Some City Council members Tuesday questioned the increasing cost of the city’s software system after recently agreeing to spend another $500,000 on the $30 million project.
The Enterprise Resource Planning system (ERP) is the back-end financial computer system the city began implementing two years ago at an initial cost of $30 million, most of which was borrowed.
City officials requested an extra $500,000 to pay for added security software. Council members approved the allocation during their May 17 meeting, by a 5 to 3 vote. The topic was further discussed Tuesday at the Budget and Economic Development Committee.
Councilors Thomas Crowder, Nancy McFarlane and Russ Stephenson all voted against the measure with Crowder and Stephenson urging the council to send the issue into committee for further review.
Crowder said his main concern is why this additional work was not considered when the project was originally put together.
“This seems to be quite a large black hole,” he said.
The added security software will manage permissions for city employees, keeping certain employees from accessing classified information.
The software costs $370,000. The balance of the $500,000 will pay for installation services from Advance Programs Group. The funds will come from the excess general fund balance.
Read more about the ERP system: The City’s Big, Invisible Change
It’s not the first time officials have requested more money for the ERP system. In July 2009 city officials asked for an extra $282,000 for the ERP project.
“This was not a one-time investment,” said City Manager Russell Allen, who has previously indicated there would be ongoing costs incurred for the ERP.
Stephenson said he would be more comfortable voting on the issue after he’s seen a full report of past, current and future spending.
Allen explained that the original $30 million investment was for the core modules for the human resources, utility billing and financial applications that have been implemented over the course of the past two years. It also includes software licenses that will be installed in the future.
The ERP programs, Oracle and PeopleSoft, handle everything from the city’s billing and payroll and human resources to budgeting and accounting.
City Chief Financial Officer Perry James called the system “diverse and complicated.”
“Virtually every transaction that the city does in its $800 million-plus-budget goes through the ERP system in one way or another,” he said.
He said he always knew that there would be a next stage for the system.
“What I think we have not communicated well is that the staging of things also meant a change of funding strategy,” James said.
Both Allen and James explained a technology fund was set up with allocations from all enterprise funds, such the general fund, parking fund and utility fund. This funding is scheduled for information technology systems, such as the ERP, but also for other systems the city uses in its day-to-day business.
Money for future spending on the ERP would continue to come out of this fund.
“My understanding that all of this was part of the $30 million,” said Councilwoman Nancy McFarlane. “All those licenses, all of this was going to be implemented.”
James said that the $30 million did include licenses, but there are extra costs associated with implementation.
Crowder asked if they could provide an estimate for future spending or if and when there would be a stop to spending associated with the system.
“I don’t think there’s a time frame that we’re ever complete,” said Allen, adding that it’s an ongoing project and that technology is constantly changing.
Asked if he felt the ERP is a black hole Crowder replied:
“Unfortunately, technology is so rapidly changing that it somewhat is a black hole,” he said. “[I am] hoping based on what they said today, the platform is substantial enough that we won’t have to make any major overhauls.”