CITY OF TALLAHASSEE
CITY COMMISSION AGENDA ITEM
ACTION REQUESTED ON: February 25, 2009
SUBJECT/TITLE: Approval to purchase Oracle License for PeopleSoft Financials
TARGET ISSUE: NA
STATEMENT OF ISSUE
In 1997, the City standardized its enterprise-wide application environments and chose PeopleSoft as the vendor to provide the City’s Financial, Payroll, and Human Resource systems. In 2004, the Oracle Corporation purchased PeopleSoft. The City is contractually required to annually submit License Verifications that reflect an accurate representation of license usage. Based on the original financial management contract, the City reports license usage for the PeopleSoft Financial System (FMS) based on the reported Annual Operating Budget. Over the last ten years, the City’s operating budget has increased from $350 million to $838 million. Because the City’s operating budget has increased, we must now increase our license according to the Expansion of Licensed Use section of the Oracle License and Services Agreement.
RECOMMENDED ACTION
Option 1— Authorize staff to enter into a three-year zero-percent interest loan with the Oracle Corporation in the amount of $458,400 (quarterly payments of $38,200) for license expansion and to approve the additional maintenance cost associated with the license expansion of $100,848.
FISCAL IMPACT
$559,248. Staff has negotiated a license cost of $458,000 to be paid by a three-year no interest loan with Oracle. The first two payments for the current fiscal year will be paid from Project 0101161 with the remaining payments to be paid from future fiscal year ISS operating funds. $100,848 will be paid from ISS’s current fiscal year operating budget (410502-521190).
Don C. DeLoach, Chief Information Systems Officer
Anita Favors Thompson, City Manager
For information, please contact: Don DeLoach, ISS, 891-8104
SUPPLEMENTAL MATERIAL/ISSUE ANALYSIS
HISTORY/FACTS & ISSUES
The City went live on the new PeopleSoft Financial system July 5, 2001 to replace a legacy mainframe system that had been in place for more than 10 years. In October 2003, the City upgraded the PeopleSoft Financial system from version 7.51 to 8.4 and in December 2008 the City upgraded to PeopleSoft Financial system 9.0. This is part of a family of applications in Oracle’s Enterprise product suite.
The City in 1999 entered into a contract agreement with the Oracle Corporation for use of the financial suite based on an operating budget not to exceed $350 million. By contract, the City is required to submit a License Verification form annually that reflects an accurate representation of license usage. The City reports license usage for the financial system based on the reported Operating Budget. For fiscal year 2009, the City reported to the Oracle Corporation an operating budget of $838 million. The City’s operating budget increased and we must now increase our licenses according to the Expansion of Licensed Use section of the Oracle License and Services Agreement.
CHARITABLE CONTRIBUTIONS
NA
OPTIONS
Option 1— Authorize staff to enter into a three-year zero-percent interest loan with the Oracle Corporation in the amount of $458,400 (quarterly payments of $38,200) and to approve the additional maintenance cost associated with the license of $100,848.
Pros:
· The City has used the financial system (FMS) for 10 years without any increases in license fees.
· Maintain support level with Oracle Maintenance Agreement.
· The ability to finance the entire amount through the Oracle Corporation at zero-percent interest for a period of three years. This will conservatively save the City approximately $23,000 in interest costs annually, based on a prime rate of 4% per annum. Over a three-year period, that is a cost savings of $70,000.Cons:
· Reallocate budget funds to accommodate costs for license fees.
· The City would be in violation of contract.
· May not be able to legally continue to use systems.
· May be required to renew licenses at a higher cost than negotiated.
Option 2—Provide alternative direction to staff
ATTACHMENTS/REFERENCES