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Report regarding a resolution approving a ten-year professional services agreement with Iron Brick Associates LLC, in an amount not to exceed $7,726,991 plus contingency funding of 15% of the first year’s costs in the amount of $519,174, for implementation services and software subscriptions for the Workday and Teller platforms to replace the City’s existing Enterprise Resource Planning (ERP) system and authorizing the City Manager to execute the agreement. (Tony Barrera, Director of Information Technology)
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RECOMMENDATION
Recommendation
Staff recommends that the City Council adopt the accompanying resolution approving the professional services agreement and authorize the City Manager to execute the professional services agreement with Iron Brick Associates for the implementation of a new ERP system. The project will include Workday as the software provider, Strada as the implementation partner, and Can/Am for the cashiering system, replacing the City’s existing financial and payroll systems.
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BACKGROUND/DISCUSSION
The City of South San Francisco has used the Tyler Eden financial management system for over 15 years, and it has worked well. Unfortunately, Tyler Technology announced in 2017 that the system will sunset in March 2027 at which time they will discontinue support of the software. Currently, the City also utilizes Vista by PDS payroll system as a separate platform. The upcoming sunset of the Tyler Eden system provides an opportunity to consolidate these two disparate systems into a single, centralized application, thereby improving efficiency and integration of our financial and human resources business processes.
In January 2024, the City partnered with Plante Moran, an experienced ERP consultant, to conduct a comprehensive needs assessment. The consultant facilitated in-depth interviews and workshops with staff across various departments to identify existing workflows, challenges, and requirements for Financials, Payroll, Human Resources, and Community Development. This process allowed for the development of a Request for Proposal (RFP) to attract qualified vendors who offer solutions that align with the City’s operational and long-term goals.
The RFP combined requirements for all components and was posted on the City’s OpenGov procurement site. It was downloaded by 82 companies and eight companies submitted proposals, but only seven submitted proposals specifically addressed to the ERP software components.
Selection Process:
An ERP selection committee was formed with representatives from the Finance, Human Resources, and Information Technology Departments. The vendor selection process was conducted in three rounds, using the following criteria:
Round 1: The IT Director reviewed all proposals to ensure they meet all the minimum required criteria.
Round 2: The Selection Committee evaluated the qualified proposals to decide which vendors would be invited back for demonstrations.
Round 3: The Selection Committee scored the proposals based on demonstrations and reference checks.
In Round 1, the IT Director eliminated two vendors for failing to meet the minimum criteria, which included submitting complete documentation and demonstrating experience with California government projects. In Round 2, staff reviewed the remaining vendor proposals and their associated costs as listed below.
After a thorough review of each proposal, the ERP selection committee chose to invite two vendors, Tyler Technologies and Workday Inc along with Workday’s three different implementation partners for software demonstrations. During the demonstrations, subject matter experts from each City department participated in two separate 5-day software sessions. They evaluated each vendor and submitted their ratings and feedback to the committee.
Following multiple additional demonstrations, the subject matter experts and the selection committee recommended Workday Inc. as the preferred ERP vendor, with Strada chosen as the implementation partner.
Below are the ERP selection committee scores:
Although Strada and Workday were not the lowest-cost option, they collectively offered the most comprehensive and effective solution to meet the City's current and future needs. Workday is a cloud-based solution that delivers all the essential features and functionality required by both Human Resources and Finance, eliminating the need for additional software to address functionality gaps. Strada emerged as the strongest implementation partner by demonstrating a robust and detailed implementation strategy, including AI-driven testing, a comprehensive project plan, and the flexibility to provide additional demonstrations as needed.
Key components of the Workday system include Core Financials, Financial Plannings, Payroll, Human Capital Management, Learning, and Recruitment, along with integration capabilities with other City software systems. Additionally, the solution will incorporate Teller software, a third-party cashiering application, to manage credit/debit card transactions, e-checks, cash, and other payment types. Teller will also integrate with existing City systems to provide a centralized and streamlined cashiering platform.
Staff recommends executing an agreement with Iron Brick Associates LLC, an authorized reseller of third-party software, platforms, and services. This agreement will cover both the Workday software, Teller Software, and the full scope of Strada’s implementation services. The term of the agreement is 10 years and includes annual price adjustments.
Strada will lead the implementation efforts, which include data migration from two disparate systems, integrations, and the configuration of all core financials, payroll, and human resources modules within the Workday platform. Can/AM will be responsible for configuring Teller, the cashiering software, to support all payment transactions.
The project timeline is estimated to be 21 months from the official starting date. Implementation and services will follow after that time period.
Project Costs:
Staff is proposing a 10-year agreement for the software subscriptions and implementation services with a total cost is $7,726,991 plus contingency funding of 15% of the first year’s cost in the amount of $519,174. The total projected cost for the first two years is $4,492,723, which will be covered by the $6 million set aside in a designated reserve within the General Fund for this project. As a result, there will be no direct impact on the General Fund’s available balance. The detailed cost breakdown is provided below.
10-Year Cost Projection
In the first year, the Workday subscription will provide only the necessary modules during implementation. In year two and year three, the Workday subscription will include all software modules, including the Workday Success Program. This program will enable City staff to deploy, adopt, and optimize the Workday Platform with tailored deployment guidance, in-tenant advice, and on-demand learning to expand City staff Workday expertise and help keep pace with innovation. In year four, the Workday Success Program will be removed, which will reduce the annual subscription costs. Furthermore, staff added Workday training credits that allow both online and instructor-led classes.
In addition to the core project costs, the project's complexity and high resource demands will require supplemental staffing and professional project management services. The following staff augmentation requirements and estimated costs have been identified based on an average commitment of 20 hours per week over the 21-month implementation period:
These costs are separate from the main agreement.
Total two-year implementation, software subscriptions, and additional estimated project costs total $6,075,723.
FISCAL IMPACT
The total 10-year cost with the contingency funding is $8,246,165. The Finance Department has designated $6 million for the ERP implementation portion of the project. Sufficient funds are currently available in account 100-27495, to cover the first two years for implementation and software subscriptions costs. A substantial portion of the total project costs will be funded by this allocation. City staff will request additional funding for subsequent years through the normal budget process. Additionally, staff estimates that future cost savings will be achieved by eliminating redundant software, which will help offset ongoing software subscription costs.
RELATIONSHIP TO STRATEGIC PLAN
The project is an initiative under Modern and Sustainable Organization, ensuring financial sustainability.
CONCLUSION
The City’s current ERP system will reach the end of its software support lifecycle in March 2027. As a result, City staff is required to replace the existing financial system and is recommending a transition to Workday. This solution would combine financials, payroll, and HRIS into a single, integrated platform. This will improve operational efficiency, leverage modern technologies, create long-term opportunities for integration with other City systems, and support the City's needs for the next 10 years and beyond.
Attachment: ERP Presentation