January 11, 2005

SUBJECT:  Request for Additional Implementation Support for the Payroll/Human Resources System Upgrade and Budget Modification No. 20

REPORT IN BRIEF

Staff requests a budget modification of $132,072 to supplement and complete the Payroll/Human Resources System Upgrade project.

A portion of this additional funding will provide backfill staffing support for members of the Project Team, which is comprised of staff from the Departments of Finance, Human Resources and Information Technology.  The remainder of the additional funding is needed for programming and implementation support.

The programming and implementation support will be provided by High Line Corporation of Markham, Ontario, Canada.  High Line is the software vendor for the City’s existing payroll and human resources system.  The cost of this additional programming and implementation support will be $99,300.  This represents $92,089 beyond the remaining balance of the existing contract with High Line.  Staff, therefore, requests that Council approve the extension of the contract with High Line Corporation for this amount.

BACKGROUND

The City implemented the existing Payroll/Human Resources System in 1989.  Minor supplemental updates have been installed since the original implementation, but there have been no major upgrades.

City staff recognized that as it aged, the payroll system became increasingly unable to accommodate some of the City’s complex payroll, benefit and attendance requirements.  Also, the software and reporting functions are based upon now obsolete technology and are increasingly difficult to support.  Further, that obsolete technology promotes an over-reliance upon a single Department of Information Technology staff member, placing the City in a precarious position for providing ongoing support of such a critical software application.

Staff researched options for changing or upgrading the Payroll/Human Resources System.  Staff concluded the least costly and most effective option was to upgrade to High Line’s most current version of the software application.

On August 27, 2002, Council awarded a contract to High Line for the purchase and implementation of this software application upgrade.

DISCUSSION

In September 2002, staff from the Departments of Human Resources, Information Technology and Finance formed a project team and began preparations for the upgrade.  The Department of Finance provided direct project leadership and broad project management was provided by the Department of Information Technology.

With the assistance of High Line, the City made significant progress on this highly complex project.  There are, however, a number of contributing factors that have extended the duration of this project and necessitate the request for additional funding and resources.

First, the original software had not been upgraded in almost fourteen years.  The new software is far more robust, and contains many more features and functions than the original. Further, the underlying database and data structure are considerably different between the two software versions.  Because this latest “version” of the software is more of a separate product, rather than an upgraded version of the original, staff found that the intended upgrade is, in fact, the equivalent of a full implementation of a new system.  The requirements of the City’s complex cost accounting system, coupled with complicated requirements of bargaining unit Memorandums of Understanding and past labor practices, further exacerbated the scope of this project.

Second, we found that a significant volume of “bad data” accumulated in the existing system over the years.  The “cleansing” of the data for conversion to the new system consumed many more resources and time than originally anticipated.  This is not unusual for a project of this size, and the bad data is usually not evident until the data conversion actually takes place.

Third, because staff initially believed that this project represented an upgrade, rather than a replacement of the existing software application, internal staffing requirements for this project were underestimated.  Software upgrades are typically far less onerous than software replacements.  As such, the project team was not committed entirely to the project. In other words, the team worked on this project in addition to their normal work load and competing priorities. The team found, however, that this is a far more complex project than originally anticipated and therefore requires more time and resources than originally planned.

Finally, the Finance Manager responsible for the direct management of the project resigned in December 2003.  This required the Information Technology Manager, who had previously provided broad project management, to assume direct leadership of the project.  A portion of the original contract amount was consumed to have High Line familiarize this individual with the details of the system and to verify the reasonableness of decisions previously made regarding system setup.

The supplemental funding will allow for:

• Hiring of temporary staff to backfill for existing project team members.
• Custom programming by High Line.
• Implementation support from High Line for the testing and final conversion stage of this project.

Staff hopes to resume this project in March 2005.  Staff expects a thirty (30) week duration for the remainder of the project.

FISCAL IMPACT

  

BUDGET MODIFICATION NO. 20 Fiscal Year 2004/2005
Current		Increase (Decrease)	Revised
General Services Fund
Expenditures:
021602 – HR/Payroll System	$0	$214,770	$214,770
021601 – Information Process Software Replacement	$921,590	($82,698)	$838,892
Reserves:
20 Year RAP	$924,124	($132,072)	$792,052

 

The original contract with High Line Corporation was $178,250.  As of the date of this report, there is a remaining balance of $7,211 on this contract.  The original project was appropriated in the amount of $343,689 in the Information Process Software Replacement Fund No. 021601.  The unexpended balance of this account is $82,698.  Life-to-date expenditures on this project are $260,991.

Remaining project costs include:

High Line Corporation
Implementation Support	$43,200
Custom programming	20,000
Development of three interfaces to outside entities	26,100
Contract Contingency	10,000
Subtotal – High Line		99,300
Other Project Costs
Professional Services – Backfill for project team	85,470
Professional Services – Report development	20,000
Project Contingency	10,000
Subtotal – Other		115,470
Total Additional Project Costs		$214,770
		========

As previously described, $82,698 has already been appropriated within Information Process Software Replacement Fund No. 021601. The supplemental funding of $132,072 is available in the Information Technology Replacement Fund reserves. Additional funds are available in the Information Technology Replacement Fund due to unanticipated expenditure savings realized in FY 2003/2004.  

RECOMMENDATION

Staff recommends that Council extend the existing contract with High Line Corporation through December 31, 2005, and authorize additional expenditures in an amount not to exceed $92,089.  Staff further recommends that Council approve the funding request to supplement the Payroll/Human Resources Upgrade project and Budget Modification No. 20.

Reviewed by:

Encarnacion Hernandez, Director, Information Technology
Prepared by: Cheryl Bunnell, Applications Manager

Mary J. Bradley, Director, Finance 

Approved by:


Amy Chan

City Manager

Attachments (pdf format)

A. Draft Amendment to Consultant Service Agreement between the City of Sunnyvale and High Line Corporation for Payroll System Application Upgrade and Implementation Services

B. Consulting Service Agreement between the City of Sunnyvale and High Line Corporation for Payroll System Application Upgrade and Implementation Services