Title
SAP System Modernization - Requirements Contract RFP 21-074 (Ordinance S-47563)
Description
Request to authorize the City Manager, or his designee, to enter into a contract with LSI Consulting, Inc. to provide a comprehensive Infrastructure as a Service package for SAP. This service package will include licensing, cloud hosting and a database upgrade implementation of the existing SAP infrastructure and database platforms for the Finance Department, in an amount not to exceed $40,000,000. Further request authorization to use existing excise tax bond proceeds to fund the costs of acquiring and improving intellectual property for the enterprise-wide financial system and for City Controller to disburse all funds related to this item. Further request an exception to the assumption of liability provision of Phoenix City Code section 42-18(B) to limit the liability of LSI Consulting, Inc. to $10 million.
Report
Summary
The City currently utilizes the SAP system for critical financial accounting and reporting processes, procurement, inventory management, and overall financial reporting and analytics. SAP has more than 3,000 users across all City departments and interfaces with numerous other citywide systems and applications. The SAP system is over 20 years old and requires significant upgrades necessary to support evolving work processes, advanced analytics and to interface with citywide functions. Additionally, the hardware for the system was installed in November 2013 and is currently at the end of life with extended support expiring in 2021.
This contract will upgrade the existing SAP infrastructure and database platforms in order to modernize and allow for full optimization of SAP's incremental enhancements, technology improvements and solutions. This service package will include licensing, cloud hosting and database upgrade implementation of SAP. The migration to a cloud-based system mitigates the risk of aging hardware and provides an ongoing secure and stable financial environment. Upgrading the software will result in improvements in the areas of system speed, user experience and data analytics.
Maintenance and hardware on the existing system over a 10-year period could amount to an estimated $28 million. Alternatively, the proposed upgrade including the cloud solution is $40 million. The incremental amount of $12 million or $1.2 million annually over 10 years allows staff to extend and enhance the life of the city's existing city-wide financial and procurement systems. This enhancement alleviates the need for a full system replacement and would not require staff to purchase, maintain and support new hardware and other infrastructure.
This item has been reviewed and approved by the Information Technology Services Department.
Procurement Information
Request for Proposal (RFP) 21-074 was conducted in accordance with Administrative Regulation 3.10. There were three offers received by the Finance Department's Procurement Division on March 26, 2021. The proposals were scored by an evaluation panel based on the following evaluation criteria: Qualifications and Experience (300 Points); References (150 Points); Approach to Scope of Work (250 Points); and Price (300 Points). The offeror scores are as follows:
LSI Consulting, Inc.: 936 Points
Accenture: 674 Points
IBM Corporation: 642 Points
The Deputy Finance Director recommends that the offer from LSI Consulting, Inc. be accepted as the highest-scored, responsive, and responsible offer that is most advantageous to the City.
Contract Term
The ten-year contract term shall begin on or about June 21, 2021. Provisions of the contract include an option to extend the term up to five additional years, which may be exercised by the City Manager or designee.
Financial Impact
The aggregate value of the contract will not exceed $40,000,000. Funds are available from existing excise tax bond proceeds and from the Finance Department's operating budget.
Concurrence/Previous Council Action
City Council approved the issuance of RFP 21-074 on December 16, 2020.
Department
Responsible Department
This item is submitted by City Manager Ed Zuercher and the Finance Department.