Hampshire County Council
Asset Management Sub Committee
11 May 2000
Review of Financial and Related Systems - Update
Report of the County Treasurer
Contact: Jon Pittam, ext 7400
1. Introduction
1.1 The Sub-Committee at its meeting on 4 November 1999 considered a report
outlining the findings and recommendations of the PriceWaterhouseCoopers
review of the County Council's financial and related systems.
1.2 Following the recommendations made by PriceWaterhouseCoopers the report
sought approval to:
* Develop a strategic plan to replace the financial and related systems
incrementally from April 2001 to March 2004 with an enterprise
resource planning (ERP) system.
* Commence procurement procedures using the Central Government and
Telecommunications Agency's (CCTA) G-Cat and S-Cat catalogues.
* Make the replacement of the payroll/human resources system a priority
for implementation by April 2001.
* Develop an Invest to Save approach for consideration in the 2000/01
budget strategy.
* Continue negotiations with neighbouring authorities on a possible
consortium approach to procurement, implementation, training and
support, and report further.
* Appoint consultants to assist with the procurement and implementation
process.
1.3 This report sets out progress since November 1999.
2. Project Structure and Management
2.1 A project management structure has been put in place and resources
assigned to the project. Currently the project is being resourced
entirely by internal staff. However, these project groups will be
supplemented with external consultants once an implementation partner
has been selected. The resource implications are significant but at
this stage of the project it is difficult to determine the precise
resource requirements. Once negotiations with shortlisted suppliers get
underway it will be possible to refine the resource estimates and
consider arrangements for how this will be managed.
3. The Procurement Approach
3.1 The original approach outlined in the report to the Sub-Committee in
November 1999 was to use G-Cat and S-Cat catalogues to procure the ERP
software. After further investigation and discussions with the
Council's Head of Supplies and Procurement it was decided not to proceed
with this option. The G-Cat charge for providing procurement support
would have been 7.5% of the total contract price yet would not have
provided the significant benefits in terms of reduced timescales and
administration that were originally anticipated.
3.2 A standard EU procurement process, using the negotiated route, was
started in December. A notice of requirements requesting expressions of
interest was posted in the Official Journal of the European Community
((OJEC).
4. Timetable
4.1 Due to the change in the procurement route the timetable has slipped
slightly. The aim remains for the replacement payroll system to be
implemented and live by June 2001. Indications from potential suppliers
and implementation partners suggest this is still a realistic and
achievable target.
4.2 The importance of replacing the payroll system by June 2001 has been
emphasised by a recent problem in updating National Insurance bands for
2000/01 within the existing system. Though the problem was successfully
resolved it did highlight how vulnerable the council is should a problem
occur which cannot be solved in-house. The MVS operating system in
which the payroll runs is now so far behind current versions, and used
by so few organisations, that knowledge and experience in the product is
very scarce. In addition, supplier support for the payroll application
software is expected to be withdrawn soon, probably around the middle of
next year.
5. The Longlisting Process
5.1 Seventeen responses to the OJEC notice were received. These were
evaluated against pre-defined criteria. Of the seventeen, eight
successfully met the required criteria.
5.2 The longlisted suppliers all attended an individual briefing session
that included a presentation outlining the council's approach to the
process and the procurement timetable. They were also issued with a
document setting out the high level specification of requirements which
they had to respond to by 25 February 2000. Technical discussions have
also been held with each of the software suppliers to ensure there were
no problems with their solution fitting in with the County Council's
corporate IT strategy.
5.3 As a direct result of the technical discussions one supplier
partnership, JD Edwards, Rebus and Deloitte & Touche, pulled. ITNET
also decided to withdraw.
6. The Shortlisting Process
6.1 Six responses to the specification of requirements were received. The
Project Team has evaluated the responses against the selection criteria.
It is recommended that four implementation partners go through to the
shortlist stage. Of the four, three are proposing a solution using
Oracle Financials software and one recommends the implementation of
SAP's R/3 system. The recommended shortlist is attached as an Appendix.
7. The Consortium
7.1 Negotiations with neighbouring authorities regarding a possible joint
project have continued. Due to differences in timetables and priorities
however it was not possible to reach agreement on a way forward early
enough to allow the County Council to meet its key target date for
replacing the payroll system.
8. Next Steps
8.1 Now that the shortlist of suppliers has been agreed detailed
negotiations and evaluation of the software products will begin. This
process is planned to take until mid May when suppliers will be asked
for 'best and final' offers and a preferred supplier is chosen.
8.2 A report requesting approval to appoint the preferred supplier will be
brought to the Asset Management Sub-Committee's July meeting.
8.3 Indicative budget figures provided by suppliers so far as in line with
the figures included in the last report. A number of financing options
have also been put forward for consideration. A lot of work needs to be
done with the shortlisted suppliers to refine plans and requirements to
allow suppliers to produce their final bids and for costs and benefits
to be confirmed.
8.4 Further analysis will be done on the financing options between now and
May, continuing with the strategy of Invest to Save outlined in the last
report. The business case for drawdown from the Invest to Save fund to
finance the initial stages of the procurement will be included in the
next report.
9. Recommendations
That the switch to the EU procurement process using the negotiated route be
approved and continued.
That the Asset Management Sub-Committee at its July meeting receives a further
report on the results of the evaluation of shortlisted suppliers together with
a recommendation for preferred supplier for both software and implementation
support and a cost benefit analysis and proposed financing option for the
recommended solution.
Appendix
Review of Financial and Related Systems
Shortlisted Implementation Partners and Software Suppliers
Implementation Partner Recommended Software Supplier
PriceWaterhouseCoopers SAP R/3
KPMG Oracle Applications (including Financials)
Andersen Oracle Applications (including Financials)
Oracle Oracle Applications (including Financials)
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