License Agreement for Performance Management Sopftware to

be Implemented under the Works Best Practices Program

(City Council on May 11 and 12, 1999, deferred consideration of this Clause to the next regular meeting of Council to be held on June9, 10 and 11, 1999; and the Commissioner of Works and Emergency Services was requested to submit a report directly to Council, for consideration therewith, on why a Proposal Call was not issued for this project.)

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(City Council on May 11 and 12, 1999, deferred consideration of this Clause to the next regular meeting of Council to be held on June9, 10 and 11, 1999; and the Commissioner of Works and Emergency Services was requested to submit a report directly to Council, for consideration therewith, on why a Proposal Call was not issued for this project.)

The Works and Utilities Committee recommends the adoption of the following report (March25, 1999) from the Commissioner of Works and Emergency Services:

Purpose:

The purpose of this report is to obtain Council approval to enter into a software licensing and maintenance agreement with Alacrity Inc. of Toronto for the supply of software and related implementation services for use as a Performance and Operations Management System in the Water and Wastewater Services Division under the Works Best Practices Program.

Funding Sources:

On March 2, 3, and 4, 1999, City of Toronto Council, by adoption of Clause No. 1 of Report No. 3 of The Strategic Policies and Priorities Committee, approved the 1999-2003 Capital Budget and Five-Year Capital Program, which contained funding for the Works Best Practices Program, including funding for the acquisition and implementation of a Performance and Operations Management System for use by operations, maintenance and management staff across the Water and Wastewater Services Division. Accordingly, funds are available in the Water and Wastewater Services Division, Water Pollution Control Capital Account No. C-WP001 and Water Supply Capital Account No. C-WS026.

Recommendations:

It is recommended that:

(1)authority be granted to enter into a software licensing and maintenance agreement with the firm of Alacrity Inc. of Toronto, Ontario, for the purchase and implementation of the Alacrity Results Management System, to be implemented as the Performance and Operations Management System under the Works Best Practices Program, at a cost not to exceed $975,153.00 after the Municipal Goods and Services Tax Rebate; and

(2)the appropriate City officials be authorized to take the necessary action to give effect thereto.

Council Reference/Background/History:

On July 2 and 3, 1997, the former Metropolitan Council adopted Clause No. 3 of Report No.13 of The Financial Priorities Committee authorizing implementation of the Works Best Practices Program in the Works Department.

Accordingly, the Works Best Practices Performance and Operations Management Team initiated design and development activities for purposes of creating and implementing a Performance and Operations Management System in the Water and Wastewater and Solid Waste Management Services units, as identified in the Works Best Practices Program applications architecture.

Comments and/or Discussion and /or Justification:

The Performance and Operations Management System and its associated practices (generally referred to as "POMS") is a key component of the Works Best Practices Program (WBPP), which brings together new enabling technologies, work practices redesigned to take advantage of those new technologies, and a transformed organizational model which focuses on team processes aligned with overall operational and business goals. With the information-rich and highly functional POMS "toolkit", work teams and management will be provided with the ability to establish operational efficiency and improvement targets and measure performance against those targets. POMS is specifically configured to import operational and resource utilization information from a wide range of sources, and to analyse and display that information in both tabular and graphical forms in support of the three major performance dimensions: quality; efficiency; and effectiveness. The importance of this in supporting "continuous improvement" is a key ingredient in the long-term success of the WBPP.

The preliminary WBPP "applications architecture" included provisions to develop a custom (i.e., program it from scratch) Performance and Operations Management System for use across Water and Wastewater Services as well as in the Solid Waste Management area (in 1998, Solid Waste Management embarked on a varied approach to implementing specific components of the WBPP, with the intention of assessing the feasibility of implementing POMS at a later date). While buying a packaged system was known to be preferable to custom-development for long-term viability, it was felt at the time that the unique nature of our requirement precluded a "packaged" solution. However, in 1997, a "market scan" to locate and compare technical capabilities of business modelling systems uncovered the Alacrity Results Management (A.R.M.) System developed and marketed by Alacrity Inc. here in Toronto. This system was discovered to provide a solid architectural foundation on which to develop POMS, was technically and functionally superior to other modelling/business component-based products in terms of our specific requirements, and, as the only viable alternative to custom-building a system, represented a clear opportunity to the City. Representatives of the corporate information technology group were involved in this process.

A joint pilot development and implementation project was commissioned (via Purchase Order with the support of Corporate Purchasing) to prove the concept and applicability of the A.R.M. product to the POMS requirement. The system was configured and implemented on a field trial basis during 1998, and, as a result, the WBPP Program Management Office, in conjunction with the Technology Architecture Office, and in consultation with corporate information technology, determined that the system had clearly proven its capabilities and was the clear choice as the software technology platform for POMS implementation. Negotiations with Alacrity Inc. were carried out, resulting in the contract award recommendation contained herein.

Terms of Licensing Agreement:

It is intended that POMS will be used in a "front-line" capacity by plant technicians and maintenance staff to support day-to-day operations, by team coordinators and plant managers to support the performance of major plant functions, and by senior and executive managers to support overall business management. The implications on licensing of such ubiquitous use of a major, specialized software product can often be significant. For example, based on the published license fees for the basic Alacrity Results Management System, a 300-user license would cost US$475,000.00.

Alacrity Inc., however, believes as we do that there is great potential for widespread use of their product for specific operations performance management applications. Knowing that the success of our implementation would be very beneficial to the market outlook for A.R.M., Alacrity has agreed to a "site license" arrangement (more accurately, an "enterprise" license - this term is not used to avoid possible confusion with City-wide use) that would provide for unlimited use of the system across the entire Water and Wastewater Services Division as well as the Solid Waste Management Division. This agreement includes unlimited use in the business areas of the former municipalities (i.e., District operations). The negotiated cost, to be paid over a two-year roll-out period, is CDN$537,500.00. In addition to the designed POMS functionality, Alacrity has agreed to include in the license coverage full future use (not presently in the WBPP scope) of the budgeting features of the systems on a site-wide basis. Annual maintenance charges for the full site license are to be phased in through the year 2001 to the maximum amount of CDN$134,375.00.

The table below shows the payment plan for roll-out of Alacrity Results Management software licensing and maintenance components through to the end of Works Best Practices Program implementation in the year 2002. Maintenance costs beyond that time will be included in the appropriate operating budgets.

License FeesMaintenanceTotal

1997$50,000.00- $50,000

1998$87,500.00$12,000 $99,500

1999$300,000.00$31,750$331,750

2000$100,000.00$96,750$196,750

2001-$134,375$134,375

2002_____-_____$134,375$134,375

Subtotal$537,500.00$409,250.00$946,750.00

GST after Rebate$16,125.00 12,277.50 $28,402.50

Total$553,625.00$421,527.50$975,152.50

Alacrity has agreed to incorporate in the licensing agreement software code protection through an escrow arrangement at no charge to the City.

Conclusions:

It is recommended that a software licensing and maintenance agreement be entered into with the firm of Alacrity Inc. of Toronto, Ontario, for the provision of Performance and Operations Management System software products and related implementation and support services to be implemented under the Works Best Practices Program.

Contact Name and Telephone Number:

Jim Coe

Program Manager, Works Best Practices

Water and Wastewater Services Division

Telephone No. (416) 392-3141

(City Council on May 11 and 12, 1999, had before it, during consideration of the foregoing Clause, a communication (May 10, 1999) from Ms. Gina Gignac, National Representative, Toronto Civic Employees' Union, C.U.P.E. Local 416, respecting the Works Best Practices Program, pointing out that the value for money audit on the consultant services for this program has yet to be completed by the City Auditor.)