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City of Stockton Legislation Text File #: 15-2180, Version: 1 AGREEMENT WITH PLANTE MORAN FOR ERP ASSESSMENT CONSULTING SERVICES RECOMMENDATION It is recommended that the City Council adopt a motion approving findings for an exception to the competitive bid process and authorizing the City Manager to: 1) enter into an agreement with Plante & Moran, PLLC (Plante Moran), of Southfield, MI for Enterprise Resource Planning (ERP) Assessment Consulting Services - Phase 1, in the amount of $192,700; and, 2) upon satisfactory completion of the ERP Assessment Consulting Services - Phase 1 agreement, enter into a subsequent agreement with Plante Moran for ERP Implementation Support Consulting Services Phase 2, in the amount of $674,400. It is further recommended that the motion authorize the City Manager to take appropriate actions to carry out the purpose and intent of this motion including utilizing the results of the analysis to be performed by Plante Moran under the ERP Assessment Consulting Services - Phase 1 agreement to return to Council for award of a contract to the best qualified software vendor to upgrade or replace the City’s existing ERP system. Summary The City has identified the need for better integration of its financial data with improved capabilities to support activity-based cost accounting. The City is also seeking better integration and compatibility of its financial and other administrative systems with related internal systems (e.g., Accela, CityWorks). The City’s ERP software functions as its primary administrative services system, providing an integrated view of core business processes for all areas of the enterprise. Through the promotion of best business practices and the use of an integrated enterprise database system, the City’s goals are to: · · · ·

Maximize administrative services productivity, efficiency and effectiveness; Improve reporting capabilities; Streamline the flow of information throughout the organization; and, Enhance decision making.

To address these needs, the City undertook a competitive bidding process, issuing a Request for Proposals (RFP) soliciting proposals from qualified firms capable of providing ERP Assessment Consulting Services. Of the seven (7) proposals received, Plante Moran was selected as the vendor best meeting the City’s requirements and therefore recommended for contract award.

City of Stockton

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File #: 15-2180, Version: 1 DISCUSSION Background The City currently utilizes SunGard HTE/NaviLine as an integrated ERP system for its financial, human resources, payroll, land management, work orders, and utility billing functions. This system has been in place since 1990 and is now more than 25 years old. As cited in the Citywide Technology Strategic Plan (CTSP), published in January 2012, the existing SunGard HTE/NaviLine system fails to meet City business requirements and therefore must be replaced through procurement and implementation of a new ERP system. Moreover, the replacement of the outmoded SunGard HTE/NaviLine system represents a key component of the City Council’s goal of improving the City’s organizational capacity while addressing the Council’s strategic objective of strengthening the City’s technology infrastructure. The City also stands to gain through the more robust internal controls offered by a state-of-the-art ERP system, which will contribute toward resolving several key findings from various internal audits. The City desires to engage Plante Moran (an ERP Assessment Consultant) to conduct a comprehensive evaluation of the various systems currently in use throughout the City against current business needs of the City and best practices utilized in municipal agencies. The objectives of this evaluation are to: ·

Identify departmental use of technology, including opportunities for process improvement;


Perform a business gap analysis, which compares existing system capabilities against business needs and current best practices while contrasting those capabilities with software functionality available in the marketplace today;


Identify areas where the current system is capable of meeting business needs but additional staff training is needed to allow the system to be utilized to its fullest potential;


Identify whether the need exists for the City to replace its current system and/or ancillary systems and prepare an RFP template as the basis for evaluating potential new systems;


Determine if a “best of suite” or “integrated” system fulfills goals identified in the business gap analysis;


Define the costs, lifecycle, and staff resources necessary to implement potential new systems;


Define potential labor savings or opportunities for staff redirection;


Identify the timeline and phasing options associated with implementing the recommendations; and,


Evaluate processes, workflow, and data cleanup as well as other quality measures.

Present Situation On July 15, 2015, the City issued an RFP soliciting proposals from qualified firms capable of providing ERP Assessment Consulting Services. The proposed scope of work consisted of the following tasks: City of Stockton

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File #: 15-2180, Version: 1 Phase 1 ·

Task #1 - Gap Analysis - The purpose of the Gap Analysis is to identify existing ERP related issues and opportunities, including functional requirements, as the basis for evaluating the appropriate ERP solution for the City based on products available in the marketplace today.


Task #2 - Develop a Plan of Action to Implement Solutions - The Plan of Action is geared toward finalizing the City’s ERP software specifications while outlining a high-level plan for completing evaluation, selection, procurement, and implementation of the ERP solution that best meets the City’s business requirements.


Task #3 - Evaluation and Selection of ERP Software Vendor - During this task, the City, with assistance from the ERP Assessment Consultant, executes the evaluation and selection process to determine the “best fit” solution for its business needs. This task includes evaluating the abilities of vendor products to meet the City’s ERP software specifications as well as conducting software demonstrations, vendor and client interviews, and other due diligence activities.


Task #4 - Contract Negotiations - During the Contract Negotiations task, the City benefits from the ERP Assessment Consultant’s familiarity with the selected vendor and its product in negotiating a performance-based contract for the software and services necessary to achieve successful implementation within the City’s business environment.

Phase 2 ·

Task #5 - Implementation Support - During the Implementation Support task, the ERP Assessment Consultant will employ its working knowledge of previously successful ERP implementation efforts to assist the City in its own successful implementation and acceptance of the selected ERP vendor solution.

On August 13, 2015, the City received proposals from the following seven (7) firms: · · · · · · ·

Baker Tilly Virchow Krause, LLP, Madison, WI Berry Dunn, Portland, ME Delegata, Sacramento, CA Plante & Moran, PLLC, Southfield, MI Public Consulting Group (PCG), Sacramento, CA Schafer Consulting, Dana Point, CA SoftResources Software Consulting, Kirkland, WA

To support proposal and vendor selection, a nine-member task force representing staff from Administrative Services, Human Resources, Public Works, and Information Technology was created. Task force members were chosen to ensure a broad spectrum of representation from current module owners and heavy users of the existing ERP system. Vendor proposals were reviewed and scored independently by each task force member based on each firm’s qualifications, experience, resources, and ability to provide services on time, within budget, and in accordance with City objectives as outlined in the RFP. Three customer reference checks were then completed, followed by on-site interviews, for each of the top three (finalist) scorers - Plante Moran, PCG, and Berry Dunn. City of Stockton

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File #: 15-2180, Version: 1 Finalists are summarized in the table below:

Plante Moran


Berry Dunn

Tasks #1-4 (Assessment) Costs




Estimated Task #5 (Implementation) Costs




Total Proposal Costs




The nine-member evaluation and selection task force voted unanimously to recommend Plante Moran as the top choice for contract award. The task force collectively expressed concern that Berry Dunn had substantially underestimated the level of effort necessary to ensure a successful ERP assessment and replacement for the City of Stockton. In addition, the task force found the following considerations in favor of Plante Moran: ·

Plante Moran’s proposal cited over 200 recurring government clients, whereas Berry Dunn’s proposal listed only 30;


Plante Moran identified more clients who are using and transitioning from the SunGard HTE/NaviLine software currently used by the City of Stockton, which increases the probability of relevant analysis being completed;


Plante Moran’s proposal reflects a greater depth of corporate experience, especially with regard to a certified public accounting background, than the other finalist proposals;


Customer reference checks and on-site interviews indicate that Plante Moran has more practical knowledge and experience relating to ERP assessment and replacement within local governments. (Plante Moran customer references include Corpus Christi, TX and Mesa, AZ, both of which are cities comparable in size and complexity to the City of Stockton; additionally, Plante Moran has worked successfully with the City of Detroit, which has faced financial challenges similar to those experienced by the City of Stockton.);


Plante Moran’s interview demonstrated a superior understanding of business, organizational and cultural change management principles and practices, which are essential to ensuring a successful engagement within the City of Stockton’s business environment; and,


Plante Moran’s interview offered a higher level of comfort that their team would be able to interact successfully with City of Stockton program staff, primarily due to the fact that a much larger proportion of their team appeared in person at the vendor interview in contrast with Berry Dunn.

Based on these findings, staff recommends authorizing the City Manager to execute an agreement with Plante Moran for ERP Assessment Consulting Services - Phase 1 for a scope of work encompassing Tasks #1 - 4 (Gap Analysis through Contract Negotiations) in the amount of $192,700

City of Stockton

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File #: 15-2180, Version: 1 Once Phase 1, Tasks #1 - 4 (Gap Analysis through Contract Negotiations), has been completed and the resulting contract for upgrade or replacement of the City’s existing ERP system has been approved through Council, the City Manager will then enter into a subsequent agreement with Plante Moran for a scope of work encompassing Phase 2, Task #5 (Implementation Support), with a cost currently estimated at $674,400. These costs have been anticipated as part of the ERP Replacement Project, which currently retains a fund balance of $8.25 million. Findings Stockton Municipal Code 3.68.070 authorizes the City Council to award contracts without requiring a competitive bid process in those cases where facts exist which would support and justify an exception. In this item, the following findings exist which, if adopted by Council, would constitute sufficient justification for authorizing the execution of a contract with Plante Moran, for ERP Assessment Consulting Services: 1. The project involves a very specialized field and its success requires an experienced firm which has successfully implemented and performed such projects. Furthermore, the City does not have the specialized personnel or equipment to perform the work required for this project. 2. Use of a cost competitive basis for the selection of professional consultant services for this project is not in the best interest of the City, because it tends to result in lower quality and thoroughness of the services provided. 3. The use of the RFP process was appropriate for this project, because it relies on the evaluation of professional qualifications and performance as the basis for selection of a consultant. Use of these criteria helps ensure selection of a firm that meets the highest standards. Next Steps Upon award of the contract for Phase 1, Plante Moran will perform a business gap analysis by comparing the City’s existing ERP capabilities against business needs while also assessing those needs against current industry best practices. Plante Moran will then assess the gap analysis results and resulting requirements specification against software functionality available in today’s ERP marketplace. This assessment will identify the ERP vendor whose product best meets the City’s business needs. Then, with Plante Moran’s support and underlying expertise, the City will negotiate a contract to acquire and implement the software product in a manner that will mitigate critical implementation risks and ensure project success. At that point, staff will return to the Council with a recommendation for contract award based on the evaluation, selection, and contract negotiations completed during Phase 1, Tasks #1 - 4 of the ERP Assessment scope of work. This approach is outlined in Attachment A and has been designed to address critical ERP implementation risks. The following timeline provides approximate time frames for the key tasks and milestones associated with the proposed ERP evaluation, selection, procurement and replacement: City of Stockton

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File #: 15-2180, Version: 1

Activity / Task

Approx. Start Date

Approx. Finish Date

Tasks 1-2 - Gap Analysis / Plan of Action

Upon approval

Spring 2016

Tasks 3-4 - Evaluation / Selection / Contract Negotiation

Spring 2016

Summer 2016

Council Approval for ERP Software Vendor Contract

Fall 2016

Fall 2016

Fall 2016

Fall 2018

Phase 1

Phase 2 Task 5 - ERP Implementation

According to industry analyst Gartner, roughly 75 percent of all ERP projects fail, despite the industry’s focus on delivering better customer service and advanced IT systems. In many cases these results can be traced to failure of the underlying procurement to address the following risk areas: · · · · · · · · · ·

Project management and executive sponsorship Realistic development of the supporting project schedule and plan Organizational change management Appropriate business involvement Adequate testing to ensure core business processes are functioning correctly Data conversion / master data management Technical infrastructure and custom development Cutover to the new system Compliance regulations, internal controls and security Engaging an advocate for management

By utilizing the vendor evaluation and selection approach outlined in Attachment A, the City of Stockton is able to customize its contract negotiation strategies, including supporting contract terms and conditions to mitigate risks, thus eliminating the need for an RFP. FINANCIAL SUMMARY Sufficient funds are available in the Computer Internal Service Fund, account number 502-5101-670, to cover the proposed cost of $867,100 for these two agreements. Attachment A - ERP Evaluation and Selection Methodology Attachment B - RFP for ERP Assessment Consulting Services Attachment C - Contract with Plante & Moran, PLLC for ERP Assessment Consulting Services Phase 1 Attachment D - Contract with Plante & Moran, PLLC for ERP Assessment Consulting Services Phase 2 City of Stockton

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