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APPROVE A MOTION AUTHORIZING HYLAND ONBASE HOSTED SOLUTION AGREEMENT WITH NEKO INDUSTRIES, INC.
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RECOMMENDATION
It is recommended that the City Council approve a motion to:
1. Authorize the City Manager to execute a five-year Hyland OnBase Online Hosted Solution Agreement with NEKO Industries, Inc. for a total amount of $1,013,212, effective July 1, 2021 through June 30, 2026 (Attachment A and B).
2. Approve findings for an exception to the competitive bidding process; and
3. Authorize the City Manager to take necessary and appropriate actions to carry out the purpose and intent of this motion.
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Summary
Six departments use OnBase for electronic document storage and retrieval (City Clerk, Administrative Services, Public Works, Economic Development, Municipal Utilities and Community Development). The OnBase software stores digital copies of invoice payments, checks, procurement requisitions, contracts, permits, drawings, plans, etc. The City is investing in a more comprehensive and strategic approach to electronic document management that uses the new Tyler Munis ERP document management system for financial documents, but it will not eliminate the need for storing historical records or ongoing usage for storing documents such as permits, drawings, plans, and other non-financial records.
Staff is recommending continuing with NEKO as a single source purchase for the OnBase software for a total amount of $1,013,212.20, effective July 1, 2021 to June 30, 2026 (Attachments A and B). The recommended action will provide the City with an overall savings of 9% off the current pricing for Hyland OnBase Online Hosted Solution.
DISCUSSION
Background
Six departments (City Clerk, Administrative Services, Public Works, Economic Development, Municipal Utilities and Community Development) use OnBase to image, store, and retrieve documents and historical records. This software solution is purchased through NEKO Industries, Inc., a reseller of Hyland OnBase Online.
An agreement with NEKO Industries, Inc. to provide imaging and hosting solutions was first approved in 2006 under Resolution 06-0409 and extended by Resolutions 07-0420, 08-0240, 09-0179, 09-0369, and 10-0365, and later Motions 2014-04-01-1201, 2015-03-24-1203, 2017-06-20-1104 and motion 2020-06-09-1106. The current agreement with Neko expires on June 30, 2021.
In July 2011, an assessment of the City’s information technology system was conducted by NexLevel Information Technology, Inc. The report was presented to Council at that time. Issues with hosted OnBase were identified in this report. It recommended the City consider a more comprehensive and strategic approach to document management.
In April 2014, the hosting contract with NEKO was extended to maintain critical business functions and to allow time for completing an assessment of the hosted OnBase system. In 2015, upon Council approval, IT implemented Office 365 with SharePoint online. As part of the migration of GroupWise to Office 365, many documents that were stored in GroupWise were moved to SharePoint/Office 365.
The hosting contract with NEKO was extended in 2015, 2017, and 2020 to maintain critical business functions and continue the effort of examining other document management systems and collaborative software as a long-term solution.
Currently, the City is implementing a new ERP system that will reduce the storage requirements and investment needed for a document management system such as OnBase, but it will not eliminate the need for storing historical records or ongoing usage for storing permits, drawings, plans, and other non-financial records. Once the ERP implementation is completed, the City will work with a consultant to define a long-term document management strategy which will require significant resources from all city departments, similar to the effort required for the ERP replacement project.
Present Situation
The most recent agreement with NEKO expires on June 30, 2021. Staff is recommending that Council adopt findings to support an exception to the competitive bidding requirements for a sole source purchase agreement with NEKO Industries Inc., effective July 1, 2021 to June 20, 2026.
Approval of the agreement with NEKO will ensure the City’s current hosted document management system is licensed and maintained. It also reduces cost from the current price of $222,684 per year to $202,642 per year for the hosted imaging services and fixed cost storage fees with a savings of $20,042 per year and a five-year total savings of approximately $100,210.
The IT Department will review available options with the departments currently using OnBase, for future renewals and other contracting options. Once the ERP implementation is completed all financial documents will be stored inside the new ERP system and no longer in OnBase. In the future, the City will work with a consultant to perform an assessment of OnBase. During this time, an agreement with NEKO is needed to meet the City’s document management needs.
Findings:
Stockton Municipal Code section 3.68.070(A)(4) 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 findings are as follows:
1. The city has a continued need of an electronic document management system for a wide variety of documents that include financial and non-financial documents.
2. An agreement with NEKO Industries, Inc. to provide imaging and hosting solutions was first approved in 2006, purchased under a cooperative purchasing agreement through the State of California’s Master Services Agreement (Resolution Numbers 06-0409, 07-0420, 08-0240, 09-0179, 09-0369, and 10-0365) and later through the County of Sonoma (Motion Numbers 2014-04-01-1201, 2015-03-24-1203, 2017-06-20-1104, and 2020-06-09-1106). The county of Sonoma cooperative expires on August 2, 2021.
3. NEKO is the only authorized distributor in Northern California for the Hyland OnBase software system. NEKO is the only vendor that offers maintenance, service, and support for the Hyland OnBase software with Kofax solution, and scanning equipment together. Kofax is the hardware used as a bridge for communication between the Hyland OnBase software system and the scanners.
4. The purchase of Hyland OnBase Online Hosted Solution is required for business continuity of six City departments (City Clerk, Administrative Services, Public Works, Economic Development, Municipal Utilities and Community Development) that currently use OnBase to image and retrieve documents.
5. The solution is cost effective compared to other solutions, and due to its extensive integration with existing City systems, it is cost prohibitive to switch to another solution.
FINANCIAL SUMMARY
The cost of the new five-year Hyland OnBase Online Hosted Solution Agreement with NEKO Industries, Inc. is in the amount of $202,642.44 per year, with a total contract amount of $1,013,212.20, effective July 1, 2021 through June 30, 2026.
There is sufficient FY 2021-22 budget requested in the Technology Internal Service Fund 510-511, account 3020-000-630006. Future annual costs will be included in the annual budget development approval process.
Attachment A - Neko Master Maintenance
Attachment B - OnBase End User License Agreement