Item - 2025.GG20.8

The General Government Committee recommends that:  

1. City Council grant authority to the Chief Technology Officer, in accordance with Sections 195-6.6 and 195-8.5 of the Toronto Municipal Chapter 195 (Procurement), to enter into, and execute non-competitive contracts with SAP Canada Inc. commencing from the date of award for a five (5) year period, for up to the total amounts set out in Confidential Attachment 1 to the report (March 25, 2025) from the Chief Technology Officer, and the Chief Procurement Officer, subject to terms and conditions acceptable to the Chief Technology Officer and generally in accordance with the terms of the existing agreement.

2. City Council adopt the confidential instructions to staff in Confidential Attachment 1 to the report (March 25, 2025) from the Chief Technology Officer, and the Chief Procurement Officer.

3. City Council direct that Confidential Attachment 1 to the report (March 25, 2025) from the Chief Technology Officer, and the Chief Procurement Officer remain confidential at this time as it pertains to criteria to be applied to negotiations carried on or to be carried on by or on behalf of the City of Toronto and be made public at the discretion of the Chief Procurement Officer following the execution of the contract authorized by Recommendation 1.

The purpose of this report is to request City Council authority to enter into non-competitive contracts with SAP Canada Incorporated, a Canadian Business Subsidiary of SAP SE (Non-American Supplier), for proprietary software licenses, cloud subscriptions, and related system services and support.

SAP is a software system developed by SAP SE, which is based in Germany, and is used to create a centralized system that allows City Divisions to share data and manage business processes. SAP solutions form the backbone of the City’s critical systems, supporting accounting, budgeting, payroll, human resources, work order management, purchasing and inventory management.

By 2027, SAP will discontinue support for several legacy systems and replace them with next-generation cloud-based solutions. In 2022, City Council adopted GL32.12 and granted authority for the City to procure next generation SAP solutions and licences and laid the groundwork to standardize and keep the City's systems up to date.

This report continues to address business continuity and state of good repair, as well as enhancements, for six City systems affected by these changes, ensuring they remain functional, secure, and supported. The programs outlined in this report support both the migration efforts to new systems and lays the foundation for core solutions that offer better integration and improved standardization. In two instances, migration is complete, but the programs focus on implementing new and enhanced capabilities to improve service delivery and ensure compliance with Toronto Auditor General recommendations and included in Attachment 2 - Decision History). New and enhanced capabilities are also subject to business case approvals future budget year submissions.

The existing contracts and spend authority for these systems are set to expire within the next year. This report consolidates subscriptions, licences, professional services, and support packages from SAP under a new 5-year term to unify timelines, terms and pricing and strengthen overall contract management. The City also plans to include these contracts under a new Master Services Cloud Agreement, that it is in the process of negotiating, with the intent to enhance pricing and terms standardization.

City Council 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 supplier under Article 7, Section 195-7.3D 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 71-11A.