1 Portfolio: Transformation, Modernisation and Regulation Procurement Committee 19 October 2006 Procurement of , Calendar and Archiving System Report by: Ward Implications: Head of City Service and City Treasurer All For Decision Not for Publication Commercial sensitivity 1. Summary and Community Implications 1.1 The Council s current and calendar system (Teamware) is no longer fit for purpose. In addition, the Council requires an archiving system for secure electronic storage of documents and s to enable compliance with the Freedom of Information Act. The Council has taken the opportunity to work with North Tyneside Council to jointly procure an , calendar and archiving system. Each authority will run its own mail system with business continuity facilities installed at the other authority, accessed across a high speed link, to enable continued operation in the event of a system interruption. Four companies responded to the tender and two options have been shortlisted. The project is now at a key stage as Newcastle City Council needs to work with North Tyneside Council to evaluate final responses and confirm the preferred supplier. The Councils will then enter a period of due diligence with the preferred supplier before concluding contracts. 2. Recommendation 2.1 The Committee is recommended to: Agree the selection of Microsoft Exchange as the replacement and calendar system. Agree the procurement of an archiving system. Delegate authority for the Head of City Service, with the advice of the City Treasurer, Head of Legal Services and Chair of the Procurement Committee, to engage with North Tyneside Council in order to: o o Appoint a preferred supplier (either Fujitsu or Northgate). Advise the company not selected as a preferred supplier that they are on standby as reserve supplier for the duration of due
2 o o diligence with the preferred supplier. Enter into due diligence with the preferred supplier to confirm detailed proposals and migration approach. Continue negotiations with the preferred supplier with the objective of concluding contracts at the end of the due diligence phase. 2.2 Overall costs are expected to be in line with the high level costs contained in section 6.1 of the report. During due diligence, North Tyneside and Newcastle Councils will be seeking to drive costs down, but there is a risk that costs may increase if items are identified which had previously been omitted. Any significant increase in costs will be agreed with the City Treasurer and escalated as appropriate for further agreement. 3. Introduction/Background 3.1 Current situation Newcastle City Council s current and calendar system is Teamware. Some of the key shortcomings are outlined below: Teamware is now a niche product with limited support and development. Teamware has a single point of failure. This is inherent in its design and cannot be overcome. The volumes of s sent and received are continually increasing and this will lead to an increasing degradation of service. The service cannot be available 24/7 because of the way backup must be carried out. There are limited facilities for mobile working. The web client does not offer the same functionality as the desktop client so this negatively affects the ability of people to work from home. Teamware is difficult and expensive to integrate with other business applications. In addition, Teamware does not provide any archiving capability. This impacts the Council s ability to respond effectively to Freedom of Information requests. An effective archiving solution is seen as critical to enable to Council to effectively store and manage high volumes of s. However, it should be noted that there are some advantages associated with Teamware. It is simple and users and familiar with the system. Training users on a new system will be a significant challenge. It is relatively straightforward and cheap to run and administer and there are limited viruses and attacks. A new fit for purpose and archiving system will require additional technical support. The schools (supported by IT Newcastle) already utilise Microsoft Exchange (Outlook) which is recognised as a market leading and calendar solution. More recently the Museums and Your Homes Newcastle have migrated away from Teamware to MS Exchange. 3.2 Business requirements
3 The Council s key business requirements in relation to , calendar and archiving are summarised below. Effective and efficient business tool o Sending, searching and organising s. o Value added features (such as task management). o Usability intuitive interface and consistency with Microsoft Office. o Enables flexible working mobile access, home working, 24/7 availability. o Single sign-on (following Active Directory migration). Channel for customer interaction o Fits into a single messaging architecture (with text, instant messaging etc.) to provide a joined up view of customer interaction. o Especially important for hard to reach groups (e.g. housebound, young people). Facilitates collaboration and joined up working o Can integrate with core business applications. o Supports regional and multi-agency working. Meets regulatory and statutory requirements o Facilities for storage, searching and archiving. o Facilitates compliance with Freedom of Information Act, Data Protection Act and relevant standards such as BS7799. Aligned with technical architecture and robust o Non-proprietary and scalable. o Meets encryption and security standards. o Incorporates failover as a disaster recovery measure to ensure business continuity. 3.3 Joint procurement with North Tyneside Council Newcastle City Council engaged with North Tyneside Council in a collaborative partnership via G-CAT to procure an and calendar system and an archiving solution. North Tyneside Council are seeking to replace (or upgrade) their current Lotus Notes system. It was agreed that the procurement would be led by North Tyneside Council. There are clear benefits to undertaking a joint procurement. It is a good example of regional working and will deliver savings in procurement costs. The two Councils together should enjoy increased purchasing power. There will be advantages to undertaking a joint implementation. North Tyneside Council already have capital spend allocated to the project in this financial year and do not need to seek any further authorisation to proceed. They are therefore extremely keen to confirm the preferred supplier and progress with the due diligence phase as quickly as possible. If Newcastle City Council is unable to meet North Tyneside Council s timescales in terms of obtaining agreement to proceed from the Procurement Committee in October, there is a risk that North Tyneside may (reluctantly) decide to proceed alone. 4. Evaluation of tender responses
4 4.1 A number of operational models were considered including: Option A server based service hosted by one Council with business continuity provision at the other. Option B bought-in managed service run by a third party. Option C server-based service managed on-site by a third party. Option D separate server-based systems with cross-over failure arrangements. All options except for D were discounted by suppliers. The agreed solution will therefore involve each authority running its own mail system with failover facilities installed at the other authority. This will be accessed across a high speed link and will enable continued operation in the event of a system interruption. Tender respondents were requested to detail their proposals for consultation, hardware, software, training, licences, implementation and project management. Four separate tender responses were received: Fujitsu Microsoft Exchange IBM Lotus Notes Northgate Microsoft Exchange Fujitsu Mirapoint Cost comparison proved difficult because each recipient had expressed their costs in different ways. The four companies were asked to complete the same cost spreadsheet to facilitate a like for like cost comparison. The tenders were evaluated in terms of quality and cost using a methodology agreed by North Tyneside Council and Newcastle City Council. This resulted in the following scores: 1 st 94 points Fujitsu Microsoft Exchange 2 nd 92 points Northgate Microsoft Exchange 3 rd 91 points IBM Lotus Notes 4 th 86 points Fujitsu - Mirapoint At this point, the third and fourth placed tender responses were discounted. The and calendar solution will therefore definitely be Microsoft Exchange. Fujitsu s proposed archiving solution is Xtender whilst Northgate propose Symantex Enterprise Vault. Further clarification questions have been issued to Fujitsu and Northgate, focusing on implementation and project management services and costs and responses were received on 21 August A final set of clarification questions was issued to the two suppliers in mid September in order to finalise confirmation of preferred supplier. The two Councils will then jointly enter a phase of due diligence with the preferred supplier to work through their proposals and planned migration approach in detail. During due diligence the Councils will seek to drive costs down but there is a risk that costs may increase if items are identified which had previously been omitted. The cost of migration from Teamware is an area of particular uncertainty which will be explored in further detail when discussing the migration approach with
5 the preferred supplier. The tender responses contained major caveats in respect of Teamware migration. A specific contingency allowance has therefore been included in the high level costs contained in section Proposed implementation approach 5.1 Stakeholder engagement The process of stakeholder engagement has already commenced. The Interim ICT Services Manager gave a presentation to the BMG Sub-Group ICT and Customer Service Executive Management Board on 13 July This provided an update on progress and briefed attendees on the proposed phased approach. The presentation conveyed the important message that technology is only one part of the project. The real business benefits will arise from how the Council uses the new , calendar and archiving systems. There is an opportunity to use the new system as a catalyst to improve business practices and help staff to work smarter. The BMG Sub-Group endorsed this approach and agreed that Directorate representatives should play a key role in the project. 5.2 Proposed phased approach The implementation approach will be discussed and agreed with the preferred supplier during due diligence. The following phases are anticipated: Due Diligence o Finalisation of technology design. o Agreement of migration strategy and schedule. o Confirmation of reciprocal resources and governance. o Negotiation of Best and Final Offer (BAFO) and contract. Planning o Formal initiation of project and production of documentation. o Detailed schedule, migration strategy, quality plan, communications plan. o Training Needs Analysis. Implementation o Design and build. o Testing and validation. o Training. o Migration. Support o Knowledge and skills transfer to NCC technical staff. o Defined escalation procedures and Service Level Agreements. o Support for end users floor walkers, helpdesk, and information on intranet. Optimisation o Visioning sessions will be run alongside the implementation of the new system. o Directorate nominees will work together to identify opportunities and establish and share best practice in all aspects of using , calendar and archiving. 5.3 Proposed governance
6 Governance arrangements will be confirmed in the due diligence phase. It is expected that there will be a joint Project Board with representation from both North Tyneside Council and Newcastle City Council. The project will be managed by the supplier under Prince2 project management methodology. The Newcastle specific elements of the project will utilise Newcastle Project Managers Framework 2 where possible and appropriate. Progress will be reported to the City Service Directorate Programme Board. Regular updates will be provided to the BMG Sub-Group ICT and Customer Service Executive Management Board. 6. Corporate Implications 6.1 Financial The detailed costs will be confirmed at the conclusion of the due diligence phase with the preferred supplier (as outlined in section 5.2 above). During due diligence the Councils will seek to drive costs down but there is a risk that costs may increase it items are identified which had previously been omitted. The high level costs anticipated at the current time are attached as Appendix 1 which shows the maximum costs associated with the scheme over a 10 year period. The summary of the costs are given in the table below: Description of Cost / Income Stream Total Cost of Project over years 1 10 Capital  1,462,415 Direct Revenue Costs 3,924,631 Total Project Costs 5,387,046 Total Revenue Costs Funded by: -Revenue savings (cessation ( 963,000) of Teamware maintenance)  -Technical Refresh Contribution ( 150,000) (year 1 only) -Contribution from Corp Reserves ( 200,000) (year 1 only) -Directorate Contributions ( 2,611,631) Total Revenue Income Streams ( 3,924,631)  The City Treasurer anticipates funding 800,000 of the capital by a Corporate Resource Pool Grant. The remaining capital balance is to be funded by borrowing; the repayments of principle and interest for this borrowing are included in the direct revenue costs.  In year 2 (and onwards) there will be a saving generated from the cessation of the current Teamware maintenance contract of 107,000 per annum.  Meetings have been held with Directorates to discuss their anticipated required financial contributions and to confirm agreement in principle.
7 Following agreement by Procurement Committee the project will be included in the next Financial Issues Report to Executive. This will enable the project to be included in the capital programme and a Delegated Decision completed. Agreement of CRP funding is due to be proposed by the City Treasurer on 18 th October Any additional views of City Treasurer 6.3 Legal Undertaking a joint procurement with North Tyneside Council should deliver savings and is a good example of joint regional working. Careful management will be required during the due diligence period with the preferred supplier to ensure that all cost elements are identified. Any significant deviations from the high level costs outlined in this report will be the subject of analysis by the City Treasurer to ensure that the project can continue to be adequately funded. A Senior Solicitor from Legal Services has attended the Newcastle and North Tyneside Partnership Board meetings where the procurement of the , calendar and archiving system has been discussed. A copy of this report has been reviewed by Legal Services. As previously noted, the procurement is being led by North Tyneside Council so the responsibility for complying with regulations lies with North Tyneside. This report has no significant Human Rights implications. The Council has the power to authorise the recommendation made in this report, under S111 of the Local Government Act Environmental and Sustainability The replacement system should facilitate mobile and home working. The archiving system may reduce the volume of documents printed and stored. The project overall should therefore contribute positively to the Council s strategic objectives to promote an awareness of and commitment to environmental and sustainability issues. 6.5 Risk Implications An analysis of the risks associated with the current situation is attached at Appendix 2. In summary the key risks are: Interruptions to service occur because mail volumes and usage exceed system limits and capabilities therefore the authority is unable to maintain business as usual with consequential disruption to service delivery and potential reputational damage Stakeholders and customers avoid driven interaction with council services because of unreliable, inflexible services therefore compromising the authority's e-government agenda and communication and consultation processes. messages cannot be stored and retrieved within timescales required by the Freedom of Information Act because of the lack of appropriate archiving and retrieval facilities therefore the authority is unable to satisfy its legal obligations under the Freedom of Information Act. Information is duplicated and business processes are inefficient because the current mail system is not capable of integration with business
8 6.6 Equalities applications therefore the City Council is unable to share information in an effective and efficient manner. A full risk log for the proposed project will be drawn up in consultation with the preferred supplier during due diligence. At the current time, the key risks are anticipated to be: Migration from Teamware is an area of particular uncertainty and could end up taking more time and costing more than anticipated. The tender responses contained major caveats in respect of Teamware migration. o This will be explored in further detail when discussing the migration approach with the preferred supplier. A specific contingency allowance has been made at this point in time. Users may be resistant to migrate from Teamware to Microsoft Exchange. o This will be mitigated by engagement with all Directorates, and through the provision of comprehensive training and support. Undertaking a joint implementation with North Tyneside could cause difficulties if both parties require supplier resources at the same time. o This will be mitigated by drawing up resource schedules. Clear escalation routes will be defined and the governance arrangements will support efficient decision making. An Equalities Impact Needs Assessment (EINA) will be conducted during the due diligence phase to identify and address any issues. This will help to ensure that training and support services are offered to all users to meet their individual requirements. Microsoft Exchange offers improved accessibility support (compared to Teamware) and will integrate better with specialist software packages, so it is anticipated that the project should overall have a positive effect. A communications plan will be developed which will address the requirements of all client and stakeholder groups. The preferred supplier will also be briefed on the Council s equality and diversity policies so they are aware of these when engaging with staff and other stakeholders. 6.7 Ward and Community Implications 6.8 Scrutiny This project has no impact on specific wards. An improved , calendar and archiving solution will support the Council in its overall engagement strategy. The Scrutiny Management Committee has not considered this report. 7. What Happens Next 7.1 Subject to approval of the Procurement Committee, the next steps will be: Continue to work with North Tyneside to review the supplier responses and obtain further clarification as necessary in order to mutually agree whether Fujitsu or Northgate should be appointed preferred supplier (anticipated end of October 2006). Advise the company not selected as preferred supplier that they are
9 reserve supplier for the duration of due diligence with the preferred supplier. Enter into due diligence with the preferred supplier to confirm detailed proposals and migration approach (anticipated November December 2006). Continue negotiations with the preferred supplier to conclude contracts at the end of the due diligence phase (anticipated end December 2006). Proceed to work with the preferred supplier through the planning and implementation phases in accordance with agreements reached during due diligence. 8. Further Information 8.1 List of Background Papers:- held by Terry Goulding on file project. 1. Tender responses from Fujitsu, Northgate and IBM. 2. Evaluation documents. Contact Officer:- Kath Moore, Interim ICT Services Manager, ext The appropriate Scrutiny Panel is: Scrutiny Management Committee.
10 Appendix 1 Outline High Level Costs Year 1 Year 2 Year 3 Year 4 Year 5 Page 1 of 2 Capital 1,204,031 86,128 Total Revenue Costs 585, , , , ,155 Total Project Costs 1,789, , , , ,155 Total Revenue Costs Funded by: -Revenue savings (cessation of Teamware maintenance) -Technical Refresh Contribution ( 150,000) ( 107,000) ( 107,000) ( 107,000) ( 107,000) -Contribution from Corp Reserves (200,000) -Directorate Contributions ( 235,382) ( 370,001) ( 290,155) ( 292,405) ( 290,155)
11 Year 6 Year 7 Year 8 Year 9 Year 10 Total Page 2 of 2 Capital 86,128 86,128 1,462,415 Direct Revenue Costs 397, , , , ,970 3,924,631 Total Project Costs 397, , , , ,098 5,387,046 Total Revenue Costs Funded by: -Revenue savings (cessation ( 107,000) ( 107,000) ( 107,000) ( 107,000) ( 107,000) ( 963,000) of Teamware maintenance) -Technical Refresh Contribution ( 150,000) -Contribution from Corp Reserves ( 200,000) -Directorate Contributions 290, , , , ,970 ( 2,611,631) Notes: All costs and savings are at April 2006 base. Capital costs of 86,128 will occur every three years. Year 7, 8 and 9 costs will recur, in sequence, every three years (e.g. years 10, 11 and 12 will be the same as will years 13, 14 and 15).
12 Appendix 2 Risk Log (current situation) , calendar and archiving - current situation Risk Log Risk No. Date raised Raised by Description (there is a risk that because therefore) MR1 27/06/06 TG Interruptions to service occur because mail volumes and usage exceed system limits and capabilities therefore the authority is unable to maintain business as usual with consequential disruption to service delivery and potential reputational damage Category Operational, Organisational, Legal& Regulatory, Strategic/Comm ercial Impact (S/L/M/H/A) Probability (S/L/M/H/V) IP score Risk response(s) (P/R/T/A/C) Risk response actions A H 0.67 P Acquire a reliable, continuously available system which is scalable, flexible and capable of round the clock operation. This will enable the authority to meet its operational, organisational, legal and regulatory and strategic/commercial requirements. MR2 27/06/06 TG Stakeholders avoid driven interaction with Operational, council services because of unreliable, inflexible Organisational, services therefore compromising the authority's e-government agenda and Legal& Regulatory communication and consultation processes MR3 27/06/06 TG messages cannot be stored and retrieved within timescales required by the Freedom of Information Act because of the lack of appropriate archiving and retrieval facilities therefore the authority is unable to satisfy its legal obligations under the Freedom of Information Act Legal/Regulatory, Organisational MR4 27/06/06 TG Information is duplicated and business processes are inefficient because the current mail system is not capable of integration with business pplications therefore the City Council is unable to share information in an effective and efficient manner Operational, Strategic/Comm ercial H H 0.42 P Acquire an e system which is reliable and capable of round the clock operation. This will encourage and support the take-up of driven interaction with council services, and support the authority's e-government agenda and consultation processes H H 0.42 P Acquire an system and appropriate archiving facility to ensure the efficient and rapid retrieval of mail-based information and linked document attachments to deliver Freedom of Information requests within the required timescales. H H 0.42 P Acquire a reliable, flexible, industry standard system capable of integrating with business applications to form part of the delivery process to meet customer demands and expectations. This will also form part of the required best practice business process re-engineering and business change to transform working practices using new enabling technologies and up-to-date collaboration tools.