HomeMy WebLinkAboutFCS-14-116 - SAP Software for SAP Implementation ProjectStaff Report
rTC.�r R finance and Corporate Services Department www.kitchener.ca
REPORT TO: Committee of the Whole
DATE OF MEETING: 2014 -06 -16
SUBMITTED BY: Larry Gordon, Director of Supply Services, 519 - 741 -2200 ext.
7214
PREPARED BY: Larry Gordon, Director of Supply Services, 519 - 741 -2200 ext.
7214
WARD(S) INVOLVED: N/A
DATE OF REPORT: 2014 -06 -11
REPORT NO.: FCS -14 -116
SUBJECT: Software for SAP Customer Relationship and Billing
RECOMMENDATION:
That software for the SAP Customer Relationship and Billing (SAP) Implementation Project, be
awarded to SAP Canada Inc., Toronto, Ontario, at their price of $1,450,000., plus H.S.T. of
$188,500., for a total of $1,638,500.
BACKGROUND:
Council approved SAP Customer Relationship & Billing (SAP) as the replacement for the
existing Customer Information System (CIS) as part of the 2014 budget process. CIS is a
critical application used at the City of Kitchener to manage and bill over $500M of revenue in
property tax and utilities annually. An external assessment of CIS concluded that the existing
application is approaching the end of its lifecycle and cannot be sustained. Council's final
decision to replace the aging CIS system with SAP resulted from four years of detailed analysis
and extensive discussions with Council, which included:
• An external assessment of CIS leading to Council direction to pursue due diligence on
the acquisition of SAP tax and utility solutions to replace CIS in 2010
• Further detailed research into SAP solutions and other alternatives from 2011 to 2013
• Definition of business requirements and the fit with SAP through a mini - blueprinting
process in 2012, based on an Expression of Interest process awarded by Council
• Findings and recommendations presented through three staff reports and a budget issue
paper in 2012 and 2013
Upon receiving Council's final approval to proceed with the project, City staff commenced
negotiations with SAP for the purchase of the Customer Relationship & Billing software. New
software licenses are purchased directly from SAP by existing SAP customers. Leveraging the
current SAP Software License Agreement signed in November 2007 for the City's SAP
Financials software, the City has obtained terms and pricing which are favourable to the City.
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The project budget represents the total estimated cost for the implementation project, including
systems integration fees, project management and change management fees, software and
hardware costs, staff secondments to the project team, contingency, HST, and other charges.
Tenders for system integration fees, project management and change management, hardware
and other charges will be brought to the Committee of the Whole for Council's approval in the
future, with the system integration Request for Proposal scheduled for the August 25 meeting.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
Theme: Financial Management
Strategic Direction: Ensure responsible use of public funds within a supportive policy
framework.
The City of Kitchener's purchasing policies and practices ensure openness, fairness and
transparency in the procurement of goods and services.
FINANCIAL IMPLICATIONS:
The net cost for the SAP Software Licenses (A), is fair and reasonable for a purchase of this scope
and the upset limit is within the budget allowance (B) provided within the budget. Funding for this
purchase is included within the approved capital budgets. The estimated surplus (D) will remain
within the project budget, and will be used to fund future phases of this project.
SAP Software for SAP Implementation Project
The total budget for all phases of this project is
Estimated Cost for SAP Software
Costs including HST
less: HST rebate on tender
Net Cost Being Awarded
Costs Incurred to Date
Total Estimated Cost for SAP Software
Budget for SAP Software
Contribution from Revenue
Gas Utility
Sanitary Utility
Stormwater
Utility
Water Utility
$ 19,912,661.00
1,638,500.00
(162,979.93)
1,475,520.07 A
1,475,520.07 C
301,148.26
1,140,061.27
236,616.49
236,616.49
236,616.49
Total Budget for SAP Software 2,151,059.00 B
Estimated Surplus /(Deficit) for SAP Software (B - C) 675,538.93 D
ACKNOWLEDGED BY: Dan Chapman, Deputy CAO & City Treasurer, Finance and
Corporate Services
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