Rancho Palos Verdes City Council
   

TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL

FROM: DIRECTOR OF FINANCE AND INFORMATION TECHNOLOGY

DATE: MARCH 2, 2004

SUBJECT: PROPOSED UPGRADE OF ACCOUNTING SOFTWARE – REVISED AGREEMENTS

Staff Coordinator: Kathryn Downs, Accounting Manager

RECOMMENDATION

  1. Authorize Staff to upgrade the City’s accounting software from SunGard HTE CitySoft and Financials to SunGard HTE NaviLine Programs;
  2. Adopt Resolution 2004- , amending Resolution 2003-42, the budget appropriation for FY03-04, to increase budgeted appropriations in the Equipment Replacement fund in the amount of $80,000 for the cost of performing the upgrade from SunGard HTE CitySoft and Financials to SunGard HTE NaviLine Programs; and
  3. Authorize the Mayor to execute the attached agreements between the City and SunGard HTE, Inc. for the upgrade from SunGard HTE CitySoft and Financials to SunGard HTE NaviLine.

EXECUTIVE SUMMARY

  • SunGard HTE has agreed to the following provisions in the "revised" agreements: (1) a commitment that SunGard HTE will not discontinue the NaviLine Programs within four years; (2) in the event any of the NaviLine Programs are discontinued within four years, a commitment that the implementation to move to the SunGard HTE’s alternative shall be at no cost to the City, except for travel and living expenses; (3) in the event any of the NaviLine programs are discontinued within four years, a commitment that SunGard HTE will provide support for four years at SunGard HTE’s standard rates; and (4) a commitment that SunGard HTE will provide twelve months prior notice in the event it elects to discontinue any of the NaviLine Programs.
  • The upgrade to the NaviLine Programs will have a three year life in the City’s financial statements. Therefore, the commitment made by SunGard HTE to support and maintain the NaviLine Programs for four years exceeds the depreciable life of the software and hardware.
  • Neither SunGard HTE or HTE VAR, its related party authorized installer, can provide a multi-year commitment of support and maintenance or prior notice of discontinuance of support and maintenance, on behalf of IBM, for the replacement IBM iSeries Model 800-2463 server or its operating system.
  • SunGard HTE cannot provide a multi-year commitment of support and maintenance or prior notice of discontinuance of support and maintenance of either the QRep catalogues or the Cognos report writer software.
  • Staff requests a budget appropriation in the City’s Equipment Replacement fund in the amount of $80,000 for the cost of performing the upgrade from SunGard HTE CitySoft and Financials to SunGard HTE NaviLine. The original cost of about $90,000 for SunGard HTE CitySoft software and hardware has been fully depreciated within the Equipment Replacement fund.

BACKGROUND

During its meeting on February 17, 2004, the City Council continued the agenda matter regarding the proposed upgrade of the City’s SunGard HTE accounting system and directed staff to inquire with SunGard HTE as follows: (1) whether or not it would provide the City with a binding multi-year commitment of its support and maintenance of the SunGard HTE NaviLine Programs for the life of the software; and/or (2) whether or not SunGard HTE would provide the City with prior written notification in the event it elects to discontinue supporting the SunGard HTE NaviLine Programs in the future. Additionally, a copy of the staff report, dated February 17, 2004, titled "PROPOSED UPGRADE OF ACCOUNTING SOFTWARE (attached to this report), provides details regarding the proposed upgrade.

DISCUSSION

The attached agreements define the SunGard HTE Financials software as NaviLine Licensed Programs ("NaviLine Programs"). Upon completion of the proposed upgrade, the City’s accounting system will operate using the NaviLine Programs, the successor to both the SunGard HTE CitySoft and Financials programs.

SunGard HTE has agreed to the following multi-year commitment of support and maintenance and prior notice of discontinuance of support and maintenance provisions, similar to what was suggested by Councilmembers Long and Stern. The attached "revised" agreements include: (1) a commitment that SunGard HTE will not discontinue the NaviLine Programs within four years; (2) in the event any of the NaviLine Programs are discontinued within four years, a commitment that the implementation to move to the SunGard HTE’s alternative shall be at no cost to the City, except for travel and living expenses; (3) in the event any of the NaviLine programs are discontinued within four years, a commitment that SunGard HTE will provide support for four years at SunGard HTE’s standard rates; and (4) a commitment that SunGard HTE will provide twelve months prior notice in the event it elects to discontinue any of the NaviLine Programs. The following revision has been inserted into page 3 of the SUPPLEMENT TO H.T.E., INC. SOFTWARE LICENSE AND SERVICES AGREEMENT BY AND BETWEEN SUNGARD HTE INC. AND CITY OF RANCHO PALOS VERDES, CA SCHEDULE A-PRICING AND PAYMENT SCHEDULE CONTRACT NO. RPVD-20040047 & RPVD-9811005-1:

"HTE will not discontinue its NaviLine software within four (4) years following Go-Live of the first NaviLine Licensed Program. Notwithstanding, in the event any of the NaviLine software is discontinued during this period, HTE agrees to provide support on the discontinued NaviLine Licensed Programs for four (4) years thereafter with the standard rate of increase on the support service fees. If HTE elects to discontinue any of the NaviLine Licensed Programs within the four (4) year period, the implementation to move to the HTE alternative shall be at no cost to Customer with the exclusion of travel and living expenses. HTE does not guarantee that each NaviLine Licensed Program shall continue in its exact form. In the event HTE elects to discontinue any of its NaviLine Licensed Programs, HTE shall provide Customer with twelve (12) months prior notice. This provision excludes the QRep Catalogs Licensed Program.

The upgrade to the NaviLine Programs will have a three year life in the City’s financial statements. Therefore, the commitment by SunGard HTE to support and maintain the NaviLine Programs for four years exceeds the depreciable life of the software and hardware associated with the proposed upgrade.

As described on page 9 of the staff report, dated February 17, 2004, Staff has developed customized financial reports using the Cognos report writer software. SunGard HTE maintains data catalogues ("QRep catalogues") that enable access to the data contained in the HTE NaviLine Programs for use with the Cognos report writer software. Cognos is an independent software company that is not under the control of SunGard HTE. Therefore, SunGard HTE cannot provide a multi-year commitment of support and maintenance or prior notice of discontinuance of support and maintenance of either the QRep catalogues or the Cognos report writer software.

As described on Pages 7 through 9 of the staff report, dated February 17, 2004, the proposed upgrade includes the replacement of the existing server with an IBM iSeries Model 800-2463 server. Neither SunGard HTE or HTE VAR, its related party authorized installer, can provide a multi-year commitment of support and maintenance or prior notice of discontinuance of support and maintenance, on behalf of IBM, for the replacement IBM iSeries Model 800-2463 server or its operating system.

Based upon discussions with Bill Boyle, the Executive Vice President of HTE VAR, Staff has been informed that IBM will not provide a support and maintenance commitment for the iSeries hardware and operating system beyond twelve month periods. IBM does announce the expected termination date for its support of a newly released version of its operating system (i.e. IBM announced that version 5.2 of its operating system will be supported through September 2005, when version 5.2 was released in June 2002). HTE VAR offered the following information to emphasize IBM’s commitment to the IBM iSeries Model 800 server:

  • IBM spent $8 Billion for research and development of the iSeries server during 2003;
  • More than 800,000 iSeries servers are currently deployed;
  • More than 300,000 IBM clients use iSeries servers; and
  • 99% of the Fortune 100 companies utilize iSeries servers in their businesses.

HTE VAR and Staff expect that the City would use the proposed IBM iSeries Model 800 server to operate SunGard HTE NaviLine Programs for three to five years.

FISCAL IMPACT

The inclusion of the multi-year support and maintenance commitments and prior notice of discontinuance of support and maintenance provisions cause no change to the fiscal impact described in the attached staff report, dated February 17, 2004. Staff requests a budget appropriation in the City’s Equipment Replacement fund in the amount of $80,000 for the cost of performing the upgrade from SunGard HTE CitySoft and Financials to SunGard HTE NaviLine. The original cost of about $90,000 for SunGard HTE CitySoft software and hardware has been fully depreciated within the Equipment Replacement fund. As described in the separate staff report titled "FY03-04 MIDYEAR FINANCIAL REPORT ", dated February 17, 2004, the estimate of the June 30, 2004 Equipment Replacement fund balance is $1,901,508. In the event the City Council authorizes the budget adjustment proposed to enable the upgrade to SunGard HTE NaviLine, the estimate of the June 30, 2004 Equipment Replacement fund balance would be decreased by $80,000 to $1,821,508. The upgrade from SunGard HTE CitySoft and Financials to SunGard HTE NaviLine will not require use of General fund reserves.

Respectfully Submitted,

Dennis McLean

Director of Finance and Information Technology

Reviewed,

Les Evans

City Manager