STAFF REPORT. Approval of City Phone System Purchase to Provide Long-term Cost Savings
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1 STAFF REPORT DATE: May 18, 2010 TO: FROM: SUBJECT: City Council Rick Guidara, Information Technology Administrator Susan Errington, IS Administrative Manager Brad Gonzalez, IT Manager Approval of City Phone System Purchase to Provide Long-term Cost Savings Recommendation 1. Approve resolution to authorize the City manager to enter into a contract for a new citywide phone system not to exceed $400, Certify that the phone system proposals from both INX, Inc and PacketFusion are both acceptable to provide a phone system for the City of Davis based on staff s analysis of the response to the City s recent Request for Proposals 3. Direct staff to begin negotiation with INX as the City s primary phone system vendor. If a final agreement cannot be reached for under $400,000, then staff will negotiate with the #2 vendor, PacketFusion. 4. Approve Budget Adjustment to allocate $435,000 from two of the City s IS replacement funds (collected to upgrade or replace aging infrastructure) to fund this phone replacement project. Summary In looking at ways to lower the City s internal operating expenses and improve the City s internal infrastructure, staff investigated the costs and requirements associated with implementing a City-owned, supported, and operated phone system. Currently the City spends between $175,000-$200,000 per year as a customer on Yolo County s phone system. Purchasing a new, City-owned system will cost approximately $435,000 and have approximately $45,000 per year in ongoing costs. This project will save the City more than $130,000/year and has a payback time frame of less than 4 years. Staff released a Request for Proposals (RFP) and received 6 responses. These responses were reviewed and narrowed down to the 2 best candidates, INX and PacketFusion. The proposals show the PacketFusion model costing about 15% less than the INX proposal, however the INX proposal includes replacing equipment the City had planned on upgrading (regardless of this phone project), which brings the difference to 5%. Staff is recommending the INX proposal since it uses the same equipment that already makes up the majority of the City s IS (Information Systems) infrastructure minimizing the need to learn how to operate and maintain different equipment City Council Meeting 03D - 1
2 Phone System Many cities have their own phone systems and have realized savings and improved performance. Not only will a new system save money, it will also provide staff and the public with a better featured system and will be less costly to maintain. This project is feasible because of technical advances in phone systems within the past 5 years which allow them to be incorporated into existing computer systems and not require independent support or installation. Fiscal Impact Funds for this project are available from 2 IS infrastructure replacement funds collected to upgrade IS infrastructure. The use of these funds will not impact future equipment upgrades because of significant changes in the IS infrastructure resulting in these funds no longer being needed. One of these funds was originally collected to upgrade the City s minicomputers, however, this function is being now outsourced and the City no longer needs to replace this equipment. The other funding source was collected to help with printer maintenance and support. This function has also been outsourced, minimizing the costs associated with maintaining and operating more than 100 printers throughout the City. The City s budget adjustment form is attached (Attachment 2) requesting the transfer of $81,360 from the deposit account (discussed above as the printer account) and $353,640 from the AS400 Replacement fund to the IS Infrastructure budget. Before a contract is signed, staff will further explore leasing options to determine if these funds are maximized by purchasing the system or by leasing it through a low, or possibly 0%, lease rate with an equipment buyout. Savings to the City by the purchase or lease of this system will be recognized by reductions in the amount each department currently spends on phones through the County phone system. The ongoing costs of system, estimated to be $45,000/year will be allocated out to the user departments. Since the implementation of this project will occur during the next fiscal year, budgeted savings will not be realized until the 2011/12 budget cycle. Council Goal(s) Infrastructure Fiscal Stability Organizational Strength Background and Analysis The City has been a customer on the Yolo County phone system for more than 20 years. Yolo County staff has been responsible for installing, maintaining, and servicing phones and the phone system infrastructure for use by City staff. The basic phone system provided by the County is adequate, however, changes in the past 5-10 years have made it economically and technically feasible and desirable to install a City-operated phone system. This will not only lower costs but City Council Meeting 03D - 2
3 Phone System also add features and functionality. Many of the features available in a new phone system will help direct, route, and track City phone usage so staff can make adjustments as needed to get calls from the public to where they need to be routed (either to staff or informational message). Several options for a new system were explored: Phone System Options Continue on the County System and encourage it be upgraded Use a hosted phone system through a local or regional phone company Purchase a traditional phone system like the existing County system Purchase a phone system that uses the City s IT infrastructure (Voice over Internet Protocol or VoIP) Findings -Would not result in lower costs -The County timelines for upgrades is uncertain -Would not result in lowers costs -Would not result in lowers costs -Would require significant infrastructure upgrades and new support staff -Lowers costs -Uses existing City IS expertise -Uses existing IS infrastructure In December of last year a, Notice of Intent to Terminate Phone System Use Agreement was sent to Yolo County giving them the required 9 month minimum notice. [For years prior to sending this notice, the City s IS Manager had been talking with Yolo County s IT Director about the City s dissatisfaction with the cost and features of their system]. City staff have also been talking with staff from the Davis Joint Unified School District (DJUSD) since several of their sites have phone systems that are becoming obsolete. The City and DJUSD share a common infrastructure and some IT resources and DJUSD is exploring the feasibility of partnering with the City on this system. Staff from the City of Woodland and Winters have also shown an interest in this project to determine if they could also benefit from this process; therefore the RFP process included a piggy-back clause allowing other public entities to enjoin the benefits of this process without any liability or legal requirements on the part of the City of Davis. In February, staff released, with the aid of a consultant specializing in phone systems, a Request for Proposals (RFP) for a voice over IP telephony system and received 6 proposals. Two of the proposals were dismissed because they did not meet the minimum standards outlined in the RFP. The 4 remaining proposals were reviewed by the City s IT staff and the City s consultant along with input from both the City of Woodland and DJUSD technical staff and a few managers within the City of Davis. City IS Staff then met with the top 2 finalists in this process to determine which would be the best fit for the City of Davis. The 2 finalists are proposing different manufacturer s systems, Cisco and Shoretel. Both of these systems have the same core functionality but differ in the equipment needed at each City site. The Shoretel system is less expensive to purchase, however, the Cisco proposal includes replacing old routers that are already scheduled to be replaced next year regardless of any changes to the phone system. These routers will be used by both the phone system (for any vendor) and the City s ongoing data operations City Council Meeting 03D - 3
4 Phone System Proposed Solution Proposal Price Cost of Equipment that would need to be Upgraded Cost to the City Cisco via INX $387,510 $0 (part of proposal) $387, Shoretel via PacketFusion $326,943 $39,400 $366, Although the purchase costs of the INX/Cisco proposal are higher than the PacketFusion/Shoretel solution, staff is recommending the INX/Cisco solution; the adjusted costs are within 5% of each other and the City s current IT infrastructure already uses similar Cisco equipment. Using the same equipment allows the City s IT staff to continue focusing on one skill set (Cisco) to aid in maintaining, supporting, and troubleshooting the City s data systems (which the phone system will use). This also fits in with the City s IT direction of standardizing on using equipment from fewer, more standard industry vendors to ensure support is available from within and outside the City as staffing resources dwindle. Staff are also estimating continuing consultant costs of $25,000 to help facilitate the implementation of the new phone system and audit our existing phone lines to ensure the City starts with a good inventory of its phone infrastructure (currently phones lines are provide by both the County and AT&T). The total cost of this project is estimated to be less than $435,000 and any unused funding will be returned to the appropriate replacement funds. Attachments 1. Resolution 2. Budget Adjustment 3. Notice of Intent to Terminate Letter to Yolo County City Council Meeting 03D - 4
5 Phone System RESOLUTION NO. 10-XXX, SERIES 2010 RESOLUTION AUTHORIZING CITY MANAGER TO ENTER INTO CONTRACT TO ACQUIRE CITYWIDE PHONE SYSTEM WHEREAS, the City of Davis has been utilizing desk phone services provided by Yolo County; and WHEREAS, technology advancements and the City s IT infrastructure improvements make it technically and economically feasible and desirable to now support these phone services inhouse; and WHEREAS, the City has issued an RFP for a City owned and controlled phone system, which will save the City money. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Davis authorizes the City manager to enter into a contract for a new citywide phone system not to exceed $400,000. PASSED AND ADOPTED by the City Council of the City of Davis on this 18 th day of May, 2010 by the following vote: AYES: NOES: ATTEST: Ruth Uy Asmundson, Ph.D. Mayor Zoe S. Mirabile, CMC City Clerk City Council Meeting 03D - 5
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