4e memo
COMMISSION AGENDA MEMORANDUM Item No. 4e ACTION ITEM Date of Meeting December 12, 2017 DATE: December 4, 2017 TO: Dave Soike, Interim Executive Director FROM: Peter Garlock, Chief Information Officer SUBJECT: PeopleSoft Financials Upgrade (CIP #C800909) Amount of this request: $3,600,000 Total estimated project cost: $3,600,000 ACTION REQUESTED Request Commission authorization for the Executive Director to (1) proceed with the PeopleSoft Financials Upgrade project; (2) procure hardware, software, and consulting services; and (3) use Port staff for implementation, for a total project cost not to exceed $3,600,000. EXECUTIVE SUMMARY The Port currently uses Oracle's PeopleSoft Financial system, version 9.1 to support the following business functions: General Ledger, Purchasing, Accounts Payable, Project Costing, Accounts Receivable, Billing, and Asset Management. Oracle's annual support plan, provides frequent, critical software patches to address constantly evolving cyber-crime threats. Regular updates of our PeopleSoft Financial System are critical to secure our financial data and preserve the value of our investment. Extended support for PeopleSoft Financials version 9.1 ends in January 2018, after which we will no longer receive security and application software patches. This project will upgrade the Port's PeopleSoft Financial System to version 9.2, and continue vendor support that is vital to on-going Port operations. Information & Communication Technology (ICT), Accounting & Financial Reporting (AFR), Central Procurement Office (CPO), and PeopleSoft users from most other Port organizations will be involved in this project. A procurement for an Indefinite Delivery, Indefinite Quantity (IDIQ) Contract for PeopleSoft Consulting services is currently in progress. When the contract is in place, it will be used to provide the vendor support needed to complete the project. JUSTIFICATION This project includes several important benefits. Template revised September 22, 2016. COMMISSION AGENDA Action Item No. 4e Page 2 of 5 Meeting Date: December 12, 2017 (1) The upgrade will ensure continued support of our PeopleSoft Financials system, used Port-wide to conduct operations. In 2017 alone, Oracle released 40 critical updates to fix security issues. The availability of security and application patches are critical for reducing the Port's vulnerability to cyber-crime and system issues that could disrupt Port business. (2) Oracle's support model will change with the new version, providing smaller, more frequent updates with the flexibility for customers to choose only the features they want to install based upon functionality and cost. After this upgrade, there will be no more large projects required to ensure continued support. (3) With the new version, there are several feature improvements including the introduction of work centers designed to improve user productivity, a more efficient, search-driven navigation, and pre-built dashboards. DETAILS The original Capital Improvement Program (CIP) Definition was to complete the upgrade as well as reconfigure the system to better meet the financial reporting needs of Port business entities and operating divisions. Current cost estimates to improve financial reporting are significant so the recommendation is to move forward with the upgrade only in this project authorization. During the project, we will leverage consulting expertise to assess the viability and implications of activating certain system features to enhance the Port's financial reporting and a future project authorization may be requested when more information is known. Scope of Work (1) Upgrade of the Port's PeopleSoft Financial System to version 9.2. Approximately 100 resources across the Port are expected to contribute to the upgrade and testing of the new version. (2) Elimination of customizations, where possible, by using built-in functionality in the new version. Schedule Planning and Design Complete 2018 Quarter 1 Upgrade and Testing Complete 2018 Quarter 4 Deployment 2018 Quarter 4 Project Close 2019 Quarter 1 Cost Breakdown This Request Total Project Port Labor $1,450,500 $1,450,500 Vendor Services $2,150,000 $2,150,000 Total $3,600,000 $3,600,000 Template revised September 22, 2016; format updates October 19, 2016. COMMISSION AGENDA Action Item No. 4e Page 3 of 5 Meeting Date: December 12, 2017 ALTERNATIVES AND IMPLICATIONS CONSIDERED Alternative 1 Select a new Financials application through a competitive procurement. Cost Implications: $6,750,000 Pros: (1) The benefits of selecting and implementing a new replacement financial system for the Port will not be known until after an initial procurement process to compare between systems. Cons: (1) The way the Port conducts its business will need to change to work within the context of a new financial system. Many business processes such as billing customers, paying bills, capturing/recording capital project costs, and accounting for the Port's many different financial transactions, will all need to be reviewed for impacts and changes. (2) The procurement process will take at least 12 months, delaying project go-live until 2020. Lack of vendor support during the interim on the current system would likely affect system availability and security. (3) Staff resources will have limited availability to work on other initiatives through 2020. This is not the recommended alternative. Alternative 2 Complete the upgrade to the PeopleSoft Financials 9.2 and reconfigure system for better financial tracking. Cost Implications: $6,900,000 Pros: (1) The upgraded system will provide improvements to critical business functions and will be fully supported with security and application patches. (2) With an upgrade to version 9.2, future new feature implementations will no longer require major upgrades. (3) A system reconfiguration to improve financial reporting will eliminate manual efforts to segregate transactions and reporting by entity and division. Cons: (1) Cost estimates for the reconfiguration effort are significant, and the benefits do not currently justify the financial and resource costs. Additional analysis will be completed in 2018 to determine if there is a less costly approach. (2) Staff resources will have limited availability to work on other initiatives through 2019. This is not the recommended alternative. Template revised September 22, 2016; format updates October 19, 2016. COMMISSION AGENDA Action Item No. 4e Page 4 of 5 Meeting Date: December 12, 2017 Alternative 3 Upgrade the PeopleSoft Financials system to version 9.2 Cost Implications: $3,600,000 Pros: (1) The upgraded system will provide improvements to critical business functions and will be fully supported with security and application patches. (2) With an upgrade to version 9.2, future new feature implementations will no longer require major upgrades. Cons: (1) Staff resources will have limited availability to work on other initiatives through 2018. This is the recommended alternative. FINANCIAL IMPLICATIONS Cost Estimate/Authorization Summary Capital Expense Total COST ESTIMATE Original estimate $5,500,000 $0 $5,500,000 Current change -$1,900,000 $0 -$1,900,000 Revised estimate $3,600,000 $0 $3,600,000 AUTHORIZATION Previous authorizations $0 $0 $0 Current request for authorization $3,600,000 $0 $3,600,000 Total authorizations, including this request $3,600,000 $0 $3,600,000 Remaining amount to be authorized $0 $0 $0 Annual Budget Status and Source of Funds This project was included in the 2018-2022 capital budget and plan of finance under committed CIP #C800909 in the amount of $5,500,000. After additional analysis, it was determined that the current project scope and objectives can be accomplished with a smaller budget of $3.6 million. Financial Analysis and Summary Project cost for analysis $3,600,000 Business Unit (BU) Corporate Effect on business performance NA (NOI after depreciation) IRR/NPV (if relevant) NA CPE Impact $.01 Template revised September 22, 2016; format updates October 19, 2016. COMMISSION AGENDA Action Item No. 4e Page 5 of 5 Meeting Date: December 12, 2017 Future Revenues and Expenses (Total cost of ownership) Annual maintenance costs, budgeted in the ICT Operating Budget, are not estimated to change with this project. ATTACHMENTS TO THIS REQUEST None PREVIOUS COMMISSION ACTIONS OR BRIEFINGS None Template revised September 22, 2016; format updates October 19, 2016.
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