ADMINISTRATIVE REPORT

Date: March 18, 1998

Author/Local:T.Leung/7225

CC File No. 1805

TO:	Vancouver City Council
FROM:	Chief Information Officer
SUBJECT:	Award of Contract: Hardware and Operating Software for SAP Applications (Core Corporate Systems Project)

RECOMMENDATION

A.THAT Council approve the award of contract to IBM Canada Limited, at a total cost of $1,491,351 plus applicable taxes, for the purchase and install of hardware and operating software related to the implementation of SAP software applications, including a three-year maintenance and support contract. The source of funds for the one-time capital purchase is from the SAP project budget previously approved by Council on September 9, 1997. Funds for the maintenance and support will initially be funded from the capital budget, and later from operating savings with the phase-out of mainframe costs.

B.THAT Council instruct the Director of Legal Services to execute the contract with IBM Canada Limited to the satisfaction of the Chief Information Officer.

GENERAL MANAGER’S COMMENTS

The General Manager of Corporate Services RECOMMENDS approval of the recommendations.

SAP PROJECT COMMENTS

The project Steering Committee RECOMMENDS approval of the recommendations.

COUNCIL POLICY

Award of contracts in excess of $300,000 requires Council approval.

BACKGROUND

After 18 months of intensive work by staff to evaluate a number of software packages to replace the City’s Financial and Human Resources systems, City Council, on September 9, 1997, approved a project budget of $20.9 million for the purchase and implementation of SAP software under the partnership of SAP Canada and Ernst and Young Consulting. The financing for the project was based on the Long Term Financing Strategy -Information Technology Replacement Program report previously approved by Council on July 23, 1996.

Council approval of the report on September 9, 1997 also allowed staff to start the process to evaluate and negotiate the purchase of hardware and operating software required to support the SAP software. The evaluation and negotiation processes have now been completed and the solution is report back to Council for approval.

DISCUSSION

As instructed by Council, staff have contacted the major suppliers of hardware and operating systems and reviewed their proposals and the options available to the City. The evaluation process considered such factors as the reliability and the ability to scale up the products, past history of the use of the products in other similar organizations, competence of the service staff and the response time for service, the compatibility with existing and planned information infrastructure, and cost / benefit analysis with a view to provide the best solution for the City to support the SAP applications.

The recommended solution is to contract with IBM Canada Limited for the purchase of IBM RS6000 machines and related peripherals, the supporting operating software, the data base management system (DB2) and the consulting services for the installation of the hardware and software. It also includes a 3-year maintenance and support services price.

The total cost of the contract is $1,491,351 plus applicable taxes.

ALTERNATIVES/OPTIONS

Based on the criteria as noted above, the recommended solution offers the best value for the City.

PERSONNEL IMPLICATIONS

The additional workload with the installation of the RS6000 machines and the related software can be absorbed from within the existing staffing level without additional cost to the City.

IMPLEMENTATION

The evaluation and negotiation process has taken more time than originally anticipated in the project plan. It is critical that the recommendations be approved at this time, and the installation of the hardware and software take place as soon as possible so as not to cause any undue hardship to the project plan.

FINANCIAL IMPLICATIONS

Sufficient funding has been reserved from the $20.9 m project budget previously approved by Council on September 9, 1997 for the one-time capital purchase. Funds for the maintenance and support will initially be funded from the capital budget, and later from operating savings with the phase-out of mainframe costs.

CONCLUSION

With the SAP project entering the second phase, additional servers with sufficient processing power is required to allow project staff the capability to continue the configuration and validation phases with eventual implementation by early 1999. The staff recommendation represents the best solution available in the market at this time, given the constraint of the project budget.

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(c) 1998 City of Vancouver