To: Honorable Mayor and Members of Town Council
Through: David L. Corliss, Town Manager
From: Trish Muller, Finance Director
Title
Resolution Waiving the Formal Written Bidding Requirement on the Basis of Sole Source and Approving a Master Services Agreement with the Government Finance Officers Association of the United States and Canada
Body
________________________________________________________________________________
Executive Summary
The NaviLine Financial system is the core of the Town’s accounting, purchasing, P-card processing, asset tracking, and cash receipt functions. Before 2023, it also served as the payroll and timekeeping system before migrating to the UKG Pro System.
NaviLine was purchased by the Town in 2008 and has been utilized over the past 17 years. During those 16 years, it has been through 3 ownership changes and continues to reside on a non-Windows, antiquated, proprietary IBM system. The future health and longevity of NaviLine is of great concern, specifically because software development for the product ceased in 2022. Ongoing development is critical in safeguarding our financial data against security threats and compliance risks. The current owner (CentralSquare) has recently purchased other financial systems, and we believe that they plan to migrate legacy NaviLine customers to these new platforms in the near future.
Our current contract with NaviLine expires on 9/30/25 but contains an evergreen clause to renew on an annual basis until we choose to cancel or renegotiate another multi-year contract. Considering our concern about NaviLine’s lack of strategic direction, and to ensure sustained long-term financial management capabilities, it is my recommendation to acquire a new financial system.
Local government finances are a complex array of comprehensive rules and distinct standards compared to most private businesses. As we recently experienced with the implementation of UKG, not all vendors comprehend our exact business functions. Therefore, it is my further recommendation to engage a subject matter expert firm, specifically the Government Finance Officers Association (GFOA), to ensure a successful and expedient implementation.
GFOA has extensive Colorado local government experience and exceptional references. Their broad suite of services includes on-site assessment of current processes, recommendations to optimize efficiency and reduce redundancy, a full-service RFP process, vendor selection, contract negotiations, implementation transition, and acceptance.
This strategic approach seeks to ensure the awarded software not only aligns with the Town’s specific needs but also adheres to industry standards while seamlessly integrating with new and existing practices.
Discussion
The Timeline:
Replacing the NaviLine system will take between 18 and 24 months and will include identifying our needs, evaluating and adjusting our processes, submitting an RFP, assessing bids, evaluating vendor products, procurement, implementation, and training. During conversations with other municipalities, we’ve learned that the time and effort to replace a financial system is not trivial.
The Vision:
The Town's expansion since adopting NaviLine has been significant. The proliferation of funds has nearly doubled, facilitating the tracking of funding sources for various projects and purposes. A clear illustration of this growth is evident in the surge in Capital account numbers. NaviLine's capacity for managing these accounts has been exhausted, necessitating the budget team to repurpose account numbers for completed projects.
Transitioning to new financial software presents an opportunity for the Town's financial management to evolve beyond the constraints of NaviLine, but it presents both business and technological risks, as outlined below
The Replacement:
1. Threats Coupled to Not Replacing NaviLine:
a. Regulatory Compliance: The absence of a finance system tailored to meet current and future regulatory standards poses a significant risk of non-compliance.
• Unsupported software presents inherent risks, potentially resulting in the generation of inaccurate and poor-quality information. Such outcomes jeopardize the Town's bond rating, directly impacting the cost of borrowing money.
• Incorporating enhanced compliance features and robust audit trails mitigates the risk of penalties and fines, thereby reducing possible expenses associated with non-compliance.
b. Information Security: Features that enhance risk management and provide internal controls to safeguard the Town’s finances.
• DoIT attempted to initiate a security audit of NaviLine through RiskRecon; however, because the system is not available on the public internet due to its age, current auditing tools cannot navigate the archaic code. Also, the router that NaviLine uses to transfer data to the Town has never been replaced; therefore is 17 years old and undoubtedly is a security risk.
c. Operational Disadvantage: The Finance team and other departments face significant challenges due to outdated technology. This limitation hinders innovation, responsiveness to financial changes, and the capability to quickly access accurate financial information.
Access to real-time financial data allows for more informed decision-making, coupled with budget vs expense comparison and ensuring financial resources are allocated effectively to high-priority areas and opportunities. Implementing a new system with advanced error-checking to eliminate inaccuracies and errors associated with manipulating data from multiple sources.
d. Dependency on Key Personnel: Over the past 17 years, NaviLine has been customized to meet our needs, including the creation of supplemental utilities to compensate for system deficiencies. The aspects of those customizations have been lost through employee attrition and are current threats to the Finance Department's operations.
e. Processing Inefficiencies: The outdated NaviLine system suffers from a lack of modern automation and optimization features, resulting in slow and inefficient processes. Prolonged processing times, a frequent complaint among staff, contribute to heightened operational costs and reduced productivity levels.
f. Inflexibility and Scalability Issues: NaviLine's old architecture hampers its ability to accommodate evolving business needs and capitalize on growth opportunities. This lack of flexibility limits our operational capabilities, particularly in automated encumbrances and budget planning, where assessing various revenue and spending scenarios is essential. Addressing these limitations is essential for ensuring adaptability and scalability to support the changing needs and size of the Town over time.
g. Customer Service and Support: A more responsive business partner to provide customer support and training resources to assist the Town’s staff when needed.
2. Threats Coupled to Replacing NaviLine
a. Implementation Challenges: Adopting new technology is time-consuming and mentally challenging. The Finance staff (plus staff from all departments) will need to dedicate hours to the replacement process while satisfying their daily workload. Utilizing contract labor for daily workload activities could be an alternative to the staffing shortfall throughout the implementation.
b. Cost: The replacement of outdated technology necessitates a substantial financial commitment. To mitigate the risk of exceeding the budgeted cost, we aim to leverage the expertise of the Government Finance Officers Association (GFOA). Drawing upon their experience, we can identify and address unforeseen expenses or delays that may arise. This proactive approach ensures greater financial transparency and accountability, helping to safeguard against budgetary overruns.
c. Operational Changes: The transition to new technology inevitably brings about operational adjustments, including scheduled downtime, testing, and comprehensive training activities. The replacement of NaviLine impacts every department’s operations and members within each department.
Budget Impact
Upon recognition that the NaviLine product is end-of-life and requires replacement, we requested through CGAIT (Colorado Government Association of IT) a recommendation for a local government financial management system consultant. Two firms were suggested, with GFOA as the consultant with more Colorado customers and impressive references. GFOA is a non-profit organization with no affiliation to any ERP vendor; therefore, no bias is involved in the vendor selection.
GFOA’s Advisory Services will cost $455,500 between 2025 and 2027. While these services are not mandatory, they help the Town proactively support the NaviLine replacement with a seasoned consultant who identifies our business needs before purchase, including recommendations to improve existing processes. The 2023 implementation of UKG proved that not all organizations have or require the same processes, which has resulted in the Town hiring a UKG consultant, reactively, post-implementation, to mitigate issues at a contract cost to date of $197,700.
Based on the awarded ERP vendor, the estimated implementation cost of the new Financial Management system is projected between $1.5M and $3M (one-time only cost), and annual subscription costs can be expected in the range of $300,000-$600,000 per year.
Budget Impact
Staff Recommendation
In conclusion, it is my recommendation that the Town enter into an ERP Advisory Services agreement with GFOA to manage the replacement of the NaviLine financial system. It is also my recommendation to replace the NaviLine financial system with a modern platform that meets regulatory compliance, progressive development, and better technical support, along with other benefits such as staff level efficiencies, automation, enhanced reporting, and real-time dashboards.
Attachments
Resolution
GFOA Master Service Agreement
Sole Source Justification