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HomeMy WebLinkAboutFIN 20-18--OlffoJ--P1 ER]NG From: Stan Karwowski Director, Finance & Treasurer Report to Council Report Number: FIN 20-18 Date: October 1, 2018 Subject: Selection of a New Finance and Human Resources Information System Recommendation: 1. That the proposal submitted by Blue IT Group Inc. dated July 27, 2018 in response to RFP-11-2018 regarding the selection of a new finance and human resources information system be accepted in principle, with the final terms and conditions of the contract to be satisfactory to the Chief Administrative Officer and Director, Finance & Treasurer; 2. That Council approve the hiring of a project manager (consultant) for a 15 month period commencing on or about November 1, 2018 at a cost not to exceed $160,000.00; 3. That Council authorize the Director, Finance & Treasurer to finance the net project cost by transfers from the following: a) 39.13 per cent from the Development Charges Studies Reserve Fund; b) The sum of $1,300,000.00 from the Financial Systems Reserve; c) The residual amount from the Rate Stabilization Reserve; and 4. That the appropriate City of Pickering officials be authorized to enter into any agreements to give effect hereto, and take the necessary actions as indicated in this report. Executive Summary: The City purchased both its current financial and human resources (HR) systems in 1997. With the City's financial system being over 20 years old, it is no longer able to keep up with the City's business processes and financial reporting requirements. It is also running on an old operating system that causes challenges with new hardware and the City's current technology environment. Replacement of the system is well overdue and the proposed solution will set the City on the right course for meeting the existing and future needs of a growing and vibrant municipality. If the financial system is not replaced there may be a future date where the financial system will become non-functioning. FIN 20-18 Subject: Selection of a New Finance and Human Resources Information System October 1, 2018 Page 2 Replacing the current financial system will result in efficiencies that will reduce the time and effort spent on financial administrative processing, ensuring more resources can be dedicated to core business activities and service delivery, enhance internal controls and better mitigate financial and reputation risks and move the City closer to a paperless,, environment. The City's HR system was originally purchased to provide a cost effective way to electronically manage employee data. It is a basic system the interfaces with the current payroll system to primarily manage compensation. It does not have the ability to provide the more sophisticated workforce and information management options essential to meet the City's growing employee needs. Being able to select a vendor which can provide the services necessary to implement both a financial and HR system in tandem, will'help the City contain implementation costs and streamline the management of such a complex project. RFP-11-2018 -Supply, Delivery, Installation and Implementation of an Enterprise Resource Planning System was issued by City staff on June 8, 2018 and closed on July 31, 2018 at 12:00 pm. The City received 11 submissions. The proponent that received the highest overall score from the Evaluation Committee was Blue IT Group Inc. (Blue IT). Blue ITs proposal includes the installation and configuration of the SAP cloud based enterprise resource planning software system. SAP has over 350,000 customers in 180 countries in total. It is anticipated that with SAP being widely used in both private and public sectors, the City will be able to hire future staff with the required skillset and knowledge base to work in an SAP environment. Blue IT specialize~ in implementing SAP in the Canadian public sector including recent projects with the City of Camtfridge, the City of Nanaimo and the Capital Regional District in British Columbia. Blue IT is also currently implementing SAP for the City of Peterborough and the Town of Richmond Hill. Blue IT implements SAP using templates for Canadian municipalities which have been developed based on their comprehensive understanding of municipal business systems. The templates should reduce the complexity of the'implementation and save valuable staff resources. Financial Implications: The recommended proposal from Blue IT Inc. was under the approved $5 million 2018 Capital Budget for the New Financial System (5203.1801.6174). Staff will continue to negotiate with the highest ranked proponent until the terms and conditions are satisfactory to the to the Chief Administrative Officer and Director, Finance & Treasurer. The project will be funded as follows: • 39.13 per cent from the Development Charges Studies Reserve Fund; • The sum of $1,300,000.00 from the Financial Systems Reserve; and • The residual amount from the Rate Stabilization Reserve. FIN 20-18 Subject: Selection of a New Finance and Human Resources Information System Discussion: October 1, 2018 Page 3 Overview of the Current State of the City's Enterprise Resource Planning (ERP) System Enterprise resource planning (ERP) software refers to a software package that combines a variety of business functions into one tightly integrated package. Common functions usually found in ERP software include core financial modules (general ledger, accounts payable, accounts receivable, procurement and budgeting) and human resource management modules (personnel administration, recruitment, onboarding, compensation and benefits administration, and personnel development and training). Modern ERP systems can also include additional modules such as constituent relationship management, project management, fleet and facility management, inventory management and payroll. The City currently maintains at least 24 separate business applications in support of its financial information processing, and many tasks are performed manually outside of the system. These systems are not fully integrated and many are challenged in terms of functionality, reporting and vendor support. The City purchased its current financial system, Vailtech, in 1997. Vailtech consists of the following modules: property taxes, accounts payable, accounts receivable, general ledger and purchasing. In 2015, the City replaced the property tax module with Tax Manager (TXM). The City's Human Resource system is HR Systems Strategies and has also been in use since. 1997. This system is primarily used to track basic employee data as well as information related t<? work history and compensation. With the City's financial system being over 20 years old it has not only become unable to keep up with the City's business processes and financial reporting requirements, but is running on an old operating system that causes challenges with new hardware and the City's current technology environment. Replacement of the system is well overdue and the proposed solution will set the City on the right course for meeting the existing and future needs of a growing and vibrant municipality. The City's vision is to implement an integrated ERP solution that will support staff in the delivery of municipal programs and services, take advantage of best practices, and significantly improve the efficiency and effectiveness of the City's work processes. In 2016, Council report FIN 19-16 -Co.nsulting and Professional Services for the Development of Financial System Specifications and RFP Proposal and Vendor Selection, engaged Deloitte to assist City staff in undertaking a comprehensive current state and needs assessment of the City's financial systems and applications. The assessment found that a significant amount of "donated labour" is expended in achieving operating and reporting targets under the current system. As a result, the assessment noted that in order to further enable the efficient and effective delivery of service, the City needs to rationalize these applications into an ERP environment, with FIN 20-18 Subject: Selection of a New Finance and Human Resources Information System October 1, 2018 Page 4 enhanced integration to key operational systems for service and work management. The following observations were noted related to the current operating environment's risk and inefficiency: 1. Current technology is not sustainable -the City needs to migrate to a product which is more aligned to the City's size, complexity and desired decentralized utilization. 2. Workflows and approvals are manual in nature -significant effort and paper shuffle is cumbersome to manage, leading to increased financial and reputation risk that is difficult to mitigate. 3. Information management through 'workarounds' -system inadequacies have inspired a proliferation of Excel spreadsheets in all departments, increasing risk of errors and data integrity in addition to efficiency losses. 4. Inconsistent and untimely report and data definitions -varying interpretations of accounts, reports and indicators increases risk and wasted effort on reconciliations. 5. Limitations in budget forecasting for financial commitments -increases risk of over-commitment against project or departmental budgets and inability to maximize interest income on cash flow. 6. Insufficient automation for managing risk and ensuring financial control -controls are manually intensive and rely on physical copies of documents. 7. Lack of meaningful analytics -the burden of effort on simply processing and managing information has reduced capacity for value added analytics and fact based decision making. 8. Proliferation of 'point' solutions -without a new system and application strategy, the City may continue to purchase/build single purpose solutions, increasing support costs and data risks. Significant Benefits from a New Financial System The existing systems have numerous opportunities for efficiency through process automation, approval workflows, integration, reporting and enhanced, fact based decision making. Undertaking a finance system implementation is a significant change effort and requires full organizational buy-in. However, the potential benefits are also significant in terms of efficiency, cost avoidance and effectiveness: • Avoid cost of adding new staff to administrative processes as the organization grows; • Reduce the number of business applications that need to be maintained; • Automate significant amount of manual processes and activities with forms automation and system workflows; • Enhance management's capability to lead the business based on timely, reliable and valuable information; • Enhance internal controls and better mitigate financial and reputation risks; • Move closer to a paperless work environment; and • Position the City to take advantage of technological advancements in the future. FIN 20-18 Subject: Selection of a New Finance and Human Resources Information System The City will be implementing the following modules: • Finance Management System o General Ledger o Accounts Pa·yable o Accounts Receivable o Project Accounting o Purchasing o Reporting and Financial Close o Point of Sale • Human Resource Management System (HRMS) o Organizational Management o Position Control o Compensation o Benefits Administration o Performance Management o Recruitment o Succession Planning o Training and Development October 1, 2018 Page 5 The City will also explore the option to implement future modules such as an E-commerce/E-store, Fleet and Asset Management, Capital and Operating Budget and Customer Relationship Management. Even though this RFP was only for the HR and Finance systems it was important for the City to receive details and pricing regarding all modules available in each ERP to allow staff could make a decision that will positlon the City for the long-term. The City is targeting a go live date of January 1, 2020 for both the HR and Finance systems. A request for proposal for a new ERP system was issued RFP-11-2018 -Supply, Delivery, Installation and Implementation of an Enterprise Resource Planning System was issued by City staff on June 8, 2018 and closed on July 31, 2018 at 12:00pm. The City received proposals from 11 vendors. The Evaluation Committee reviewed the proposals against the following criteria and weighting: FIN 20-18 Subject: Selection of a New Finance and Human Resources Information System October 1, 2018 Page 6 Item J Qualification Criteria Maximum I Points Technical Proposal 1 Company Overview, Experience and Qualifications 15 2 Proposed Manager, Project Team and Resources 10 3 Approach to Project and Change Management 10 4 Implementation and Work Plan 20 5 Functionality 50 6 References 25 Financial Proposal 7 Total Cost of Ownership 30 Total Scores Stage II and Stage Ill 160 Interview/Presentation/Demonstration 8 Interview/Presentation/Demonstration 40 Overall Score 200 After the initial review of the proposals, 3 proponents were invited to provide City staff with a 1-day demonstration and presentation. The proponent that received the highest overall score was Blue IT Group Inc: (Blue IT). Blue IT's proposal included the installation and configuration of the SAP S/4 Hana cloud based ERP software system. SAP has over 350,000 customers in 180 countries in total. Blue IT specializes in implementing SAP in the Canadian public sector including recent projects with the City of Cambridge, the City of Nanaimo and the Capital Regional District in British Columbia. Blue IT is also currently implementing SAP for the City of Peterborough and the Town of Richmond Hill. Blue IT implements SAP based on a template for Canadian municipalities which should reduce the complexity of the implementation for the City. In addition to meeting all of the module requirements identified in Phase 1 and Phase 2 of the RFP, the proposed solution is able to meet all of the optional module requirements identified. The software will replace all the core financial software plus lay the foundation to enable the City to build on those basic needs with tools and modules that are expected in today's munkipal environment. SAP is a stable, highly customizable ERP software that includes a number of features that will improve staff efficiency via the use of improved workflows and dashboards. SAP has made significant investments in the software, updating the front end screens as well as the back end technology. SAP is used, or in the process of being implemented, in a number of Ontario municipalities including larger municipalities such as the City of Toronto, the City of Ottawa, Halton Region, the City of Burlington, the City of Kitchener, and mid-sized municipalities such as the City of Thunder Bay, the City of Barrie, the City of Cambridge, the City of Peterborough and the Town of Richmond Hill. The benefit of FIN 20-18 Subject: Selection of a New Finance and Human Resources Information System October 1, 2018 Page 7 comparable municipalities using the same software will be the ability to share best practices through the established SAP Municipal User Group. With SAP being widely used in both private and public sectors the City will be able to hire future staff with the required skillset and knowledge base to work in an SAP environment. The City's Information Technology staff expressed a preference for an Oracle based solution, however, they confirm that the SAP based solution proposed by Blue IT Group Inc. has full functionality for City use, and the use of SAP is more prevalent in the municipal sector. Staffing Implementing a project of this magnitude will require additional staff resources. The following are the projected staff resources to be added during implementation: • Project Manager a trained and experienced project manager will be critical to the success of the project. This position will be filled by an external consultant who will be with the City until 30 days post-implementation. • Information Technology (IT) Resource 1 (Database Analyst/Business System Analyst) -the project will require an IT resource who is knowledgeable with SAP. This position will begin early 2019 and will continue with the City post-implementation to support the new system. • Backfill and overtime costs -the project will be demanding on staff within Finance, HR and IT. The positions to be backfilled are to be determined but it is expected that at a minimum 1 position in Finance and 1 in IT will be required. Additionally, overtime costs will be required to cover the additional workload on staff. These costs will be funded through the department's 2019 Current Budget. The City is forecasting that the following staffing will be required post-implementation and these resources will be brought forward for approval in future budgets. • IT Resource 2 - a second IT resource to maintain the system such as a Database Analyst or Business System Analyst. • Finance and HR Super User-positions will be required within Finance and HR to be a "super-user" in order to maintain the system, support staff and train new staff members. Finance and HR over many years have flat lined their staffing requests to help reach Council budget levy targets. It is expected the HR and Finance Super User will dedicate 50 per cent of their time to support the system and the other 50 per cent of their time will help assist or address workload pressures within their respective departments. FIN 20-18 Subject: Selection of a New Finance and Human Resources Information System October 1, 2018 Page 8 The following table summarizes the above staffing requirements for both implementation and post implementation: 2019 2020 2021 2022 Implementation Project Manager 1.0 0.1 0.0 0.0 IT Resource 1 1.0 1.0 1.0 1.0 Post-Implementation IT Resource 2 0.0 1.0 1.0 1.0 Finance Super User 0.0 0.5 0.5 0.5 HR Super User 0.0 0.5 0.5 0.5 Recommendation 2023 0.0 1.0 1.0 0.5 0.5 It is recommended that the City enter into -negotiations with Blue IT Group Inc. to proceed with the purchase and implementation of a new finance and human resources information system, and enter into an agreement that is satisfactory to the Chief Administrative Officer and Director, Finance & Treasurer. Attachments: 1. Report FIN 19-16 regarding Consulting and Professional Services for the Development of Financial System Specifications and RFP Proposal and Vendor Selection Prepared By: Approved/Endorsed By: ~ -------Paul Creamer Stan Karwowski Senior Accounting Analyst, Internal Audit Director, Finance & Treasurer ntfer Eddy Director, Human Resources FIN 20-18 Subject: Selection of a New Finance and Human Resources Information System Ray drigues October 1, 2018 Page 9 Services & City Solicitor Manager, Supply and Services Recommended for the consideration of Pickering City Council rmation Technology -C1#o/-p](KERJNG From: Stan Karwowski 1-ffTACHMENT#_L_ TO REPORT#.l:L1J. ~O -lg> Report to. Council Report Number: FIN 19-16 Date: October 17, 2016 Director, Finance & Treasurer Subject: Consulting and Professional Services for the Development of Financial System Specific;;ations and RFP Proposal and Vendor Selection Recommendation: 1. That Report FIN 19-16 of the Director, Finance & Treasurer regarding Consulting and Professional Services for the Development of Financial System Specifications and RFP proposal and vendor selection be received; 2. That Council approve the hiring of Deloitte LLP for consulting and professional services in accordance with Pur~hasing Policy 10.03(c), as the assignment is more than $50,000.00; 3. · That the fee proposal submitted by Deloitte LLP for Consulting and Professional Services for the Development of Financial System Specifications and RFP proposal and vendor selection in the amount of $110,740.00 (HST included) be accepted; 4. That the total gross project cost of $110,740.00 (HST included) and the total net project cost. of $99,725.00 (net of HST rebate) for Consulting and Professional Services for the Development of Financial System Specifications and RFP proposal and vendor selection be accepted; 5. That Council authorize the Director, Finance & Treasurer to fund the total net project cost of $99,725.00 by a transfer from the Financial Systems Reserve; and 6. That the appropriate officials of the City of Pickering be authorized to take the necessary actions as indicated in this report. Executive Summary: In 1997, the City purchased a new financial system, Vailtech, to address possible "Y2K" issues. The new financial system consisted of the following modules: property taxes, accounts payable, accounts receivable, general ledger and purchasing. The Vailtech financial suite cost approximately $50,000.00 and the City spent an additional $70,000.00 for implementation and training. In November of last year, Report FIN 27-15, Financial System Status Update was submitted to Council for information purposes. The report provided an update on ttie recent conversion of the property tax system from Vailtech to Tax Manager (TXM). lncluc;led in this report, was the Deloitte LLP (Deloitte) business case as it relates to the City's financial system which is attached for your information. FIN 19-16 October 171 2016 Subject: Consulting· and Professional Services for the Development of Page 2 Financial System Specifications and RFP Proposal and Vendor Selection The business case considered several alternatives including maintaining the status quo and various vendor strategy options. The business case recommends that the City pursue a new financial system. The new financial system wm form the building block of the Enterprise Resource Planning (ERP) system. An ERP system is software that replaces many stand alone systems and manual work · processes by integrating the functions into an automated system. Phase one of the project is to replace the accounts payable, accounts receivable, general ledger and purchasing systems. Phase two of the ERP system is to implement a new Human Resource system that is integrated with the financial system. Head count is tied to salaries that is linked to cost centres that makes the connection a natural "logical fie for integration. Over the years, many municipalities have replaced their Vailtech financial systems with newer, more robust and integrated financial management solutions. The·trend today is to replace these legacy systems with ERP systems. The next step in the process is to develop a Request for Proposal (RFP) for a new financial system. This step includes developing the system specifications, RFP evaluations, arranging demonstrations and recommending a vendor. The goal of the new financial system is to accommodate the City's future growth due to Seaton and downtown inten_sification. In addition, replacing the current system will result in efficiencies that will reduce the time and effort spent on financial administrative processing, ensuring more resources can be dedicated to core business activities·and service delivery. Deloitte has been the City's auditor since January 15, 2002. They provide a variety of auditing, accounting and advisory services to a number of municipalities including six of eight local municipalities and the Region of Durham. They are familiar with the City's current business and have a vast experience in the municipal sector to help ensure that the City's new financial system is capable of meeting the Cityis financial information needs for the next twenty to thirty years. In accordance with Purchasing Policy 10.03(c) where the project or annual cost of a consulting or professional service assignment is expected to be more than $501000.00 and the initiating Director intends to acquire the services without obtaining written proposals, the Director shall submit a Report to Council to obtain approval to engage the services of a particular Qonsultant. Staff are recommending Council approval of the fee proposal submitted by Deloitte for Consulting and Professional Services for the Development nf Financial System Specifications and RFP Proposal and vendor selection in the amount $99,725.00 (net of HST rebate). FIN 19-16 October 17, 2016 Subject: Consulting and Professional Services for the Development of Page 3 Financial System Specific.ations and R~P Proposal and Vendor-Selection Financial lmplic~tions: 1. Project Costing Summary Fe~ Proposal HST (13%) Total Gross Project Cost HST Rebate (11.24%) Total Net Project Cost .2. Approved Source of Funds 2016 Current Bu.dget -Finanee Approved Code 2127 .2392. 0000 Source of Funds Financial ~ystems Reserve-. Project Cost under (over) approved funds by Budget '$100,·000.00 $98,000.00 12,'740.00 $110,740.00 (11,015.00) $99.725'.00 Required $99,725.00 $275.00 Discussion: The City of Pickering has an annual operating and capital budget ~hat exceeds $122.0 million. Ensuring that the organization's finances and assets are managed in accordance with the requirements of the regulatory and statutory requirements requires a robust and secure enterprise-wide solution. In addition! the underlying financial processes must be efficient and effective, providing key financial information and indicators of performance to inform decision making by senior management, departments and Council. Last year, Deloitte undertook an analysis of the City's current financial system. The document is attached to this report. The Deloitte study reviewed the current acco~nting system and provides several options for the City to consider. The authors reviewed the '~Status Quo" option and are recommending ·that this option not be pursued. The key issues and/or challenges with the current ·system are: · . . ~ The City has 24 separate business applications processing financial information and these · systems are not fully integrated, resulting in lost opportu.nities in efficiency and decision making. • Processes are manual and require significant staff effort leading to increased cost and financial risk. · •· Current system reports provide limited information and do not provide flexible reporting capability for operational and management decision making. FIN 19-16 October 17, 2016 Subject: Consulting and Professional Services for the Development of Page 4 Financial System Specifications and RFP Proposal and Vendor Selection • Current financial controls are manually intensive and rely on the experience and reliability of key finance staff. Phase 1 is to replace the core accounting systems: Accounts Payable, Accounts Receivable, General Ledger and Purchasing. Page 10 of Attachment 1 is a diagram of the current system and shows the relationship among the various other systems and how they are connected directly or indirectly to the City's financial core. Consulti~g Project Description Deloitte has proposed that the project work begin around the third week of October. The plan is to meet with key staff who work with various systems to obtain their vision for future systems and to discuss technology ·options. This phase of the prpject is expected to be completed by mid December. During this time, the consultant will also be writing the system specifications for the new financial system. In May 2017-, the ·'RFP" will be issued with an expected 'closing date of mid June. The next step will be to evaluate the various proposals and to conduct financial system demonstrations from the short listed vendors. Deloitte will help develop the evaluation criteria and provide assistance and guidance regarding the selection of the final vendor. · During the vendor selection/evaluation stage, the City will entertain the use of a cloud based financial system. Any system selected will have to be evaluated and measured against all possible solutions including a "cloud based" system. Attachments: 1. City of Pickering Financial System Review & Business Case 2. Deloitte Proposal Lette_r dated September 22, 2016 Prepared/Endorsed By: Stan Karwowski, MBA, CPA, CMA Director, Finance & Treasurer Recommended for the consideration of Pickering City Council ~. od: 4, 2o1h Tony Prevedel, P.Eng. Chief Administrative Officer Deloitte<, · City of Pickering t=inance.System ·Review and Business Case September 2015 . .. · ckgr un l an · ~ontext ' © Deloilte LLP and arntlated entilles. 3 . . Overvie\lV The Project. The City of Pickering (City) contracted with Deloitte to undertake a review of their finance system (Vailtech) and underlying processes. The assessment of financial pro~e~sing includes: accounts receivable, accounts payab.le1 purchasing, budgeting and forecastfng. As the City is already moving to a new prope_rty ta~ system this area w_as no~ specifically consi~ered for replacement. Current Syst~ms. The City has at least 24 separate business applications processing financial information. These systems are not integrated and many are challenged in terms of functionality, reporting and vendor support. A significant amount of 11donated labourn* is expended in achieving operating and reporting targets under the current system. In order to further enable the efficient and effective delivery of service, the City needs to modernize their technology landscape, with the core finance system as the anchor starting point. This report provides: · A recommendation that the City would benefit from an investment in a new finance system; • Implementation scope for a new finance system; • The related costs· and benefits of a new implementation; and -. A brief roadmap of e:tctivities for the City to consider as part of the procurement initiative. -• The term donated labour refers to ove~time· hours that are incurred by management staff but not paid by the City. Management estimates this to be 300 -500 hours a year within the finance department. · · © Deloille LLP and afflllaled entitles. 4 Overview ( continued) Benefits. Our assessment has identified numerous opportunities fo·r efficiency th.rough process automation, approval workflows, integration, report,ing and enhanced, fact-based decision making. Undertaking a finance system implementation is a significant change effort and requires full organizational buy in. However, the potential benefits are also significant in terms of efficiency, cost avoidance and effectiveness: • Rationalize the number of business applications used to process financial transactions;· • Avoid cost of adding new staff.to administrative pro.cesses as the org~nization grows; . . • Automate significant amounts of manual processes and activities with forms automation and system wo'rkflows; . · · • Enhance management's capability to lead the business b~sed on timely, reliable and yaluable information; • Centralized mechanism to re-deploy manual effort to value added activities such-as decision support. and continuous improvement; • Rationalize redundant processes and duplicated efforts through enha~ced integration of core systems; • Enhance internal controls and better mitigate fin~ncia! and reputation risks; and • Position the City for taking advantage of technological advancement's in the future ( ex. mobile functionality) · © Delollle LLP and aHllialed entities. · 5 Overview ( continued) Business Case. The overall investment required is estimated at $3M -$4.7M in capital over two years, and an increase in the annual operating budget of $200K -$400K (plu·s inflation) starting in 2017. This in.vestment is necessary to ensure the City is able to provide improved constituent service through its growth period. The City is under-invested in technology when compared to its peers. For example-, the C_ity's 2014 IT operating budget i~ $8.70 per constituent when compared with an average of $17.34. Capital cost over 5 years_ Operating cost over 5 years Totat $1M $4.2M $3.6M $2.3M $1.2M $2.3M $4.8M $4.6M • A doud solution represents a lower capital cost as hardware and related infrastructure is not required. However operating costs are higher due to the subs~ription fee model based on number of users. · On premise solutions will require ·both production and backup hardware acquisition. @ Deloilte LLP and arnllated enlllies. 6 Th ca for h n @ DelolUe LLP and affiliated entilies. 7. The City's growth path ·requires modernization of administrative technology The current financial processing environment presents seve·ral limitations to the City's future growth . a·spfrations. Based on current projections the City is looking to add 60,000 resjdents by 2030·, representing approximately 67% growth. In the context of approved development projects the City qm expect an increase in transactional volumes, as well as a greater need to enhance operational contro~s, gain efficiencies, and provide better data for management decision making. 1. Vailtech is not sustainable -the cyrrent financial system has reached end of life after 15 years of use at the City .. The system's ability to cope with future accou_nting requirements is limited and would result in further mant,jal workarounds and increased demand on staff. 2. Workflows and approvals are manual -significant effort and paper shuffle is cumbersome to manage, leading to increased financial and reputation risk that is difficult to mitigate: 3. Limitations in budget forecasting for financial com.mitments -. increases risk of over-commitment against project_ or department budgets and inability to maximize inte~est income on cash flow. · 4. Dispersed information management through "workarounds" -system inadequacies have inspired a proliferation of Excel in all departments, increasing risk of errors and data integrity ih addition .to efficiency losses. @ Delollle LLP a·nd aHillaled en!ilies. 8 · ·The City's Qrowth ·path requir~s modernizati'on of.. administrative technology ( continued) . 5. Availability of a9equate reporting·-current system reports provide limited information.and do not provide flexible -reporting capab.ility for operational and ':lanagement deciston making. .· · 6. · Insufficient automation for managina risk and ensuring financial control -controls are m~nually intensive and rely on the experience and r€;:}liability of key current staff. · · 7. Lack of meaningful analytics -the burden of effort on .simply prpcessing and managing information . has reduced capacity for value added analytics·and fact based decision ·making. · 8. Capital project proc.urement practices Current tools are not user-friendly resulting .i,:i manual contract and v~ndor management practices. © Deloi!le LLP and amllated enl!lies. g Financial processing is disconnected and manually in.tensive Fihanhhll r~Jated syst~rns .en.vironmeht-24 separale appilctali~ns With ·s ·1hletfaoes lo Mre Vallteilh. . There.ate no ltil,erfaoi:i'jJolhts wllh assel/prop~rty matiagetfieht ayslemsu , Mlorosofl Ex•el Used as a oore tool tot malnleli~nu~ ahtf lt~oklttg of faollllles artd !ineat assets, Umltetl eapabliny tot tepottlng and ~llhahoed i:l~olslon tllaklng, .J,egend ........ ,.,.-man.Ila! Interlace · .: ~ alllotnaled ihtorface Thero may ba othe_t.mlhof applicalfons Witliin (he deparllmmts. hol mflecled hero • There Is ho one view of oapltal asset~ with dlffetertl levels of lrtfqth'1allori stored In CltyW!d~ and eioel spreadsheets. Tliefe Is M aUlomatad proJe~I aooountlrtg i:lapabll!ty, · .. :.:· ·. -: '· ·· · ·· · ·· · © Deloille LLP and aHJl!ated entitles. .... ~. , .. ~ Group Teclina (parking and by law) . Parklane ' Health and Safety DRAFT HR INFO Microsoft Excel Administrative appllcations > :1,t1· l 10 The City is under-invested in _technology when compared to peers Deloitte compared the City's operating and capital spend on information systems against comparable municipalities in Ontario. The data Is gathered from publically available sour·ces and classifications of spend may differ across municipalities. The municipalities include: • Niagara Falls;. qari~gton; • Chatham-Kent; ard • Ajax. The table below demonstrates t~at the City is below average in all four financial·metrics·measured indicating an underinvestment in technology. It is noted that one of the comparator municipalities has undergone a recent ERP implernentation which results in higher capital and operating investments in IT. 2014 IT operating budgeVoonstltuent .$23.09 $3.39 $25.21 $17.69 $17.34 $8.70 2014 IT capital budgeVconstltuent $·4.28 $4.32 $0.01"' $4.40 $3.25 $2.14 2014 IT operating spend as a% of tEJtal operating budget 1.90% 0.47% '1.76% 3.00% 2% 1,30% 20141Toapitalspendasa%oftotaloapltalbudge~ 1.26% 2.26% · 9.01% 1.77%. 4% ·_0,36% :,i?ijpµlatlon:-..::.:.. -., ·, _.': -. 0;1:. .. ··; · ., .. ':·· : ::';·: : •• ·.; .. : .. : :.· :: 82199o/, ::,.:/a1/to6-\, \: :jo~;eo/1.':..":,;:.-'160;Mo:> ._ ...... ~5,992: _,_._ :<'ae,121 ~~ .._• . ..;:.. ,..;,:::..:~ ... t• •.~. -..• !,., -» ,+ ........ ,._,_. •• ~• .z,~_..,_ .... • _,: • • • • •' •~ •,,., .. ,•,.-e,,o..,.,a-~:~~• ,.,,+,._,,:,,..< ,•<:,'•' ~-•-~,. •-•--.... ~*•• •chalham-Kenl Is completing an ERP implementation and had high amounts of capital IT dollars allocation In 2011-2013, however 2014 dollars are minima! as the transllion completes and costs shift to operating © D~loille LLP and alllliated entitles. 1i The risk of d·oing nothing about existing Fh1ance . . systems Maintaining the status quo exposes the City to yarious operational and financial risks. Municipal organizations can be tempted to direct funds towards constituent facing projects while neglecting administrative systems. However th~s approach comes at its own cost. . Finan~ial risk of error and fra·ud· -manual internal controls have been developed to compensate for lack of system functionality. These controls are person dependent and susceptible to turnover risk. • Escalating costs to serve ari.d administer~ direct correlation of population to staff growth will continue to increase operating budgets. • Contract management risk increases -vendor contrac~s will grow in size and volume without a system to manage vendor perf<?rmance and compliance. This risk is most relevant in the context of the City's manual and decentralized capital project accounting practices. • Key.person dependency risk increases -manu~l·process workarounds rely heavily on the person processing. • Manually intensive financial processing and reporting -the City relies on significant amounts of unpaid overtime fabour from key.management staff to achieve inte·rnal and.external reporting objectives. • Finance system failure --inevitably, the system will fail to meet requirements and the fix/upgrade will be challeng.ing With. costs substantially higher than a planned replacement · (9) Deloitte LLP and alliliated entitles. ·12 Projected benefits of a new Finance system The most desired benefit is to have a consolidated and integrated Finance system environment that will enable data capture and transaction processing at the source, with enhan·ced integration of operating and administrative systems. · Allows for routing of transactions through a hierarchy for approvals. • Provides work lists for users. • Leverages ~mail notifications for approvals. • Official ledger of the City for financial data with commitment control and • encumbrances. Department applications will interface financial Information on a more timely basis. • Automated controls are ·more reliable than manual. • Ability to segregate key activities .and route approvals. • Enables data capture at source, with routing for validation and approvals. · · © De!ollle LLP and affiliated entities. • Conslste~t service delivery to departments.; • Easier for. training, mobility of resource. • Autom~ted processes are more reliable and timely. • Less manual intervention between systems. Less d~ta aggregation in "side" systems. • Consistent data definitions and attributes. • Drill down reporting capability. Statistics ledger for KPls and dashboards. Decentralized report writing/analytics .. 13 Conditions are present to support a successful change Finance management and staff believe that system implementation would result in operational· improvement and have a positive impact on the broad qrganization including reduced risk, increased controls, efficiencies, more reli~ble data and enhanced reporting capability. Across the organization the· desire for change is driven further by a need to st~eamline purchasing processes_ and. enhance project accounting cc;:tpability. · · Value proposition:. ·1n the principal areas of focus (AP, AR, GL, Purchasing), there is a general belief that modernized systems are necessary to continue to support growing demand, become more efficient and provide the platform for growth. An understanding of ttie rationale and benefits of a new system will need to· be.shared/adopted more broadly. Stakeholder readiness: The.re is little stated or overt change resistance and a broad willingness to participate in early-stage assessment efforts. Once ·a go-forward decision is made, stakeholder interests will need to be considered ~here the solution·may impact outside of Finance. Whlle support for standardization and process improvement exists, there is an entrenched way of doing business that will have to b.e addressed in the change plan. Competing Priorities: The aoility to ensure organizational commitment lo a finance system implementation will be critical to its success. This will include align_ing resources and decision making processes. © Deloille LLP and alfilialed enlilies. • Communication planning. • Linking projecf to strategy and broad organizational benefits. · • Realistic expectation setting. • Communication planning. • Cross-functional project governance. • Change readiness checkpoints with key · stakeholder groups. · • Develop plans to engage broad stakeholder groups-in project design through implementation. • Role Impact assessmei:its. • Common project oversight and management group. 14 . . Determining a p_ath forward • There is a need for n·ew technology to enable the effidencies in processing and increased . effectiveness of reporting and decision support, therefore a formal RFP process is required to evaluate · potential_ solutions. -The City' should cor:,duct an RFP for a solution rather tha_n just the software, as this provfdes for comparable assessment of total cost of ownership, and can allow for better planning and budget ·estimating prior to contracti~g for the software license. • For this business case, we have assessed the options on the following slide, ·estimating costs and benefits only for option 3 and 4, as there are more available data points,.and it provides a high watermark of cost and benefits. · · · · -The RFP process will allow further assessment of options 213 and 4, with lower costs expected through a compe_titive process. · · · -As th~ cloud marketplace is evolving rapidly, costs and benefits for option 4 are giv~n based on 2014 price and·contract structures. The City should assess vendor maturity and total cost of ownership c~nsiderations as ·part of the future procurement process. -This business c.ase should bE: updated pripr to implementing the selected solution. © Deloille LLP and affiliated enUlies. Options considered for systems renewal Manual controls, not • · NEGATIVE Staff growth with increase Not a Viable Manual workarounds will scalable, usability continue. in transaction volume. (ie. option. challenges. Capital) MODERATE MODERATE· MODERATE .. Municipalities have faced · Functions, features and Softyvare less expensive, Evaluate further issues with mid-market benefits better align with Tier services appe·ar to be ·rower during RFP applications due to 1 providers. but usually under-process. breadth of requiremen\s. estimated. HIGH LOW HIGH More· internal ana external Ma·ture products with High degree of auto_mation, resource required, .Evaluate further multiple municipal integr~tion,. self servi9e and considered an investment _during RFP installations, available ability to r~tion_alize existing for 20 years, not process .. skills in marketplace. business applications. replacement again in 1 O years. HIGH MODERATE MODERATE Less proven, qependency Expanding functionality is Less capital investment,. Evaluate further on service provider, few . quicker, high degree of more operating cost impact, during RFP municipal examples. automation, municipal nimble platform. process. functionality is not mature. © Delollle LLP and arfillated enlilles. 16 .. . . . I I m nt ti n (~o. J .• . ·opti. n •·· . © Delollle LLP and arnUated e·nlities. · 17 Implementation scope for a new system The intended scope is to replace Vailtech with new core· finance system including general ledger, accounts payable, accounts receivable1 and purchasing modules. A new property tax system as been acquired from the City of Mississauga which has already been integrated to core finance modules in other municipal . environments. The desired outcomes and benefits from a new system are highlighted below. 1. Faster, better repo~ing.-refreshed tools and reporting· environr:ients for leaders and end users. 2. Automated approvals_; automated workflows, approvals and controls for users within the selected system. 3~ Commitment accounting~ new accounting structure with Commitment Accounting to improve bud_get management and timeliness of financial repo.rting for departments such as: a) Enhanced integration -with department applications, including Citywide, budgeting, recreation, property tax, and future capital asset management systems where real time integration will be required for commitment accounting; b) Drill down reporting -integration vyith detailed payroll data for enhanced drill down and analysis; c) Simplified accounting structure -development and conversion of a new chart of accounts; and . d) Comparative reporting -conversion of prior and current year budget and general ledger transactions. © Deloil!e LL~ and a!lillaled enlllies. 10 •:·. Implementation scope for a new system ( ccmtinued) 4. Enhanced vendor managernent-.integrated Payables, Purchasing, Inventory, Vendor Man·agement and·Contract Management to improve the overall efficiency ~nd effectiveness·of non-salary spend. · . ' 5. · Improved stewardsh_ip. of capital -integra~ed Capital Pr-ojects and Ass·ets to improye st~war'dship of. the City's assets and capital spend (dependent on future asset management planning). . . . . 6. End user focus -deployment to end users with training, communications· ~nd post go-live ~upport © Def•ilte LLP and a[ffllaled en1!1les. 19 Budget impacts -traditional· ERP solution The City has currently allocated $3,000,000 in its capital budget for 2017. To support a conservative budgetary estimate, we are basing the budget on a Tier 1 or Cloud Solution. In addition, the City should consider operating budget impacts to ensure the system is adequately supported and kept current over its lifetime. The most significant capital budget item is the implementation cost. These costs include configuration, data conversion, change management, and project management. Given the significance of the change the City should ensure that they are adequately supported through the implementation. JD Edwards Estimate '.,. Hardware acquisillon ~!wara_.!.!"lic"'"ene!!:s~a ________ ___,1:..:..75=0=0=0=,oo=---------------------'------'----'1:..:..75=00'-"-0.=00fln.!in.Qlj!J l!nc.tpl!fG~sln.9..[!Wd.u_!~ Includes production and disaster recovery · 900,000.002022 cost for hardware refresh 450,000.00 450,000.00 entation 1200000.00 1200000.00 100 000.00 100 000.00 400,000.00 4001000.00 Finance and IT backfill support ontingency (.10%,i----=--------=232,§00.00 232,500.00 Opera0ng cost ...... -•--------------------------'----~-------. --~· ------~ --··--__ ,,_·-----•-+-~.---•~,,.. ~----··-~--.... ,.,. ..... _., $!JrlWar5:1 maintenance 37,840.00_ 39,353'.00 . 40,927.00 42,565.00 44,267.00 46,038.00 250 980,0022% of sonware lfcansa + Inflation .P, ~ \' mmmRIITTw.t~,1l:~~UtfJ~1iiM;.!),ij,~~•R~1M~1MD.~~iji.~ .• J~~ii\JlIH{@MJJK~;'l.iP.l.ft~1.'ig,6~;$#)~l~.~1M&iM~ll}ffJld,M1MXtP.P1~M:,ij~,~J~a.~;~b]l1$Jf.41~G.~i4.il_Q,O~l~----------J © Deloitte UP aml alfillated entitles. . 20 udget impacts ( continued) PeopleSoft Estimate ¢ •• · ca-ital cost Software .license Hardware ac uls!Uon Im lemenlation raining and certificalion · lmplemenlatlon {Internal) oo· @ De!oille LLP and ~.lliliated enuties. 260,000.00 450 000.00 1500000.00 ·100 000;00 400,000.00 285 000.00 57,200.00 59,488.00 traditional ER·P sotutio·n 450000.00 61,867.52 _64,342.22 . 66,915.91 69.592.55 r ''a 260,000.00Fina'nclal and purchasing modules Includes p~oduction and disaster recovery 9QO 000.002022 cost for hardware refresh 1 500000.00 100 000.00 400.000.00F[nance and IT backfill sup ort .285 000.00 379,406.20 22% .of software license + lnflallon Budget irhpacts cloud ERP sOlution • The following quotation is based on available pricing from leading cloud solution providers. Given that the marketplace for cloud solution~ continues to mature, pricing models may vary by the time the City is ready·for implementation. · .• Costs for cloud solutions. are similar to traditional E~ P solutions with the primary differences being: No local hardware or disaster recovery site management; -Costing is based on a per user or transaction subscription fee model vs·the traditional software license and maintenance fee model; and . · · Support staff resources are typically requfr~d in fin~nce, a~ opposed to IT. Traditional on-premise solutions typically require system and database. · 1 5QO 000.00 1 500,000.00 100 000.00 100 000,00 320 000.00 Finance and lT backnll support {lower than on-premise cost due to 320 000.00 otenliall shorter llmeline 165,000.00 165,000.00 _. --Readiness, RFP/procurement re-Im lementallon costs 150 000.00 150 000.00su port 250 000.00 250 000.00 250 000.00 257 500.00 · 265 226.00 286 443.00 1 559166Financials and urchasin ort staff · 50,000,00 150,000.00 150,000.00 150,000.00 150,000.00 -150.000.00 800,000,001 -2 additional FTE 2 Budget impacts achieving baseline Although the co?ts involved are significant they represent the amounts necessary to· bring the City's finance technology in line with municipal peers. The table below reflec~s how the comparator metrics shown above on slide 10 are impacted by the system implementation. · The budgetary impact during the implementation year greatly increase the capital budget/constituent ratio given high one time costs. Operating budget/constituent remains lower _than the comparator average. Overall metrics show a closer alignment with the comparator average at post-implementation, however remain at the low end of municipal peers. This may be attributable to technology .gaps in areas outside of finance. -Comparator averages are ll,kely _to increase with inflation. IT capital budgeVconstituerit $2.14 $3.86 IT operating spend as a % of total operating ~udgel 1.30% .2% 2% IT oaf:llt~I spend as a % of total capital budget . 0.36% 4% 5% Key notes/assumptions: 2017 metrics are based on the City's current population (2011 census). 2022 metrics are bas.ed on forecasted population growth (60,000 increase by 2030; assuming linear growth). 2022 represents the year the C)ty would invest in·a hardware refresh if an on-premise solution is selected. Total operating and capital budgets in 2017 and 2022 are based on 2014 budgets plus 4% inflation and increase in system implement~tion costs only (other factors impac~ing total budget increases have no~ been included). • City or Plc!terlng -Finance System Business Case (DRAFT) . 1% 1% 23 Implementation plan internal project roles The City will need to identify resources for the following project roles, drawing from central Finance and . Finance support staff in the departments. · . Some roles will need to be dedicated and fully backfilled, while other roles will require participation on an 11as needed'1 and scheduled basis for key workshops, festing and training activities~ lti{jl!!rlit i-Narlr~ k't ::,.,, t:?;t'<; · .... ; 'li1s· "or·: tij t~p'@'.:::':! J: ;:. \ .. : .,.~ ... ;;;ff6rt.'@Mthfidttr ;>::;.:~·a.)::: -r H :,~,.!,~:>'•!~·,:: ,yii;~\~<::·f<li~1fl,;litlOrtr Ii f, _:, t) '!)._; ;,: :··r· :: ::, •' I':,., i~1:·,\).lf'h.i . .,_ .. , .J~:r,1(1,,1·1: .. :,:·t :•::; .... 1 ,,. .... ~ •• J:J.i ... , , •::,; "· ,.,. 1·:,11 .4: ~!·t·1 -,,.,., ., ,·.·· •• :, •. ,c1J1,ir'l111:1·1.~1-,/,;!1f:.;,:li1:n!i;:ti:_.,N: lsf ,..,.:!·~; .,.l,~.:.!'.•?l1,•;.',?;·;;.:i'!'-.;'.'.// Steering Director/Treasurer level. 8 hours/month, scheduled Profect progress reporting, issue resolution, Committee meetings. oversight and governance. Project Finance and IT manager 35 hours/week, fully Hands-on project management of functional backfilled and residing In Management ·level. project team office. and technical project components. Project Advisory Managers from operational 15 -25 hours/month, Design workshopsi decision making input, departments and central scheduled workshops and Group Finance meetings. issue res9lution, testing oversight, training .. · Project Team Analysts, st9ff from 35 hours/week, fully System design, configuration, testing, data operating departments and backfilled and residing in conversion, integration, user access . Members central Finance. project team office. requirements, training and sustainment.· Subject Malter Analysts, staff from 15 -25 hours/month, Provide input to design, conversion, testing, operating departments and scheduled workshops, ~raining; lead for deployment into operating Experts central Finance. activities and meetings. department. · © Deloltle LLP and aHiliated enUlies. 24 Next ·step.s for a finance system implementation_ -. . . 1.. Develop 9etailed busin.ess requirements for finance ~ystem modules in s~ope. 2. Consider procurement options and begin development of the RFP for a Finance Management System solution (i.e. Technology then lmpleme~~er or together). 3. Develop a project resourcing plan1 including strategy for backfilling. 4. Present business case to-council for approval of capital. 5. RFP process to select an System Vendor and System Integrator. 6. Contrad awards and negotiations with vendors. 7. Implementation of a solution in 2017 . Sehlar Matiagettlent at1a eounoU adoptlen of plan In JJflnolple. • @ Deloille LLP snd alfllia!ed enli!ies. .. • ; Flhanhlsl system ~FP · praoess· -. .. : .. ,. ~ .... 25 -Deloitte~ Deloitte, one of Canada's leading professional services firms, provides audit, tax, consulting, and financial advisory services. Deloitte LLP, an Ontario limited liability partn·ership, is the Canadian member firm of Deloitte Tou9he Tohmatsu.Limiled. Deloitte refers lo one o; more of Deloitte Touch_e Tohmatsu Limit~d, a UK private company limited bY. guarante~. and its network of member firms·, each of whicti js a legally separate and independent entity. Please see www.deloitte.corrJ/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and jts member firms. The information contained herein is not inten~ed to substitute for competent professi?nal advice. © Deloitte LLP and affiliated entities. ·ATTACHMENT~L TO REPORT#..6!f. /Cf-.J(; Deloitte~ September 22, 2016 · Mr. Stan Karwowski Division Head, Finance & Treasurer City of Pickering One The Esplanade -Pi~kering, ON LIV 6K7 Dear Mr. Karwowski: Re: ERP Selection Adyisory Deloitte LLP Bay Adelaide East 22 Adelaide Street West Suite 200 Toronto ON, M5H OA9 Canada Tel: 416-601-6150 Fax:416-601--6151 www.deloitte.ca This letter confirms the proposed engagement of Deloitte LLP ("Deloitte" or ''we,, or "us") by City pf Pickering ("Pickering" or the ''City") to advise the City in their Enterprise Resource Planning (ERP) selection. Deloitte will perform this engagement subject to the terms and conditions set forth herein and in tlie accompanyin~ Appen~ix A. Scope of services City of Picking has requested Deloitte to advise with the ERP selection process starting with gaining an understandirtg of the current busµiess processes and systems to the d~velopment of their Request for Proppsal (RFP) specification package of their ERP package. Deloitte will perform the agreed-upon services under the direction of City management to assist management with respect to identifying the requirements for an ERP solution, including the following activities and deliverables ( collectively, the "Services"): · Phase 1: Current State Assessment Deloitte will perform the following agreed-upon s.ervices under the dirftction of management to identify the requirements for a new ERP system: · • Workshops with Pickering to review: o Current state Current business processes including Budgeting and Forecasting, Purchasing and Accounts Payable, Revenue and Accounts Receivable, Management Reporting> Finance, Payroll; Capital Assets, HR Current systems landscape Challenges in current systems and processes · o Future state -Vision for future state systems landscape and functional scope -Develop list of requirements _for future state -Discuss potential technology options o Organizational technology standards and requirements • Document workshop findings • Workshop to review deliverable and finalize the requirements • Attend discovery calls from. vendors, with management, as a technical advisor • Advise management on preparing specifications for the RFP September 22, 2016 Page2 Deliverables include: • Summary of the workshops (processes maps) IT map, findings and requirements) • Selection approach and ne:x.i steps · • RFP specifications Phase 2-3: RFP Development, Demonstrations and Evaluation • Advise the City as they liaise with vendors and provide clarifications and responses during the RFP bidding period • Advice and perspectives on management's drafted evaluation fram·ework (Deloitte can provide a generic template upon which City of Pickering can draft its framework) • Participat~ on the evaluation committee to read vendor submissions sent to City of Pickering • Advice and perspectives on management's drafted demo evaluation scorecard (Deloitte can provide a generic template upon·which City of Pickering can draft its scorecard) • Attend, with management, initial demos with 3-4 vendors • Advice and perspectives on management'·s drafted detailed demo scenarios and expectations · document • Attend detailed demonstrations w~th 2.:.3 vendors with management as a technical advisor • Advise management as they debrief discussions and make theu: selection · • Attend proposal presentations from vendors, with management, as a technical advisor_ • Advise management as they make their final selection Deliverables include: • RFP evaluation scorecard template • Initial demo evaluation scorecard template • Detailed demo scenarios and expectations template • Detailed demo evaluation scorecard_ template Phase 4: Contracting • Support the drafting of further clarifications·and attend reference calls • Advise management as they review the services and software agreements from vendor, as well as the statement of work • Provide fina1 considerations and next steps related to preparation for the implementation Advisory work relating to subsequent phases ( e.g. implementation quality oversight, etc.) are to be addressed as a separate engagement. · The work product Qf this engagement will consist of providing verbal and written comments as well as observations, insights and perspectives. fu some cases, ·such documents may be initially drafted by Deloitte personnel for City of Pickering management's consideration. In all cases, management will be responsiole to review and make ultimate decisions with respect to.approval, modification, acceptance and use of such documents. Timing of the Services Pursuant to conducting all related workshops and demos according to the suggested timeline and milestones in the project plan, we expect to start this engagement in October 2016 and conclude Phase 1 of the engagement by end ofNovember 2016. September 22, 2016 Page3 Phases 2, 3 and 4 of the engagement pertaining to the RFP, Demonstrations, Evaluation and Vendor Selection as well as Contracting work are scheduled to commence in May 2017 and conclude by end of July 2017 This timeline has assumed that for the months of pecember 2016 through to April 2017 po further work related to this engagement will be performed. .This time line also assumes that the RFP will be issued to the vendors during the first week of May 2017. A detailed wdrkplan can be found in Appendix B. Acknowledgments and agreements The City specifically acknowledges and agrees. to the following: 1. The performance of the Services does not constitute an engagement to provide audit, compilation, review or attest services in accordance with professional standards issued by the Chartered Professional Accountants of Canada ("CPA Canada") and, therefore, Deloitte will not express an opinion or any other form of assurance with respect to any matters (including, without limitation, compliance with Public Sector Accounting Standards). 2. This engagement cannot be relied on to disclose internal control deficiencies, errors, or :fraud should they exist. Deloitte has no responsibility for updating the Services performed or for performing any additional services, except as agreed to in writing with the City. 3. Management's purpose for engaging Deloitte to perform the Services is to assist management's own resources in selecting an ERP software and not to obtain an opinion from Deloitte. 4. The City shall be solely responsible for, among other things: (a) making all management decisions and performing all management functions; (b) designating one or more individuals who· possess suitable skill, knowledge, and/or experience, preferably within senior management to oversee the Services; ( c) eva)uating the adequacy and results of the Services; ( d) accepting responsibility for the results of .the Services; and ( e) establishing and maintaining internal controls, including, without limitation, monitoring ongoing activities. Deloitte will not perform any management functions, make any management decisions or implement any solutions or processes. 5. All management decisions and final conclusions reached in connection with this engagement will be the responsibility of the City. Deloitte will not make any decisions or assessments. 6. The City will be solely responsible for all decisions regarding the accounting treatment of any item or transaction and acknowledges that the Services do not include the recording of any amounts in the City's books or records. All amounts derived from the·performance of the Services will be reviewed and approved by, and will be the responsibility of, the City's management. 7. The nature, scope, and design of the Services are so]ely the responsibility of the City. Deloitte will rely, without independent verification on the .facts, information and assumptions provided by the City. 8. Deloitte can act as a project manager over Deloitte personnel; however, Deloitte cannot coordinate or oversee the work of City or vendor resources. Deloitte can maintain a draft status scorecard of progress made towards achieving management's action steps and reporting on such to management. Management retains overall responsibility for the plan, management of City employees and reporting to other City exe9utives and/or the board of direct9rs. · 9. Deloitte may be involved in City led meetings and Committees. Deloitte may participate and provide insights/advice based on best practices or process in these .sessions as a technical advisor, but Deloitte will not lead these sessions. 10. Deloitte cannot provide any forecasts, projections or budgets which could be used by the City for financial statement or budgeting purposes. This includes any cost assessments for varfous design models or builds. 11. Deloitte will not be designing or implementing the hardware or software system that aggregates source data underlying the financial statements or generates information that is significant to 'the financial statements or other financial information systems taken as a whole. 12. All communications with vendors are forWarded to the City of Pickering management September 22, 2016 Page4 !3. Deloitte will not negotiate with, or commit City of Pickering to any commitment.or contract Engagement team For this engagement we have assembled a team of highly skilled ·senior individuals who bring ucique experience managing technology assessments, as well as finance function transformations from planning through to implementation. Mike Qoodfellow will be the Lead Engagement Partner, and has overall responsibility for all aspects of this engagement. Mike will ensure that your expectations for our performance are both understood and exceeded. fu this role, Mike is supported by a team that is responsible for the oversight and execution of our advisory services . · Vanessa Medeiros Coqueiro, Seni~r Manager, Assurance & Advisory will serve as the engagement mcµiager and have responsibility for the execution of this engagement. Brandon Braganza, Manager, Assurance & Advisory will assist in delivering the project, and Matthew Colley, Senior Manager, Assurance & Advisory will serve as a Subject Matter Expert. This engagement team may~ as necessary, call upon additional pe~onnel either within Deloitte or a member firm of Deloitte Touche Tohmatsu Limited to assist in performance of the $ervices. Fees The µpset limit for this engagement is: Fee for services: $90;000 Disbursements (including travel, photocopying, gas, hotels, etc): $8,000 Total Cost: $98,000 HST: $12,740 . Total: $110,740 The fees quoted for the Services are based on certain assumptions and our understanding of the engagement scope as outlined in this letter. Disbursements, such as but not limited to: travel, photocopying, gas, hotels, etc will be billed separately and during the execution of the Work. · Other matters · This engagement letter, including the appendices attached hereto and made a part hereof, constitutes the entire agreement between the City and Deloitte with respect to this engagement and supersedes all other prior and contemporaneous representations, understandi_ngs, or agreements between the parties, whether written or oral, relating to this engagement and may not be amended except by mutual written agreement of the City and Deloitte. If the above terms are acceptable to you and the Services described are in accordance with your understanding, please sign the copy of this engagement letter in the space provided and return it to us. We recognize the importance of this initiative and appreciate the opportunity to assist you in this assignment. lf you have any questions or co:nunents regarding our proposal, please contact me at mgoodfellow@deloitte.ca or at 416-643-8027. September 22, 2016 Pages Yours truly, Mike Goodfeilow Partner The services and terms set forth in this contract.are accepted. and agreed to by City of Pickering management: Signature Name Title Date September 22, 2016 Page 6 Appendix A General business terms City of Pick~ring 1. Contract and parties. a. The engagement letter and attached schedules, appendices and attachments (the ."Engagement Letter") issued by Deloitte LLP ("Deloitte',') and addressed to the entity specified in the Engagement Letter (the "City"). and these General Business Terms (together, the "Contract'') constitute the whole agreement between the City and Deloitte in relation to the services, deliverables and work product described in the Engagement Letter (the ''Services"). For the purposes of.this Contract, the "City" shall include such City's subsidiaries and affiliates as specifically identified in the Engagement Letter or, if none are identified, all the City's subsidiaries and affiliates (together with the City, the "City Group"). The City represents and warrants that it has the power and authority to execute this Contract on behalf of, and to bind, itself and its subsidiaries and/or affiliates identified in the Engagement Letter or if none identified those forming part of the City Group. b. This Contract is between the City and Deloitte. The City hereby agrees that Deloitte may use the services of any Deloitte Tonche Tohmatsu Limited member firm and its respective subsidiaries and affiliates (including those operating outside of Canada) or, with the consent of the City, the services of any other party.( collectively, "Subcontractof'). The City's rela~ionship is solely with Deloitte as the entity contracting to provide the Services. Each party is an independent contractor and neither party is, nor shall be considered to be, the other's agent, distributor, business partner, fiduciary, joint venturer, co-owner, or representative. Deloitte remains responsible to the City for all of the Services under this Contract, inc_luding Services performed by Subcontractors. Accordingly, to the fullest extent possible under applicable law, ·none of the Deloitte Entities (as defined below) (except Deloitte) will have any liability to the City and the City will not bring, and will ensure that no other member of the City Group brings, any claim or proceedings of any nature (whether in contract, tort, breach of statutory duty or otherwise and including, but not limited to, a claim for negligence) in any way in respect of or in connection with this Contract against any of the Deloitte Entities (except Deloitte). c. "Deloitte Entities,, means Deloitte Tonche Tohmatsu Limited ("DTTL"), a UK private City limited by guarantee, its member firms and their respective subsidiaries and affiliates (including Deloitte), their predecessors, successors and assignees, and all partners, principals, members, owners, directors, employees, subcontractors and agents of all such entities. Neither DTTL nor, except as expressly agreed herein, any of its member finns has any liability for each other's acts or omissions. Each of the member finns ofDTTL is a separate and independent legal entity operating under the names "Deloitte", ''Deloitte & Tonche", "Deloitte Tonche Tohmatsu" or other related names; and services are provided by member finns or their subsidiaries or affiliates and . not by DTTL. 2. Responsibilities of the Client. The City shall cooperate with Deloitte in the performance by Deloitte of the Services, including, without limitation, providing Deloitte with reasonable facilities and timely access to data, information and personnel of the City. The City shall be responsible for the performance of its personnel and agents, for the timeliness, accuracy and completeness of all data and information (including all financial information and statements) provided to Deloitte by or on behalf of the City. Deloitte may use and rely on information and data furnished by the City or others without verification. Deloitte's performance shall be dependent upon the timely performance .of the City's responsibilities hereunder and timely decisions and approvals of the City in connection with the Services. Deloitte shall be entitled torely on all decisions and approvals of the City. 3. Payment ofinvoices. Deloitte's invoices are due and payable by the City within 30 days ofreceipt by the City. Without limiting its rights or remedies, Deloitte shall have the right to suspend or terminate the Services entirely or in part if payment is not received within sixty ( 60) days of the invoice date. September 22, 2016 Page 7 The City shall be responsible for all taxes, such as federal, provincial or other goods and services or sales taxes, gross receipts tax, withholding tax, and any similar tax, imposed on or in connection with the Services, other than Deloitte's income and property taxes. Expenses will be stated separately on the invoices. To the extent that Deloitte personnel are required to perform part of the Services in the United States of America ("U.S. Business"), the City and Deloitte agree to assign performance o'rthe U.S. Business to Deloitte Canada LLP, an affiliate of Deloitte. All services performed by Deloitte Canada LLP shall be performed under the direction of Deloitte which shall remain responsible to the City for such Services. . · 4. Term. Unless terminated sooner in accordance with its terms, this Contract shall terminate once the Services have been performed. This Contract may be terminated by either party at any time, with or without cause, by giving written notice to the other party not less than thirty (30) calendar days before the effective date of termination, provided that in the event of a termination for cause, the breaching party shall have the right to cure the breach within the notice period. In the event of termination, the City agrees to compensate Deloitte under the terms of the Engagement Letter for Services performed and expenses incurred through the effective date of termination. Deloitte may terminate this engagement with immediate effect upon written notice to the City if Deloitte determines that (i) a governmental, ·regulatory or professional entity (including, without limitation, provincial accounting 1nstitutes, Canadian and foreign securities commissions, the Canadian Public Accountability Board and the Public City Accounting Oversight Board (United States)) or an entity having the force of law has introduced a new, or modified an existing, law, rule, regulation, interpretation or decision the result of which would render the performance by Deloitte of any part of the Contract illegal or otherwise unlawful or in conflict with independence or professional rules, or (ii) circumstances change (including, without limitation, changes in ownership of the City or any of its subsidiaries or affiliates) such that the performance by Deloitte of any part of the Contract would be illegal or otherwise unlawful or in conflict with independence or professional rules. 5. Confidentiality. · a. To the extent that, in connection with this Contract, Deloitte comes into possession of information relating to the City which is either.designated by the disclosing party as confidential or is by its nature clearly confidential (the "Confidential Iufo~ation"), Deloitte shall not disclose such Confidential fuformation (including Personal Information as defined below) to any third party without the City's consent, except as follows. The City hereby consents to Deloitte disclosing such Confidential Information (a) to legal advisors, external and internal auditors, · insurers, other Deloitte Entities or as may be required or permitted by law, regulation, judicial or administrative process, or u1 accordance with applicable professional standards, or in connection with potential litigation; (b) to a Subcontractor, and the City acknowledges that, by such consent, the Confidential Information disclosed may be subject to the domestic and international laws applicable to the Subcontractor; or ( c) to the extent such Confidential Information (i) shall have otherwise become publicly available (including, without limitation, any information filed with any governmental agency and available to the public) other than as the result of a disclosure by Deloitte in breach hereof, (ii) becomes available to Deloitte on a non-confidential basis from a source other than the City which Deloitte believes is not prohibited from disclosing such information to Deloitte by obligation to the City, (iii) is known by Deloitte prior to its receipt from the City without any obligation of confidentiality with respect thereto, or (iv) is developed by Deloitte independently of any disclosures made by the City to Deloitte of such information. b. All Services are only intended for the benefit of the City for its internal use and City agrees that such Services and any work product prepared by Deloitte and delivered to the City will not be circulated, quoted, disclosed or referenced to any other third·party except as provided above or in the Engagement Letter. The mere receipt of any work product or advice by any other persons is not intended to create any duty of care, professional relationship or any presen:t or future liability between those persons and Deloitte. As a consequence, if copies of any work product or other advice ( or any information derived therefrom) are provided to others under the above exclusions, it is on the basis that Deloitte owes no duty of care or liability to them, or any other persons who subsequently receive the information. September 22, 2016 Page 8 c. In addition, the City acknowledges and agrees that to the extent a Deloitte Entity is the independent auditor of any entity in the City Group, any information that comes to the attention of Deloitte in the course of performing this Contract may be considered and used by the Deloitte Entity independent auditor in the context of responding to its professional obligations as the independent auditor for the City. d. The City agrees to reimburse any costs any Deloitte Entity or any Subcontractor may incur in complying ~ith any legal, professional or regulatory disclosure requirement relating to any of the Services imposed jn any proceedings or regulatory process not involving any substantive claim or proceeding against any such Deloitte Entity or Subcontractor, provided the City is notified promptly and, where reasonably or legally possible, prior to disclosure. e. Deloitte acknowledges that any submissions and information exchanged shall become a record belonging to the City and therefore is subject to the Municipal Freedom of Information and Protection of Privacy Act. This provincial law gives individuals, businesses and other organizations a legal right to request records held by the City, subject to specific limitations. Deloitte should be aware that it is possible that any records provided to the City, including but not limited to, pricing, technical specifications, drawings, plans, audio-visual materials or information about staff, parties to the bid or suppliers could be requested under this law. · Records relating to the contract could possibly be released under l\1FIPPA .. If Deloitte believes that all or part of the quote should be protected from release, the relevant parts should be clearly marked as confidential. Please note that this will not automatically protect the submission from release, but it will assist the City in making a determination on release if a request is made. The identity of all companies, as well as total prices, may be available to the public subject to the City's Purchasing Policy. 6. Limitation on warranties. This is a services engagement. Deloitte warrants that it shall perform the Services in good faith and with due professional care. Deloitte disclaims all other warranties, either express or implied, including, without limitation, warranties of merchantability and/or fitness of the Services for a particular purpose. 7. Limitation on damages. Deloitte, any other Deloitte Entity and their respective personnel, if'and only to the. extent it is determined such other Deloitte Entity and its respective personnel have a liability, shall not be liable to the City Group for·any claims, liabilities, losses, damages, costs or ·expenses relating to this Contract, the Services and the Deliverables ( as defined below) ("Claims") for an aggregate amount in excess of the fees paid by the City to Deloitte, except to the extent finally judicially determined to have resulted primarily from the bad faith or intentional misconduct of Deloitte, or any other Deloitte Entity or their respective personnel. In no event shall any Deloitte Entity (including Deloitte) or its respective personnel be liable for any loss of use, data, goodwill, revenues or profits or failure to realize expected savings (whether or not deemed to constitute direct Claims) or any consequential, special, indirect, incidental, punitive or exemplary loss, damage, or expense relating to this Contract, the Services and the Deliverables. In circumstances where.all or any portion of the provisions.of this section are finally judicially determined to be unavailable, the aggregate liability of Deloitte, any other Deloitte Entity, any Subcontractor and their respective personnel for any Claim shall not exceed an amount which is proportional to the relative faultthat their conduct bears to all other conduct giving rise to such Claim. The provisions of this section shall apply regardless of the form of action, damage, claim, liability, cost, expense, whether in contract · (including fundamental breach), statute, tort (including negligence) or otherwise. If the liability exclusion for Deloitte I;:ntities and Subcontractors provided in section 1 (b) is for any reason not effective, then the limitations on liability provided for in this section 7 shall apply to Deloitte Entities and Subcontractors as if they were named therein. 8. Indemnification. The City shall indemnify and hold harmless Deloitte, any other Deloitte Entity and their respective personnel from all third party Claims related to the Services, except to the extent · finally judicially determined to have resulted primarily from the bad faith or intentional misconduct of Deloitte, any other Deloitte Entity or any of their respective personnel. In circumstances where all or any portion of the provisions of this paragraph are finally judicially determined to be unavailable, the aggregate liability of Deloitte, other Deloitte Entities and their respective personnel for any third party September 22, 2016 Page9 Claim shall not exceed an amount which is proportional to the relative fault thanheir conduct bears to all other conduct giving rise to such Claim. The provisions of this section shall apply regardless of the form of action, damage, claim, liability, cost, expense, whether in contract (including :fundamental breach), statute, tort (including negligence) or otherwise. 9. Limitation on actions. No action, regardless of form, relating to this Contract or the Services, may be brought by either party more than two years ( or the applicable period under any mandatory statutory limitation period in the relevant jurisdiction) after the cause of action has accrued under applicable law · · 10. Ownership of work product and work papers. a. To the extent that Deloitte utilizes or develops any of its property (whether tangible or intangible) in connection with this Contract, such property, including work papers, shall become the property of the City. Any intellectual property and proprietary rights in the material provided by City Group for performing the ·services shall remain the property of the City Group. City acknowledges that Deloitte, in connection with performing the Services, may develop or acquire general experience, skills, knowledge, and ideas that are retained in the memory of its personnel. The City acknowledges and agrees that Deloitte may use and disclose such experiences, skills, knowledge. b. All working papers, files and other internal materials created or produced by Deloitte related to this engagement that are not Deliverables are the exclusive property of Deloitte. 11. Force majeure. Neither party shall be liable for any delays or nonperformance resulting from circumstances or causes beyond its reasonable control, including, without limitation, acts or omissions or the failure to cooperate by the other party (including, without limitation, entities or individuals under its control, or any of their respective officers, directors, employees, other personnel and agents), acts or omissions or the failure to cooperate by any third party, fire or other casualty, act of God, epidemic, strike or labour dispute, war or other violence, or any law, order, or requirement of any governmental agency or authority. 12. Non-solicitation. Deloitte and the City each agree not to directly or indirectly solicit, employ or engage, any personnel of the other party involved in this engagement for a period of six (6) months following any such personnel's involvement with the provision of the Services or otherwise directly connected with this Contract, except where an individual responds directly to a general recruitment campaign. 13. Communications. a. Except as instructed otherwise in writing, each party may assume that the other approves of properly addressed fax, ·email (including email exchanged via internet media) and voicemail communication of both sensitive and non-sensitive documents and other communications concerning this Contract, as well as other means of communication used or.accepted by the other. b. It is recognized that the internet is inherently insecure and that data can become corrupted, communications are not always delivered promptly ( or at all) and that other methods of communication may be appropriate. Electronic communications.are also prone to contamination by viruses. Each party will be responsible for protecting its own systems and interests and will not be responsible to the other on any basis ( contract, tort or otherwise) for any loss, damage or omis.sion in any way arising from the use of the internet or from access by Deloitte personnel to networks, applications, electronic data or other systems of the City Group. 14. Privacy. Deloitte and the City acknowledge and agree that, during the course of this engagement, Deloitte may collect persom;l information about identifiable individuals ("Personal Information"), either from the City or from third parties. Deloitte's services are provided on the basis that the City has. obtained any required consents for collection, use and disclosure to us of Personal Information required under applicable privacy legislation. The City and Deloitte agree that Deloitte will collect, use and disclose Personal Information on behalf of the City solely for purposes related to completing this engagement, related engagements, or providing services to the City and Deloitte shall not collect, use and disclose such Persona] Information for Deloitte' s own behalf or for its own purposes. September 22, 2016 Page 10 15. Anti-money laundering. Under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada), Deloitte and its personnel are required to report any (a) attempted or completed suspicious transactions (transactions which are reasonably suspected to be related to the commission of a money laundering or terrorist financing offence), (b) terrorist property that comes into the possession of Deloitte, and (c) large cash transactions (receipt by Deloitte of over $10,000 Canadian or equivalent in cash) to the Financial Transactions and Reports Analysis Centre of Canada, a government agency. The Act specifically prohibits Deloitte from informing a client that a report has· been made. 16. Entire agreeme~t, modification and effectiveness. Nothing discussed prior to execution of the Engagement Letter induced, nor forms part of, the Contract unless as specifically set out in t1;iis Contract. This Contract supersedes any previous agreement, understanding or communication, written or oral, relating to its subject matter. No variation to the Contract shall be effective unless it is documented in writing and signed by authorized representatives of both parties, provided, however, that the scope of Services set forth in the Engagement Letter may be changed by agreement of the parties in writing, including by e-mail or facsimile. If Deloitte has already started work ( e.g. by gathering information; project planning or giving initial advice) then the City agrees that this Contract is effective as of the start of such work. 17. Assignment. Except as provided in paragraph 1; no party may assign, transfer, or delegate any of its rights or obligations relating to this Contract without prior written consent of any other party. Neither party will directly or indirectly agree to assign or transfer to a third party any claim against the other . party arising out of this Contract. · 18. Governing law and submission to jurisdiction. This Contract, including exhibits and all matters relating to it shall be governed by, and construed in accordance with, the laws of the province of Ontario Any action or procee.ding arising out of or relating to this Contract or the Services shall be brought and maintained exclusively in the courts of the province of Ontario. The parties hereby expressly and irrevocably (i) submit to the exclusive jurisdiction of such courts for the purposes of any such action or proceeding and (ii) waive, to the fullest extent permitted by law, any defense of inconvenient forum to the venue and maintenance of such action in any such courts. 19. Survival and interpretation. a. Any provisions of the Contract which either expressly or by their nature extend beyond the expiration or termination of this Contract shall survive such expiration or termination, including, without limitation, sections l(b), 5, 6, 7, 8, 9, 10, 12, 16, 17, 18, 19 and 20. · b. Deloitte Entities are intended third party beneficiaries of this Contract and any Deloitte Entity may in its own right enforce such terms. c. If any provision of this Contract is found by a court of competent jurisdiction to be unenforceable, such provision shall not affect the other provisions, but such unenforceable provision shall be deemed modified to the extent necessary to render it enforceable, preserving to the fullest extent permissible the intent of the parties set forth herein. 20. Qualifications. Notwithstanding anything herein to the contrary, Deloitte may use, with prior written approval from the City, the name of the City, refer to this engagement and the performance of the services in marketing, publicity' materials and other material, as an indication of its experience, and in internal data systems.