The Fort Smith Board of Directors weighed options on the city’s Enterprise Resource Planning (ERP) computer system slated to begin implementation in 2017 and roll out over the next five years.
The new system will replace a clunky system that costs more than $600,000 per year to maintain, city officials noted. Following a pricey implementation, the city’s maintenance costs will fall to just under $350,000 annually and present other savings opportunities through increased productivity.
In a presentation led by Fort Smith IT Director Russell Gibson and Finance Director Jennifer Walker, City Directors considered three options for payment.
The first would include paying $2 million in ERP implementation before the end of the year (includes $1.93 million for implementation and a $72,571 prorate for yearly maintenance). Starting in 2017, the total would fall to $1.128 million, then $1.07 million in 2018; $339,297 in 2019; $328,550 in 2020; and $344,977.50 in 2021. Under this option, the ERP project cost would total $5.214 million.
Option two — financing the entire ERP cost over a 5-year period — would be the most expensive option finishing out at $5.812 million from 2017 to 2021, while option three — financing the implementation cost only — would bring the five-year cost down to $5.568 million.
While the Board during Tuesday’s study session did not give a clear indication on how it would vote, City Director Tracy Pennartz said she preferred the first option because “it’s potentially less money out of our taxpayers’ pockets.”
For nearly three decades, the city has partnered with ArcBest Technologies to provide financial services, related software, and custom development. Gibson called the partnership “productive” in a memo to the Board, but noted “the existing financial system presents a number of challenges to the City including extensibility, enterprise integration, end user training and technology obsolescence.”
“The technology on which the existing financial system is built represents older, mainframe technology and does not provide a suitable platform on which to centralize and integrate departmental data and business processes and extend/enhance via today’s application development trends (e.g. mobile, public-facing portal, open data, etc.),” Gibson wrote, adding the city of Fort Smith is ArcBest Technology’s sole remaining partner under the old system, and in 2015, expressed a desire “to transition away from providing these outside services and decommission the existing financial system platform by the end of 2018.”
A technology plan to move toward implementation launched in 2014 under directive of the Board with the following goals
• Improve the overall financial system functionality;
• Improve reporting and access of financial information;
• Improve transparency of financial data and city business practices;
• Improve work order management;
• Improve capital improvement project reporting; and
• Improve enterprise integration of all city systems, data, and business processes as well as the internal auditing process.
A six-year cost breakdown was submitted to the Board ahead of Tuesday’s study session in which it was explained there will be a two-year “overlap” of costs for the existing financial system and the proposed ERP solution to maintain operational integrities. There will also be a 24-month termination notification clause in the contract with ArcBest Technologies.
The most significant single cost for the ERP solution is implementation, which includes initial procurement of software licensing, servers/PCs, hardware (e.g. compatible credit card scanners, biometric time clocks, cash drawers, etc.) and the migration of more than 30 years of historical financial data and development services information. City systems will harness existing IT resources and continue with an onsite server setup rather than the increasingly popular cloud-based solution.
Also Tuesday, Walker laid out a plan for restructuring her department, telling City Directors that Finance had “the right people,” but observed that they aren’t “necessarily in the right jobs.”
“We are changing the way we do business, and because of that we need some additional skill sets,” Walker explained, citing the need for new positions including a budget analyst, bond specialist, insurance specialist, contracts specialist, senior staff accountant, treasury analyst, and senior financial reporting analyst with an overall projected cost of $377,000.
Walker also said there could be some employees in the department capable of filling these roles, but called it “a personnel issue I’d rather discuss (with City Directors) in an executive session.”