Agenda Index City of Vancouver

A6

ADMINISTRATIVE REPORT

TO:

Vancouver City Council

FROM:

General Manager of Corporate Services Group

SUBJECT:

SAP 4.6C Upgrade

 

RECOMMENDATION

A. THAT Council accept the best value bid from Omnilogic Systems Group to provide contracted service to assist the City's SAP Business Support team with the upgrade of the SAP system from version 3.1I to version 4.6C, at a cost of $936,900 (exclusive of GST) subject to a contract satisfactory to the Director of Legal Services.

B. THAT Council approve $370,100 to meet the bid price of the recommended contractor, Omnilogic Systems Group, and for project contingency to ensure successful completion of the City's first major upgrade to SAP. This funding is in addition to the $500,000 previously approved by Council. The source of funding will be the Information Technology Long Term Financing Plan.

CITY MANAGER'S COMMENTS

The City Manager believes that the evaluation of these proposals has been comprehensive and the budget and funding are appropriate and therefore recommends A and B.

BACKGROUND

Since go-live, the City's SAP team has worked hard on stabilizing and evolving the SAP environment. As a result, over the past twelve months, calls to the Help Centre have declined by 32%, a supplemental training program has increased usage and understanding of SAP and its associated business processes, and the new SAP Business Support team has been established to ensure the system is appropriately supported and sustained. SAP is now an integral part of the City's information systems environment.

On March 30, 2000 Council approved an upgrade path for the City's SAP system, involving an upgrade to version 4.6C. The rationale for this upgrade included:

· packaged software is normally purchased to take advantage of new developments in functionality provided by software vendors on a regular basis;
· it is important to remain current with the technology so that vendor support is continuous, even if the new functionality is not implemented;
· vendor support includes Legal Change Packages (LCP's) which are regularly provided by SAP to fix problems and adjust for regulatory changes, e.g., Revenue Canada rules;
· SAP releases new versions with increased functionality each year;
· expansion of the SAP functionality used by the City and the configuring and testing of additions will allow the City to make better use of its SAP investment.

In addition to the reasons listed in the report, the following is worth noting:

· the new 4.6C graphical user interface (GUI) offers significant improvements in usability and productivity over version 3.1I;
· SAP support for the City's current version of SAP is due to expire in October 2001;
· the system architecture of version 4.6C positions the City to deliver new web-based functionality.

At the time of the previous report to Council, the City was using version 3.1H. Since support for this version was due to expire in October 2000, an interim upgrade to 3.1I was required. The City's SAP team successfully completed this upgrade, without external assistance, in September 2000. However, because of the degree of change between 3.1I and 4.6C, City staff will be unable to complete the upgrade to 4.6C without assistance in the following areas:

· providing a methodology and approach which has been proven through use with at least three large organizations;
· providing trained resources with experience in previous upgrades to 4.6C;

· providing training and knowledge transfer to internal staff on 4.6C functionality and architecture (business and technical).

It should be noted that the focus of this project is for the external consulting partner to provide a project framework and hands-on assistance to the City's internal SAP team such that they are equipped to conduct system upgrades to future releases themselves.

Deloitte Consulting provided the original project scope and cost estimate for the upgrade to 4.6C which formed the basis of the previous report to Council. Based on that preliminary estimate, Council allocated $800,000 to the upgrade project: $300,000 for hardware with funding from the Computer Equipment Reserve, and $500,000 for consulting services with funding from the Information Technology Long Term Financing Plan.

REQUEST FOR PROPOSAL (RFP) AND EVALUATION PROCESS

On August 29, the City publicly advertised a Request For Proposal to assist the SAP Business Support team with the 4.6C upgrade. Five proponents responded: Deloitte Consulting, IBM, ISM-BC, Omnilogic Systems Group and SAP Canada. The responses were assessed against the following criteria, using the Expert Choice evaluation software:

· understanding of the skill levels and project requirements of the City's SAP Business Support team;
· ability of the proposed upgrade methodology and toolset to ensure a successful upgrade to 4.6C and to provide a solid foundation for future upgrades;
· good value ratio of consulting days to cost;
· quality and experience of the proposed consulting team;
· 4.6C upgrade experience of both the proposed resources and the company overall.

The evaluation team consisted of the SAP Business Support manager and team leads, the Director of Business Support and the Manager of Materials Management. The overall cost of the proposals varied from $599,995 to $3,090,000 (including net GST). All proposals were higher than the initial estimates contained in the previous Council report. Omnilogic proposed the second lowest cost but scored substantially higher on all of the key evaluation criteria, and almost twice as high as the lowest price proponent. The team therefore decided that Omnilogic offered the best value overall and recommends them as our upgrade partner.

PROJECT SCOPE

The scope of the upgrade will cover:

· upgrading the SAP system from version 3.1I to version 4.6C;
· technical training for the City's SAP Business Support team;
· any configuration and programming changes required to ensure the new version fits within the context of the City's business processes and systems environment;
· unit testing, integration testing and user acceptance testing to ensure that the upgrade has minimal impact on the City's business;
· training for all SAP users, including navigating through the new desktop screens (graphical user interface) and any new functionality;
· documentation of all changes to the SAP system, including updating of information on the SAP website;
· change management and communications activites to prepare City staff for the new version.

PROJECT TIMING

As noted above, support for the City's current version of SAP (3.1H) is scheduled to end in the fall of 2001. In order to ensure that the new version (4.6C) is functional before this support ends, it is proposed to begin the upgrade project on November 20, 2000, with completion in May 2001.

FINANCIAL CONSIDERATIONS

On March 30, 2000, Council instructed staff to proceed with planning for the upgrade project based on the $800,000 estimated budget developed by Deloitte Consulting. Funding for the project was provided from the Information Technology Long Term Financing Plan ($500,000) and the Computer Equipment Reserve ($300,000).

Since March, the necessary hardware upgrades have been completed at a cost of $190,000. As a result, the commitment from the Computer Equipment Reserve will be $110,000 below the original estimate.

The bid price from Omnilogic for the upgrade project is $936,900 (excluding net GST). In addition, staff recommend additional funding of $100,000 in order to ensure funds are available to cover project contingencies, including:

· SAP team members have highly marketable skills; losing key staff during the projectwould necessitate hiring external consultants to ensure a successful go-live;
· given that this is the City's first major upgrade of its SAP software, it is appropriate to ensure provision has been made for other unforeseen circumstances.

With contingency estimated at $100,000, the total budget for the upgrade project will be $1,226,900. As noted, $190,000 of this cost has been used to upgrade system hardware.

The following table summarizes the current project budget compared to the estimate considered by Council in March:

As the Computer Equipment Reserve is an inappropriate source for funding consulting costs related to the upgrade, it is necessary to identify additional funding of $536,900. It is recommended that this funding be provided as follows:

Funding is available from the SAP Business Support Group Budget because of delays in hiring key staff members onto the SAP team and the inability to take full advantage of the consulting services portion of the 2000 budget. It is proposed that the balance of the funding be provided from the IT Long Term Financing Plan.

CONCLUSIONS

Since go-live, the SAP team has worked hard to stabilize the SAP software and to train and support its user community. This effort is reflected in the reduced number of Help Centre calls and increased competency of the user community. To ensure continued stability and growth of the SAP environment at the City, it is essential that we upgrade to a supportedversion of the software. The City's SAP Business Support team expects to be able to handle regular system upgrades itself - as with the successful upgrade to 3.1I earlier this year. However the group will require additional help with 4.6C since it is their first major release.
The recommendations to engage Omnilogic to assist with the 4.6C upgrade and to approve the additional funding for contracted service and contingency provide best value to the City. The additional funding covers the contract price and provides an appropriate contingency to ensure successful project completion.

*****

ag001031.htm

General Mgr./Dept. Head: Estelle Lo

Date:

This report has been prepared in consultation with the departments listed to the right, and they concur with its contents

Report dated:

October 19, 2000

Author:

Shari Wallace

Phone:

871-6501

Concurring Departments

Purchasing Department

 
 
 

Comments or questions? You can send us email.
[City Homepage] [Get In Touch]

(c) 1998 City of Vancouver