided availability of project budget. As of February 2024, the estimated available budget is approximately $147,410.50, after the proposed Contract Amendment No. 1.
As the project continues in its implementation phase, and staff assesses the various operational components of the system, a comprehensive project update, timeline and budget, will be incorporated as part of the FY2024/25 Mid-Cycle review process.
STRATEGIC PLAN OBJECTIVE
Regular City Business
FISCAL IMPACT
The fiscal impact for the proposed Amendment No. 1 would result in a net increase to the existing SaaS agreement of $29,722.50, paid in FY 2023/2024 for year 1, as the addition/expansion of the Time and Attendance modules would be offset by the removal of the inventory module and purchasing integration. Additionally, the annual subscription costs for the additional license would include an increase of $18,901 for years 2 and 3, and subject to the overall agreement annual adjustment beginning with Year 4. The fiscal impact for the second year of the 2-year budget cycle would be $18,901 in FY 2024/2025. Additionally, beginning with FY2025/26, with the migration of Menifee PD to the Munis Time and Attendance & Advanced Scheduling system, the City of Menifee Staff Report
Amendment to (SaaS) Agreement with Tyler Technologies, Inc.
March 20, 2024
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City would realize annual cost savings in eliminating the current software solution being used. No additional budget appropriation(s) is required for the proposed contract amendment at this time.
ATTACHMENTS
1. Amendment No. 1
2. Statement of Work
3. Original Agreement