City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: IT Department
Meeting Date: April 13, 2026
Report #:2511-5459
TITLE
Authorize the City Manager to Execute Amendment No. 1 to Eight Professional Services Contracts for SAP On-Call Services: Contract C26193272A with 360S2G, C26193272B with Sage Group Technologies Inc, C26193272C with Avertra Corp, C26193272D with Amick Brown LLC, C26193272E with 2iSolutions Inc, C26193272F with the Peloton Group, C26193272G with Phoenix Business Inc, C26193272H with EPI-USE America, to Increase the Not-to-Exceed Amount by $2,000,000 and Extend the Term for One Year; CEQA Status – Not a Project
RECOMMENDATION
Staff recommend that the City Council authorize the City Manager, or designee, to execute Amendment No. 1 to on-call professional services contracts with each of the eight vendors listed above for SAP on-call services, in an amount not-to-exceed $2,000,000. This amendment results in a revised total contract not-to-exceed amount of $4,000,000.
BACKGROUND
On June 17, 2025, the City Council approved eight on-call SAP professional services contracts for a one-year term from July 1, 2025, through June 30, 2026, with four optional one-year extensions1. Year 1 is nearing completion, and the City continues to require SAP on-call support.
Table 1 below provides a sampling of the projects completed under the current contract. Staff is now requesting approval for Year 2, from July 1, 2026, through June 30, 2027. 1 June 17, 2025 City Council Agenda Item No. 12:
https://recordsportal.paloalto.gov/WebLink/DocView.aspx?id=83497&dbid=0&repo=PaloAlto
Table #1: Fiscal Year 2026 - SAP On-Call Projects
AMI - UTL $223,000
ERP Enhancements & Production Support $1,587,205
$1,810,205
Example Projects:
Finance: Multiple Year-end process automations and streamlining OMB: New Position Interface, process automations for manual entries HR: New Timesheet Fiori App, CalPERS interface
Purchasing: New Dashboards, Warehouse and Inventory Management process streamlining Utilities: KPI Dashboards
In early 2025, the Information Technology Department (ITD) issued a Request for Proposals (RFP) to establish a pool of qualified vendors capable of providing SAP on-call services from July 1, 2025, through June 30, 2030, as described in the City Council 2025 staff report1, reflecting vendor specialization across the scope of work.
City continues to upgrade and expand its SAP platform including Fiori applications, business intelligence dashboards, and utility-specific solutions. Staff has reviewed the ability to transition this work in-house, however, varied specialized support is required for system configuration, data integration, troubleshooting, and project delivery. Therefore, the volume of positions needed to solicit the breadth of skills is cost prohibitive. The on-call structure allows ITD and other departments to access skilled SAP resources on a limited-term, as-needed basis, without adding permanent staff, while maintaining flexibility to respond to changing operational and project priorities.
The total combined spending across all eight contracts shall not exceed $2,000,000 per year. No vendor is guaranteed a minimum amount of work. Services will be issued through task orders with defined scope, schedule, and price and awarded based on skillset, availability, and price.
ANALYSIS
These on-call contracts are planned to support multiple complex, multi-year SAP initiatives underway or scheduled to begin in FY 2027. Estimated SAP consulting needs for FY27 include:
$1.12 million for ongoing production support (Payroll/HR, CRM, Utilities, Finance, Budget), driven by staff vacancies and the need to maintain operational continuity. $1.05 million for in-progress and planned enhancements, including Fiori upgrades, year- end closing automation, SAP integrations, and enhanced HR and utility reporting. Several tentative pipeline projects may require SAP professional services support, such as: SAP S/4HANA migration (Administrative Services, HR, Utilities); Fiber billing integration; SEW Portal upgrade project (Utilities); Telecom OSS/BSS project (Utilities); Bill redesign project (Utilities); OMS upgrade project (Utilities). Special projects will be charged to the appropriate funding source such as enterprise funds.
Overall, under these on-call contracts, consultants may provide various services to support the City’s enterprise resource planning (ERP) system.
Scope of services may include: upgrading and configuring the City’s SAP software; improve/streamline user interfaces (e.g., Fiori applications); supporting payroll, timekeeping, benefits, and HR processes; develop dashboards and reports for management, regulatory, and operational needs; troubleshooting technical issues and availability of critical systems; and system integration with other platforms.
Services under these on-call contracts are assigned via task orders:
Contractors will be selected based on availability, relevant SAP expertise, and alignment with project requirements.
Staff will evaluate each task order’s scope, contractor qualifications, and billing rates to ensure appropriateness and cost-effectiveness.
Department directors or their designees will approve all task orders, including contractor selection and budget adherence.
City Manager or designee will approve any task order over $100,000. Project managers will oversee deliverables and budgets and will approve invoices only after confirming that billed hours match work performed and that deliverables meet City standards.
Before issuing a task order, staff will assess whether the work can be performed internally or requires specialized consultant support. Task orders will include documentation and knowledge transfer requirements to ensure the City retains institutional knowledge.
These on-call contracts use the City’s standard professional services template, which allows the City to terminate for convenience with written notice; Terminate due to non-appropriation of funds; temporarily suspend work by written notice; and elect not to issue additional task orders
FISCAL/RESOURCE IMPACT
Funding for these on-call contracts in Fiscal Year 2027 are within proposed budgeted levels adopted by the City Council; no additional funding is requested. The not-to-exceed amount is higher than the budgeted amount to allow for other departments to be able to utilize these on- call contracts with their contract services or capital budgets.
Funding for subsequent years of the contract will be subject to approval through the annual budget development process. ITD is funded by the Technology Fund, an internal service fund.
Approximately 49% of the department is General Fund funded with the remaining 51% funded by enterprise and special revenue funds.
STAKEHOLDER ENGAGEMENT
ITD collaborated with other departments to identify SAP needs, prioritize projects, and confirm that the proposed on-call contracts and Year 2 extension will support key operational, regulatory, and modernization objectives.
ENVIRONMENTAL REVIEW
The approval of this contract is exempt from review under the California Environmental Quality Act (CEQA) under CEQA Guidelines section 15061(c)(3) because it can be seen that there is no possibility that the activity in question may have a significant effect on the environment.
ATTACHMENTS
Attachment A: SAP On-Call Project Support Services Contracts:
360S2G SAP On-Call Contract No. C26193272A3
Sage Group Technologies SAP On-Call Contract No. C26193272B4 Avertra SAP On-Call Contract No. C26193272C5
Amick Brown SAP On-Call Contract No. C26193272D6
2iSolutions SAP On-Call Contract No. C26193272E7
Peloton Group SAP On-Call Contract No. C26193272F8
Phoenix Business SAP On-Call Contract No. C26193272G9 EPI-USE America SAP On-Call Contract No. C26193272H10 APPROVED BY:
Darren Numoto, Chief Information Officer; Lisa Bolger, Assistant Director Information Technology/CTO
3 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/sap-on- call/2026/c26193272a.pdf
4 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/sap-on- call/2026/c26193272b.pdf
5 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/sap-on- call/2026/c26193272c.pdf
6 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/sap-on- call/2026/c26193272d.pdf
7 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/sap-on- call/2026/c26193272e.pdf
8 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/sap-on- call/2026/c26193272f.pdf
9 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/sap-on- call/2026/c26193272g.pdf
10 https://www.paloalto.gov/files/assets/public/v/1/it-department/cmr-attachments/sap-on- call/2026/c26193272h.pdf