TO: ADAM PIRRIE, CITY MANAGER
FROM: JEREMY STARKEY, FINANCE DIRECTOR
DATE: JANUARY 14, 2025
Reviewed by:
City Manager: AP
SUBJECT:
Title
AWARD OF CONTRACTS TO DATA CLIMB, LLC AND TYLER TECHNOLOGIES, INC. FOR IMPLEMENTATION OF THE ENTERPRISE RESOURCE PLANNING (ERP) FINANCIAL MANAGEMENT SOFTWARE SOLUTION (FUNDING SOURCE: GENERAL FUND, TECHNOLOGY FUND AND AMERICAN RESCUE PLAN ACT FUND)
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SUMMARY
The City has used Tyler Technologies, Inc’s (“Tyler”) Eden Inforum Gold (“Eden”) financial system since 2003. As the City has continued to develop, so has the volume and complexity of its financial transactions along with the need for additional automation and streamlined solutions. Tyler’s Eden system now has a final end-of-life date of March 1, 2027. After this date, Tyler will no longer provide support for the solution, meaning the City will not receive updates, security patches, or assistance for this critical financial system. Allowing the financial system to exceed its end-of-life could expose the City to significant risks, such as increased vulnerability to cyber threats, disruptions in operations, and missed opportunities to enhance business processes.
After evaluating various options, staff determined that upgrading from the current Eden software to the latest product from Tyler Technologies would be the most effective solution. Accordingly, staff recommends that the City upgrade to Tyler Technologies’ Enterprise ERP (Enterprise Resource Planner) software.
In August 2024, staff solicited proposals for a third-party consultant to assist with the Tyler ERP upgrade. At the close of the advertisement period, six proposals were received. Based on the review of each proposal and two interviews with the top consultants, staff recommends that the City Council authorize the City Manager to enter into an agreement with Data Climb, LLC to provide consulting and project management support services for the ERP upgrade project. Data Climb, LLC has assisted other municipalities with these upgrades and has a wealth of knowledge about municipal financial processes.
RECOMMENDATION
Recommended Action
Staff recommends the City Council:
A. Authorize the City Manager to enter into a contract with Data Climb, LLC in the amount of $255,108 for project management support services related to the ERP Implementation Project;
B. Authorize the City Manager to enter into a contract with Tyler Technologies, Inc. in the amount of $900,666 for a comprehensive Enterprise Resource Planning (ERP) Financial System; and
C. Appropriate $96,000 from the unassigned General Fund balance to fund a portion of the ERP Implementation Project.
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ALTERNATIVES TO RECOMMENDATION
In addition to the recommendation, there are the following alternatives:
• Request additional information from staff.
• Do not approve one or both of the proposed contracts.
FINANCIAL REVIEW
The 2024-26 Budget includes $685,000 in American Rescue Plan Act (ARPA) funds for this project.
The costs for Data Climb, LLC (“Data Climb”) are one-time in nature and are not to exceed $255,108 for the ERP Implementation project. The procurement of project management support through an agreement with Data Climb complies with all City purchasing guidelines.
The purchase of the ERP Financial System from Tyler Technologies, LLC (“Tyler”) consists of both one-time and ongoing costs and is considered an upgrade to the City’s existing financial system. Staff recommends a sole-source procurement, which does not require bidding, due to the proposed system having the same compatibility, interoperability, and technical application as the software currently used and the upgrade is expected to significantly reduce the implementation and training impact on staff. The upgrade to the ERP Financial System is also expected to meet or exceed the performance and quality requirements of the current financial system.
Additionally, Tyler has offered a discount of eleven percent of the annual license for maintenance and support and discounted the one-time conversion costs by fifty percent for the implementation phase of the project. The total costs for Tyler is $900,666 which includes one-time costs of $531,390 and ongoing costs of $123,092 per year for the first three (3) years of Software as a Service (SaaS) maintenance and support.
Total one-time costs for both the Tyler and Data Climb contracts are $786,498, which will be funded through the use of $685,000 in ARPA funds already appropriated, plus $96,000 to be appropriated from unassigned General Fund balance, if approved. The remaining $5,498 will be reallocated from savings from other ARPA funded projects.
Ongoing costs of $123,092 annually are expected to be partially offset by the reduction in contracted costs of standalone systems that will be eliminated with the implementation of integrated services or functions in the new ERP system. Staff estimates a go-live date for the new system to begin with the 2026-27 fiscal year, and therefore, the ongoing costs of supporting the system will be included in the proposed 2026-28 Budget.
In addition to the contracted costs above, staff has estimated a total of $581,000 in salaries and benefits for existing staff to support the project during the implementation. Key staff from all departments will be needed to validate and test conversion data as well as participate in training for the new system. The total one-time costs for the ERP implementation project, including the investment of staff time, are estimated at approximately $1.4 million.
The staff cost to explore and evaluate possible solutions for the expiring financial system, procurement activities, and to prepare this report is estimated at $10,746, and is included in the operating budget of each department.
ANALYSIS
As part of the 2022-24 Budget, City Council approved to set aside $400,000 in American Rescue Plan Act funding for the upgrade or replacement of the City’s existing financial system. At this time, staff began assessing the City’s needs for financial software and any potential opportunities to integrate other standalone systems it currently uses.
The City Council approved an additional $285,000 in ARPA funds in the 2024-26 Budget, bringing the total appropriation to $685,000 for this project. In November 2024, the City Council approved the Inter-agency Agreement (IAA) with the Administrative Services Department to obligate these funds according to the Obligation Interim Final Rule requirements from the US Treasury. The IAA was executed prior to December 31, 2024 to meet the obligation deadline for ARPA Funds.
Over the last year, the City assigned staff from the Technology Division, the City Manager’s Office and the Financial Services Department to evaluate the City’s needs. Staff reviewed many options and ultimately decided that an upgrade from the current Eden software to the latest version of software from Tyler Technologies, Inc. (“Tyler”) would be the best solution. Therefore, staff recommends that the City upgrade to Tyler’s Enterprise ERP software.
With limited staffing resources, the City would require additional implementation assistance and project management support. In September 2024, staff solicited proposals for a third-party consultant to assist with the Tyler ERP Implementation. A total of six proposals were submitted and reviewed by staff. Staff recommends that the City contract with Data Climb, LLC (“Data Climb”) for their support in managing the project and additional consulting services during the implementation. Data Climb will provide support through their two Principals, a Project Manager/ ERP Consultant, and an ERP Analyst throughout the project duration. Collectively, Data Climb’s team has over 26 years of experience and have managed more than sixty implementations of Tyler ERP systems.
Staff has identified the opportunity to integrate systems that are currently standalone systems, such as our cashiering and utility billing systems. Staff is also exploring other system upgrades for timekeeping, employee recruitment and onboarding. Staff’s overall approach will be to implement a comprehensive ERP system designed around best practices, streamline existing functions, and integrate key technology systems. The implementation of an ERP system will be extensive and labor intensive during the project timeline. It will also require the involvement of key City staff and participation of staff from various departments who are experienced power users and subject matter experts in areas such as accounting, payroll, budget, benefits, procurement, human resources and information technology. A detailed project timeline will be developed that seeks to ensure that regular processes continue uninterrupted during the implementation schedule.
With the City Council’s approval of the two agreements in this report, staff will secure a project start date during the spring of 2025 and have estimated a Go-Live date with the start of the 2026-27 fiscal year. This timeline provides the cleanest transition to the upgraded system and minimizes impacts to limited staff during the middle of a fiscal year.
RELATIONSHIP TO CITY PLANNING DOCUMENTS
Staff has evaluated the agenda item in relationship to the City’s strategic and visioning documents and finds that it applies to the following City Planning Documents: Council Priorities, General Plan, and the 2024-26 Budget.
CEQA REVIEW
This item is not subject to environmental review under the California Environmental Quality Act (CEQA).
PUBLIC NOTICE PROCESS
The agenda and staff report for this item have been posted on the City website and distributed to interested parties. If you desire a copy, please contact the City Clerk’s Office.
Submitted by:
Jeremy Starkey
Finance Director