CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
8/14/2023
1 SUBJECT:
Agreement with Tyler Technologies, Inc for the purchase and implementation of Munis Enterprise Resource Planning (ERP) System
RECOMMENDED ACTION:
Adopt the attached resolution to authorize the City Manager to execute an agreement with Tyler Technologies, Inc. for the Munis Enterprise Resources Planning (ERP) System and Implementation Services for the City of Pacifica.
STAFF CONTACT:
Yulia Carter, Assistant City Manager
(650) 738-7402
[email protected]
Lucy Xie, Deputy Finance Director
(650) 501-6014
[email protected]
BACKGROUND:
Enterprise Resource Planning (ERP) refers to tools used to integrate an organization's multiple functions to manage their resources more effectively to collect and organize data from various sources (e.g., purchasing, payroll, accounts payable and receivable, time and attendance, and human resources management systems) into a centralized system that can be used to share information cross-departmentally and create standardized reports for the evaluation of operations and future service needs.
The City's finance system, GEMS by Harris Computers, was implemented in 2008 and has been utilized for core financial functions and payroll. While the City has used GEMS for many years, the Software is no longer meeting the City's operational and reporting needs. Unfortunately, the GEMS system was already slightly outdated at the time of the implementation and is even more inadequate now with its limited functionality and complex DOS-based platform that requires extensive manual effort, time-consuming processes, and inability to provide comprehensive and timely reporting. Furthermore, limited support is currently available for the GEMS system, as most clients have upgraded to other Harris Computers products or implemented a new ERP system.
Efficient and reliable financial systems are crucial for the smooth functioning of any government entity. A modern ERP system would expand direct access to financial information to all departments and will be able to connect and integrate other software programs used by individual departments, which would significantly improve efficiency citywide. The ERP Implementation was added to the City's Capital Improvement Plan in 2019. In June 2020, the City of Pacifica contracted with Client First to conduct a needs assessment, develop requests Pacifica City Council 2
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for proposals (RFPs), evaluate vendor selection, and assist with contract negotiations with the selected vendor.
The City issued an RFP in 2021 and received five responses (Caselle, CentralSquare, Harris CitySuite, Oracle NetSuite, Tyler Technologies Munis) as listed in the table below.
COMPANY ONE TIME COST RECURRING ANNUAL COST
Oracle NetSuite $696,140 TO BE DETERMINED
CentralSquare $ 579,205 98,505
Tyler Technologies $ 446,033 155,054
Harris Computer System $349,922 100,314
Caselle Inc. $ 68,019 68,208
The City formed an ERP Selection and Evaluation Committee, comprised of representatives from various departments to evaluate software functional requirements across all desired applications. The comprehensive evaluation was based on the following factors: ability to meet the City’s functional requirements, cost within the budget; implementation methodology and compatibility with the City’s technology standards, support availability and financial stability of the vendor and the overall quality of the RFP response. From this analysis, Tyler Technology, Oracle NetSuite and Central Square were selected as finalists for the project. The evaluation committee conducted a series of Proof of Capabilities (POC) demonstrations with all three vendors that followed the City-developed script and described key processes (e.g. purchase requisitions and payroll) and functionality (e.g. workflow and reporting) that the vendors were asked to demonstrate. Through this process, the Munis® solution by Tyler Technologies scored the highest and was selected for the City's next Financial and Human Resources ERP software.
We want to express our appreciation to city staff members who serve on the ERP evaluation team for their efforts during the RFP evaluation and vendor selection process and their overall commitment to the entire ERP project, that falls outside of their normal scope of duties.
Due to budget and staffing constraints, the project implementation has been delayed for two years. However, after the Finance department successfully filled vacancies earlier this year, the ERP implementation became a high-priority project again, prompting staff to re-engage in contract negotiations with Tyler Technologies. As a result of the good faith negotiations efforts, the City and Tyler Technologies have reached an agreement that significantly reduced the cost of the original bid down to $239,660 as initial one-time investment and $85,378 in ongoing annual cost.
After carefully reviewing and evaluating all materials presented by Tyler Technologies, staff contacted current customers of Tyler Technologies using the Munis software to conduct an extensive reference check and received generally positive feedback. Staff is confident that the Munis system will meet the City's needs for a comprehensive software solution. Therefore, the City Manager recommends that the City enter into an agreement with Tyler Technologies for the Munis ERP software.
DISCUSSION AND ANALYSIS:
Tyler Technologies, Inc and SaaS
Tyler Technologies, Inc. is the leading provider of integrated software systems for the public sector. Munis® ERP has nearly 30 years of experience in California. Tyler Technologies is committed to growing with public agencies for years to come. Munis® ERP has more than 1,900 Pacifica City Council 3
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clients in the public sector nationwide. Some local Bay Area cities that use Munis® ERP include San Carlos, Burlingame, Richmond, Hayward, Berkeley, Pleasanton, Napa, and Vacaville. We can leverage best practices, streamline processes, and enhance collaboration between departments by implementing a system trusted by others in the industry. The new system offers comprehensive reporting tools that enable accurate and detailed financial reporting. This functionality will significantly enhance our financial understanding, support data-driven decisionmaking, and provide instant reports for better analysis.
SaaS stands for Software as a Service. It is a cloud computing model in which software applications are provided and hosted by a third-party vendor and made available to customers over the Internet. With SaaS, users can access and use software applications without installing and maintaining them on their local systems. In the case of Munis's ERP implementation with Tyler Technologies, the City opted for a cloud-based solution implies adopting the SaaS model.
Instead of hosting the ERP software on-premises and managing the infrastructure, the City will subscribe to Tyler Technologies' Munis ERP system as a cloud-based service. This means that the Software and its associated infrastructure will be hosted and managed by Tyler Technologies, and City Staff will access the system remotely through the Internet.
This cloud-based system can provide real-time updates, eliminating the need for manual file conversions and enabling instant access to data. This modern technology would enable to City to streamline workflows and make timely and informed decisions.
In addition to standard financial modules, the new Tyler Technologies' Munis® ERP system will include advanced payroll time and attendance functions that will reduce the manual workload for payroll staff. It will also include the human resources management system to manage employee data and benefits and generate comprehensive reports. These features will also increase efficiency and streamline HR processes.
Timeframe of the ERP implementation
Once the agreement is executed, Tyler Technologies will assign an implementation team to work with City staff on delivering the new system.
It is anticipated that the financials portion of the project (including such modules as Accounting/General Ledger, Accounts Payable and Purchasing, Budgeting, Project & Grant Accounting, Accounts receivable, and General billing) will be implemented first, starting from September 2023, and the expected go-live date for these modules will be in September 2024.
The Payroll, Human Resources, and Time and Attendance modules, including Employee SelfService (ESS) features, are projected to roll out by January 2024, with the expected go-live date in January 2025. ESS allows employees to access and update their own personal information through a secure online web portal. Employees will also be able to view payroll information such as paycheck history and W-4 election details, view current benefits, make limited changes in their own demographic data, see their leave balances, enter timecards, and request time off online.
The table below shows the tentative implementation timeframe:
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Cost and Budget:
Staff has negotiated the terms of the attached agreement and carefully reviewed Exhibit A, Investment Summary, to ensure a well-informed and cost-effective decision-making process.
During this review, the modules were categorized into two groups: "must-have" and "good to have but not of utmost importance." This classification was crucial in identifying the essential modules for meeting urgent needs and those considered optional to save costs.
The "must-have" modules listed above were also prioritized to ensure the seamless functioning of critical processes to effectively streamline operations and ensure the success of the ERP implementation.
To optimize costs and ensure fiscal responsibility, the Staff has also identified certain modules as "good to have but not of utmost importance." because of staffing limits.
Replacing a key technology platform is a complex and challenging undertaking, and the City's Finance and Human Resource Departments are already understaffed to manage regular daily operations. The ERP implementation will be one of the highest priorities for both departments for the next two years. Although the Council previously approved a contract extension with Regional Government Services to assist with the ERP implementation, bringing the new system to life will still be a very staff-intensive process that may increase personnel cost as it may require temporary backfill of other day-to-day functions and/or additional overtime cost. Staff will revisit these needs during the mid-year budget review. Once implemented, the new ERP system will be a prudent investment in the City's fiscal future.
As presented in Exhibit A - Investment Summary, the locked SaaS fees for selected modules have been negotiated at a discounted rate of $85,378 a year, which will be locked in for five years. Pricing for optional modules is listed for reference as well. Staff can revisit these optional modules once the essential ERP system is in place and there is staff capacity and bandwidth for additional implementation.
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Remote Implementation:
Remote implementation of software systems has been gaining traction across various industries in recent years. This trend has become even more popular after the pandemic, as organizations have sought innovative ways to continue essential projects while minimizing in-person interactions and travel expenses. Remote implementation significantly reduces or eliminates the need for city staff to travel to the vendor's location or for vendor representatives to visit our organization.
Staff opted for remote implementation of the Munis ERP system as this aligns with current trends, enhances cost-effectiveness, improves time efficiency, and optimizes resource utilization and results in a significant cost saving compared with the original quote for onsite implementation. With remote implementation, project activities can proceed without constraints of travel time and scheduling conflicts. This will allow for more flexibility and faster progress, as meetings and consultations can be arranged more efficiently and promptly.
Exhibit A - Investment Summary shows the selection of remote implementation at a cost of $193,140 with 1,044 hours committed by the Tyler implementation team and trainers. Executive Insights Implementation and Tyler Project Management are budgeted at $8,400 and $24,420 respectively to the total one time implementation fee of $239,660.
FISCAL IMPACT:
The ERP implementation project has been a Council priority item since 2020, and the cost of the project has been previously funded in the Capital Budget. The cost of this agreement of $325,038 in the first year ($239,660 initial one-time implementation fee, plus $85,378 annual subscription fee) is already budgeted in Fund 22 Capital improvement Fund. Staff is not requesting any additional appropriation at this time. Any potential additional personnel cost (staff backfill and/or overtime cost) will be reviewed at the mid-year budget analysis and reported to Council at that time if any adjustments are needed.
ORIGINATED BY:
City Manager's Office
ATTACHMENT LIST:
Attachment A: SaaS Agreement - Tyler Technologies Inc. (PDF) Pacifica City Council 6
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RESOLUTION NO. ________
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PACIFICA
AUTHORIZING THE CITY MANAGER TO EXECUTE AN AGREEMENT BETWEEN THE CITY
OF PACIFICA AND TYLER TECHNOLOGIES, INC FOR MUNIS ENTERPRISE RESOURCE
PLANNING (ERP) SYSTEM AND IMPLEMENTATION SERVICES
WHEREAS, the City’s current Finance System, GEMS, which supports all finance and payroll functions, was purchased in 2008, and utilizes outdated software technology, making it increasingly difficult to maintain; and
WHEREAS, with the technical assistance of the project consultant Client First, City staff issued a Request for Proposals (RFP) for Enterprise Resource Planning (ERP) System and Implementation Services and received five qualified responses; and WHEREAS, Tyler Technology, Inc. demonstrated that the proprietary software product Munis ERP can meet the City’s needs without the need for customizations; and WHEREAS, Tyler Technology, Inc. has agreed to perform the services related to Munis ERP implementation as outlined in the Exhibit A Investment Summary in the contract for the City at a cost not to exceed $666,550. This includes a one-time fee of $239,660 from remote implementation and data conversion, as well as a locked annual subscription of $85,378 for the next five years.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Pacifica, California, to authorize the City Manager to execute an agreement with Tyler Technologies, Inc for the Munis Enterprise Resource Planning Solution.
• • • • •
PASSED AND ADOPTED at a regular meeting of the City Council of the City of Pacifica, California, held on August 14, 2023, by the following vote:
AYES, Councilmembers:
NOES, Councilmembers:
ABSENT, Councilmembers:
ABSTAIN, Councilmembers:
_________________________________
Tygarjas Twyrls Bigstyck, Mayor
ATTEST: APPROVED AS TO FORM:
______________________________ _________________________________ Sarah Coffey, City Clerk Michelle Kenyon, City Attorney