4.6. SR 11-17-1997c~ty of
iver
MEMORANDUM
Item #4.6.
TO:
FROM:
DATE:
SUBJECT:
Mayor & City Council
Lori Johnson, Asst. City Administrator/
Finance Director
November 17, 1997
Consider Letter of Intent to Purchase
Computer Software for Finance and
Payroll Applications
For numerous reasons, the city's payroll and financial software needs to be
replaced within the next year. In anticipation of this purchase, funds were
included in both the 1997 and 1998 budgets. This request is coming forward
at this time because the vendor of choice is offering a discount which expires
on November 18. This memo will provide background information on the
need for the change, the selection criteria that were used, and the Finance
Department's recommendation.
Background
In 1988, an IBM System 36 and the software necessary to perform all payroll,
financial, and data processing applications were purchased for approximately
$15,000; the expected useful life was estimated to be five years. Almost ten
years later, our software vendor has informed us that our applications will no
longer be upgraded or maintained because the hardware is obsolete. In fact,
the applications will not be made year 2000 compliant. Our current system
has been efficient, cost effective, and reliable but will no longer be supported
so a change must be made.
Recently, the Finance Department has been reviewing options, including
renewing the licenses with the current vendor and buying upgraded
hardware on which to run the updated software, or finding acceptable
software to run on the current network.
After reviewing the software available from numerous vendors, the selection
was narrowed to two; BRC, the current vendor, and Micro Arizala Systems,
Inc., whose product is FundBalance. When reviewing and comparing the
13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330 · TDD & Phone: (612) 441-7420 · Fax: (612) 441-7425
systems, the main focus is on output, ease of entry, flexibility, fit with our
current operating procedures, and completeness and integration of the
system. Secondary considerations, once it's determined the system fits our
needs, include financial stability of the vendor, training costs and
availability, initial investment, annual operating costs, and vendor support.
After applying these criteria to the two systems selected, FundBalance was
selected. Because there were no hardware costs required up front it is
considerably less expensive. See the attached System Selection detail for
initial investment and annual support cost comparisons. More important
though, it is more flexible and up to date than our current system and also
offers future accessibility to department heads through our current network.
The disadvantages of FundBalance include the unfamiliarity of the system
which requires additional staff time and costs for training and conversion,
the loss of history files, and the out of state location of the vendor. The
concern over FundBalance's location was negated by the fact that there are
currently over 30 entities in Minnesota using this system.
Initially FundBalance was offering a discount through October 1, 1997. After
informing them that we would be unable to make a decision by that time, the
discount was extended until November 18. If the Council approves this
recommendation and agrees to enter into a Letter of Intent to Purchase, the
discount savings will be approximately $7,000. The Letter of Intent to
Purchase will contain several provisions that must be confirmed or met prior
to actual purchase including confirmation of year 2000 compliance, some type
of annual support cost containment agreement, agreement on the cost to
purchase major program updates, and several other items. Although the
Letter of Intent to Purchase will be dated November 18, 1997, actual
implementation will not begin until July 1998.
The 1997 and 1998 budgets include $24,000 for this purchase and $7,000 for
training. The approximate cost of FundBalance software is $12,000 and
training is estimated at $6,000. The remainder of the budget will be used to
purchase a duplex laser printer and at least two personal computers. The
total hardware and software purchases should not exceed the budget.
Action Requested
The Council is asked to authorize staff to enter into a Letter of Intent to
Purchase FundBalance software packages and related implementation and
training services as outlined in the attachment.
\XelkriverXsysXshrdocXcouncil\finclsft.doc
1997 FINANCIAL AND PAYROLL SYSTEM SELECTION
INITIAL INVESTMENT
ANNUAL OPERATING COSTS
FundBalance BRC FundBalance
Software
General Ledger/Budget 2,175.00 2,500.00 500.00
Accounts Payable 1,775.00 3,000.00 450.00
Cash Receipts 1,775.00 450.00
Accounts Receivable 1,775.00 5,000.00 450.00
Payroll 2,700.00 2,500.00 450.00
Fixed Assets 1,625.00 5,000.00 400.00
Consolidated Reporting 1,400.00 450.00
Software Subtotal
Discount
Software Total
Hardware
AS/400e Server
PC Graphical User Intf.
Hardware Total
Total Software & Hardware
Other one time startup costs
Installation
Installation/Migration*
Other Total
13,225.00 18,000.00
1,322.50 1,300.00
11,902.50 16,700.00
15,129.00
1,500.00
16,629.00
11,902.50 33,329.00
700.00
4,000.00
700.00 4,000.00
12,602.50 37,329.00
TOTAL INVESTMENT
BRC
2,835.00
2,615.00
900.00
900.00
3,150.00 7,250.00
1,296.00
1,296.00
3,150.00 8,546.00
Annual Support Cost
*Transfers current data to new system creating historical data files.
Tax is not included in the above prices. Additional minimal costs may be incurred during installation.
A new duplex laser printer and at least two updated PCs will also be purchased in conjunction with
the conversion. These would be required under either option. The less powerful PCs will be
used for other administration purposes.
TRAINING COSTS
BRC - Minimal training is needed since this would mainly be an update to what is currently used.
FundBalance - Estimated on site training for all packages is approximately $6,000. This may be
less if the number if training days can be reduced or if training can be coordinated with another city.
This training cost was included in the 1998 Data Processing budget.
11/14/97