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Home My WebLink About05.b. Review draft Position Paper to authorize the General Manager to amend an existing agreement with DLT Solutions, LLC in an amount not to exceed $283,014 increasing the agreement cost ceiling to $2,011,192 to switch Oracle Cloud licensing to HostedPage 1 of 4 Item 5.b. DCENTRALSAN MEETING DATE: JANUARY3, 2023 BOARD OF DIRECTORS POSITION PAPER DRAFT SUBJECT: REVIEW DRAFT POSITION PAPER TO AUTHORIZE THE GENERAL MANAGER TO AMEND AN EXISTING AGREEMENT WITH DLT SOLUTIONS, LLC I N AN AMOUNT NOT TO EXCEED $283,014, INCREASING THE AGREEMENT COST CEILING TO $2,011,192, TO SWITCH ORACLE CLOUD LICENSING TO HOSTED EMPLOYEE AND INCREASE LICENSES IN BUDGETING MODULE SUBMITTED BY: INITIATING DEPARTMENT: CHARLES MALLORY, INFORMATION ADMINISTRATION DEPARTMENT- IT TECHNOLOGY MANAGER REVIEWED BY: PHILIPLEIBER, DIRECTOR OF FINANCE AND ADMINISTRATION ISSUE Board of Directors approval is requested to amend an existing agreement as part of the Oracle system implementation that would increase the available licensing necessary for the budgeting module. Staff is presenting this item for Board authorization and transparency of the proposed change. BACKGROUND Central San currently licenses the Oracle Fusion — Enterprise Resource Planning (ERP) Cloud solution through a "Named User" model has proved to be less cost efficient than initially anticipated. Significantly more employees require direct access to multiple models, such as Financial, Procurement, and Project than was originally anticipated in the scoping with project implementer Emtec. A subsequent workaround plan of using custom reports instead of direct user access to these modules did not live up to expectations and is not the most cost-effective way to proceed in the use of the ERP application. Additionally, more licenses are needed to optimize the use of the budgeting module to allow for both Operations and Maintenance (O&M), which was implemented in 2021, and Capital Improvement Program (Cl P) budgeting within the application. Development of the budgeting module for the latter use is presently underway. It is recommended to change the structure of the license to an Enterprise software model. This will change the current structure from "Named User" to an Enterprise model, for several of the Oracle modules. January 3, 2023 Regular ADM IN Committee Meeting Agenda Packet - Page 28 of 252 Page 2 of 4 In the summer of 2017, Central San started the process of replacing the aging ERP system by contracting with Government Finance Officers Association (GFOA) to help document the ERP-related business processes, and to assist in issuing the Request for Proposal (RFP). The legacy ERP system (SunGard) was found to be antiquated compared to modern solutions. SunGard was also becoming difficult to maintain and vendor support was nearing "end of life" for the system. In spring of 2018, an RFP for anew ERP was posted and five responses were received and evaluated. Ultimately, the Oracle Fusion ERP was selected, and the contract was signed in the summer of 2019. I n order to acquire the rights to use the Oracle Cloud ERP software, a separate contract was signed with DLT Solutions, LLC (DLT) in the summer of 2019. DLT is the reseller of Oracle licenses. The timeline of going live of major Oracle Cloud modules was as follows: April 2020 — Core HCM (Human Resources) July 2020 — Timekeeping and Absences September 2020 — Financial, Procurement and Projects November 2020 — Employee Benefits January 2021 — Payroll, O&M Budgeting Every Oracle Cloud module is licensed separately, and a license is required regardless of the type of access. Our current license covers all employees for Payroll, Timekeeping, Absences and Benefits. However, there are not enough licenses for everyone that need to use the Financial and Project modules. The original intent was that separately developed reports would be used by some staff members to access financial and project information, but it has been realized that using reports in that manner is not an efficient solution. I n February 2022, Oracle provided notification of licensing shortfalls in several modules. Our current licensing model is called "Named User", which is the most economical approach for a small number of users, but becomes more expensive as the number of users increase. The proposal here is to switch to Enterprise licensing for Central San for many of the Oracle modules which collectively comprise the Oracle Fusion Cloud ERP that Central San is using. This will allow any Central San employee and/or contractor to use the licensed modules as needed. Additionally, staff is proposing to begin using Oracle to develop the CI P budget in addition to the O&M budget. Staff has contracted with developer Emtec to configure the Oracle modules for this purpose at a cost of approximately $78,000. This will require user licenses for the Oracle Cloud budgeting module, which is proposed in this Position Paper, as described further below. ALTERNATIVES/CONSIDERATIONS Staying on the current "Named User" licensing model would require a "true -up" to the license count for all under -licensed modules. This would result in higher costs and additional administrative effort of tracking the many combinations of modules versus users. Converting to an Enterprise model would simplify the entire process and save money. As another alternative, the District could forgo the plan to use Oracle for Cl P budgeting. This is not the recommended alternative, as the existing approach of using only Excel spreadsheets has resulted in less transparency than is desirable during the development process, less granularity of information in the Oracle system for when the budget is completed, and the need to transfer data from Excel to Oracle on a manual basis. January 3, 2023 Regular ADM IN Committee Meeting Agenda Packet - Page 29 of 252 Page 3 of 4 FINANCIAL IMPACTS The current five-year Oracle Cloud licensing agreement has a total value of $1,728,178, which ends June 30, 2024. This will need to increase by $283,014 to a total of $2,011,192. This represents the additional funding needed for the remainder of the contract term to reflect (1) the revised Enterprise licensing approach, and (2) the cost of new licenses for C I P budgeting. While an increase from the current amount, the new total is less costly that if the existing "Named User" approach is continued, while increasing the number of "Named Users", which would be necessary to continue using the modules in the manner in which they are currently being used. Representing the above commentary on an annual basis is the following: • Annual Cost per original contract: $345,437 • Annual Cost with existing "Named User" licensing approach and revising to the required number of licenses: $500,179 • Annual Cost with existing "Named User" licensing approach and revising to the required number of licenses and adding licenses for CI P functionality: $575,238 • Annual Cost with Enterprise licensing approach and adding CI P budgeting functionality: $499,676. COMMITTEE RECOMMENDATION The Administration Committee reviewed this matter at its January 3, 2023 meeting and recommended RECOMMENDED BOARD ACTION Authorize the General Manager to amend an existing agreement with DLT Solutions, LLC in an amount not to exceed $283,014, increasing the agreement cost ceiling to $2,011,192, to switch Oracle Cloud licensing to Hosted Employee and increase licenses in budgeting module. Strategic Plan Tie -In GOAL FOUR: Governance and Fiscal Responsibility Strategy 3 - Maintain financial stability and sustainability GOAL SEVEN: Innovation and Agility Strategy 1 - Leverage data analytics to become a more efficient utility, Strategy 2 - Implement organization -wide optimization ATTACHMENTS: 1. Oracle Fusion ERP Annualized License Evaluation January 3, 2023 Regular ADM IN Committee Meeting Agenda Packet - Page 30 of 252 Oracle Fusion ERP Annualized License Evaluation Original Contract True -up Enterprise Licenses Final Enterprise License Licenses Annual Cost Licenses Annual Cost Licenses Annual Cost Annual Cost Financial Cloud 100 $ 114,881.40 1000 $ 48,000.00 1000 $ 3.74 $ 44,898.00 Expense Cloud 1000 $ 1,914.72 1000 $ 4,800.00 1000 $ 0.37 $ 4,489.80 Invoice processing 10 $ 919.05 10 $ 919.05 1000 $ 0.36 $ 4,340.04 Forms Recognition 10 $ 919.05 1000 $ 4,800.00 1000 $ 0.36 $ 4,340.04 Purchasing Cloud 10 $ 5,361.13 63 $ 33,789.99 1000 $ 38,400.00 1000 $ 2.99 $ 35,918.28 Contracts Cloud 10 $ 6,127.01 50 $ 30,000.00 1000 $ 38,400.00 1000 $ 2.99 $ 35,918.28 Procurement Self -Service 100 $ 1,225.40 200 $ 2,000.00 1000 $ 9,600.00 1000 $ 0.75 $ 8,979.60 Project Financials Cloud 10 $ 11,488.14 48 $ 55,162.67 1000 $ 48,000.00 1000 $ 3.74 $ 44,898.00 Inventory Management Cloud 10 $ 5,361.13 63 $ 33,789.99 1000 $ 38,400.00 1000 $ 2.99 $ 35,918.04 PBCS 30 $ 16,083.40 30 $ 16,083.40 100 $ 53,612.99 Enterprise Performance Reporting 30 $ 16,083.40 30 $ 16,083.40 100 $ 53,612.97 HCM Cloud 1000 $ 41,484.96 1000 $ 41,484.96 1000 $ 3.99 $ 47,868.60 Time & Labor Cloud 1000 $ 9,573.48 1000 $ 9,573.48 1000 $ 0.80 $ 9,573.72 Payroll Cloud 1000 $ 22,338.00 1000 $ 22,338.00 1000 $ 1.86 $ 22,338.72 Performance Management Cloud 1000 $ 6,382.32 1000 $ 6,382.32 1000 $ 0.53 $ 6,382.44 Learning Cloud 1000 $ 6,382.32 1000 $ 6,382.32 1000 $ 0.25 $ 3,000.00 Workforce Health & Safety 1000 $ 6,382.32 1000 $ 6,382.32 1000 $ 0.53 $ 6,382.44 Additional Test Environment 1 $ 19,944.69 1 $ 19,944.69 1 $ 19,945.31 Transparent Data Encryption 1 $ 6,648.23 1 $ 6,648.23 1 $ 6,382.50 Public Sector 25 $ 31,077.35 25 $ 33,939.98 Digital Assistant 1 $ 1,988.95 1 $ 2,214.34 RightNow $ 273.48 $ 721.57 Collaboration $ 165.75 $ 437.32 Additional Test for Permits $ 12,430.94 $ 13,562.82 $ 154,742.66 Total $ 345,436.61 $ 500,179.27 $ 382,622.16 $ 499,675.80 January 3, 2023 Regular ADM IN Committee Meeting Agenda Packet - Page 31 of 252