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Financial and Human Resource System Modernization Innovation and Technology Subcommittee February 13, 2023 | 3:30 p.m. | City Hall 5th Floor Large It’s 2023 Outside of Work. What year is it inside? 1999 Oracle EBS end of life Dec 31, 2033 Agenda • History • Oracle E-Business Suite • Upgrades & Efforts • Challenges • Benefits Administration & Wellness Portal • Recommendation • Why Now? • Replacement Timeline & Cost Estimate • Q&A Background Then (1999) • Employee Population: 1186 FTE • Large/robust system for city size to support growth • Bought more than needed at the time to prepare for the future and enable the city to grow • Technology Standards • Security - on-prem applications • Customizations – maintenance and upgrades complex (increased cost of support) • Modifications require redeployment • Business reliant on IT • Business Standards • Pushing paper was the norm • Inflexibility – keeping up with mandates and legal requirements Now (2023) • Employee Population: 1767 FTE • Outgrown the application’s usefulness • Technology Standards • Security – cloud solutions • Move at the speed of business • Accessibility – mobile; anytime/anywhere • Mobility – desktop to laptop • Business reliant on business • Business Standards • Pandemic has changed how we do business • Nature of work has changed substantially • Increased expectation to work where you are • Quick, accessible information • Attract and Retain Talent difficult with outdated technology Overseen by the Oracle Steering Committee Asset Management Banking (JP Morgan Chase) Budget Software System Building Permits Business Registration Criminal Justice Information Services Email Energy Tracking Invoices Job Applications and Recruitment Landlord Payment Payment Processing Pension Plan ASRS Pension Plan EORP Pension Plan PSPRS Printing Services Registration & Reservation Application Timekeeping Utility Billing Workplace Giving Banking (JP Morgan Chase) Budget Software System COBRA Compensation Management Deferred Compensation 457(b) Electronic Data Management System Email Employee Dental Insurance Employee Life Insurance Employee Medical Insurance Employee Vision Insurance Employment Verification Family and Medical Leave (FMLA) Administration Flexible Spending Account (FSA) Administration Health Savings Account (HSA) Administration Job Applications and Recruitment Retirement Health Savings Plan (RHSP) Short Term Disability Administration Talent Management System Timekeeping Wellness Worker's Compensation Imports Exports Major Upgrades • 2009: i11 • 2011: r12 • Citywide effort and an enormous undertaking for IT and departments • Added three modules: iExpense, iProcurement, Projects & Training • Removed customizations • 2021: 12.2.9 • Back-end system upgrade for supportability; no new business functionality • 2022: 12.10.10 (latest EBS version) • City on latest version; no new business functionality Upgrades and Maintenance Business Cycle Maintenance • Patches & Upgrades • Annual patch cycles • Year End/Open Enrollment • Efforts to make the most out of the system • Fix what can be fixed • 3rd party solutions • Oracle Contractors • Purchasing additional licenses • Upgrades and workarounds cannot meet city needs Oracle EBS On-Prem to Oracle Cloud • Move existing Oracle EBS from on- premise application to Oracle Cloud Infrastructure (OCI) Oracle EBS to Oracle Fusion on OCI • Implement Oracle Fusion for HR & Financials • Inclusion of Fusion SaaS, OCI for data retention, OCI integration and analytics, 2+ years of Oracle support, training and other internal costs Oracle Upgrades Engagement: 12 months Cost: Est. $2.6+- million plus annual support costs Engagement: 18 months Cost: Est. $10+ million plus annual support costs Challenges Shortcomings of Current ERP Lack of Oracle Support Inability to Move at the Speed of Business Immobility & Limited End User Accessibility Reporting Complexities Resource Limitations Outdated Technology System Limitations Challenges Shortcomings of Current ERP Inability to Move at the Speed of Business The need for organizational speed has never been greater. Digital technology should help manage infrastructure and processes however Oracle has proven to be a hindrance and remains inflexible to the city’s changing needs and the future of work. Examples: o FLSA – Federal Labor Law changes o Change Leave Schedules o Update allowances o Observing a new holiday o Two Week Payroll Cycle o MOU Negotiations & Changes Challenges Shortcomings of Current ERP Immobility & Limited end user accessibility This enterprise resource application is currently on premises making it in-accessible to employees outside of the network or VPN access. No out of network browser access or mobile access. Completely Inaccessible to: o Employee Out of Office o Employees on any type of leave including military leave or FMLA o Retirees o Surviving family members of employees who passed in duty, o COBRA participants Not intuitive or user friendly for employees, supervisors or administrators. Challenges Shortcomings of Current ERP Oracle requires extensive technical support to maintain existing configurations. There is concern with Oracle supporting the product as implemented in Chandler. Oracle support services have recently reduced their support hours slowing the response time. Requires contracted services to continue to support existing configurations. Lack of Oracle support Challenges Shortcomings of Current ERP Internal and external resource limitations make it challenging to maintain existing processes and limit the ability to implement enhancements or improvements. o Annual business cycles patching is time intensive o Internally, the same business teams are stretched across multiple projects while supporting daily activity o Contracted services are becoming difficult to find and more expensive Resource limitations Challenges Shortcomings of Current ERP Maintaining an outdated system has resulted in manual efforts, additional systems and workarounds. There are several projects currently underway to fix what can be fixed totaling approximately $1.5 million. o Report Security o Position Control o Budget System Replacement o Compensation Management o HR Production Support o Support Open Enrollment and Standard Benefit limitations o Support the required system changes needed due to the Classification and Compensation Study Outdated technology Challenges Shortcomings of Current ERP Oracle EBS was originally configured for City of Chandler’s use in 1999 with customizations to support existing business processes. Third party applications have been purchased and implemented to supplement system limitations. o Time and Attendance – Intellitime & TeleStaff o Talent Management - LEAF o Recruitment - NeoGov o Wellness Portal - Cerner o Reporting - Oracle Business Intelligence o Payroll Reporting - KBase System limitations Challenges Shortcomings of Current ERP Today, there is missing functionality, components still not configured correctly and a need for business process change. $2.2 million in projects have been identified to address specific issues a new ERP solution could resolve collectively. o Benefits Administration o Accounts Payable Portal o iReceivables o Oracle Mobility o Tax and License Data Repository o Utility Services Data Repository o Citywide Central Cashiering o Replace 3rd Party Payment Processor Not intuitive or user friendly. System limitations Challenges Shortcomings of Current ERP The inability to produce accurate, timely, and useful reports is a detriment to the organization. Poor reporting leads to less productivity, poor decision making, and missed opportunities. The inability to access real-time data leads to decision making based on knowledge and not true data or leaves departments without the information needed for better decision making. Reporting complexities Benefits Admin & Wellness Portal Cerner Wellness end of life 2023 Oracle Standard Benefits out of support Comprehensive Benefits Program Chandler’s Investment o $24 million in annual costs for the medical plan o $2 million in annual costs for the dental plan All employee related benefits including retirement, life Insurance, health savings accounts, etc. o Simple enrollment process to take advantage of the city’s investments o Allow employees the opportunity to consult with their family and make decisions together o Automate processes that should be automated by industry standards o Mitigate errors when maintaining critical coverage for all benefits. o Retirees unable to access system; all actions are completed manually Employees’ Needs Recommendation The Oracle Steering Committee recommends the City of Chandler begin the Enterprise Resource Planning (ERP) Replacement Analysis to invest in a new solution. The goal is to deliver an employee focused experience to the workforce, providing services and insights to accelerate work that are easy, personal, accessible, reliable and evolving. Seamless experience across systems Easy Designed from the employee perspective Personal Content, knowledge, data highly available Accessible Expertise at any scale Reliable Mindset of continuous improvement Evolving Features of Modern ERP Systems Why Now? Today, a holistic and digital workforce experience sets innovative organizations apart. The City of Chandler has recognized the increasing gap between the experience employees expect and what they actually receive. “We need to think about the employee experience the way we think about the consumer experience. Information must be available as needed, people are efficiently guided to the right systems and departments, and employees can get relevant help at any time.” – Josh Bersin, Global Industry Analyst “ There is a need to take care of the people who take care of our residents by providing seamless technology. Updating our aging technology that cares for our financial and human resources, while increasing the customer experience will position us for ongoing innovation. It is the right thing to do since taxpayers entrust us to manage these resources. Employee Perspective Taxpayer Perspective 5 Year Citywide Effort Questions? Next Stop – the Future.