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APPROVE MOTION TO AUTHORIZE THE PURCHASE OF NEW HARDWARE AND PROFESSIONAL SERVICES FROM SPS VAR FOR THE CURRENT ERP SYSTEM
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RECOMMENDATION
Staff recommends the City Council approve a motion to:
1. Authorize the City Manager to enter into an agreement with SPS VAR for an amount not to exceed $100,000 for professional services, maintenance, and purchase of new IBM hardware for the current Enterprise Resource Planning system (Attachments A-C);
2. Approve findings which support and justify an exception to the competitive bid process; and
3. Authorize the City Manager to take all appropriate and necessary action to carry out the purpose and the intent of this motion.
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Summary
The city’s system of record for financial data including all accounting functions, payroll, budgeting, utility billing, code enforcement, etc. is the current Enterprise Resource Planning (ERP) system called H.T.E. This ERP system has been in use for over 28 years and runs in the city’s data center on a proprietary server platform from IBM.
On September 2017 IBM announced that the current Power7 server hardware will reach the end of support on September 30, 2019. As a result of this announcement the City must replace the existing server with the new Power9 server.
In October of 2017 an RFP was issued to replace the current legacy ERP system with a modern ERP. Expectations are that the implementation of the new ERP system will take up to 5 years to complete. Until the new ERP system is fully implemented, the City must maintain all software and hardware for the current ERP system.
Replacing the current IBM iSeries Power7 server will ensure that the City’s current ERP system is maintained and supported for the next 5 years. Maintaining new releases of the operating system and newer versions of the ERP software will minimize security vulnerabilities and risk of data loss.
The new IBM iSeries Power9 server will provide the City with a stable, robust and secure hardware platform through 2024. This will coincide with the planned retirement of the City’s current ERP system and the transition to the new ERP system.
DISCUSSION
Background
In June of 2015, the City purchased a used four (4) year old IBM iSeries Power7 server from SPS VAR for the City’s current ERP system from CentralSquare. The current ERP system can only run on an IBM iSeries server. The server has been in operation for four (4) years and is now nine (9) years old. The system has reached its life expectancy and support of this system from IBM will end September 30, 2019.
SPS VAR is registered as the Business Partner of Record with IBM for the City of Stockton. As the “Business Partner of Record”, IBM requires the City to purchase from SPS VAR unless the City has some reason to be dissatisfied with the vendor. The City has worked successfully with SPS VAR in the past. As a registered business partner with IBM, SPS VAR receives preferred pricing over other vendors.
Present Situation
IBM announced on September 2017 the current support for iSeries Power7 server will be ending September 30, 2019. The new system will be replaced with iSeries Power9 server. The total cost of the IBM hardware, one-time software license, software maintenance cost and professional services to migrate to the new system, is not to exceed $100,000 (estimated breakdown below). Based on the IT team’s experience and conversations with other cities this is a competitive price:
• IBM iSeries Power9 server hardware is $38,930
• One-time software license transfer fee of $13,600
• Professional Services to migrate to the new system of $13,320
• Software maintenance cost for five years is $24,950
• Estimated tax of $3,504
SPS VAR will replace the hardware and transfer all necessary software licenses. In addition, they will ensure that the current ERP software is running properly.
Included with the proposal provided by SPS VAR is maintenance and support from IBM for five years which will cover the City through the implementation of the new ERP system.
The City has a solid working relationship with SPS VAR since June of 2015. Replacing the iSeries Power7 server and working with SPS VAR will ensure the City’s new hardware is scalable, efficient, secure, and prepared for growth. It will also minimize the risk of equipment failures and security risks.
Findings:
Stockton Municipal Code section 3.68.070 provides an exception to the competitive bidding process for sole source vendors in cases where the City Council has approved findings that support and justify the exception.
The proposed findings are as follows:
1. IBM requires the City to go through SPS VAR as the Registered Business Partner of Record to receive preferred pricing.
2. SPS VAR has the necessary skills and experience. SPS VAR has successfully performed a replacement for the City in the past.
3. SPS VAR is also the IBM Business Partner of Record with our current ERP software vendor CentralSquare, ensuring a smooth transition of the current ERP software to the new IBM iSeries Power9 server.
FINANCIAL SUMMARY
This is a one-time cost not to exceed $100,000 to SPS VAR for the purchase of new IBM hardware and professional services. There is budget in the current FY 2018-19 appropriation for this expenditure, in the Computer Equipment Internal Service Fund, Account 502-5101-670.
Attachment A - SPS VAR Power9 Proposal
Attachment B - SPS VAR Product Agreement
Attachment C - SPS VAR Services Agreement