DECISION UNDER DELEGATED POWERS DECISION CANNOT BE TAKEN BEFORE 23 JANUARY 2008 REPLACEMENT OF FINANCIAL SYSTEMS

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1 04/08 DECISION UNDER DELEGATED POWERS DECISION CANNOT BE TAKEN BEFORE 23 JANUARY 2008 Title REPLACEMENT OF FINANCIAL SYSTEMS Report to the Cabinet Member for Residents and Resources. Purpose Outcomes 1. To approve the business case for the procurement of a new integrated financial management system. 2. If approved, the report will lead to the (i) Creation and progression of the project through tender stage; (ii) approval of funding from previously identified capital funding; (iii) creation of a project board under sponsorship of Dave Burbage (Interim Director of Finance); (iv) support of proposed live dates of 1 st April 09 for Finance systems and December 09 for HR and Payroll system. Background 3.1. The Isle of Wight Council has inherited a number of key financial systems when it was formed in 1995 from both the Isle of Wight County Council and Medina Borough Council These systems include the General Ledger, Creditor payments, commitments, Cash Receipting, Sundry Debtors, SBS Homecare and Payroll/HR systems. They are made up of a combination of in-house developed systems and externally procured systems The systems have largely been developed in isolation and in the main provide minimal integration through overnight processes. This ultimately means that upto date information is not immediately available Over time the systems have continued to be developed but it is getting increasingly difficult to maintain due to the following reasons: Staff with key specialist skills have retired or moved on Technology has moved on but the systems remain the same, making it difficult for staff / managers to use. Problems when they occur are taking an inordinate amount of time to resolve due to lack of skills. Concern has been expressed by the Audit commission following some of these failures. 1 of 5

2 3.5. In addition to this, existing business processes mean that there is increased duplicated effort to run these systems resulting in poor use of resources and time taken to resolve what should be simple tasks. Strategic Context 4.1. In June 2007 the then Interim Director of Finance commissioned the Head of Organisational Development to develop an outline business case to explore the possible replacement of the council s key finance systems and HR/Payroll system A report was completed in draft by November 2007 and proposed that the following systems are replaced: FIDO financial general ledger Wealden creditors and commitments system Cash Receipting council s main income management system Sundry Debtors SBS Homecare for statement billing. PIPS council s integrated payroll and personnel system By replacing these systems, the council should achieve: Significant savings as a result of business process reengineering Near real-time reporting on financial information allowing better management decisions at the right time. Improved performance in terms of collection of monies owed and payment of bills A significant role model for council wide transformational change. Reduced risk of system failure (as opposed to that currently being experienced) 4.4. If a decision is made to proceed on this project, the following activities will take place within the scheduled time below: Jan 08 Delegated decision made Jan 08 Appoint Project Manager Jan 08 Create internal project board Jan / Feb 08 Commence tender process Mar 08 Agree benefit realization protocol Jul 08 Evaluation of potential suppliers Sep 08 Select solution / Contract award Oct 08 Jan 09 Implementation /Testing Feb / Mar 09 Staff training Apr 09 Go live with Finance systems Sep 09 Closure of finance systems Implementation Dec 09 Go live with HR / Payroll Apr 10 Closure of HR / Payroll Implementation Jun 10 Post Implementation Review 2 of 5

3 Consultation 6. As part of the production of the outline business case the author has consulted with all key stakeholders across the council to ensure requirements are taken into consideration. 7. In addition to this the report has been reviewed by the Director of Finance, the Director of Customer Services, the ICT Manager, the Acting Head of Human Resources and other key officers within finance and ICT. 8. On Tuesday 18 th December 2007, the Directors approved the outline business case. Financial / Budget Implications 9. It is anticipated that the initial costs of the project, through to supplier selection, will be found from the capital funding provided entitled Corporate System Replacement. 10. The next phase will be implementation of the system and again it is anticipated that the funding will be found from capital money. As it is anticipated that the implementation of the system will realise significant savings, ongoing costs will be funded through this method. 11. For full details of the cost of the financial system refer to the Outline Business case for Replacement of existing financial systems. Decision Urgency 12. This decision was not published in the forward plan due to it only being decided just before Christmas to follow the delegated decision process. 13. This decision is urgent because the finance systems need to be implemented for the start of a financial year. Any delays at this stage could result in a delay of implementation by 12 months. Legal Implications 14. Legal agreements will be drawn up through contract negotiations. 15. The project will follow procurement rules for the tender and procurement of most appropriate solution. Options 16. The outline business case considered the following options: a) Maintain and develop existing systems this will require considerable investment in staff, time and costs and is not cost effective. b) External services potential for including shared services. Choosing this option could delay the project by upto one year whilst this is looked into and therefore is not recommended. However the council should consider whether this is viable for HR / Payroll as implementation is further down the line. c) Procure commercial solution provides the best solution utilising expertise, knowledge and better integrated systems resulting in significant benefits preferred option. 3 of 5

4 Risk Management 17. As already explained in Section 3, the council is at a high level of risk with its current systems. This is predominately due to the level of sophistication and current skill levels to support the system. Due to the age there is also a lot of duplication across the council in running financial processes. In accepting the recommendations of this report the risk will reduce once the systems are replaced. 18. There are a number of risks that will require strong project management along with highly skilled professionals to ensure that the project remains on track and within budget, and will deliver its anticipated benefits. A project board will be created to oversee the management of the following key risks and mitigation: Failure to meet projected savings target Creation of protocol for management / realisation of benefits, along with governance to oversee realisation. Failure to achieve satisfactory contractual arrangements. Appoint / nominate professional contract negotiators (poss include external 3 rd party negotiator). Indecision and inappropriate decision making Adoption of appropriate project management methodology for reporting of exceptions. Lack of resources / expertise in the project Identify and appoint resources to role, backfilling where necessary. Unclear expectations of what the project will deliver Identify requirements at earliest stage. Creation of stakeholder interest group to ensure involvement / expectations understood. Recommendation 19. It is recommended that approval is given to replace the council s current financial systems and HR/Payroll system and that: The project is approved and progressed to Tender stage to ensure full costs and benefits are fully understood Money is allocated from the previously agreed capital budget for Corporate Application replacement to finance the Tender stage Confirm support of the project and agree to appoint David Burbage (Interim Director of Finance) as project sponsor Support the proposed live dates for delivery of financial systems by 1 st April 2009 and HR/Payroll by December The Project Sponsor creates a project board which will be responsible for: 4 of 5

5 Appointing an external Project Manager to undertake change management and procurement processes. Agree procurement processes Communication of project to all staff Oversee the creation of a protocol for realising benefits Select and appoint officers to form an Implementation team. Appendices Attached Background Papers 20. None 21. Executive summary of Outline Business Case (attached). To review the complete Outline Business Case please contact Richard Williams, ICT Manager. Contact Point: Debbie Dixon, Director of Customer Services, debbie.dixon@iow.gov.uk Richard Williams, ICT Manager Ext Richard.williams@iow.gov.uk. DEBBIE DIXON Director of Customer Services COUNCILLOR BARRY ABRAHAM Cabinet Member for Residents and Resource Decision Signed Date 5 of 5