HomeMy WebLinkAbout12. Authorize an amendment to an existing agreement with DLT Solutions, LLC regarding the Oracle ERP SystemItem 12.
BOARD OF DI RECTORS
POSIT ION PA PER
M E E T ING D AT E:J A NUA RY 19, 2023
S UB J E C T: A UT HO R I Z E T HE G E NE R A L MA NA G E R TO A ME ND A N E X I S T I NG
A G R E E ME NT W I T H D LT S O L UT I O NS, L L C I N A N A MO UNT NO T TO
E X C E E D $283,014, I NC R E A S I NG T HE A G R E E ME NT C O S T C E I L I NG TO
$2,011,192, TO S W I T C H O R A C L E C L O UD L I C E NS I NG TO HO S T E D
E MP L O YE E A ND I NC R E A S E L I C E NS E S I N B UD G E T I NG MO D UL E
S UB M I T T E D B Y:
C HA R L E S MA L L O RY, I NF O R MAT I O N
T E C HNO L O G Y MA NA G E R
I NI T I AT I NG D E PART M E NT:
A D MI NI S T R AT I O N D E PA RT ME NT - I T
RE V IE WE D B Y: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
R oger S . B ailey
General Manager
IS S UE
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 f or the budgeting module. S taff is
presenting this item f or B oard authorization and transparency of the proposed change.
B AC K G RO UND
C entral San currently licenses the Oracle F usion – Enterprise Resource Planning (E R P ) C loud solution
through a "Named User" model has proved to be less cost ef f icient than initially anticipated. Signif icantly
more employees require direct access to multiple models, such as F inancial, P rocurement, and P roject
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-ef f ective way to proceed in the use of the E R P 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 C apital I mprovement Program
(C I P) budgeting within the application. D evelopment of the budgeting module f or the latter use is
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presently underway.
I t is recommended to change the structure of the license to an Enterprise software model. T his will change
the current structure from "Named User" to an E nterprise model, f or several of the Oracle modules.
In the summer of 2017, Central San started the process of replacing the aging ERP system by contracting with
Government Finance Officers Association (G F OA) to help document the ERP-related business processes, and
to assist in issuing the Request for Proposal (R F P). T he 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.
I n spring of 2018, an R F P for a new E R P was posted and f ive responses were received and evaluated.
Ultimately, the Oracle F usion E R P was selected, and the contract was signed in the summer of 2019.
I n order to acquire the rights to use the Oracle C loud E R P software, a separate contract was signed with
D LT Solutions, L L C (D LT ) in the summer of 2019. D LT is the reseller of Oracle licenses.
T he timeline of going live of major Oracle C loud modules was as f ollows:
April 2020 – Core HC M (Human R esources)
J uly 2020 – Timekeeping and Absences
September 2020 – F inancial, P rocurement and Projects
November 2020 – E mployee B enef its
J anuary 2021 – Payroll, O&M Budgeting
Every Oracle C loud module is licensed separately, and a license is required regardless of the type of
access. Our current license covers all employees for Payroll, Timekeeping, A bsences and B enef its.
However, there are not enough licenses for everyone that need to use the F inancial and Project modules.
T he 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
ef f icient solution.
I n F ebruary 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.
T he proposal here is to switch to E nterprise licensing f or Central S an for many of the Oracle modules
which collectively comprise the Oracle F usion Cloud E R P that Central S an is using. T his will allow any
C entral San employee and/or contractor to use the licensed modules as needed.
Additionally, staf f is proposing to begin using Oracle to develop the C I P budget in addition to the O&M
budget. S taff has contracted with developer E mtec to configure the Oracle modules for this purpose at a
cost of approximately $78,000. T his will require user licenses f or the Oracle C loud budgeting module,
which is proposed in this P osition P aper, as described f urther below.
ALT E RNAT I V E S /C O NS I D E RAT IO NS
Staying on the current “Named User” licensing model would require a “true-up” to the license count f or all
under-licensed modules. T his would result in higher costs and additional administrative ef f ort of tracking
the many combinations of modules versus users. C onverting to an E nterprise model would simplif y the
entire process and save money.
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As another alternative, the District could forgo the plan to use Oracle for C I P budgeting. T his 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 inf ormation in the
Oracle system for when the budget is completed, and the need to transfer data f rom E xcel to Oracle on a
manual basis.
F I NANC IAL I M PAC T S
T he current five-year Oracle Cloud licensing agreement has a total value of $1,728,178, which ends J une
30, 2024. T his will need to increase by $283,014 to a total of $2,011,192. T his represents the additional
funding needed f or the remainder of the contract term to reflect (1) the revised E nterprise licensing
approach, and (2) the cost of new licenses f or C I P budgeting.
W hile 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.
R epresenting the above commentary on an annual basis is the f ollowing:
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 C I P functionality: $575,238
Annual Cost with Enterprise licensing approach and adding C I P budgeting f unctionality: $499,676.
C O M M I T T E E RE C O M M E ND AT IO N
T he Administration Committee reviewed this matter at its J anuary 3, 2023 meeting and recommended
approval.
RE C O M M E ND E D B O ARD AC T I O N
Authorize the General Manager to amend an existing agreement with D LT S olutions, L L C in an amount not
to exceed $283,014, increasing the agreement cost ceiling to $2,011,192, to switch Oracle Cloud
licensing to Hosted E mployee and increase licenses in budgeting module.
Strategic Plan Tie-I n
G O A L FO U R : G overnance and Fiscal R esponsibility
Strategy 3 - Maintain financial stability and sustainability
G O A L S E V E N : I nnovation and Agility
Strategy 1 - Leverage data analytics to become a more efficient utility, Strategy 2 - I mplement organization-wide
optimization
AT TAC HM E NT S :
D escription
1. Oracle F usion E R P Annualized L icense E valuation
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Oracle Fusion ERP Annualized License EvaluationLicenses Annual Cost Licenses Annual Cost Licenses Annual Cost Annual CostFinancial Cloud 100 114,881.40$ 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$ Original Contract Enterprise LicensesTrue-up Final Enterprise LicenseJanuary 19, 2023 Regular Board Meeting Agenda Packet - Page 74 of 319 Page 4 of 4