Project Proposal, Financial and
Human Resources/Payroll Systems
(City Council on July 8, 9 and 10, 1998, deferred consideration of this Clause to the next
regular meeting of City Council to be held on July 29, 1998.)
(Clause No. 1 of Report No. 9 of the Corporate Services Committee)
The Corporate Services Committee:
(1)recommends the adoption of Recommendations Nos. (1) and (3) embodied in the
joint report (June 10, 1998) from the Chief Financial Officer and Treasurer, the
Commissioner of Corporate Services and the Executive Director of Human Resources;
and
(2)reports having recommended to the Budget Committee the adoption of
Recommendation No. (2) embodied in the aforementioned report; and having
requested the Budget Committee to report thereon to the meeting of Council scheduled
to be held on July 8, 1998, when this matter is being considered.
The Corporate Services Committee further reports, for the information of Council, having:
(1)referred the following motion to the City Solicitor for report thereon directly to Council
for its meeting scheduled to be held on July 8, 1998:
Moved by Councillor John Adams:
"That City Council adopt the following policy:
"(i)if any director, officer, employee, agent or other representative of a
proponent/respondent, including any other parties that may be involved in a joint venture or
a consortium with the respondent, makes, from and after Council's decision on July 8, 1998,
any representation or solicitation to any elected representative or employee or agent of the
City of Toronto, with the exception of the contact person designated by the Chief
Administrative Officer with respect to the respondent's proposal or any other respondent's
proposal, City Council is entitled to reject the proponent/respondent's proposal;
(ii)a representation can be considered to be anything said or written to any Member of
Council, employee or agent which provides information advancing the interests of a
proposal;
(iii)this requirement does not extend to representations made to the designated official or to
any public deputation made to a Committee of City Council in accordance with the
Procedural By-law;
(iv)should a respondent desire that any information be presented to Members of Council,
the Respondent may request the Designated Official to do so and that official shall distribute
such information to all Members of Council and appropriate staff;
(v)should Members of Council wish to receive information from any respondent(s), then
the request shall be made through the Designated Official, and if any Member of Council
directly approaches a respondent for information, the respondent is at jeopardy if he or she
does make any representation to any Councillor in response; and
(vi)in the event of any alleged breach of the foregoing protocol, City Council shall be the
arbiter of the effect of such a breach to the process";
(2)requested the Chief Administrative Officer and the Chief Financial Officer to submit a
joint report directly to Council for its meeting scheduled to be held on July 8, 1998,
providing recommendations respecting the inclusion of all Agencies, Boards and
Commissions, including the Toronto Hydro Commission, in the FIS/HRS system being
proposed; and
(3)requested the Chief Financial Officer, in consultation with the outside independent
consultant from LGS Inc., to submit a written brief to all Members of Council, as quickly as
possible, respecting the risks involved regarding this project and the concerns expressed by
Members of the Corporate Services Committee.
The Corporate Services Committee submits the following joint report (June 10, 1998)
from the Chief Financial Officer and Treasurer, the Commissioner of Corporate
Services and the Executive Director of Human Resources:
Purpose:
To recommend the acquisition of financial and human resource systems essential to the
operation of the City and the effectiveness of amalgamation.
Recommendations:
It is recommended that:
(1)the acquisition of financial and human resource/payroll systems from SAP be approved
in principle, as outlined in this report;
(2)funds not to exceed $6.1 million be authorized for expenditure in 1998, $3.4 million in
1999, $6.5 million in 2000, $6.5 million in 2001, and $3.8 million in 2002 with total capital
expenditures for the financial and human resources/payroll systems not to exceed
$26.3 million for the necessary hardware, software and project implementation; and
(3)the appropriate city officials be authorized to enter into contract negotiations with SAP
for the supply of financial and human resource/payroll systems.
Funding Implications:
The 1998 requested capital expenditures of $6.1 million have been included in the ranked
list of transition projects envelope of $40 million in a separate report to the Budget
Committee. Future year's requests are also included in that report with other city transition
projects. Given that the minimum required investment for financial and human
resources/payroll systems is $19 to $20 million, the total requested capital expenditure of
$26 million represents the greatest financial and operational benefit to the City.
Background Summary:
Upon amalgamation, each of the seven municipalities entering the new City had their own
systems for managing financial and human resource information and administration. Payroll,
purchasing, position management, salary and benefits administration, time and attendance
reporting, payment of accounts, budgeting, staffing, collective agreement administration and
many other administrative tasks are handled by these systems. For the most part, the existing
systems are still functioning independently. In these interim months, summary financial
information is being consolidated in the former Metro system, but financial detail is only
available from the systems in the previous municipalities, which continue to require
maintenance and support.
It is essential that the City's administrative systems be consolidated as soon as possible, for
several reasons:
(i)it is impossible to exercise appropriate financial and staffing control when the necessary
information is distributed among several systems;
(ii)most of the existing systems are not year 2000 compliant, and will not function properly
when this issue begins to arise in 1999;
(iii)administrative efficiencies for 1999 and beyond cannot be achieved without the
benefits of consolidated systems, and savings potentially associated with amalgamation
become unattainable without the necessary investment in systems; and
(iv)it is essential that a single system be in place to support activity based costing and
charge-back of the costs of administrative systems, as this capacity is required in order to
achieve administrative savings The City has also received expressions of interest in
outsourcing of administrative systems, through partnership with private-sector
organizations. While these possibilities have not yet been subject to full analysis, it is clear
that installation of effective administrative systems serving all of the new City will enable
the City to realize significant savings itself. Once these immediate benefits have been
realized and internal efficiencies achieved, it may be appropriate to entertain proposals for
alternate service delivery arrangements.
Movement to a single system, or set of systems, is a massive and difficult undertaking. In
an organization the size of the City, a normal time-frame for implementation of a new suite
of business systems would be a minimum of two years, from approval of the project and
selection of vendors to full functionality. Because the City does not have a single set of
administrative systems in place, and consequently does not have the necessary mechanisms
to support management accountability or to achieve the available administrative efficiencies,
it is necessary to move much more quickly.
In late 1997, RFIs were issued requesting information from vendors on the supply of
systems to support the City's financial and human resource requirements. Several vendors
were asked to provide product demonstrations. Separate staff groups evaluated the proposals
for financial and human resource/payroll systems, using systematic criteria determined in
advance.
Both the HR/Payroll and Finance groups reviewed detailed information on the functional
capabilities of the various products, and the cost structures proposed by the vendors.
Extensive presentations were conducted by each of the vendors for each of their products
(when a single vendor proposed both financial and human resource/payroll products, each
was presented separately). In addition, extensive presentations by each vendor were made to
City technical staff, focusing on the technical features and support requirements for the
products.
During February and March of 1998, there were extensive discussions with vendors, and a
number of site visits were conducted. Also during March, the separate financial and human
resource/payroll systems projects were consolidated under the FIS/HRP Steering
Committee. The Committee reviewed the staff recommendations, and the financial impact of
the proposals. In light of the City's financial circumstances, and the need to ensure that the
most cost-effective solutions to the City's requirements be identified, the Committee
directed that further review of all options be conducted.
Technology and management consultants LGS Group were retained to assist in the
evaluation of options. LGS Group has wide experience in the application of technology to
the business needs of both private and public sector organizations, including municipalities.
Subsequent analysis included detailed consideration of the financial impact of the most
viable options, including estimates of the impact of each on the staffing requirements of the
City over the next few years. Reports were also obtained from the Gartner Group,
consultants specializing in analysis of technology companies and products, on the financial
status and viability of each of the "qualified" vendors, and on the strengths of each product
line.
The results of this extensive evaluation process are summarized in this report. A minimum
investment of $19 to $20 million is required to meet the basic needs of the City. The
recommended additional investment of $6 million brings the total required investment to
$26 million. This will generate additional savings of almost $6 million per annum, and will
position the City well for future reengineering and efficient operations.
What is a Financial Information System (FIS)?
A Financial Information System is the set of computerized business tools used by
organizations to perform a variety of finance-related tasks, and to track and control
expenditure and revenue. It provides essential support to an organization's operations. Even
the smallest businesses make use of automated accounting systems; all large organizations
require the support of sophisticated and integrated financial systems in order to conduct
business efficiently and with appropriate financial control. At the City of Toronto, this
system will track $5.6 billion of annual expenditures and revenue. The very wide variety of
FIS components has an impact on virtually all areas of the City's operations, as can be seen
from the following FIS component summary.
General Ledger (G/L):
The G/L is at the core of any financial system, and is central to all accounting operations.
All revenues and expenditures are recorded in the G/L, and the structure of its Chart of
Accounts allows these to be tracked at any required level of detail. It is through the G/L that
budgets can be assigned to operating units, authority for expenditures assigned to
individuals, financial reports produced, and so on. All of the financial transactions
accomplished through other modules of the FIS are reported to the G/L, requiring that all of
these be integrated with the G/L in a single system.
Budgeting:
Financial information systems provide budget development support, allowing for the
systematic preparation and modelling of budgets. Managers can model and prepare their
budget proposals on a decentralized basis, and these are consolidated and subject to analysis,
with necessary amendments made prior to final submission. Once the budget is adopted, the
final figures are loaded into the G/L, allowing funds to be expended within the budget
parameters.
Purchasing:
The purchasing applications provide for the specification of product requirements, the
sourcing of supply, vendor management and the preparation and management of tender
processes (including the creation and management of Requests for Information and Requests
for Proposals). When goods are to be purchased or otherwise obtained, these systems
provide for requisitioning, and the subsequent issuing of purchase orders. In an effective
integrated system, requisitions are created, approved, and submitted for action electronically.
Purchase orders may also be forwarded to vendors electronically. Under normal
circumstances, a requisition will not be allowed unless funds are available, and the
appropriate approval obtained. Available funds are determined by looking up the necessary
information in the G/L, which will have the up-to-date available balances (which include
any previous requisitions, even if the goods have not yet been received or paid for). This is
all accomplished electronically.
Accounts Payable:
The accounts payable system is closely linked to the purchasing system. When goods have
been received after a purchase order is issued, their receipt in good order is documented
electronically. Invoices are matched with the purchase order and the receiving information,
and payment scheduled to optimize the City's interests. Once payment has been made, the
expenditure is recorded in the G/L.
Accounts Receivable:
When the City provides goods or services to individuals or other organizations, payment or
reimbursement is accomplished through the A/R application. Examples include program
registration, license fees, property rentals, etc. The A/R module ensures that appropriate
amounts are charged, and that the revenues get properly posted to the general ledger.
Fixed Assets:
An organization's property (including real estate, buildings, equipment and other tangible
items) is tracked and managed through the fixed assets module of an FIS. Where
appropriate, depreciation is recorded, and all transactions reported to the G/L.
Inventory:
Closely linked to fixed assets and purchasing, the inventory module of an FIS allows
tracking of the current status of goods that are stocked, for instance, in a warehouse or
store-room, and to document distribution of the goods. When a critical level is reached,
re-ordering of the product is accomplished automatically. It is essential that an inventory
system use standardized coding systems, and support tools such as bar code identification.
An inventory system will also be closely linked to any future fleet and equipment
maintenance system used by the City.
Project Management:
An effective project management component allows the creation of project budgets (e.g.
capital), and the tracking of expenditures over a multi-year period against the budgeted
amounts. This allows the early identification of potential cost overruns and of delays in the
completion of projects. To be effective, a Project Management component requires efficient
links to the information generated by or contained in Human Resource/Payroll systems.
Cost Accounting:
In some instances, tracking costs across organizational units is necessary in order to identify
program costs, where programs involve more than one department or other organizational
unit. As well, a cost accounting module provides the mechanism through which the costs
associated with an activity can be tracked, and subsequently charged to a purchasing
department or outside organization. As in Project Management, effective Cost Accounting
requires an efficient link to the HR/Payroll system.
Performance measures:
Tracking the effectiveness of an organization requires that activities be monitored and
costed, and that comparisons be made to external standards. The performance measures
component of an FIS provides the mechanism through which this is accomplished.
Fleet Management:
Fleet Management is sometimes included as part of an FIS, and provides for acquisition
control, cost tracking, maintenance, assignment and disposition of fleet assets. Although
several of the vendors reviewed here can provide a Fleet Management application, it was not
included in our original specifications, and has not been explicitly evaluated.
What is a Human Resource Information and Payroll System (HR/P)?
Human resource and payroll systems are the mechanisms through which an organization's
human resources are managed. Payroll costs are by far the largest single component of the
budgets of municipal organizations, and efficient allocation of those resources, and tracking
and control of payroll costs, are essential.
There are several functions within an HR/P system, which fall logically into two categories
- those related to attendance and compensation, and those related to the management of
positions and employees. There are complex relationships among the various elements of the
HR/Payroll system, and between HR/Payroll and the financial systems of the organization.
Payroll:
The payroll module collects information about employee salary rates (taking into account
overtime and special rates), time worked, sick time used, etc., and pays employees
appropriately. Payroll staff throughout the organization use the payroll system, in order to
record necessary data. The system must interact with the general ledger in the finance
system, in order to post salary expenses to the appropriate chart of accounts features, in
order that both total expense and detail relating to projects and programs is reflected
properly.
Pensions and Benefits:
Pension and benefits administration ensures that appropriate pension contributions are made
and recorded, and that benefit options are implemented correctly for each employee. Where
there are benefit systems allowing for wide choice (e.g. "cafeteria" or flexible
arrangements), the benefit system provides the mechanism through which the choices are
exercised.
Time and Attendance:
Recording work time and attendance is an essential element of the overall payroll system. It
is this system which provides data to the payroll system, triggering employee pay. It is also
this system that records absences and bank balances (sick time, vacation time, lieu time),
according to the multiple variations on employment terms. Attendance management systems
rely on the time and attendance module for information on absence patterns. The Time and
Attendance system is also closely linked to project management and fleet and property
maintenance systems.
Position management:
Most public sector organizations control staffing levels and expenditures through a position
management system. Positions are created, each of which has an authorized number of
employees who may be assigned to it, and a salary range. Hiring more employees into a
position than the "authorized establishment" is not allowed by the system unless an
exception is approved by someone in an appropriate position of authority. The position
management module provides the mechanism through which positions are defined and
created, and through which control of staffing levels is achieved.
Compensation and Salary Administration:
Job Evaluation programs allow for the description and rating of jobs according to a defined
set of criteria. Salary rates have to be administered, including provision of mass increases,
stepping of employees through salary levels, etc. Together, the compensation and salary
administration functions of an HR/Payroll system support these functions.
Staffing:
The staffing module supports all the recruitment and promotion activities of the
organization, and is the first point through which information about employees enters the
system. Information from résumés and applications is captured electronically, and entered
into employee or applicant databases. Movement of employees through jobs is tracked.
Grievance Tracking:
In a large organization, managing grievances, tracking each one individually and recording
outcomes, is essential if the organization is to exercise proper control. An effective HR/P
allows labour relations staff to enter information and associate the data with employees and
workplaces. Pattern analysis allows problem areas to be anticipated and addressed before the
grievance problems become unmanageable.
Training and Organizational Development and Competency Management:
Training strategies are supported by HR/P systems in several ways, including scheduling of
employee attendance at courses, and the generation of information about organizational
structure and operations. Employee skills and competencies can be recorded and tracked,
and the information used in the identification of individuals with skills suitable to particular
assignments.
Health/Safety/WSIB:
Every employer has statutory responsibilities with respect to the health and safety of
employees, and must record and process information about any incidents involving injury.
As well, workers' compensation claims must be recorded, processed and managed. Data can
be entered initially from the field, with all follow-on events recorded as part of the same
record. The HR/P is essential to these processes.
Existing FIS and HR/P Installations (Former Municipalities):
All seven of the former Toronto municipalities have functional systems for management of
financial and human resource/payroll processes. These systems represent a wide diversity of
vendors and installation types, with very little overlap. Many of the systems would have had
to be replaced in order to address problems associated with the "Year 2000" (Y2K) issue -
these systems would likely become non-functional on January 1, 2000. In other cases, the
applications provide relatively limited functionality, not appropriate for a large organization.
Table 1 shows the products in use in the various organizations, as well as the date of
installation and Y2K status.
There has been concern that the recent substantial investment in business systems at the
former City and Metro will all have to be "written off". Both organizations were very large,
with many complex operational needs. However, at the same time as the new systems were
installed, a great deal of technical infrastructure was also put in place. This included
networks, servers and desktop computers. The infrastructure was necessary to support the
modern business systems being installed, but was also necessary to support electronic mail,
geographical information systems, etc. At the time that decisions were made to install these
business systems, the amalgamation of the seven municipalities into a new City of Toronto
was not yet even under consideration. Most of the technical infrastructure will remain in
place after the business systems are replaced, and will be utilized with any new installation,
as well as the other technical requirements of the organization. It is expected that most of the
infrastructure components implemented within the last two or three years at the City and
Metro will be Y2K compliant, or readily made Y2K compliant, although final analysis has
not yet been completed.
The total cost of the installations at the City and Metro are shown in Table 2, along with the
amounts attributable to the business systems themselves and the amounts that represent a
reusable investment.
--------
Table 1: FIS and HR/P Installations, Former Municipalities
|
Former
Municip. |
Human Resources |
Payroll |
Finance |
Annual
Maint. $ |
|
Vendor |
Y2K
1 |
Vendor |
Y2K
1 |
Vendor |
Y2K
1 |
|
Metro |
Cyborg
February 1997
|
No |
Cyborg
February 1997 |
No |
Computron
February 1997 |
Yes |
$384,949 |
Toronto |
SCT Gov't
Systems
(Banner)
August 1997 |
Yes |
SCT Gov't
Systems (Banner)
August 1997 |
Yes |
SCT Gov't
Systems (Banner)
August 1997 |
Yes |
$725,000 |
Scarborough |
Peoplesoft
1992 |
Yes |
Cyborg
1992
|
No |
In-house
developed app.
1970s |
No
info |
$ 72,300 |
Etobicoke |
Organization
Metrics Inc.
(OMI)
Fall 1997 |
No |
Solutions for
Government (SFG)
January 1993 |
No |
SAP Financials
January 1997 |
Yes |
$150,000 |
North
York |
American
Management
Systems
(AMS)
1990 |
No |
American
Management
Systems (AMS)
1990 |
No |
Local Gov't
Financial System
1986 |
No |
$480,000 |
York |
ADP Canada
(formerly GSI)
1992 |
No |
Systems for
Government (SFG)
1992 |
No |
Systems for
Government
(SFG)
1992 |
No |
$ 6,000 |
East York |
SRB
International -
PRS
1984 |
Yes |
SRB International
- OPS
1984 |
Yes |
SRB International
- BAS
1984 |
Yes |
$ 50,178 |
Total Annual Maintenance Cost |
$1,868,427 |
1 "Yes" indicates existing system is already Year 2000 compliant. "No" indicates existing system requires a version
upgrade or significant rework in the case of an internally developed system to become Year 2000 compliant.
Table 2: Metro and City Total Application and Infrastructure Costs, 1995 - 1998 ($ millions)
|
|
FIS
and
HR/P |
Technical
Infrastructure |
Electronic
Office |
GIS/LIS |
Total Cost |
Unrecoverable Cost2 |
Reusable
Component
Cost3 |
Metro1 |
$10.7 |
$12.9 |
$ 1.2 |
$ 0.6 |
$25.4 |
$10.2 |
$15.2 |
Toronto |
$ 7.5 |
$13.4 |
$ 0.9 |
$ 0.3 |
$22.1 |
$ 8.6 |
$13.5 |
1Metro costs are based on actuals with estimated allocation to componentsl includes $5.3 million of internal staff
costs.
2"Unrecoverable Costs" are those costs directly associated with the acquisition and implementation of business
software which is to be replaced, including license fees, software training, etc. Internal staffing costs are included
for Metro.
3"Reusable Component Costs" are for equipment or other expenditures, which will not be replaced but will
continue to be useful within the new City, such as networks, servers, desktop hardware, reporting tools, data
warehousing, operating system training, etc. |
Evaluation Process
The City's requirements for business systems were determined by a thorough analysis of
the City's business needs and amalgamation-support requirements. Detailed business
analyses conducted by Metro, the former City of Toronto, North York and Etobicoke were
also reviewed.
Separate Requests For Information (RFIs) were issued for the FIS and HR/P software were
issued in late November, 1997.
The FIS RFI was issued to seven vendors after a survey of municipalities and the financial
systems in use. Four of these vendors' financial systems are currently in use at four of the
former seven municipalities. These are SAP (former Etobicoke), Computron (former Metro),
SCT Government Systems (former Toronto) and American Management Systems (former
North York). SCT and AMS declined to respond, indicating that they were not in a position
to address the requirements of the new City. Submissions were received from SAP,
Computron, J. D. Edwards, PeopleSoft and Oracle. Oracle later withdrew from the process
when it could not comply with the timetable for presentations.
The HR/P RFI was issued to five vendors, three of whose systems are currently in use
within the seven former municipalities. These are Cyborg (former Metro HR/P and
Scarborough payroll only), SCT Government Systems (former Toronto) and PeopleSoft
(former Scarborough HR only). SCT declined to respond. Submissions were received from
SAP, PeopleSoft and Cyborg.
Information about the responding vendors and their products is outlined in Table 3.
Evaluation teams composed of business and information technology staff were assembled,
and detailed evaluation criteria were prepared for each of the two separate (FIS and HR/P)
processes. Product demonstrations were conducted by vendor representatives during
December, 1997, following demonstration scripts prepared by the evaluation teams.
Follow-up requests for information were forwarded to the vendors, and responses considered
in determination of ratings. Further discussions were held with each vendor to investigate
implementation strategies and to refine software, hardware and implementation costs.
After the formal evaluation was completed, contact was made with several client sites to
assess the level of product and vendor satisfaction. Site visits were conducted for the FIS
systems by a team of accounting, information technology and library representatives.
Table 3: FIS and HR/P Vendors and Products
|
Company |
Product(s) considered |
Notes |
Computron |
Financial systems |
Vendor of financial systems which are
noted for their modularity (various
applications can be installed
independently). Much lower market
share, compared to market leaders.
Current installation at Metro. |
Cyborg |
HR/Payroll systems |
An established vendor of HR/Payroll
systems. Installed at Metro, but many
HR/Payroll functions at Metro are
performed by third-party or custom
applications. An older version of the
Cyborg Payroll system is in use at
Scarborough |
J. D. Edwards |
Financial systems |
A credible vendor of Financial systems.
Not currently in use in any of the
amalgamated municipalities. Also has an
HR/Payroll product, but this has little
visibility in government, and was not
evaluated. |
PeopleSoft |
Financial and
HR/Payroll systems
(integrated) |
One of the most prominent vendors of
HR/Payroll systems to private sector and
government organizations. Recently
developed financial systems, not widely
installed in Canada. HR is in use at
Scarborough, both Payroll and Human
Resources are being used by Toronto
Police. |
SAP |
Financial and
HR/Payroll systems
(integrated) |
The market leader in Financial systems,
with many private and public sector
installations throughout the world. Have
a well-established HR/Payroll system.
Financial installation at Etobicoke. |
Functional and Technical Analysis:
Data on the current business and product status of each of the vendors was obtained from
the Gartner Group, a consulting organization that produces widely used analyses of
technology companies and products.
A summary analysis of each of the products is provided in Table 4.
Table 4: Financial and HR/Payroll Systems Evaluation
|
Vendor |
Functional and Technical Evaluation |
Gartner Group Analysis |
Computron |
Financial Systems
Of the four financial packages evaluated, Computron
rated third, well behind the products from J. D. Edwards
and SAP, but ahead of PeopleSoft. Although it was rated
well in some areas (e.g., General Ledger, Accounts
Payable), where it is comparable to JDE and SAP, it fell
well short of the target standard in a number of others
(e.g., Budgeting, Purchasing, Project Management, Cost
Accounting, and module integration). For instance, it does
not have a bid document module, which makes it
necessary to prepare these outside of the purchasing
system, and it does not allow for automatic creation of a
vendor file. Stock reordering and inventory analysis must
be done through special reports or manually. Most budget
calculations are done on an external worksheet, rather
than in the budget module. In addition, the technical
evaluation, which addressed the underlying technical
architecture of the product, led to a substantially lower
score than those obtained by SAP and JDE. |
Computron has had recent financial
difficulties, although these have
begun to come under control. There
continues to be uncertainty about its
future. Its product direction is not
clear. Gartner recommends that
existing users hold off on upgrading
or increasing commitment, and that
potential users consider alternatives
unless the product addresses specific
business needs. |
J. D.
Edwards |
Financial Systems
The financial systems package from J. D. Edwards was
rated highly in most areas, and was given the highest
overall score, slightly higher than that assigned to SAP. In
purely functional terms, the two were almost tied, SAP
having a slight advantage on the technical side. In other
areas, JDE was particularly strong on General Ledger,
Budgeting and Accounts Payable, with relative
weaknesses on Project Management and Cost Accounting. |
J. D. Edwards is a significant vendor
in the "mid-market" area (companies
up to about $250 million in annual
revenue and expenditures), especially
where an AS400 based application is
required, but is not well positioned
for installations in larger
organizations where Unix-based
applications are required. It has
delayed implementation of an
HR/Payroll integrated system,
although the promise of this for the
future is a positive sign. |
PeopleSoft
|
Financial Systems
Although the PeopleSoft financial product shows promise
and appears to be evolving rapidly, the evaluation
suggested that the version assessed is not yet capable of
supporting the City's requirements. It has some strengths
(in particular a very strong Purchasing module), but does
not have satisfactory modules for Project Management,
Cost Accounting and Performance Measures. In addition,
the technical evaluation was that PeopleSoft financials did
not meet the City's requirements.
Human Resource Systems
The Human Resource and Payroll systems from
PeopleSoft achieved the highest rating among those
evaluated, slightly edging out SAP for top spot. Among
the areas in which PeopleSoft had particular advantages
were Position Management, Payroll and Report
Production. A relatively weaker area was Training and
Organization Development. PeopleSoft was originally
rated as having somewhat greater capacity for supporting
the City's implementation.
|
The Gartner Group identifies
PeopleSoft as the market leader in
HR/Payroll software, with a strong
world-wide presence. Its strategic
product direction is clear, and it has a
clear commitment to expansion into
the financial systems area, with a
fully integrated product line. No
financial issues were identified. |
SAP |
Financials
SAP has an excellent financial application, which was
rated overall as just slightly below J. D. Edwards, with
some areas of particular strength. Its Project Management
and Cost Accounting applications were seen as
particularly strong relative to those of the other vendors,
and its technical score was highest of all the vendors.
Relative weaknesses were identified in the General Ledger
and Accounts Payable modules, although these were seen
as relatively minor after follow-up dialogue with the
vendor.
Human Resource Systems
SAP HR/Payroll applications were evaluated as being of
very good overall quality, with scores somewhat below
those for PeopleSoft, but much better than those for
Cyborg. A particular strength was seen in Training and
Organizational Development. The biggest initial gap
between SAP and PeopleSoft was seen in the Payroll
application. This was due in large part to the absence of
large fully functional payroll installations in Canada at the
time of the evaluation. Successful implementation of the
system at two large Ontario employers has subsequently
allayed these concerns. |
SAP is the market leader in Financial
software, with a very strong
international profile. It has a credible
HR/Payroll product that positions it
very well for integrated solutions. |
Cyborg
|
Human Resource Systems
The Cyborg systems did not evaluate well with respect to
the City's requirements, or relative to the other products.
It received the lowest score of the three evaluated on all
criteria, and in most cases was very inferior. Its overall
score was half that of SAP and PeopleSoft. Of particular
concern was the fact that payroll cannot support the
number of "earning codes" required by the operational
and labour relations complexity of the new City. Also of
concern is the limited functionality in the Time and
Attendance and Training applications, although overall
functionality in all areas was well below the acceptable
level. Position Management could not be demonstrated at
all. From a technical point of view, Cyborg does not
comply with the City's draft IT standards, and these
deficiencies will increase implementation risk and
downstream system administration costs.
Evaluators were also very concerned about the ability of
the vendor to support an implementation of the scale
required at the City. |
Gartner was unable to provide a
current written analysis of Cyborg
and its products, as it is a small
vendor with limited distribution.
However, they did provide an "on the
record" verbal report.
Cyborg is a small vendor with a
single product line, and is considered
to be high risk as integrated solutions
find market favor. It has particular
weaknesses in position control for the
public sector, and in employee self
service and integrated voice response
(IVR). As well, Cyborg does not
have a substantial municipal presence
relative to the market as a whole.
|
System Integration:
There are two approaches possible to installation of Financial and HR/Payroll systems. The
first is the "best of breed" strategy, which separately identifies the best available options (all
things considered) for the Finance and for the HR/Payroll systems. Excellent functionality
can be obtained, but appropriate interfaces must be built between the Financial and the
Human Resource/Payroll systems. In most cases, this means that the FIS and HR/P will
come from different vendors.
The alternative approach see the Financial and HR/Payroll systems fully integrated, and that
they share data seamlessly without the necessity for building interfaces. This can only be
provided by a single vendor supplying both HR/Payroll and Financial systems.
The initial intention was to adopt a "best of breed" strategy, and to separately evaluate and
acquire the financial and human resource/payroll systems. The original project structure
reflected this intent, with separate project teams conducting separate product evaluations.
Over time, however, it became clear that integration issues would have to be considered in
the evaluation. In particular, analysis from the Gartner Group, and from LGS Group, the
consultants retained to assist the City in the decision process, indicated that substantial
benefits would accrue from an integrated system. The LGS analysis, attached as Appendix
B, concludes:
"We strongly recommend that the City pursue the integrated alternative as the target solution
for the City's administrative system. This path will help the City maximize the benefits of
amalgamation, transform its administrative operations and provide the City with a solution
flexible to sustain future business improvements and technology advances."
Of particular concern was the likelihood that non-integrated systems would require either
cumbersome multiple-entry of data into the financial and human resource/payroll systems,
or the expense of creating and maintaining electronic interfaces among the products. In
either case, real efficiencies are difficult to achieve. Specific issues revolve around the need
to obtain financial information for certain human resource actions (e.g., funds availability
for position creation), and the need to obtain payroll information for financial transactions
(e.g., time worked on a project, for billing purposes). These are more fully documented in
Appendix B.
A careful review of the issues led to the conclusion that substantial additional savings
would be achieved by an integrated solution, relative to a "best of breed" solution. These
savings will come through the elimination of multiple data-entry functions, and greater
efficiency of transaction processing. While it is not possible at this stage to identify specific
positions which would be effected, we are confident that savings in the affected
administrative areas will exceed 15 percent relative to non-integrated solutions, and this
analysis is supported by industry experience.
Ranking and Short-Listing of Products:
All available information was reviewed in order to determine which applications or
combinations of applications could serve the City's needs, so that detailed financial and
implementation analyses could be conducted. The issues were complex and many variables
entered into the analysis. Ultimately, four factors were considered in short-listing products
for detailed analysis, and in determining the ultimate recommendations:
(a)relative scores on the functional and technical evaluation, as determined by the original
evaluation teams
(b)ability of the vendors to support an implementation on the scale required by the City and
within the required timeframe;
(c)degree of functional integration available across financial and human resource/payroll
functions; and
(d)the presence of existing installations at the City, which could provide a base for a new
installation, as well as staff with familiarity with the products.
An investment has been made in the Computron/Cyborg installation at Metro, as
documented in Table 2, of which approximately 50 percent is infrastructure investment
necessary to support the new City and is reusable, subject to year Y2K compliance. In any
event, it is essential that future costs and benefits be a significant criteria on which the
evaluation is conducted.
It is not possible to simply add additional data or hardware to the existing
Computron/Cyborg installation to support the new organization. Entirely new financial
structures must be created, a multitude of new business rules implemented, new hardware
installed and a vast amount of existing data converted to the new system from the seven
existing municipalities (including Metro, whose existing data will have to be converted to
the new standard necessitated by amalgamation). As a result, all software including both
current and new modules would have to be reinstalled (or installed for the first time) and
appropriately configured. It would be necessary to treat the implementation of Computron
and/or Cyborg as a new installation, at a capital cost of $10.5 million.
Neither Computron nor Cyborg ranked high in the head-to-head evaluation. In particular,
Cyborg was identified as lacking the minimum functionality necessary to support the City's
Human Resource and Payroll needs. Its Payroll module is unable to support sufficient
earnings categories to support the complex operational and labour relations realities at the
City. Position Management could not be successfully demonstrated, or otherwise evaluated,
as it was still in development without any implementations. Employee self service capacity
was very limited, and the company has no apparent plan to move toward web-enablement,
which would facilitate ease of access with a standardized web browser user interface through
either the internal intranet or remotely via the internet. The Cyborg product cannot be used
by the City, and was not included in the final short-listed analysis. As a result, the minimum
investment required in FIS and HR/P systems by the City is $19 million because of the need
to completely replace the HR system.
Computron did not evaluate well relative to the other products, but not quite so dramatically
as Cyborg. It has been determined that Computron could be acceptable for the City's
financial systems needs, at least for the short term. Because of the existing installation at the
former Metro, and the possibility that implementation of Computron financials could be
accelerated as a result, this product was included in the final implementation and
cost/benefit evaluation.
PeopleSoft provided both Financial and HR/Payroll systems for evaluation. It is clear that
PeopleSoft is committed to production of an integrated suite of business systems, and will
likely be very competitive in the integrated systems market in the future. However, our
evaluation suggests that the version of the PeopleSoft financial systems product submitted
for evaluation does not yet meet the City's needs, and therefore an integrated PeopleSoft
system is not possible.
However, the PeopleSoft Human Resource and Payroll applications are clearly
"state-of-the-art", and provide a very good fit relative to our needs in those areas. PeopleSoft
HR/Payroll systems were included in the implementation and cost/benefit evaluation.
Although J. D. Edwards financials were evaluated highly, the absence of either an
integrated HR/Payroll system or an existing installation at the City on which to build a new
implementation were significant factors in the decision not to pursue the JDE applications.
In addition, Gartner Group analyses have identified J. D. Edwards as a niche player, with
strength in AS400-based smaller organizations, but with limited capacity to service
organizations the size of the City.
Only the SAP product line provided the potential for achieving an integrated solution across
the Financial and HR/Payroll applications. Both of the SAP products were rated highly in
the separate evaluations, just slightly behind the 'best of breed" leader in each category.
Because of the very good quality of the individual products, along with the integration
factor, both SAP Financials and SAP HR/Payroll were shortlisted in their respective
categories.
Implementation and cost/benefit analyses have been conducted on the financial systems
products from Computron and SAP, and on the HR/Payroll products from SAP and
PeopleSoft, in various combinations, as follows:
(a)SAP Integrated Systems: SAP Financials and SAP HR/Payroll, implemented together,
with the Etobicoke installation of SAP Financials as the base.
(b)Computron Financials with SAP Human Resource/Payroll: Computron Financials
would be implemented by building on the existing Metro implementation where possible,
although significant reworking would be required. SAP Human Resource/Payroll would be
implemented as a new installation. If it were decided at a later date to implement SAP
financials, this would allow migration to a fully integrated solution.
(c)Computron Financials and PeopleSoft HR/Payroll: As in b) above, but with PeopleSoft
HR/Payroll instead of SAP.
(d)Computron interim Financials to SAP Financials/Human Resource/Payroll: The
Computron Financial system and SAP HR/Payroll is implemented initially, to allow for
reduced risk of delays in availability of the necessary financial systems. The full suite of
SAP financial products would be implemented after the initial Computron implementation
was completed.
Implementation and Cost Analysis:
With the assistance of consultants LGS Group, a detailed analysis of the costs and benefits
associated with each of the options was conducted. The results of the analysis are shown in
the table "Cost and Benefit Analysis, Financial/HR Systems", attached as Appendix A.
Cost analyses are based on information provided by the vendors for licensing and
implementation, and upon additional information generated by staff.
Benefits through staffing efficiency have been calculated using conservative assumptions.
All products will provide similar levels of benefits (primarily through staff reductions)
within the Finance and HR/Payroll organizations. It is anticipated that reductions of about
80 positions can be achieved within these organizations as a function of implementation of
the new systems across the organization.
Additional savings have been identified from within the Operating organizations, primarily
as a function of integration of Finance and HR/Payroll applications. As outlined previously
and in Appendix B, an integrated system will provide significant gains in efficiency. We
have calculated that about 90 positions (out of a total of about 600 positions involved in
these kinds of administrative activities) should be eliminated upon full implementation of an
integrated solution. Of the vendors with products providing acceptable functionality, only
SAP is able to provide this high level of integration. These savings are shown only in the
figures for SAP implementation.
Net present value uses discount rates appropriate for the products involved. In general,
discount rates are higher where risk is higher, and lower where risk is lower. For instance,
the initial discount rate for installations involving Computron is relatively low, because the
risk of being unable to implement on the projected time-frame is low. The initial discount
rate for SAP installations, on the other hand, is moderately high, because of increased
on-time risk. However, the long-term Computron risk is high, because of the uncertain
future of the company and its product line, and potential associated difficulties obtaining
support and upgrades, while the corresponding SAP risk is low.
Net present value and internal rate of return calculations show that installation of SAP
products for the FIS and the HR/P provide by far the best financial return over the life-cycle
for product installations of this type. Even though initial capital cost is relatively high, net
present value and internal rate of return favor this combination as early as the third year.
The recommended solution, SAP Financials with SAP Human Resource and Payroll, has
the most favorable bottom line over both three and seven year terms. Total capital
investment for the SAP solution will be $26.3 million, with operating costs to 2005 of $10.7
million. Total benefits and savings to 2005 will be about $89 million, including reduced
staff requirements in the core administrative functions (finance, human resources, payroll)
and about a 15 percent reduction (90 positions) in staff requirements for administrative
functions in the operating departments. Over the life of the average installation (seven
years), we expect an SAP installation to produce net savings of about $52 million.
An installation of Computron financials with SAP human resource/payroll would have
lower capital and operating costs ($19 million and $4.3 million respectively), but would also
have significantly lower downstream benefits ($54.8 million) as a consequence of the
reduced efficiencies in administrative systems. The net savings over the life of a
Computron/SAP installation are expected to be about $32 million.
Figures for an installation of Computron financials with PeopleSoft human resource/payroll
are similar to those for Computron/SAP, except that costs for PeopleSoft are somewhat
higher. An interim installation of Computron financials, with SAP financials and human
resource/payroll as the target installation, has significantly higher costs and somewhat lower
benefits than a "pure" SAP installation.
All analysis is predicated on an aggressive implementation schedule, which focuses on
implementation of the essential financial components by early in 1999. Supplementary
financials would be fully implemented by September of 1999, as would be the full suite of
HR/Payroll products. Complete installation is required by the end of the third quarter in
1999, in order to avoid Y2K problems in the period leading up to the millennium.
Degree of product integration has some effect on the implementation scheduling. Meeting
the third quarter 1999 deadline for complete installation is most achievable using an
integrated system on an accelerated and closely vendor-coordinated schedule. While use of
an existing system such as Computron will make achievement of the financial systems target
in early 1999 more readily achievable, the creation of custom interfaces to any HR/P product
will be difficult to achieve within the target timeframes.
All vendors have undertaken to meet this schedule. Schedule definition will be an important
element of the contracting process with the selected vendor(s).
Future Partnering Issues:
It has been anticipated that many of the City's Agencies, Boards and Commissions will
make use of the new business systems to be implemented. In particular, the Toronto Police
are in the process of considering options to address the inadequacies of their existing
systems relative to the Year 2000 issues. We have been advised that the Police do not
believe that Computron can adequately address their complex needs. The Police are
prepared to work closely with the City, towards a joint system, if SAP is selected.
The police have just recently implemented PeopleSoft products for their HR and Payroll
needs, and will have to re-evaluate this strategy if they partner with us on financial
applications. They may choose to continue with PeopleSoft HR/Payroll for the time being,
pending an evaluation of the costs and benefits associated with migration to an SAP
HR/Payroll installation, in partnership with the City.
In addition, the Toronto School Board has recently opted to pursue a contract with SAP for
installation of financial systems. It is anticipated that synergies could be obtained through
collaboration with the Board, and initial discussions have been held. In particular, it is
possible that joint training ventures could be set up, significantly reducing costs for both
parties.
It is also possible that broader administrative efficiencies could be obtained through
partnership with these and other public sector organizations jointly or with an outside
agency. Such partnerships are more likely to be possible when the organizations share a
systems infrastructure. However, it is felt that such a proposal should be considered once the
initial implementation period is complete and when the City has captured the maximum
savings itself.
Conclusions:
The absolute minimum financial investment required is $19 to $20 million in order to
provide a basic solution for the City. After review of the all of the data (functional
evaluation, third-party assessments of the companies and applications, cost analysis and
partnering possibilities), it has been concluded that SAP applications for Financial and
Human Resource/Payroll systems, with a financial investment of $26 million, provide the
greatest functionality, best cost/benefit analysis (i.e., most opportunities for staff
efficiencies) and most opportunities for partnering, and are the recommended solution. The
company is a leader in the field, and is very stable with a well-articulated vision for its
product line. In addition, affiliated organizations such as the Toronto Police and the Toronto
School Board will be able to partner with the City most effectively if SAP is implemented as
the City's business systems. The additional investment of $6 to $7 million will generate
savings of almost $6 million per annum on an ongoing basis.
It is therefore recommended that the City contract with SAP for supply of Financial and
Human Resource/Payroll systems.
Other options have been considered, and are potentially viable. In particular, Computron
financials could be implemented more quickly than the SAP application, with a somewhat
lower capital and operating cost. However, functionality and potential returns through staff
savings would be lower, and it will be more difficult to implement a non-integrated
HR/Payroll system within the target timeframe. It is also possible that this option would not
allow the Police or the School Board to partner with the City.
Either SAP or PeopleSoft HR/Payroll applications could be used in association with
Computron for a cost of $19 to $20 million. Our analysis suggests that SAP implementation
would provide slightly lower costs, and would allow future consideration of an integrated
solution, with the associated benefits. These options should be considered only if
medium-term net costs are the principle deciding factor.
A third option (the most expensive at $30 million) is an interim installation of Computron,
with SAP Financial and HR/Payroll systems as the target product line. The single advantage
of this strategy is that it would somewhat reduce the risk of delayed implementation of the
financial applications, relative to an SAP installation. However, costs would be significantly
higher, and it is likely that the risk associated with the alternatives can be managed
successfully. This option will also preclude involvement by the Police and the School
Board, at least until the SAP applications were installed. This option should be considered
only if short-term risk reduction is the principle deciding factor.
Contact Names:
Alan Deans, Ron Myhr, Al Shultz, Lana Viinamae, Stephen Wong, Ivana Zanardo
--------
Appendix A: Cost and Benefit Summary Analysis
Financial/HR Systems
Thousands of
dollars |
SAP Financials
and
SAP HR/P |
Computron
Financials and
SAP HR/P |
Computron
Financials and
Peoplesoft
HR/P |
Computron
interim Financials
to
SAP
Finance/HR/P |
Costs and
Benefits |
|
|
|
|
Capital Cost:
In 1998
in 1999
in 2000
in 2001
in 2002
Total Capital
Cost: |
$ 6,070
$ 3,400
$ 6,500
$ 6,500
$ 3,800
$26,270 |
$ 8,350
$ 3,618
$ 3,500
$ 3,500
$ 0
$18,968 |
$ 8,350
$ 1,118
$ 2,947
$ 4,947
$ 2,948
$20,310 |
$ 8,350
$ 5,118
$ 7,282
$ 6,500
$ 2,800
$30,050 |
Total Operating
Cost to 2005 |
$10,695 |
$ 4,320 |
$ 6,384 |
$ 9,900 |
Total
Benefits/Savings to 2005 |
$88,988 |
$54,750 |
$51,693 |
$82,550 |
Net Savings to
2005 |
$52,023 |
$32,002 |
$24,999 |
$42,600 |
Net Present
Value to 2001 |
$ 5,692 |
($791) |
($1,550) |
($3,084) |
Internal Rate of
Return to 2001 |
52.34% |
13.81% |
4.32% |
-11.50% |
Net Present
Value to 2005 |
$32,950 |
$ 8,925 |
$ 6,175 |
$24,871 |
Internal Rate of
Return to 2005 |
83.68% |
50.86% |
41.34% |
42.92% |
The figures for Net Present Value and Internal Rate of Return are indicators for how
favourable an investment is - the higher the positive numerical value, the more favourable
the investment.
Assumptions:
(1) Transition plans:
(a)the business cases use either the transition strategies, plans and resource requirements
provided by the software vendors with respect to their products; or the estimates provided by
the City staff for "internal" activities such as conversion, internal training, interfaces, etc.;
and
(b)the distribution of the costs and benefits for each alternative over the cost benefit period
is consistent with the corresponding transition plan for this alternative.
(2) Cost benefit period:
(a)the life cycle of administrative software is approximately seven years; and
(b)the cost benefit models demonstrate the financial impact of the transition alternatives
not only after seven years (2005), but also after three, five and nine years to demonstrate a
shorter-term (capital) expenditure impact and a longer term impact as some "target"
solutions are likely to last beyond 2005.
(3)Capital costs:
(a)Capital costs can be grouped into three broad categories - hardware, software, and HR
costs;
(b)HR costs include software / hardware configuration, enhancements, conversion,
training, etc. The cost benefit models assume that City staff (IT and business) be used
whenever possible during the transition; and
(c)all transition costs except internal HR costs are considered capital.
(4) Hardware costs:
(a)hardware requirements are essentially the same for all alternatives; and
(b)all cost benefit models use the same transition (capital) and ongoing annual (operating)
costs of $4,570,000.00 and $75,000.00 respectively, the estimates provided by Sun Systems.
(5)Software costs:
(a)the business cases use software costs, both licensing and maintenance, as per software
vendor quotations; and
(b)the software licensing costs of SAP and PeopleSoft are accrued once the software is in
production, and are capitalised over three years. These vendors have indicated that they will
be flexible with respect to this issue, but there is no official proposal from either vendor at
this time.
(6) HR costs:
(a)the business cases use external consulting costs as per software vendor quotations;
(b)conversion and training costs are essentially the same for all alternatives;
(c)the estimates for conversion, training and other "internal" costs were based on analysis
of the former City's SCT Banner experience, and extrapolated to the other cost benefit
models; and
(d)the business cases use the following City staff rates to calculate the operating HR costs:
(i)$1,000.00 per diem for IT staff; and
(ii)$500.00 per diem for business staff.
(7) Benefits:
(a)the business cases include only additional savings resulting from implementing the
considered alternatives, but do not include the projected amalgamation savings; and
(b)in addition to staff efficiency gains attributed to implementing any of the solutions, the
business cases for the SAP alternatives include the following "integrated solution" benefits:
(i)additional $160,000.00 per annum, or 15 percent of IT support, as per Gartner Group
research; and
(ii)additional $5,400,000.00 per annum in the Operating organizations resulting from the
reduction in the HR/Finance data capture duplication and the management information
preparation.
(8) Risk Factors:
(a)the business cases consider key risk factors associated with the transition to, and the
ongoing maintenance of each alternative by applying variable rates of discount to the cash
flows in the Net Present Value (NPV) calculation. Higher risks mean higher discounts; and
(b)the following are the three risk groups and associated discount rates used in the business
cases:
(i)Low - 7.5 percent;
(ii)Medium - 19 percent; and
(iii)High - 30 percent.
(9) Transition risks:
(a)the risk assessment of various transition paths is based mainly on the ability to meet
successfully the transition constrains (see Assumption 1 above), and, thus, reflects such
factors as:
(i)use within the City;
(ii)availability of experienced resources; and
(iii)scalability.
(b)the following is the relative risk assessment of the transition alternatives as used by the
business cases:
(i)Computron / Cyborg - Low;
(ii)Computron / PeopleSoft - Medium; and
(iii)SAP - Medium.
(10) Ongoing risks:
(a)the assessment of ongoing risks of maintaining various software products reflects such
factors as:
(i)vendor's viability;
(ii)vendor's commitment to the City and to the municipal market;
(iii)product's viability;
(iv)product improvement; and
(v)availability of support.
(b)Gartner Group research suggests that:
(i)"best of breed" products are likely to lose their market share to integrated solutions;
(iii)Computron customers "watch" the vendor closely and conduct an annual re-assessment
of their relationship and potential buyers consider other alternatives;
(iv)Cyborg is a small vendor with a limited product line, and is high risk; and
(v)SAP leads the integrated solution vendor race.
(c)the following is the relative risk assessment of the ongoing maintenance of the target
solutions considered in the business cases:
(i)Cyborg / Computron - High;
(ii)PeopleSoft HR / Computron - Medium;
(iii)SAP - Low; and
(iv)SAP HR / Computron - Medium.
--------
Appendix B
City of Toronto
Administrative Systems Evaluation
"Best of Breed" vs. Integrated Applications
Introduction:
The new City of Toronto is working on a complex and pressing task of consolidating its
administrative services and systems, a critical element of its overall amalgamation effort.
The City is faced with two fundamentally different alternatives in its application system
evaluation- an integrated HR/Payroll/Financials and a "best of breed" package. The "best of
breed" solution is a combination of HR/Payroll and Financials. Normally, these products are
developed (but not necessarily distributed) by different vendors, and are chosen for their
relative strength in their respective functional areas, in this case, HR/Payroll and Finance.
On the other hand, the integrated solution is a product which is comprised of tightly
integrated modules with a common underlying data base and a common access tool set. The
functional superiority of "best of breed" components, unquestionable a few years ago, has
practically disappeared as leading ERP (enterprise resource planning) vendors have
dramatically improved the functionality of their products in all areas, while maintaining their
integration focus.
In this document, we review the business needs of the City and analyze the impact of the
aforementioned alternatives on its business operations. We highlight the principal
differences between these solutions and illustrate them with a few examples representing
some typical City needs. Finally, based on this analysis, we make a recommendation.
City of Toronto Business Needs:
The City has aggressive improvement targets for its administrative services with respect to
both staff efficiency and quality. In order to achieve the expected results, the City should
consider a holistic approach to change. While technology is a necessary and very important
element of change, its alignment with business processes, organization, and culture are
extremely important.
Therefore, prior to reviewing the aforementioned technology alternatives, we consider the
business environment the technology solution will have to be aligned with.
The administrative services will need to reduce cost of transaction processing, and focus on
value-added activities (e.g., analysis, planning). According to Gartner Group, the following
are some strategic imperatives in transforming these services:
(1)Finance - in addition to traditional general accounting, should focus on cost and
management accounting and treasury issues; its analytical capabilities should span the entire
enterprise, not just focus on financial metrics.
(2)Procurement - in addition to processing user requests and contracting with vendors,
should focus on negotiating deeper discounts, reducing transportation and other carrying
costs; influencing the vendor's R and D, yield and production capacity, and watching
operational, decommissioning and disposal costs of capital goods.
(3)HR/Payroll - in addition to administering the organization and its employees, should
focus on HR planning which is becoming increasingly complex with the proliferation of
business process outsourcing/insourcing options and project-based organizations.
This shift in focus encourages capturing (with edits and controls), and ensuring quality of
information at the source. Capturing information at the source also strongly suggests it
should be done once. The fact of (re-)entering the same information into loosely connected
systems for different purposes was not obvious before, as it was done by different
administrative areas (often based on colourful multi-part documents produced by the
originating department), but pushing the activities to the source has exposed the problem.
Gartner Group expects 1999 investments in data capture and sharing technologies to deliver
a 50 percent better return on investment than those in refreshing transaction-processing
capabilities.
The strategies described above are consistent with the direction the City is taking (New City
New Opportunities, Transition Team, December 1997):
(a)benchmarking against private sector;
(b)move budgets for support services to operating departments;
(c)responsibility for results; and
(d)balance centralized and decentralized functions.
Integrated vs. non-integrated HR/Payroll/Financials:
In this section, we discuss how these technology options would function in the business
environment described above. There are several key areas of the City's business operations
where the alternatives will result in a strikingly different impact on the business users.
Data Capture:
The integrated alternative enables information capture and validation at the source while the
non-integrated alternative requires either re-entry of the same information into the software
components or maintenance of interfaces which would simulate this re-entry. The interfaces
are normally specified and controlled by vendors and represent compromise solutions aimed
at satisfying their user group needs.
The following are a few examples of how the alternatives would impact the City's
operations.
(1)Create a Position:
Normally, creating a new position using a HRMS (HR Management System) first requires
checking if the organizational unit has sufficient budget, and, if it does, adjusting the budget
upon creation of the position. The integrated alternative allows on-line real time validation,
position creation and budget adjustment while the non-integrated alternative, at best, will
validate the position budget against financial information captured at some point in the past
(FIS-to-HRMS interface) and upon creation of the position will create a transaction to revise
the budget (another interface, HRMS-to-FIS). As the validation was not real time, this
transaction may be rejected and thus may trigger a manual process of reversing the creation
of the position.
(2)Process a Salary Increase:
Processing a salary increase first requires checking to see if the G/L salary account has
enough money in its free balance, and, if it does, adjusting the free balance and salary
encumbrance according to the increase.
The integrated alternative allows on-line real time validation, salary increase processing and
free balance adjustment, while the non-integrated alternative, at best, will validate the
increase amount against financial information captured at some point in the past
(FIS-to-HRMS interface) and upon increasing the salary will create a transaction to revise
the free balance budget (another interface, HRMS-to-FIS). This validation will be
impossible to perform in the latter case at all if the funds checking rules include both the
salary budget and the bottom line budget of the organizational unit. As the validation was
not real time, this transaction may be rejected and may trigger a manual process of reversing
the salary increase.
(3) Time and Activity Reporting:
An employee working on a project /program(s), reports his/her Time and Activity
information to his/her project manager as well as to HR/Payroll for payroll, vacation, benefit
and other purposes.
The integrated alternative allows on-line real time validation and updates both the
project/program information and HRMS. On the other hand, very few project management
systems have interfaces with HR/Payroll systems and vice versa. Therefore, this example is
likely to result in duplication of data entry (following with reconciliation).
Operational Management Information:
The integrated alternative provides an integrated information view and allows the end-user
relatively easy access to up-to-date cross-modular (e.g. HR and Financials) operational
management information. The non-integrated alternative requires development and
maintenance of a data warehouse which would serve as a repository for gathering and
synchronizing information from various software components, e.g. HRMS and Financials,
for reporting and analytical purposes. This information is historical and may not be current
enough for tactical purposes. This data warehouse would likely be a product from a niche
vendor, and would have a tool set different from the tools supplied by the main software
products.
The following are examples of enquiries which could be satisfied by an integrated solution,
but not by a non-integrated one:
(a)ability to view departmental salary budget (maintained in FIS) and to "click" on it to
view the positions (maintained in HRMS) comprising the budget;
(b)ability to view summary payroll actuals (FIS) and to zoom into corresponding
employee-by-employee payroll detail (HRMS);
(c)ability to view overtime summary payment (FIS) and to see, employee-by-employee,
what it is comprised of; and
(d)ability to view project/program information (FIS-Project Management) and to view HR
costs (regular salaries, overtime, benefits) for the project/program or, with proper access
clearance, by project member (HRMS);
The previous example is just an indicator of the value of the integrated project/program and
HR information. HR planning (skills, training, competencies) can be driven by project plans,
schedules and required skills; and, conversely, employee competency always includes
his/her project experiences.
Workflow:
Workflow plays a critical role in implementing business processes by gluing operational
units and administrative services together. While workflow permeates all functions by
enabling employee self-service, routing purchase requisitions, purchase orders and other
electronic objects for approval and further processing in all business areas, workflow roles
are driven by organizational structure maintained in HR. According to Gartner Group, "If
HR is integrated, common workflow definitions ¼ should be part of the integrated design. To
reach the same level of functionality, best-of-breed HR implementations must create
interfaces to share and manage responsibility information beyond the HR application, across
workflow for applications in other business areas. Few HR vendors have made provisions
for exporting this information. Conversely, few outside workflow systems (particularly
those produced by enterprise application vendors) have facilities for importing such
information. This makes interfaces difficult and often leads to dual data entry and
maintenance with no reconciliation of differences in organization structure representations in
competing systems. The more cross-business-area-workflow is a requirement, the greater the
appeal of an integrated system."
Further Integration Opportunities:
Selecting the integrated HRMS/Payroll/FIS/Project Management alternative now will pave
the way for further integration. If in the future the City chooses to acquire software to
support its fleet and equipment maintenance operations, and implements the modules of the
integrated solution that are designed for this purpose, the City will reap further benefits of
integration. Imagine preventative maintenance programs triggering automatic ordering of
parts, work order information concurrently affecting equipment records and mechanics'
HR/Payroll, resource planning capabilities, etc. This list can go on and on. Clearly, the more
encompassing the integration is, the more beneficial it becomes, the more interface
maintenance and dual data entry headaches can be avoided.
City Staff Efficiency Gains:
In addition to the qualitative benefits described above, selecting the integrated
HRMS/Payroll/FIS/Project Management alternative should result in significant staff
efficiency gains in various areas of the City. The single most important benefit in this area is
the virtual disappearance of the role of "information broker". This role does not easily
translate into a position or positions, full- or part-time, on the City's organizational chart.
The role includes everyone who is presently involved in:
(a)preparation, capture and reconciliation of cross-functional information and/or
information required by multiple systems (e.g. HRMS and FIS);
(b)packaging and "massaging" the information above to support operational managers; and
(c)maintaining system interfaces described above.
This change should affect HR, Finance, IT and especially operational departments.
Moreover, IT staff complement dedicated to multi-vendor systems (support and help desk)
is expected to be 15 - 20 per cent. higher than for an integrated solution.
Conclusion:
We have reviewed a number of advantages, both short-term and longer-term, of proceeding
with the integrated alternative. Based on this analysis, our understanding of the City's
circumstances and business needs, our experience in the application of technology to the
business needs of private and public organizations, we strongly recommend that the City
pursue the integrated alternative as the target solution for the City's administrative system.
This path will help the City maximize the benefits of amalgamation, transform its
administrative operations and provide the City with a solution flexible to sustain future
business improvements and technology advances.
--------
The following persons appeared before the Corporate Services Committee in connection
with the foregoing matter:
-Ms. Mina Wallace, Vice President and General Manager, PeopleSoft Canada Inc., and filed
a submission in regard thereto;
-Mr. Tim Conroy, and Mr. John Nye, Computron Software, and filed a submission in
regard thereto; and
-Mr. Yakov Matusevich, Management Consultant, LGS Group Inc.
The Chief Financial Officer gave an overhead presentation to the Corporate Services
Committee in connection with the foregoing matter, and filed a copy of her presentation
material.
(City Council on July 8, 9 and 10, 1998, had before it, during consideration of the
foregoing Clause, the following communication (June 26, 1998) from the City Clerk:
Recommendations:
The Budget Committee on June 25, 1998, recommended that:
(1)consideration of the Project Proposal, Financial and Human Resource/Payroll Systems,
be deferred to the meeting of Council to be held on July 29, 1998;
(2)the Chief Administrative Officer, the Chief Financial Officer and Treasurer, the Chair
of the Corporate Services Committee, the Chair of the Budget Committee, and the Executive
Director of Information Technology, be requested to:
(a)select a third party, who is not associated with any software-related companies, to
review the financial analyses of the total capital expenditure of $26.3 million; and
(b)report to a joint meeting of the Budget Committee and Corporate Services Committee,
for a recommendation directly to Council on July 29, 1998, together with the
recommendations adopted by the Corporate Services Committee on June 22, 1998; and
(3)the Chief Administrative Officer be requested to report on the number of computer
consultants that have been selected recently, how much money the City is spending on them
and whether there was any type of tendering process, including expressions of interest.
Background:
The Budget Committee on June 25, 1998, had before it the following:
(a)Transmittal Letter (June 22, 1998) from the Corporate Services Committee;
(b)Communication (June 23, 1998) from Mr. Jeffery S. Lyons, Q.C., Morrison, Brown,
Sosnovitch, Barristers and Solicitors;
(c)Communication (June 24, 1998) from Mr. Peter J. Smith, Vice President, Sales,
PeopleSoft Canada;
(d)Facsimile (June 24, 1998) from Mr. Gennaro Vendome, Vice President, Computron
Software; and
(e)Communication (June 19, 1998) from Mr. Tim Conroy, Sales Manager, Computron
Software.
Mr. Peter J. Smith, Vice President, Sales, PeopleSoft Canada, appeared before the Budget
Committee in connection with the foregoing matter.
(Letter of Transmittal dated June 22, 1998 addressed to the
Budget Committee from the
Corporate Services Committee)
Recommendation:
The Corporate Services Committee on June 22, 1998, recommended to the Budget
Committee, and Council, the adoption of Recommendation No. (2) embodied in the joint
report (June 10, 1998) from the Chief Financial Officer and Treasurer, the Commissioner of
Corporate Services and the Executive Director of Human Resources; and requested the
Budget Committee to report thereon to the meeting of Council scheduled to be held on July
8, 1998, when this matter is being considered.
The Corporate Services Committee reports, for the information of the Budget Committee,
having:
(1)recommended to Council the adoption of Recommendations Nos. (1) and (3) embodied in
the joint report (June 10, 1998) from the Chief Financial Officer and Treasurer, the
Commissioner of Corporate Services and the Executive Director of Human Resources;
(2)referred the following motion to the City Solicitor for report thereon directly to Council
for its meeting scheduled to be held on July 8, 1998:
Moved by Councillor John Adams:
"That City Council adopt the following policy:
"(i)if any director, officer, employee, agent or other representative of a
proponent/respondent, including any other parties that may be involved in a joint venture or
a consortium with the respondent, makes, from and after Council's decision on July 8, 1998,
any representation or solicitation to any elected representative or employee or agent of the
City of Toronto, with the exception of the contact person designated by the Chief
Administrative Officer with respect to the respondent's proposal or any other respondent's
proposal, City Council is entitled to reject the proponent/respondent's proposal;
(ii)a representation can be considered to be anything said or written to any Member of
Council, employee or agent which provides information advancing the interests of a
proposal;
(iii)this requirement does not extend to representations made to the designated official or
to any public deputation made to a Committee of City Council in accordance with the
Procedural By-law;
(iv)should a respondent desire that any information be presented to Members of Council,
the Respondent may request the Designated Official to do so and that official shall
distribute such information to all Members of Council and appropriate staff;
(v)should Members of Council wish to receive information from any respondent(s), then
the request shall be made through the Designated Official., and if any Member of Council
directly approaches a respondent for information, the respondent is at jeopardy if he or she
does make any representation to any Councillor in response; and
(vi)in the event of any alleged breach of the foregoing protocol, City Council shall be the
arbiter of the effect of such a breach to the process";
(3)requested the Chief Administrative Officer and the Chief Financial Officer to submit a
joint report directly to Council for its meeting scheduled to be held on July 8, 1998,
providing recommendations respecting the inclusion of all Agencies, Boards and
Commissions, including the Toronto Hydro Commission, in the FIS/HRS system being
proposed; and
(4)requested the Chief Financial Officer, in consultation with the outside independent
consultant from LGS Inc., to submit a written brief to all Members of Council, as quickly as
possible, respecting the risks involved regarding this project and the concerns expressed by
Members of the Corporate Services Committee.
Background:
The Corporate Services Committee on June 22, 1998, had before it a joint report (June 10,
1998) from the Chief Financial Officer and Treasurer, Commissioner of Corporate Services,
and the Director of Human Resources, recommending that:
(1)the acquisition of financial and human resource/payroll systems from SAP be approved
in principle, as outlined in this report;
(2)funds not to exceed $6.1 million be authorized for expenditure in 1998, $3.4 million in
1999, $6.5 million in 2000, $6.5 million in 2001, and $3.8 million in 2002 with total capital
expenditures for the financial and human resources/payroll systems not to exceed $26.3
million for the necessary hardware, software and project implementation; and
(3)the appropriate City officials be authorized to enter into contract negotiations with SAP
for the supply of financial and human resource/payroll systems.
The following persons appeared before the Corporate Services Committee in connection
with the foregoing matter:
-Ms. Mina Wallace, Vice President and General Manager, PeopleSoft Canada Inc., and
filed a submission in regard thereto;
-Mr. Tim Conroy, and Mr. John Nye, Computron Software, and filed a submission in
regard thereto; and
-Mr. Yakov Matusevich, Management Consultant, LGS Group Inc.
The Chief Financial Officer gave an overhead presentation to the Corporate Services
Committee in connection with the foregoing matter, and filed a copy of her presentation
material.
(Communication dated June 23, 1998 addressed to
Councillor Tom Jakobek, Chair, Budget Committee from
Mr. Jeffrey S. Lyons, Q.C., Morrison, Brown, Sosnovitch
Barristers and Solicitors
One Toronto Street, P.O. Box 28, Suite 910, M5C 2V6)
I understand that the aforesaid matter is on the budget Committee Agenda for Thursday,
June 25th next.
I am enclosing the response of Computron Software Inc. who made a deputation at the
Corporate Services Committee on April 22nd last.
I have been asked by Computron Software Inc. to put forward their response to the Staff
Report for your consideration.
(Communication dated June 24, 1998 addressed to
Mr. Tom Jakobek, Chair, Budget Committee, City of Toronto from
Mr. Peter J. Smith, Vice President, Sales, PeopleSoft Canada
181 Bay Street, Suite 769, M5J 2T3.)
As you know, the Year 2000 problem is the single most significant challenge facing
business and government today. These systems will be crucial to the success of your
initiatives. Many businesses have solved their problems already by acting early and
minimizing their risks. your decision is being made at the last minute. They had time. You do
not.
The recommendation that is before you, has the City investing its entire future in a single
software system for Financial, material management, Procurement, human Resources, Time
and Attendance and Payroll. this effectively puts all of your Year 2000 eggs in one software
basket.
By investing its entire future in a single software system, the situation is analogous to an
investor putting all of his/her savings in the stock of a single company. It is a high-risk
venture and an inadvisable investment strategy in any and all circumstances, regardless the
track record of the stock. No financial advisory would advance such a strategy.
Staff have recommended a higher cost, integrated Financial and Human Resources solution
that they believe presents a higher Internal Rate of Return. Your decision is not whether
"integration" is better than a "best-of-breed" solution for Financial and Human
Resources/Payroll. That could have been your decision months ago and indeed, under the
circumstances, it is probably a decision to be made in a more rational environment in the
months after the year 2000 has passed.
Your decision is how to approach and move through the very small window of opportunity.
Do you really want to take a chance on a unproven payroll system? There is an axiom that
says, "Go with proven technology." A beta version of software, even a version 1.0, simply
allows a vendor into the marketplace. It does not prove capability, nor does it provide any
assurance of deliverability. We were there once, many years ago.
PeopleSoft has a proven track record, with scores of public sector installations in Canada
and the USA. Our Canadian references are large Human Resources and Payroll
implementations in unionized public sector environments, like you. During the Corporate
Services Committee meeting, staff referenced the recommended solution as having been
implemented AT&T Canada in 9 months. We do not believe that a non-union, private sector
implementation of 2,000 employees who have been using the system since January 1998 can
be extrapolated to predict success at the City. Our Human resources/Payroll software
applications are state-of-the-art and have been in-production at our customers in Canada
since 1992.. Recently PeopleSoft was proud to release
"PEOPLESOFT CANADA PAYROLL REACHES MILESTONE
More than 500,000 Canadians now paid by industry-leading payroll system
TORONTO, Ontario - (May 1st, 1998) - PeopleSoft Canada, a leading provider of
enterprise application software, today announced that more than half a million Canadian
employees are now paid using PeopleSoft Payroll - making PeopleSoft payroll the top enter
prise payroll application suite in Canada. Available in Canadian-specific form since 1992,
PeopleSoft Payroll is licensed by more than 100 of Canada's largest companies and public
sector institutions including bell Canada, Canadian Airlines International, the Province of
British Columbia, AlliedSignal Aerospace Canada, Metro Toronto police, Ontario Hydro,
Air Canada, CIBC Wood Gundy, Bombardier, and Bank of Montreal.
Even your staff agree that we are the industry leader. We are the only solution that can
guarantee delivery on time and within budget.
PeopleSoft suggests that the City minimize its risk by "risk averaging" much as an investor
would dollar average an investment. We recommend that the City utilize the very best,
proven technology available for Human Resources and Payroll.
Getting over the Year 2000 obstacles is the issue. you have two different, core systems, so
use two equally capable, stat-of-the-art applications to solve the problem. Make the decision
on integration at a point after the problem has been solved. We have many customers who
are successfully running combined PeopleSoft and SAP systems such as the City of
Mississauga, the City of Edmonton, the Canadian Federal Government and Bell Canada.
PeopleSoft has innovative ways to allow you to do this, including "Catalyst", our year 2000
postpone option, which allows you to rent a solution for 3 years and the make a long term
strategic decision that is right for the City.
At the outset of this project you issued for two separate RFP's to help solve your financial
problems and human resource/payroll problems. Integration does not solve any of your
problems; indeed, if an unproven product line fails to deliver then an integrated solution
may cause even more problems.
Select the very best technology on the market at the very best prices.
Select PeopleSoft to be your Human Resource/Payroll system partner.
Attached to above letter:
PEOPLESOFT CANADA LTD. LAUNCHES NEW SOLUTION TO
BRIDGE YEAR 2000 CHALLENGE
PeopleSoft Catalyst delivers rapidly implemented, low-risk alternative for organizations to
replace legacy computer systems and build future competitiveness TORONTO, Ontario -
(January 13, 19998) - PeopleSoft Canada Ltd., a leader in enterprise business management
software, today announced an innovative strategy for companies that have not begun to
replace legacy computer systems in time for the year 2000 deadline. Available immediately,
PeopleSoft Catalyst features a complete bundle of software, hardware and services in an IT
outsourced environment that will allow organizations to postpone the decision of full
replacement while solving year 2000 issues quickly. PeopleSoft Catalyst lowers the business
risk of the decision -- organizations avoid incurring high up-front financial costs, don't have
to compete in the market for scarce technical resources, and do not pay until the software is
ready for use.)
(City Council also had before it, during consideration of the foregoing Clause, the
following report (July 7, 1998) from the Chief Financial Officer and Treasurer:
Purpose:
To respond to the request from the June 22, 1998 meeting of the Corporate Services
Committee that a written brief be submitted to Council regarding the risk assessment
performed by the external consultants LGS Group and other questions raised by members of
the Committee.
Financial Implications:
N/A
Recommendation:
It is recommended that this report and the attachments be received as information.
Background:
First, as a matter of context, the Steering Committee feels that it is important to state that
the recommended solution meets three objectives: (1) it allows for the benefits of an
integrated solution without sacrificing the functionality of a "best of breed" solution; (2) it is
implementable within the required time frames for the FIS and HRIS system i.e., by the year
2000; and (3) it will serve as the foundation for the efficient operation of the City's financial
and human resources administration for the future.
Discussion:
In March 1998, when the separate Financial and Human Resources/Payroll projects were
merged into a single project, the City requested quotations from several consulting
companies to provide assistance in completing the evaluation process. LGS Group, an
independent consulting firm with no alliance with any of the software vendors under
consideration, was selected. Their role in the process is described in detail in Attachment A
titled "On LGS Role".
The Project Steering Committee and the staff evaluation team considered the various
options, determined the best solution, and made the recommendations in the report to the
Corporate Services Committee. LGS provided research and analytical assistance. They
tested our recommendations and also reached an independent opinion that an integrated
SAP Financial and Human Resources/Payroll solution is the best solution for the City (see
Conclusion in Attachment A). This as well, formed part of staff's analysis and final
recommendations.
Risk assessment was an integral part of our analysis in formulating the business case.
Attachment B titled "Risk Assessment" is a detailed discussion of the analysis done by LGS
Group for the various options considered.
In order to mitigate risks associated with the tight implementation timeframe, a formal risk
management methodology is being incorporated into the overall project management. The
recommended solution is feature rich. Implementation of the features will be prioritized and
phased-in as necessary and possible. It is however, intended to fully utilize all applicable
features as quickly as possible to achieve the noted benefits.
On the FIS side, the City's projected implementation date is April 1999. The City, in the
meantime, will be reducing the number of operational FIS systems over the next 6 months,
being in a position of having year 2000 compliant system left for final conversion. It is
important to note that in implementing the SAP FIS that we are building on an already
successfully implemented FIS in the former City of Etobicoke. The final cutover to SAP
would not occur until adequate testing of operations is complete.
On the HRIS side, the City's projected implementation date is September 1999. The City, in
the meantime, is reducing the number of HRIS systems in operation for many reasons, not
the least being, maintaining good internal controls. Already, there are only 5 systems
operating today. The shut-down of two systems occurred over the period of one month.
Planning is underway to reduce the City's risk of project implementation by continuing to
reduce the number of HRIS system by year end. Since none of the existing systems is year
2000 compliant, the HRIS implementation will require significant resources - regardless of
which product is chosen. Having the vendor as the prime implementer, and taking
responsibility directly, as SAP is prepared to do, is critical to the City's success.
As noted, significant to minimizing the risk in the recommended solution is the "prime" or
"lead" role that the vendor SAP is prepared to take with the City. Generally the vendors
considered by the City in all the business cases only sell their software and then "contract
out" the project implementation to third party consultants - some who are certified by the
vendor and others who are not. SAP has agreed to mutually share the risk associated with
our implementation by taking responsibility for project implementation. They will put
together the necessary team to deliver results as expected by the City. SAP, the
recommended vendor and the City will therefore jointly manage implementation risks. A
separate document has been prepared to address issues associated with the recommended
vendor and its solution.
Conclusion:
Staff have completed an intensive and extensive evaluation process. The independent
analysis supported staff's own recommendations (and extensive findings of the external
consultant who assisted in the process.) It is essential that project approval be expedited to
maximize the available time for implementation before the Year 2000, to achieve
appropriate financial and staffing control, and to attain administrative efficiencies
associated with amalgamation. I am confident that based on the work performed to date by
staff, the work of the independent consultant, the vendor, it products and track record, that
the recommended solution of a SAP Financial and Human Resources/Payroll System will
not only assist the City in achieving these goals but will also position the City well for future
re-engineering efforts and efficient operations. The staff resources from all the former
municipalities are dedicated to implementing the recommended solution on time and within
budget and bring a significant track record of successful implementation skills.
Contact Name:
Stephen Wong,
Phone: 394-8135.
(A copy of Attachments A and B, referred to in the foregoing report, is on file in the office of
the City Clerk.)
(City Council on July 8, 9 and 10, 1998, also had before it, during consideration of the
foregoing Clause, the following report (July 7, 1998) from the City Solicitor:
Purpose:
The purpose of this report is to comment on the motion by Councillor Adams pertaining to
adoption of a policy pertaining to lobbying by proponents in the above-noted proposal call.
Funding Sources, Financial Implications and Impact Statement:
N/A
Recommendation:
It is recommended that this report be received for information.
Council Reference/Background/History:
At its meeting on June 22, 1998, the Corporate Services Committee, in consideration of the
matter of the acquisition of financial and human resource/payroll systems, referred a motion
by Councillor Adams (set out in Appendix 1 to this report) to the City Solicitor for a report
directly to Council for its meeting scheduled on July 8, 1998 (see Clause No. 1 of Report No.
9 of The Corporate Services Committee).
Comments and/or Discussion and/or Justification:
The motion would adopt a policy to prevent (given the potential consequences to a
proponent) the lobbying of Councillors and staff and would require that the "flow" of
information to and from proponents and Councillors, including staff, occur through a
designated staff person or in public by deputations to Committee. Failure to adhere to the
process would result in the discretion of Council to reject a proponent's proposal.
The policy is in effect a repetition of the policy that was adopted for the Proposal Call
issued in 1995 by the former Metropolitan Toronto for disposal of Metro's residual solid
waste (the "SW RFP"). That policy was in turn modelled on that contained in the proposal
call for the National Trade Centre (the "NT RFP").
In the prior processes, the policy was incorporated within the issued SW RFP and NT RFP
and the instructions to proponents. In particular, the fact that a proposal could be rejected
based on contravention of this "anti-lobbying clause" was set out in the calls together with
other relevant grounds for rejection and the criteria that would be used in recommending
the successful proponent. As an example, the relevant clause used in the SW RFP is set out
in Appendix 2. This was in keeping with essential principles of tendering law that the
bidding rules for rejection and award, including evaluation, be set out for the bidders in the
bid documents and be adhered to.
Should Councillor Adams' motion be adopted, there is a concern that this could be
considered the adoption of other criteria (in so far as rejection of a proposal is concerned)
not initially disclosed to bidders.
Conclusions:
Adoption of the motion would initiate a process for the distribution of information not
contemplated in the information given to respondents at the time proposals were requested.
Given that the adoption of the policy at this stage in the process could result in the rejection
of a proponent's proposal and was not shown as a basis of rejection in the proposal call, I
would recommend against its adoption in this case. Any provision against lobbying should
be undertaken in the context of explicit instructions to bidders in the bid call, if deemed
appropriate for that call, or in the context of an overall policy adopted by City Council on
lobbying.
Contact Name:
J. Anderson392-8059
--------
Appendix 1
Motion by Councillor Adams:
"That City Council adopt the following policy:
(i)if any director, officer, employee, agent or other representative of a
proponent/respondent, including any other parties that may be involved in a joint venture or
a consortium with the respondent, makes, from and after Council's decision on July 8, 1998,
any representation or solicitation to any elected representative or employee or agent of the
City of Toronto, with the exception of the contact person designated by the Chief
Administrative Officer with respect to the respondent's proposal or any other respondent's
proposal, City Council is entitled to reject the proponent/respondent's proposal;
(ii)a representation can be considered to be anything said or written to any Member of
Council, employee or agent which provides information advancing the interests of a
proposal;
(iii)this requirement does not extend to representations made to the designated official or
to any public deputation made to a Committee of City Council in accordance with the
Procedural By-law;
(iv)should a respondent desire that any information be presented to Members of Council,
the Respondent may request the Designated Official to do so and that official shall
distribute such information to all Members of Council and appropriate staff;
(v)should Members of Council wish to receive information from any respondent(s), then
the request shall be made through the Designated Official, and if any Member of Council
directly approaches a respondent for information, the respondent is at jeopardy if he or she
does make any representation to any Councillor in response; and
(vi)in the event of any alleged breach of the foregoing protocol, City Council shall be the
arbiter of the effect of such a breach to the process."
Appendix 2
Clause contained in Metro's Request for Proposals for the Disposal of Residual Solid
Waste
"Solicitation:
If any director, officer, employee, agent or other representative of a respondent, including
any other parties that may be involved in a joint venture or a consortium with the
respondent, makes, from and after November 10, 1995 (the Closing Date of the RFP), any
representation or solicitation to any elected representative or employee or agent of Metro or
the media, with the exception of Mr. Shaun Hewitt of Metro Treasury or his designate, with
respect to the Respondent's Proposal, Metropolitan Council will be entitled to reject or not
accept the Respondent's Proposal. This requirement does not extend to any public
deputations that may be made to any Metro committee in accordance with Metro's
Procedural By-law.")
(City Council also had before it, during consideration of the foregoing Clause, a
communication (July 3, 1998) from the Vice-President, Sales, PeopleSoft Canada Co.,
providing an outline of issues with respect to the Financial and Human Resource/Payroll
systems project proposal and enclosing background material in this regard.)