Item - 2024.GG17.2

The General Government Committee:

1. In accordance with Section 71-11.1.C of the City of Toronto Municipal Code Chapter 71 (Financial Control By-Law), authorized the negotiation and amendment of Purchase Order 6052202 with Deloitte Incorporated for the provision of System Integrator Services for Financial System Transformation Program up to $12,100,000 net of all taxes and charges ($12,312,960 net of Harmonized Sales Tax recoveries), from $51,645,200 net of all applicable taxes and charges ($52,554,156 net of Harmonized Sales Tax recoveries) to a total amount of up to $63,745,200 net of all applicable taxes and charges ($64,867,116 net of Harmonizes Sales Tax recoveries).

The purpose of the report is to seek authority from the General Government Committee to negotiate and amend Purchase Order number 6052202 with Deloitte Incorporated for the provision of System Integrator Services for the Financial System Transformation Program (the Program) - in order to continue to provide implementation services to support the City's Fall 2025 launch and year end process in 2026, without any impact on the total project cost. The current contract expires December 20, 2024.

The Program is required as the current version of the City's core financial software is approaching end of life in 2027. In the current state, there are numerous systems with financial information that exist outside of the core financial platform. Extensive manual and paper-based steps are required in most aspects of financial processes and reporting.

The new SAP version of the core financial platform provides the City with the opportunity to review and implement more up-to-date industry leading practices by transforming the City's accounting system, which was first implemented in 1999.

This is a large and complex corporate wide business and technology modernization transformational project, focusing on changes to the City's General Ledger, operating accounting processes, capital accounting processes and numerous integration points to other procurement, payroll, asset, and banking processes. Over 2900 plus City divisional stakeholders, representing over 40 divisions and one Agency, will be impacted by the transformation of commonly used financial processes.

So far, the Program has completed the redesign of financial business processes and 80 percent of the preliminary initial testing phase. Part of this work includes collaborating with all City divisions and the Toronto Police Service to socialize the business transformation and assess organizational change impacts.

Organizational change impacts are being actively managed through engagement of all divisions, supported by a 95 plus Change Ambassador Network to raise awareness and educate their divisions of the upcoming transformation.

The negotiations and the impending Purchase Order Amendment are intended to support the next phases of the Financial System Transformation Program from 2025 to May 2026, and complete the following key deliverables, all within the current approved budget:

1. Implement the revised Public Sector Accounting Standards.

2. Integration Testing of the end-to-end business process system.

3. User Acceptance Testing phase.

4. Train end users across the City and the Toronto Police Service.

5. Upload the City's Interim and Final 2026 Capital and Operating Budgets.

6. Conversion, migration and cleansing of data records to migrate from the current SAP system to the new S/4 system.

7. Implementation of the Ariba Service Purchase Order process integrated to S/4.

8. Hypercare to address critical issues identified by City users which are triaged and rectified in a timely manner to minimize business disruption of City services, as well as adoption of new business processes, including enhancements to the system, where required. This will also include expertise to deliver the new Financial Statements by July 2026.

The total value of the Purchase Order Amendment being requested is up to $12,100,000 net of all taxes and charges ($12,312,960 net of Harmonized Sales Tax recoveries), revising the current Purchase Order value from $51,645,200 net of all taxes and charges ($52,554,156 net of Harmonized Sales Tax recoveries) to up to $63,745,200 net of all taxes and charges ($64,867,116 net of Harmonized Sales Tax recoveries). Funding is available within the approved budget for the Financial System Transformation Program included in the 2024 - 2033 Approved Capital Budget and Plan for the Office of the Controller.

The $12.1 million includes $2 million in contingency to support any unforeseen issues that may arise and could impact the Go-Live. Request to use the contingency will adhere to the project governance approval process which requires Executive Leadership sign-off.

In early 2024, a project review was undertaken to better understand the challenges in achieving project milestones. As an outcome, the project established a stronger governance structure and oversight, improved divisional collaboration, a revised project timeline and realigned the project team resources for efficient delivery of the next phases. The $12.10 million request for this purchase order amendment is almost entirely offset by savings identified through the project realignment.

General Government Committee approval is required in accordance with Municipal Code Chapter 195, Purchasing, where the current request exceeds the Chief Procurement Officer's authority of the cumulative five-year commitment limit for each vendor under Article 7, Section 195-7.3(D) of the Purchasing By-law or exceeds the threshold of $500,000 net of Harmonized Sales Tax allowed under staff authority as per the Toronto Municipal Code Chapter 71, Financial Control, Section 71-11.1.