Oracle Review: Outline Business Case - South Ayrshire Council

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Oracle Review: Outline Business CaseJuly 2020

Appendix 1

Outline Business Case Executive Sponsorship

Executive Sponsorship Tim Baulk - Head of Finance and ICT

Proven Approach Combining Stakeholder Engagement, Meetings & Research

Collaborative Drawing from extensive Socitm Experience and Network

Holistic People, Process, Technology, Change

Outline Business Case 13yr Comparison of Various Options, Risks, Cost & Benefit

1


Glossary

Acronym Full Name Description

ERP Enterprise Resource PlanningA single system providing HR, Payroll, Procurement and Finance

solutions

BoB Best of BreedMultiple integrated systems providing HR, Payroll, Procurement and

Finance solutions

CoA Chart of AccountsThe set of codes used by the Council to differentiate and log accounting

entries in the general ledger

EBS Enterprise Business systems The current Oracle on premise solution the Council is using

P2P Procure to Pay

The end to end process of procuring goods and services, raising a

purchase order, receiving the goods and then paying for them via

accounts payable

AR Accounts Receivable The function that deals with raising debt where people owe the council

money

AP Accounts Payable The function that makes payments to suppliers the Council owes money

to

2

Executive Summary


Executive Summary

Early 90’s

Payroll Cyborg

system in use

2014

Oracle EBS R12.1.3

goes live for Finance,

Procurement and HR

2016

Oracle EBS R12.1.3

goes live for payroll

2020

Socitm OBC

review of

systems

2021

Oracle EBS

premier support

ends

Timeline to date

2005

Implement Oracle EBS

R11 for Finance,

Procurement and HR

4


Option Description

The current costs the Council currently pay over a 3 + 10 period. This is purely a baseline and not an option for

consideration

Upgrade to Oracle 12.2.9 so that the Council can continue to be supported up until December 2030. It is

assumed the Council would need to go to market in 2028 to procure a replacement solution that would then be

implemented by December 2030

Migrate to a fully integrated HR, Payroll, Finance and procurement solution whilst also improving the integrations

with certain line of business systems. In addition, a number of line of business systems would be sun-set as the

solution provide the required functionality.

Migrate to a multiple solutions for HR, Payroll Finance and procurement solution whilst also improving the

integrations with certain line of business systems. In addition, a number of line of business systems would be

sun-set as the new solutions provide the required functionality.

Options AppraisalOptions for Consideration

4. Best of Breed

1. Baseline Costing

2. Minimum Upgrade

3. ERP Cloud

Solution

5


Options AppraisalOptions for Consideration

4. Best of Breed

1. Current Baseline

2. Minimum Upgrade

3. ERP Cloud

Solution

Option Major Risks Key Benefits

• System will be unsupported from December 2021, meaning payroll

statutory changes will not be made to the system

• South Ayrshire will have to continue paying ad hoc costs for payroll to run

(226k between 2018 – 2020)

• No benefits to be realised

• Will need to pay for 2 implementations, an upgrade in 2020 and a further

implementation in 2028

• Will have to pay more to implement in the future as technology gap

widens, meaning it costs more to change

• Continued costly support

• Unable to harness newer technologies such us upgrade mobile access

and self service,

• No benefits to be realised until 2030, when a new solution is in

place. The upgrade to R12.2 will purely seek to keep the Council

compliant

• Significant continuous third party support is required to assist in the

implementation of any system configuration that is not included as part of

the standard product or vendor support model. Such examples are

Scottish legislative changes in Payroll and Pensions.

• Single Source of truth and improved integration, meaning reports

can be run from one system

• Improved automation means less requirement for manual input

from back office services on transactional activities

• Moving to a planning and budgeting tool removes current manual

process

• Complex data migration path likely to cause project overruns, creating

additional unplanned cost to the council.

• Continued lack of true integration between systems requiring

organisational hierarchies to be maintained in multiple systems, potential

rekeying and manual manipulation of reports.

• Significant Scottish Statutory changes that require system development

may lead to additional support costs from the system vendor but these are

typically shared across customers and so significantly less costly than

employing continuous additional third party support.

• Improved automation means less requirement for manual input

from back office services on transactional activities

• Moving to a planning and budgeting tool removes current manual

process

• As many Scottish Councils use BoB systems, vendor

development costs to meet Scottish statutory changes can be

shared and they are more aligned to the needs of Scottish

councils due to the significant market share.

6


Executive SummaryFindings

*All costs at this stage are indicative and will not be final until the Council has been to market

Next steps

• It is recommended that South

Ayrshire Council evaluate the options

based on the evidence provided in

the OBC

• To ensure the Council are able to meet the tight

deadlines for Go Live, there a number of pre

procurement tasks that need to be undertaken,

documented in Next steps

• If the Council do not undertake these tasks, the

risk is often transferred onto the programme, as

these tasks will then need to be undertaken

during implementation

• The Council should look to start work on their

requirements as soon as possible, to ensure they

get to market in a timely fashion.

Non – financial Implications

• Existing back office systems are not user friendly;

difficult to use. In addition reporting is exceptionally

manual and there is a lack of integration between

systems.

• The current Payroll solution is not fit for purpose

and a redesign will be required as part of any future

implementation.

• Although there is richer functionality with the Best

of Breed solutions, there seems to be greater risk

around implementation and integration due to the

complicated data migration path. This was

supported by Council feedback.

• A Scottish Council has gone live with an ERP

Cloud solution, creating a single source of truth and

have managed to Go Live during the Covid – 19

crisis.

• Looking at Risk vs Cost, is appears that ERP offers

the lowest risk to the Council

Financial Implications*

• We have included the current costing baseline, as

a starting point to compare options.

• Implementing a BoB solution requires the least

capital investment at £5.7m, however the impact on

support cost is low as 2 systems will need to be

supported and there is less scope for business

process savings.

• An ERP solution is forecast to see the greatest

level of cost avoidance, mainly due to the ability to

make greater business process savings. In addition

the support costs are cheaper, as only one system

needs technical support, rather than multiple.

• Implementing an Upgrade will mean that the

council has to invest in the upgrade and then invest

again in 2028 for a permanent replacement for

Oracle R12, due to support ending in 2030

• Looking at a 24 month implementation over 3

financial years + 10 years BAU, Best of Breed is

most cost effective - but costs are dependent on

level of back office savings achieved over the

period.

7

Approach & Progress


Approach & ProgressSocitm Approach

Engage Discovery Review

Review Approach

Agree Business Case Method

Procurement Consideration

Finalise Approach

Product Demos

Develop Financial Model

Produce Business Case

Review with Stakeholders

Sign-Off Results

Financial Evaluation

Review Risks

Identify In Scope Systems

SLT Workshops

Pain Point Workshops

Identify Costs/Savings

9


Approach & ProgressProgress & Project Status

Status Stage Notes

CompleteCurrent Systems

Analysis2 + 10 year analysis of the Council’s current system costs has been

completed. Contracts that require extending have been noted.

Complete Pain Point Workshops11 Pain point workshops have been completed with back office services to

identify issues both in process and system functionality.

Complete Stakeholder EngagementThe discovery reports needs to be signed off at G1 and the final OBC at

G2 at the end of April before going to May Leadership Panel

Complete Vendor DemosVendor timetable has been agreed, with session running from the 11/05 –

22/05

Complete OBC OBC to be signed of by executive team

10

Market Insights


Market InsightsCurrent Market

There is disruption in the local government market as the

new cloud offerings have gained traction. Some

customers are upgrading to cloud products, others

procuring them. This means the market is competitive,

which should mean there is good pricing

• Lambeth

• Camden

• Croydon

• Thurrock

• Walsall

• LGSS

• South Norfolk

• Shropshire Council

• Leicestershire/Nottingham

• Worcestershire

• Cornwall

• Havering

• Birmingham

• Swansea

• Essex

• Wiltshire

• Norfolk

• Redbridge

• Suffolk

• Surrey

• Leeds

• Lancashire

• South Ayrshire

• City of London

HR & Finance

implementationsReviews in progress

12


Market Analytics ERP vs Best of Breed

202020192016-2018 2021

ERP to ERP ERP to Best of Breed

Best

of

Bre

ed

to

E

RP

13


Approach & ProgressCloud vs On - Premise

202020192016-2018 2021

Cloud-ERP Implementations

On

-Pre

mis

e

imp

lem

en

tati

on

s

Retained on-premise

14

Case for Change


Case for Change

Oracle EBS R12.1.3

(Using Oracle Databases)

Financials:Accounts Payable

General Ledger

Cash Managmnt.

HCM:Core HR

Manager SS

Payroll:Payroll

Expenses

E-payslips

ProcurementCatalogue use

Purchasing

Suppliers

Civica:Customer inv.

Debt Recov.

Northgate:NNDR

CT

Unified Bens

Bottomline

Critiqom

South Ayrshire Internal Network

HMRC:EDI Gateway

8 Apex Apps:

BOB:

Edu.

BOB:

Lib.BOB:

Fac.

BOB:

Leis.

Easy

Badge

Book

&

Go

HOTW

Databas

e

link

Coast

Org

Publisher

Talent

link

Capita:AIM

Kofax:Scan sol.

Bank of

Scotland

SEEMIS:Clothing Grant

Servitor

NFI

Current Architecture

16


Key

No Issues

Minor scope

to improve

Major scope

to improve

Case for ChangeDiscovery Findings

*Assessment criteria identified during the strategy workshop and will be used to assess future options in the next stage

Financials Debtors P2P HR Payroll

User Friendliness

Automation & Integration

Single Source of Truth

Statutory Requirements

Core Functionality

`

Reporting

Overall

Accessibility and Mobility

17


Case for ChangeNew Technology

18

Options Appraisal:

Financial Evaluation


Options AppraisalFinancial Appraisal – Summary (000’s)

*Programme Costs include both the upgrade implementation costs and the implementation for their future solution in 2028

IMPLEMENTATION PERIOD (3 Years)+ 10 YEAR FIGURES 1.) Current Baseline 2.) Minimum Upgrade 3.) ERP Cloud 4.) Best of Breed

A. System Operating Costs 3,512 6,267 8,248 6,008Additional Licence costs / (Savings) 2,756 4,737 2,496

B. Services and Support Model Costs 8,272 7,876 7,171 8,166Additional costs / (Savings) in support model (396) (1,102) (106)

Total 13 Year Revenue Costs 11,784 14,143 15,419 14,174Total Additonal Costs / (Savings) 2,359 3,635 2,390

C. Define, Procure and Prepare Costs 0 232 132 132

D. Upgrade Costs 0 1,058 0 0

E. Programme Costs 5,635 5,635 5,528Programme Team 2,913 2,913 3,032SI Costs 1,100 1,100 750Data Archiving Costs 200 200 200Data Migration Costs 460 460 5983rd Party Development Costs 150 150 150Parallel Payroll Support 77 77 77Contingency 735 735 721

Total Capital Costs 0 6,926 5,767 5,660

Total Programme and On going System Costs 11,784 21,069 21,186 19,834

Total cost to Organisation (Excl. Business Process Savings) 11,784 9,285 9,402 8,050

20


Options AppraisalFinancial Appraisal – Back Office Savings (000’s)

BoB / ERP Business Improvements

BoB & ERP Clean CoA and improve business process around code closures

ERP Improved reporting to reduce manual creation of final account statements, by having single source of truth and better

functionality. Set up core reports and dashboards that are system produced rather than manually produced.

BoB & ERP On system budget setting, budget monitoring and forecasting

BoB & ERP Greater integration between core systems and line of business systems reduces dual keying for back office staff freeing up

capacity

BoB & ERP Implementation of Employee and Manager self service reducing manual input from HR and payroll, particularly around

absence

BoB & ERP Move to a schools self service model for reporting (schools dashboard). Removal of manual timesheets and booked in

system

ERP Only having to manage one set of users for core systems and not across multiple systems.

*Targets based upon what other Councils are targeting as part of their ERP Programme. Upgrade starts to see business process savings from 2030, due to replacement solution

OptionCurrent Annual HR, Payroll and

Finance Service costTarget Saving % * Total cost of service Target (Savings) / Costs

1.) Current Baseline 3,769 56,431 02.) Minimum Upgrade 3,769 0% 56,311 (159)3.) ERP Cloud Solution 3,769 20% 55,879 (736)

4.) Best of Breed Solution 3,769 10% 56,063 (368)

21

Options Appraisal:

Non - Financial Evaluation


Options AppraisalNon Financial Evaluation – Strategic drivers

User Friendliness: Simple easy to use system that is similar to technology people day to day

Core Functionality: Having all the core functionality needed to run the Councils back office functions: HR,

Payroll, Procurement and Finance

Automation and

Integration:

Reducing the need for manual intervention by having fully integrated systems, which

require less human touch points throughout the end to end process

Accessibility and Mobility : Increased levels of self service for the business and their citizens to be able to

access the system when added from anywhere

Single Source of Truth: A single source of truth supported through improved integration reducing the need for

multiple systems

Statutory Requirements Be able to meet Scotland's specific statutory requirements, especially with regards to

payroll

Reporting Real-Time Management information and enhanced flexible analytics used to facilitate

decision making

23


Approach & ProgressVendor Demos

VENDOR ATTENDEES DATE

Senior Leadership Team, Architecture lead,

Socitm20/05/2020


Socitm27/05/2020


Socitm28/05/2020


Socitm14/07/2020

24


Options AppraisalNon Financial Evaluation - Demo Survey Results

*Additional feedback can be found in the appendix

Question ERP (A) ERP (B) BoB HR & PayrollBoB Finance & Procurement

Number or survey responders 17 17 9 8

Is the system user friendly and intuitive? 2.35 2.47 3.00 2.38Strategic Driver: User Friendliness Scoring: Average of responses scored from 3 to 1

How confident are you that the system can automate common processes with ease?

1.71 2.12 1.78 2.00

Strategic Driver: Automation & Integration Scoring: Average of responses scored from 3 to 1

Do you feel that the system is able to integrate with other systems? 2.18 1.82 2.44 1.88

Strategic Driver: Automation & Integration + Single Source of Truth Scoring: Average of responses scored from 3 to 1

Are you confident that the system can handle statutory local government requirements in Scotland?

2.00 2.06 2.33 1.75

Strategic Driver: Statutory Requirements Scoring: Average of responses scored from 3 to 1

Do you feel that the core functionality of the proposed system would be an improvement from your current system?

1.88 1.94 2.33 1.63

Strategic Driver: Core Functionality Scoring: Average of responses scored from 3 to 1

Are you happy with the reporting facilities that are built into the system? 2.50 2.50 3.20 2.30

Strategic Driver: Reporting Scoring: Average of responses scored from 4 to 1

Do you feel that creating customised reports appears to be simplified and easy to do?

2.50 2.50 3.00 2.00

Strategic Driver: Reporting Scoring: Average of responses scored from 4 to 1

System Average Score 2.16 2.20 2.58 1.99

ERP vs BoB Average Score 2.18 2.29

25


Options AppraisalNon Financial Evaluation – Baseline Costing

Pros Cons

- Will have no change impact on the Council

- Financial costs are kept to a minimum in the immediate term

- Does not solve the issue of going out of support in December 2021

- Will have continued issues being faced by payroll, which is costing the Council

a lot in additional costs

RAG Risk / Issue Risk/Issue Description

Red Risk The Council’s current Oracle EBS system will be out of support in December 2021, meaning payroll will not receive any statutory updates

Red Risk Could leave the Council open to continued additional expense to keep Payroll

Red Risk No direction of travel identified for their core systems post December 2021, when Oracle EBS goes out of support

Amber Risk No future benefits could be realised whilst using an on premise platform that does not benefit from evergreen technology

Amber RiskWill still need to eventually move to the Cloud, which may be more expensive in the future as the gap between their current technology and future

technology widens

Amber RiskUnderlying Oracle database goes out of extended support December 2020. The option of sustaining support would not receive security patch updates.

Internal resources required to carry out this work would could be the same resources required to be part of the ERP replacement project.

Red Risk The Kofax product suite (ProcessIT) is end of life and will be out of vendor support by June 2021 with a replacement solution yet to be identified

OVERALL RISK STATUS Red

26


Options AppraisalNon Financial Evaluation – Minimum Upgrade

Pros Cons

- Will have a reduced change impact on the Council, compared to the other 2 options

- Easier to migrate from a data perspective as just moving from R12.1 to R12.2.

- Solves the issue of missing the December 2021 out of support deadline

- Could re design payroll processes and solution as part of the implementation

- Will not get the most up to date technology as Oracle Development is mainly

focused on their cloud product

- Could create greater maintenance as R12.2 is now updated every 6 months,

but with lots of customisations to retest

- Will have to continue to pay for 3rd party support in the future

- Will require a longer period of UAT to test all the customisations currently in

place, as well as the improved and reconfigured payroll


Amber RiskThe Council will eventually have to move to a Cloud solution, meaning the gap between the upgrade technology will get wider as time goes on creating

a more challenging migration path in the future

Red Issue Will need to two implementations over the next 10 years, which leads to greater cost to the Council

Red Risk Will not be able to maximise savings potential that could be gained through better and new technology

Green Risk Data migration – Reduced risk due to same Oracle platform

OVERALL RISK STATUS Red

*Any issues put overall status at red

27


Options AppraisalNon Financial Evaluation – ERP Cloud

Pros Cons

- Improved reporting functionality and automation, meaning employees can focus on more

value add processes

- Will able to exploit new technologies sooner than if they stay on an on premise platform

- Can improve payroll processes and configuration as part of implementation

- Will be able to reduce reliance on 3rd party support by supporting the solution inhouse

- Enhanced reporting reduces the need to create reports in spreadsheets facilitating finance

into a business partnering model

- Single source of truth for the Council

- Need to understand how the Council will cope if they miss the December 2021

extended support date

- Data migration to a new solution is challenging

- A risk the business will not adopt and embrace change and requires the business to

drive the business change


Amber RiskThe Council may need continued support from a third party to manage payroll changes related to Scottish requirements, incurring additional unknown

cost

Red Risk If the Council switch from an Oracle Platform the Council will need to pay third party support, which will cost an additional £62k for the year

Amber Risk Data migration – Will need to ensure is data clean and ready for migration prior to Go Live

Amber Risk Lack of capacity and capability within the Council to drive the programme

OVERALL RISK STATUS Amber

28


Options AppraisalNon Financial Evaluation – Best of Breed

Pros Cons

- Scored highest in the vendor demo feedback, which suggests have 2 specific solutions will

offer richer functionality to South Ayrshire and has most business buy in

- Improved reporting functionality and automation, meaning employees can focus on more

value add processes

- Will able to exploit new technologies sooner than if they stay on an on premise platform

- Can improve payroll processes and configuration as part of implementation

- Will be able to reduce reliance on 3rd party support by supporting the solution inhouse

- Enhanced reporting reduces the need to create reports in spreadsheets facilitating finance

into a business partnering model

- Need to understand how the Council will cope if they miss the December 2021

extended support date

- Data migration to two separate solutions will be very challenging

- A risk the business will not adopt and embrace change and requires the business to

drive the business change

- No evidence from other Councils that there is a fully integrated best of breed solution

currently available


Amber RiskThe Council may need continued support from their vendor to manage payroll changes related to Scottish requirements, incurring additional unknown

cost

Amber Risk There is a risk that the implementation timelines may be longer based on discussions with other Councils

Red Risk The council will have to pay an additional 62k for extended support of their Oracle solution

Red RiskData migration – Will need to ensure is data clean and ready for migration prior to Go Live, more challenging data migration path due to migrating to 2

new systems

Amber Risk The systems will not be fully integrated meaning there is no single source of truth, an issue that other Scottish Councils have found

OVERALL RISK STATUS Amber

29

Conclusion


Option Cost RiskImprovement

OpportunityOverall

Baseline costing, not an

option to be considered

Baseline costing, not

an option to be

considered





Most costly option as the

Council will have to pay

for 2 implementations

The Council will have

outdated processes

and increased

maintenance will be

required

Can improve Payroll as

part of the upgrade,

however will not have

access to newer

technologies until 2030

This option is too costly

and will not help the

Council achieve the

savings required

Can reduce support costs

and help council achieve

business process savings

There is a risk that the

Council may miss the

support deadline of

December 2021

Improved business

process through greater

integration and

enhanced technology

Will deliver savings

through better

technology and create a

single source of truth

Can achieve business

process savings through

richer functionality,

however requires greater

support

No certainty around

integration and risk that

it can be implemented

by the December 2021

deadline

Greater functionality can

be harnessed through

newer technology,

however there are

challenges integrating

Will offer richer

functionality, however

may not deliver single

source of truth and is

costly to support

Options AppraisalFinal Summary

4. Best of Breed

1. Do Nothing

2. Upgrade

3. ERP Cloud

Solution

31


Options AppraisalConclusion

Co

st

Low Best of Breed

Med Cloud ERP

HighDo Minimum and

Upgrade

High Med Low

Risk

Assessing each option based on Cost, risk and improvement opportunity, Option 3 Cloud ERP is the most viable options in terms of meeting the Council’s

requirements for the future, whilst having an acceptable risk tolerance.

The differentiating significant factors for this are:

1. Moving to a new solution will give the Council the opportunity to improve their payroll solution, which is currently causing the organisation considerable

pain

2. Moving to a cloud ERP solution creates a single source of truth, which when consulting other Councils a Best of Breed solution was unproven to date

3. The risk associated with moving to a Cloud ERP is lower, as there is a simpler data migration path, however there is a still a risk that the current solution

could go unsupported

4. The Council can look to improve their reporting and business processes through the adopt not adapt ethos, helping them achieve future savings

We would therefore recommend the Council consider the above, and select the best option available, based on the importance of revenue

cost/savings and risks.

32

Next Steps


June July August September October November

Options AppraisalNext steps to implementation

Programme benefits definition

Organisational design

People Change

Requirements Development

OBC Production and SMT buy in

Prepare to go to market

Leadership Panel

Mid September

Mobilise for

implementation

Preparing your data for migration

34


Options AppraisalSuggested Programme Team

35

Oracle Review: Outline Business Case - South Ayrshire Council

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