Council authorizes ERP vendor selection process and sets $2.5M aside for implementation; potential increase to $3.74M pending RFP

Cupertino City Council authorized staff on Feb. 12 to begin the vendor-selection process for a replacement enterprise resource planning (ERP) system and set aside $2,500,000 for implementation and related costs, with council reserving the right to increase that allocation to the previously requested $3,744,000 if the vendor proposals demonstrate the higher amount is necessary.

Staff and Plante Moran consultants presented background and a needs assessment completed in 2023, explaining the city—s current Tyler New World system is aging, produces manual workarounds across finance and HR, and presents cybersecurity and operational risks. Staff recommended a competitive RFP and vendor selection process followed by a separate council decision to award an implementation contract. The presentation outlined core modules the city requires in a replacement system: general ledger, accounts payable/receivable, payroll and time entry, budgeting, fixed assets, purchasing, project/grant accounting and basic HR functions (benefits, position control and employee self-service). Optional modules include contract management, learning management and recruitment/onboarding.

Council members asked detailed questions about timelines, how the 2023 needs assessment would be updated, payment and invoicing schedules, whether vendors would be dissuaded from bidding if the city does not publicly post a high budget figure, and how implementation would affect day-to-day staff responsibilities. Consultants explained that vendor responses and implementation costs vary substantially depending on product choice, modules selected and the split of implementation tasks between the city and the vendor; they estimated an RFP/selection phase of roughly eight months and an implementation phase of about 24 months.

At the start of the item staff had requested a budget modification in the mid-range of a tier-2 high estimate (roughly $3.7 million) to preserve flexibility and attract a broad set of bidders. Council debate focused on fiscal prudence versus the operational and cybersecurity risk of delaying replacement. Councilmember Fruin argued that having a broader set of bids reduces litigation and procurement risk; Councilmember Wong urged stronger spending controls and more frequent check-ins.

The final motion (moved by Mayor Chow and seconded by Councilmember Wong) directed staff to initiate the RFP and vendor-selection process, authorized an initial budget appropriation of $2,500,000 to be held for the ERP project, and allowed council to increase the appropriation up to the previously requested high-end figure (approximately $3,744,000) if the RFP results provided a clear justification and staff return with that request for council approval. The motion passed on a roll call vote with Councilmember Mohan voting no and all other members voting yes.

Staff emphasized the RFP and vendor-selection work can proceed under existing consultant contract funds already encumbered for RFP preparation and vendor selection; any final contract award and additional appropriation above $2.5 million must return to council for approval. Consultants warned ERP implementations carry risk and require sustained project governance and change management; staff said change management, temporary backfill and project management costs are included in the planning estimates.

Key numbers and schedule: staff estimated a broad cost range from roughly $1.3 million (low tier-2) to $3.7 million (high tier-2) for implementation and one-time costs, with tier-1 enterprise options reaching higher figures; the RFP and evaluation phase was estimated at about eight months, and implementation about 24 months.