Rochester council authorizes final contract work to move city and utility to single SAP-based ERP platform
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Summary
Council authorized staff to finalize an agreement with HCL (implementer) and SAP (software) to replace aging on-premises enterprise systems for the city and Rochester Public Utilities, with staff estimating a multi-year implementation and higher near-term costs than budgeted.
The Rochester City Council authorized staff on Oct. 20 to finalize an agreement with HCL and SAP to implement a new enterprise resource planning (ERP) system for the city and Rochester Public Utilities (RPU).
City administrators described the measure as the first of two major decisions in a long replacement process that would move many city and utility functions from disparate, aging on-premises systems to a cloud-based SAP solution. City Administrator Aaron Parrish and RPU General Manager Tim McCullough said the replacement is driven by end-of-life software, security risks of on-premises servers, and the operational benefit of a single integrated platform that can handle finance, payroll, human capital and utility work-management functions.
Staff told the council the estimated two-year implementation cost for the city portion, including a 25% contingency, is about $12.9 million; the project had $6.2 million already budgeted in the capital improvement plan. The recommendation asks the council to authorize negotiation and finalization of a contract for council review; items including a final negotiated price and funding plan would return for a subsequent council action. Annual hosting and licensing costs after implementation were estimated by staff at roughly $1.4 million per year.
Council members asked about schedule, contingency sizing and the risk of long, expensive conversions. Staff said the target is to convert critical modules (including timekeeping) in 2027 because Kronos/timekeeping support reaches end of life that year, and that the contingency was intended to cover unknowns that often appear in major software implementations. Staff also said the RPU portion of the work makes SAP the preferred choice because RPU already runs core operations on SAP and the work-management capabilities are central to utility asset stewardship.
After discussion, the council voted to authorize city staff to finalize an agreement with HCL and SAP for council review and return with a formal contract for approval. Staff said additional budget effects and a final schedule will be presented when the final agreement is before the council.
