HomeMy WebLinkAbout2010-01-12; City Council; 20098; Cost of Human Capital Management System SoftwareCITY OF CARLSBAD - AGENDA BILL 13
ADZ
AB# 20 098
MTG. 01/12/10
DEPT. HR
AUTHORIZATION FOR THE
ALLOCATION OF COSTS FOR THE
PURCHASE AND INSTALLATION OF
HUMAN CAPITAL MANAGEMENT
SYSTEM (HCMS) SOFTWARE
DEPT. HEAD
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CITY MGR.
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RECOMMENDED ACTION:
Adopt Resolution No. 2010-009 authorizing the purchase and installation of Human
Capital Management System (HCMS) software and contracts for services related to this
software implementation.
ITEM EXPLANATION:
Accurate, timely information is vital to the efficient operation and management of any
organization. Readily accessible, precise data is a key element in decision-making and the
management of personnel, and the accuracy and timeliness of an organization's data
becomes even more critical in times of scarce resources. This is the current environment at
the City of Carlsbad - there is an increased demand to provide enhanced information for
decision-making at a time in which organizational resources are limited. Unfortunately, the
City's existing core technology is not able to provide needed information pertaining to one of
the most valuable (and costly) of City assets - the employee workforce. Using new, more
effective technology it is possible to increase productivity, which may, in turn, allow the City to
decrease the size of its workforce while maintaining or improving service levels. Thus, the
need to improve our employee based information processing systems has come to the
forefront.
Proposed Solution
Over the past three years, a project team has been exploring technologies that would
automate processing and increase the availability of information pertaining to the employee
workforce. Known as a Human Capital Management System, or HCMS, this type of business
system integrates the processes associated with the entire employment life cycle - from
application for a City position to the end of employment. Currently, without a comprehensive
automated system, City staff uses manual and redundant methods which duplicate efforts
and impede efficient and cost effective operations. Some examples include:
• using estimates (instead of actual) of personnel-related costs (time spent on tasks and
projects) to determine fees and chargebacks City-wide
• using manual processes to develop cost recovery strategies for City services
• managers lacking access to information required for efficient personnel management
DEPARTMENT CONTACT: Julie Clark 760-602-2438 Julie.Clark@carlsbadca.gov
FOR CITY CLERKS USE ONLY.
COUNCIL ACTION: APPROVED
DENIED
CONTINUED
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• manually maintaining and reviewing employee work schedules, attendance records
and payroll related timekeeping
• manually maintaining separate records to ensure that departments do not exceed their
Council-approved budgeted personnel allocations
• manually tracking legally required training and job-specific certifications
• manually implementing standard human resource processes including recruitment,
applicant tracking, compensation, benefits, leave and absence management
• relying on paper forms for timecards and salary and benefit changes and
• managers and employees lacking real-time leave balance and budget information
during timecard preparation.
Increasing the accessibility, accuracy and timeliness of business data is a key benefit of a
City-wide HCMS. This proposed solution will allow managers to make better decisions
through increased exposure to the data necessary to do their jobs.
Current Environment
Currently, the City uses a financial management system from Sungard Bitech to manage
financial and budget data. This system performs well in managing the City's finances;
however, it has very limited human capital management and timekeeping capabilities. In
order to provide data when and where it is needed, copying and hand-delivering information
stored only on paper or entry of the same information into multiple databases is often
required. This is not only inefficient; but also opens the door to having inconsistent data and
data that is more easily compromised. In addition, the existing software does not allow City-
wide managers to obtain vital personnel related information in an online real time mode.
Expected Benefits
An enterprise-wide HCMS will provide many benefits across the City organization. Listed
below are a few:
1. Increased efficiencies: With over 1,100 full-time and part-time employees, there are
countless routine personnel transactions performed manually. One example is the
payroll/timekeeping function. Currently, City employees manually calculate and submit
their paper timecard to their supervisor. The supervisor then compares the timesheet
to their own attendance and scheduling records (which are maintained separately) and
checks for accuracy (including manual calculation of overtime). Often, timecards are
then reviewed by department administrative staff who review other administrative
compliance issues. In the engineering department, staff also enter timekeeping data
into a separate database to track the time spent on projects and to make sure costs do
not exceed project budgets. The paper timecards are then delivered to the Finance
department where they are reviewed for accuracy and entered into the payroll module
of the financial management system. An HCMS will provide a single point of data
entry for the employee. It will automatically perform calculations and verifications such
as overtime, leave usage and project cost accounting (saving time and preventing
errors) and route the timesheets via workflow technology to the supervisor and the
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Finance department (saving paper and reducing the City's carbon footprint). The
HCMS will also help supervisors create work schedules and capture time worked more
accurately for hourly employees via timeclocks.
2. Manager self-service: Currently, managers do not have access to information to make
personnel decisions. They must request the information from Human Resources
department staff. After the manager makes a decision, they submit personnel
changes (such as changes to salary, job titles, benefit levels, etc.) on a paper form via
inter-office mail. Not only does this present significant logistical challenges and work
for multiple people, it also creates a greater likelihood of error. Automation of these
routine processes will allow managers to access information online to make personnel
decisions and process the changes online.
3. Employee self-service: An enterprise HCMS will give City employees greater control
over their personal records. For example, employees will be able to update their own
record, enroll in eligible benefit plans, check on vacant positions and register for
needed training. This self-service option reduces the number of transactions currently
performed by Human Resources department staff. Less busy work frees up Human
Resources staff to work on more strategic efforts.
4. Salary/personnel savings: Used by every City department, the HCMS has the
potential, over time, to allow the City to reduce staff without affecting the level of
service to the community. The Human Resources department has already committed
to reduce staffing levels by one full-time equivalent (FTE) after the system has been
implemented. As the system becomes fully implemented, additional reductions in City
staffing levels will be possible (estimated four (4) additional FTEs City-wide).
5. Additional cost savings: Implementation of the HCMS will eliminate the need for some
of the City's current annual technology and miscellaneous costs. This includes event
planning software used to enroll employees into training and development classes (but
incapable of monitoring mandatory training and licensing) and maintenance fees for
the payroll module within the current financial management system.
Requested Next Steps
An enterprise-wide Human Capital Management System has been identified by the
Information Technology Director as a vital yet missing piece of the City's Information
Technology Strategic Plan and a necessary addition to the City's technology infrastructure.
In an effort to explore this technology as an option for the City, a project team was formed.
This team has completed the following milestones to date:
• identified the critical functionality requirements for Carlsbad and the missing elements
not covered by existing systems
• investigated the effective use of human capital management systems at other
organizations
• distributed an RFP soliciting qualifications and bids to qualified HCMS vendors
• reviewed request for proposal (RFP) responses and viewed demonstrations of the
leading vendors' solutions and
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• selected the best valued HCMS solutions and an implementation partner to install an
HCMS.
This project has been reviewed and recommended by the City's Leadership Team and the
City's Information Technology Governance Committee (ITGC). The ITGC was established by
the City in 2000 to evaluate and prioritize proposed technology acquisitions to ensure that
they meet the City's business needs and technology standards.
The project is scheduled to begin in the first quarter of 2010 with an estimated 18-month
implementation period. During implementation, staff from Information Technology, Finance,
Human Resources, Parks and Recreation, Library and other key departments will:
• determine workflow to automate all related business processes
• convert data from the current human resource and payroll system
• create an on-line automated timekeeping system with workflow functionality
• build interfaces with systems currently used in order to integrate all relevant data
• develop employee and manager self-service functionality
• develop reports
• train employees City-wide to use this system and
• take advantage of operational efficiencies through automation to facilitate timely and
more informed business decisions.
Staff is now seeking City Council approval to purchase and install Human Capital
Management System (HCMS) software and to contract for services related to this software
implementation. Because there are several vendors involved, it is being requested that the
project be approved with the understanding that individual contracts will be brought forward
for City Council approval at a later date.
FISCAL IMPACT:
This software acquisition was anticipated several years ago. As such, $900,000 has been
set aside as a result of budgetary savings in the Human Resources department budget over
Fiscal Years 2006 - 2009 to help pay for the HCMS. This $900,000 has been moved to the
Technology Innovation Fund for this project. In addition, the City has set aside budgetary
savings in the Technology Innovation Fund over the last few years in anticipation of
purchasing an HCMS. Sufficient funds are available in the Technology Innovation Fund for
the entire cost of this project and no new funding is needed. Funds for this project will be
moved from the Technology Innovation Fund into the General Capital Construction (GCC)
Fund. The estimated savings and costs associated with this software purchase are outlined
below.
Estimated Savings
Implementation of the HCMS will result in significant savings of staff time through elimination
of duplicate work and automation of manual processes (see Table 1). These duplicate efforts
occur throughout the City, primarily in administrative positions. Analysis of staff time spent on
current inefficient processes reveals an estimated annual net time savings to the City valued
at $460,000 per year beginning in year two (2). Implementation of the HCMS will result in
productivity improvements and allow the City to meet demands of a growing population and
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maintain service levels with existing staff. Also beginning in year two (2), there is an
estimated annual cash savings of $60,000 related to elimination of current technology and
miscellaneous purchases that will be replaced by an HCMS. Following the implementation of
the HCMS, it is estimated that five (5) full time positions will be eliminated City-wide as a
result of efficiencies created (estimated annual salary and benefit savings of $310,000)
beginning in year four (4).
TABLE 1. Estimated Annual Savings
Staff Time/Efficiency Improvements
Cash Savings
Future FTE Eliminations (5)
(includes salary and benefits)
$460,000
$60,000
$310,000
Total $830,000
Estimated Cost
The initial fees associated with the purchase and implementation of the HCMS (including a
15% contingency) are estimated to be $1.8 million (see Table 2). At start up, these overall
project costs may be reduced by:
• redeployment of existing staff to backfill for current staff devoted to this project
• completion of the project in less than 18 months and/or
• reduction in contingency fund spending.
In addition, it is estimated that the City will pay, on average, $340,000 per year for annual
support. Initial fees, a 15% contingency and three years of annual support will be funded
from the Technology Innovation Fund for an overall project cost of $2.8 million. These fees
will be paid over one to two years based on the successful completion of implementation
milestones.
TABLE 2. Estimated Implementation Costs
Initial Fees
Startup Fees
Implementation Services
Software License
Hardware -Timeclocks
Staffing Services
Contingency
Subtotal
Annual Support
Software Maintenance ($60K)
Application Hosting/Support ($264K)
Hardware Maintenance ($6K)
Yearl
$ 420,000
$ 290,000
$ 300,000
$ 45,000
$ 110,000
$ 160,000
$1,325,000
$ 330,000
Year 2
$ 215,000
$ 140,000
$ 60,000
$ 80,000
$ 495,000
$ 340,000
YearS
$350,000
Total $1,655,000 $ 835,000 $350,000
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Funding for the ongoing maintenance and support of the system (including upgrades) will be
funded with savings derived through future eliminated full-time positions City-wide as a result
of the efficiency improvements.
The return on investment is estimated to occur in year seven (7). The City has kept core
City-wide technology applications such as this one in excess of fifteen (15) years.
Hosting
To determine the best way to deploy the HCMS the Information Technology (IT) department
staff looked at two scenarios (1) a "hosted solution" where the application resides at a third
party's data center and is managed and supported by the third party and (2) the application
resides at the City's data center and is managed and supported by City IT staff. A Total Cost
of Ownership (TCO) analysis was done on each scenario. The hosted solution was the most
cost and resource effective manner to deploy and support this HCMS solution. Among other
things, the hosted solution provides for:
• 24/7 monitoring, support and availability
• simplified deployment
• elimination of capital equipment costs
• reduced reliance on City IT staff for system support and maintenance functions and
• elimination of the need to hire at least one additional IT staff member to support this
system.
As such, the IT department recommends deployment of HCMS as a "hosted solution"
provided, managed and supported by the third party hosting vendors.
ENVIRONMENTAL IMPACT:
This action does not constitute a project as defined under CEQA (California Environmental
Quality Act) pursuant to CEQA regulation 15060c(3).
EXHIBITS:
1. Resolution No. 2010-009
1 RESOLUTION NO.2Q1Q-Q09
2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, AUTHORIZING THE
3 ALLOCATION OF COST FOR THE PURCHASE AND
4 INSTALLATION OF HUMAN CAPITAL
MANAGEMENT SYSTEM (HCMS) SOFTWARE
5
WHEREAS, the City of Carlsbad does not have sufficient technology to deliver
6
accurate and timely information concerning the employee workforce to City
7
departments; and8
9 WHEREAS, the purchase of a Human Capital Management System (HCMS) will
10 allow City departments to automate manual processes and reduce redundancies,
11 thereby increasing efficiencies in City operations; and
12 WHEREAS, a HCMS will increase the accessibility, accuracy and timeliness of
13 business data, allowing managers to make better business decisions; and
14 WHEREAS, an enterprise wide Human Capital Management System (HCMS)
has been identified as a vital yet missing piece of the City's Information Technology
16
strategic plan and a necessary addition to the City's technology infrastructure; and
17
WHEREAS, the City Council of the City of Carlsbad, California considers it
18
necessary and in the City's and public's best interest to purchase and install HCMS
20 software to the benefit of all City departments; and
21 WHEREAS, this project has been reviewed and recommended by the City's
22 Leadership Team and the City's Information Technology Governance Committee
23 (ITGC); and
24 WHEREAS, the City has set aside budgetary savings in the Technology
25 Innovation Fund over the last few years in anticipation of this project so that sufficient
26 I
funds are available in the Technology Innovation Fund for the entire cost of this project.
27"
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1 NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of
2 Carlsbad, California, as follows:
3
1. That the above recitations are true and correct.
4
2. That the City Council authorizes the Human Resources Director or designee
5
to negotiate proposed contracts with Human Capital Management System (HCMS)6
vendors to implement the HCMS project.
3. That the City Council appropriates an overall cost not to exceed $2,840,000
9 for the purchase and installation of HCMS software.
10 4. That the City Council authorizes the Finance Director to transfer $2,840,000
from the Technology Innovation Fund to the General Capital Construction (GCC) Fund
12 for the HCMS project.
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PASSED, APPROVED AND ADOPTED at a Regular Meeting of the City Council
of the City of Carlsbad on the 12th day of January, 2010, by the following vote to wit:
AYES: Council Members Lewis, Kulchin, Hall, Packard and Blackburn.
NOES: None.
ABSENT: None.
OJDE(AbfeWI&, Mayor
ATTEST:
IJ9RRAI
(SEAL)
Human Capital Management
System (HCMS)
Julie Clark
Lisa Irvine
Gordon Peterson
Information Technology Roadmap
•Innovation and process improvement through
technology
•Indentify core businesses and technology
•Match business needs with technology
solutions
•Improve access to meaningful information
•Consolidate and eliminate redundant systems
•Identify missing systems
Core Business –Core Technology
HUMAN CAPITAL
MANAGEMENT
(HCMS)
CUSTOMER
RELATIONSHIP
MANAGEMENT
DATA
WAREHOUSE
COMMUNICATION
AND
COLLABORATION
FINANCIAL FUND
ACCOUNTING
(IFAS)
POLICE DISPATCH UTILITY BILLING
GEOGRAPHIC
INFORMATION
(GIS)
BUILDING
PERMITS
ASSET
MANAGEMENT
WORK ORDERS
LIBRARY
CIRCULATION
RECREATION
CLASS
REGISTRATION
DOCUMENT
MANAGEMENT
(DMS)
Technology Portfolio
3
Human Capital Management
•Reduce expenses
•Eliminate administrative tasks
•Move from administrative to
strategic focus
•Provide accurate and timely
information
HCMS Project Goal
•Integrate and automate processes
associated with entire employment
life cycle –from application for a
city position through end of
employment
Areas of Improvement
•Time management
•Absence management
•Labor scheduling
•Labor budgeting
•Learning management
Expected Benefits
•Increased efficiencies
•Manager self-service
•Employee self-service
•Salary/personnel savings
•Additional cost savings
Hosted Solution
•24/7 monitoring, support and
availability
•Simplified deployment
•Elimination of capital equipment costs
•Reduced reliance on city IT staff
•No need to hire additional IT staff to
support this system
Estimated Project Cost
Year 1 Year 2 Year 3 Total
Initial
Fees
$1,325,000 $495,000 -----$1,820,000
Annual
Support
$330,000 $340,000 $350,000 $1,020,000
Total $1,655,000 $835,000 $350,000 $2,840,000*
*Funding Sources: Human Resources Department (budgetary savings) = $900,000
Technology Innovation Fund = $1,940,000
Estimated Annual Savings
Type of Savings Estimated Dollar Value
Cash Savings $60,000
Future FTE Eliminations (5)
(including salary & benefits)
$310,000
Staff Time/Efficiency Improvements $460,000
Total $830,000
Requested Action
That the City Council authorize:
1.Contracts with vendors to implement
HCMS
2.Allocation of $2.84 million for
purchase and installation of HCMS
3.Transfer of $2.84 million from
Technology Innovation Fund to
General Capital Construction Fund for
this project