HomeMy WebLinkAbout5.b. Receive update on implementation of ERP systemItem 5.b.
J une 16, 2020
T O: A D MI NI S T R AT I O N C O MMI T T E E
F RO M :J O HN HUI E, I T MA NA G E R
P HI L I P L E I B E R , D I R E C TO R O F F I NA NC E A ND A D MI NI S T R AT I O N
RE V IE WE D B Y:A NN S A S A K I , D E P UT Y G E NE R A L MA NA G E R
R O G E R B A I L E Y, G E NE R A L MA NA G E R
S UB J E C T: R E C E I V E UP D AT E O N I MP L E ME NTAT I O N O F O R A C L E F US I O N C L O UD
E NT E R P R I S E R E S O UR C E P L A NNI NG (E R P ) S YS T E M
Introduction
T his is an update on the Oracle F usion Cloud E R P implementation. T his project commenced
implementation in A ugust 2019 and was anticipated to extend through early 2021. A core human
resources related module was the first to be implemented in A pril 2020. Staf f provided an E R P update to
the Administration Committee on May 5 indicating that a revised project schedule due to lost time related
to C O V I D-19 was not without significant risk as the “New compressed schedule is highly aggressive.”
M ore T ime Needed to C lose Readiness Gaps
D uring the first week of J une, the system implementer, Emtec, discussed with Central S an staf f the
activities that would need to be completed f or/by each group for the planned go-live date of J uly 1, 2020
for the f inancial related modules. T hese activities included data conversion and loading the production
environment with inf ormation needed f or the go-live date. W hile the plan was viewed as realistic f or most
modules, it was recognized to be stretch for others. Additional discussion about the readiness levels f or all
the involved groups ultimately led to a consensus that more time was needed to close remaining readiness
gaps.
T he modules that were scheduled to go-live on J uly 1 included the f ollowing: (1) F inance (general ledger,
cash management, payables, receivables, fixed assets, expenses, procurement cards, and employee
travel reimbursements); (2) P rojects (used for capital project accounting as well as monthly f inancial
reporting); and (3) P urchasing/Contracting/I nventory management.
T he F inance-related areas were viewed to be in an acceptable state of readiness. L imited gaps
were either able to be remediated in J une or viewed as not critical for essential operations at go-live.
Projects, while somewhat behind the F inance related areas in terms of readiness, were viewed as
workable for J uly 1 go-live.
Purchasing/C ontracting/I nventory management had more gaps. C onfiguration of the Oracle
modules extended beyond the anticipated stage when the overall readiness was to be tested f or
system acceptance (User Acceptance Testing). Progress on higher intensity data conversion
activities was impacted due to the need to continue to f ocus on configuration issues and insufficient
user guides. Development of user guides needed for staf f to complete the multiple steps necessary
to complete day-to-day Oracle processing activities needed more time.
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Options Considered
Going live with a system before it is ready would involve significant risks. W hile this was discussed as an
option, it is viewed as inadvisable. Another option of going live with some of the modules but not others
was also considered. However, given the integrated nature of the above modules, implementing them in a
piecemeal f ashion on J uly 1 was discussed with E mtec, but viewed as challenging. Accordingly, that lef t
the alternative of a delay for the go-live date of these modules. W hile a delay of as little as one month was
viewed as possible, discussions between E mtec and staf f concluded that a two-month def erral in the go-
live date would be preferred given the f ollowing factors:
Ensuring true readiness at go-live by completing necessary activities, including closing remaining
conf iguration gaps, system documentation, testing of all f unctionality by staff, data conversion, and
training of all staf f .
Allowing for adequate time to complete these modules, while maintaining the overall E R P
implementation schedule intact, which was already a phased implementation that had other modules
going live af ter these financial modules. I mplementation dates of other modules are unchanged,
including E mployee S elf S ervice on J uly 1, 2020, Time & L abor on J uly 18, 2020,
Permitting/Community D evelopment in September, P ayroll in J anuary 2021, and Budgeting in early
2021.
R ecognizing staff's normal work activities that take place around the fiscal year-end for the F inance,
Purchasing and C apital Project workgroups.
Providing f or additional time f or the more complex data conversion that would need to take place to
bring in transactional data f rom the legacy system after the start of the new f iscal year.
Maintaining project team momentum to get over the f inish line.
F actors L eading to Delay
T he f actors that led to gaps in the readiness included:
Scheduled Float Time Lost Due to COVID-19: T he original schedule for a J uly 1 go-live was tight
but had some float time if configuration of certain modules required more time than anticipated. T his
float time was lost as a result of the C O V I D-19 disruptions that took place in March and April. At
least three to four weeks of project time was lost as staff needed to rework existing business
processes to enable teleworking/social distancing, which pushed back the start of the second testing
phase known as C onference R oom Pilot 2 (C R P 2). T his phase, when it did commence, had to be
conducted remotely via Microsoft Teams. T his delay also resulted in a loss of time between the
testing sessions (C R P2 and the f inal “User Acceptance Testing”) f or E mtec to make necessary
changes to the module configurations.
More Time for Module Configuration: C onfiguration of some modules has required more time than
originally anticipated, including resolving issues in contract management, inventory, procurement
cards, approval workf lows, f orm development, reporting, and the DocuS ign integration. T here is
inherent uncertainty going into any E R P P roject. Unlike more typical capital projects that C entral San
undertakes, the E R P P roject does not commence implementation with a 90% design document, but
more like a 5-10% design plan. A great deal of learning takes place about C entral San by the
implementer, and by Central S an staf f of the Oracle software. F urther, more time has been required
by both Central S an staf f and Emtec staff on configuration and design issues for Oracle functionality
that Central S an has not had before, such as encumbrance accounting, budgetary control, and
approval workflow.
The Need for Instructional Guides: Guides for users on how to perform tasks in the new system,
given the complexity of the Oracle system and how it was conf igured to meet C entral San needs,
have been recognized as a necessity, and have had to be developed by Emtec.
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More Fully Documented Testing Scripts: T he need f or more structure going into testing rounds,
including f ully documented testing scripts for users, specif ic assignments to users, and a common
progress/issues log.
More Time for Staff Training: T he need for adequate time f or training the wider Central S an
community beyond the core users involved in the system is also necessary.
Data Conversi on: Complexity of data conversion efforts in some areas, particularly Purchasing, and
challenges in aligning these efforts with obtaining necessary updated contract information from Divisions.
C ost Implications of Two-M onth D eferral
T he cost implications of a two-month def erral in the F inance modules go-live date is expected to be
relatively limited. W hile a f ormal quote has not yet been received, preliminary discussions with E mtec
have indicated a cost of approximately $40,000 to $50,000 per month of additional ef f ort that the entire
Emtec team is employed. T he additional ef f orts of Emtec in J uly-August may not require the entire team
to be committed to Central S an, so the cost may be less than twice this monthly run rate. T he E mtec
contract costs approved by the Board on J une 20, 2019 were $2,285,000. A ssuming a maximum of an
incremental $100,000 and other approved and pending change orders of $62,170 (approved C O#3
$22,770 for C O V I D -19 related delays, extra integrations, and pending C O#4 $39,400 for extended post-
go-live support, extra training and documentation), Emtec would be paid about $162,170 above the J une
2019 approved contract amount, which represents an increase of 7%.
T he total potential change orders of approximately $162,170 are within the $200,000 change order limit
within the General Manager authority. T hese additional costs are well within the project contingency
amount of $527,000 included in the E R P P roject capital budget costs of $5,205,000 over the f our f iscal
years commencing in F Y 2018-19. A part from these incremental third-party costs, there is anticipated to
be some further Central S an staf f time charged to the P roject f or the teams that continue work on these
modules beyond the originally anticipated go-live date of J uly 1. However, the total C entral San staff time
charged to the project is not expected to exceed the $1,855,000 included in the approved P roject budget.
M ore Recent Hybrid Option Considered
F urther consideration of the work involved in bringing legacy system transaction data into the new Oracle
System for J uly and August has also led to the exploration of a hybrid option that appears promising as of
J une 11 (the date this memorandum has been f inalized f or distribution). S hort of a complete cut-over to
the new system on J uly 1, parallel use of the two systems (HT E and Oracle) appears to be of value. T his
would involve maintaining the legacy HT E system as the official system of record f or J uly and A ugust
(including printing checks from HT E ), but also inputting transactions into Oracle during this time as well. A ll
of the Oracle modules noted above, except for Purchasing/C ontracting/I nventory management, would be
used by staf f . T his would allow f or intensive use of the Oracle system, allow f or all transaction data f or the
new year to be in the system, and f inancial reporting to be done from the new system. T here would be
some additional staf f ef f ort involved, but this appears manageable. E mtec costs f or a hybrid approach are
expected to be consistent with the two-month delay option discussed above. Additional discussions with
the f ull project team on this hybrid approach will take place F riday, J une 12, through the date of the
Administration Committee meeting on J une 16.
C onclusion
Staf f and Emtec remain positive about the project and are confident that these modules will be
implemented successfully, and that the overall project timeline f inishing with the P ayroll and Budgeting
modules in early 2021 remains on-track. A dditionally, the plan to convert to use of the Oracle Timekeeping
module ef f ective J uly 18 remains on track. T he approaches noted above, either a delay in implementation
of certain modules, or a hybrid option of parallel use of both HT E and most of the Oracle modules during
J uly and August, are viewed as prudent to ensure the new system functions as intended, while avoiding
risks from a complete cut-over to the new system bef ore full readiness of all the involved modules is
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achieved. S taff expects to finalize an intended course of action with respect to the F inance modules in the
coming days. T his information is provided as a briefing only; Board action is not required.
Strategic Plan Tie-I n
G O A L TH R EE: Be a Fiscally Sound and Effective Water Sector Utility
Strategy 2 - Manage costs
G O A L S I X: Embrace Technology, I nnovation and Environmental Sustainability
Strategy 3 - Encourage the review and testing of technology to optimize and modernize business operations
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