Itrent Hr and Payroll Systems Replacement Project Update
Argyll and Bute Council · 8 May 2025
Back to Policy and Resources Committee — 8 May 2025 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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ARGYLL AND BUTE COUNCIL POLICY AND RESOURCES COMMITTEE 8 MAY 2025 JOINT REPORT BY CUSTOMER SUPPORT SERVICES AND FINANCIAL SERVICES ITRENT HR AND PAYROLL SYSTEMS REPLACEMENT PROJECT UPDATE 1.0 EXECUTIVE SUMMARY 1.1 The purpose of this report is to update Policy and Resources Committee on the major new HR and Payroll system implementation, to highlight what has been delivered so far and request additional funding to complete the final elements of the project. 1.2 The Policy and Resources Committee agreed to support the HR and Payroll system replacement project in 2021, with funding approved for this purpose. The previous system was about to become obsolete. MHR/iTrent were the successful bidders and a project team and project board were put in place to oversee the implementation of the new system. 1.3 This paper highlights the successes in the installation of this new system to date, along with a number of challenges that emerged post implementation, which have caused some delays to completing the final elements of system installation and realisation of the full expected outcomes. These final elements will result in greater efficiencies and accuracy in our people management processes. 1.4 The Policy and Resources Committee is requested to approve: a) The continued development and implementation of the remaining elements of the iTrent project (Phase 2), in order to maximise the benefits from its investment, as outlined in the original business case; and b) Additional budget resources of £480k for 2025/26, to be funded from the partial release of an earmarked reserve balance, previously earmarked to create a general provision for future redundancy costs.
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ARGYLL AND BUTE COUNCIL POLICY AND RESOURCES COMMITTEE 8 MAY 2025 JOINT REPORT BY CUSTOMER SUPPORT SERVICES AND FINANCIAL SERVICES ITRENT HR AND PAYROLL SYSTEMS REPLACEMENT PROJECT UPDATE 2.0 INTRODUCTION 2.1 In 2021, the council approved the replacement of its core HR & payroll software application, Resourcelink with MHR iTrent. This decision was taken following approval of the associated Business Case by SMT, the agreement to allocate funding and the selection of a preferred provider via a competitive procurement process. This resulted in the award of a 5 year contract to MHR iTrent, commencing 1 January 2023. 2.2 A multi-disciplinary project team was established to deliver the successful implementation of the replacement system. The system comprises a number of modules and phased implementation saw the first modules go live in August 2024, with the new payroll module delivering the August pay for teachers. 2.3 A number of challenges have been encountered post implementation. These predominantly relate to issues associated with the functionality of the payroll module. Unfortunately, these issues were unforeseen and therefore not provided for within the original project timescale and approved resources. 2.4 A project remediation plan for the resolution of key issues is now in place and resources have been allocated to develop and manage delivery of agreed remedial actions. A risk based approach has been taken to the deployment of resources and it has been necessary to prioritise this remedial work over the continued development and implementation of remaining modules, fundamental to delivery of the wider objectives outlined in the business case. 2.5 It will not be possible to fully deliver the iTrent project objectives within approved project resources. As such, a cost benefit analysis of potential options has been undertaken in order to inform recommended next steps.
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2.6 The purpose of this report is to set out the original iTrent project objectives, provide and update on progress and challenges to date, and bring forward recommended next steps, based on an options appraisal. 3.0 RECOMMENDATIONS 3.1 The Policy and Resources Committee is requested to approve: a) The continued development and implementation of the remaining elements of the iTrent project (Phase 2), in order to maximise the benefits from its investment, as outlined in the original business case; and b) Additional budget resources of £480k for 2025/26, to be funded from the partial release of an earmarked reserve balance, previously earmarked to create a general provision for future redundancy costs. 4.0 DETAIL 4.1 Project Objectives and Vision 4.1.1 A copy of the Business Case Executive Summary is given within Appendix 1 for information. The key driver for the business case was that Resourcelink was not fit for purpose to deliver on the council’s digital, transformational agenda and the system was reaching end of life. The business case set out the need to procure and implement an HR and payroll system that would deliver: • An effective and efficient way of paying staff. • Efficient and effective storing, processing and reporting on employee data. • An intuitive user interface to manage the employment relationship efficiently and effectively. 4.1.2 The specific business and project objectives comprised the following: • Demonstrate management of the entire HR & Payroll journey from recruit to retire. • Ensure seamless integration with data platforms and reduce administrative workload through intuitive design. • Centralise employee information and reduce duplication of data across multiple systems. • Achieve improved reporting, creating a single, reliable source of truth for all stakeholders. • Successful configuration, testing, and live implementation of iTrent. • Development of necessary interfaces to external and council systems. • Effective training for HR, Payroll, and ICT teams to manage the system and its processes.
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• Proper decommissioning of legacy systems and a strong data management approach. 4.1.3 The vision for the project was not to simply implement new software, but to review our current practices and processes in the design of each module, ensuring what was built was an automated and intuitive user experience, reflective of modern HR and Payroll best practice and in line with the Council’s digital and transformation agendas. 4.2 Project Governance 4.2.1 A multi-disciplinary project team was established to deliver project design, development and implementation, with representation from Payroll, HR Operations and Systems Development; and input from professional ICT, Finance and Procurement support services. This aimed to ensure that knowledge of the new system would be embedded within existing staff. 4.2.2 A Project Board was established to oversee project delivery, with the Head of Customer Services as SRO. The Board comprised senior managers from HR and Financial Services, in addition to the project team, supported by ICT and procurement colleagues. The Board has met regularly since the project inception and continues to monitor and review project management information. 4.2.3 The Board has put in place a post implementation remediation workplan, as advised by ELT, to ensure satisfactory resolution of a number of critical issues arising from the implementation of the payroll module. This workplan continues to be closely monitored with regular progress updates provided to the ELT. It has also been necessary for the Board to agree the redirection of resources from the continued development and implementation of further modules to the remediation of priority issues. These priority actions were essential and had to be undertaken immediately to configure functionality to ensure the pay awards were implemented before Christmas and all employees received their back pay in addition to ensuring that the payruns can run each month. The other critical items relate to costings and the accounts, pension returns and timesheets. These were prioritised by ELT pending the development of an options appraisal on next steps. 4.3 Progress To Date 4.3.1 The initial phase of project implementation progressed broadly to plan. Resourcelink was safely decommissioned, with all data removed by the contract end date of 28 September 2024. The new payroll module went live for teachers in July 2024 and SLGE employees in August 2024. 4.3.2 Specific deliverables comprised the following: • Configuration and installation of the new software, with all security checks completed. • All employee data transferred, and multiple, complex work patterns installed.
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• Installation of all pay rates, pension and NI rates; leave entitlements; and post hierarchies. • Front end of HROnline configured, tailored to Argyll and Bute Council, with images and key tasks easily accessible creating a user-friendly interface. • Structure Chart prepared and installed, which had been unavailable in Resourcelink. • Secure Single Sign On for all networked staff and Multi Factor Authentication for all non-networked staff configured and enabled. • Absence recording and return to work notifications to managers configured and enabled. • Temporary contract extensions designed, configured and enabled for self service. • Travel and Expenses, New starts and Visa process designed, configured and enabled. • Training and guidance for employees developed and delivered, with FAQs also provided online and through HR Service Centre. • All legacy data safely removed from Resourcelink and stored in a secure manner, accessible for reporting. • All key reports created in Business Objects to schedule. • Design and configuration of elements of case management and recruitment. 4.4 Key Challenges 4.4.1 It became clear at the early stages of the project that the system as purchased was not an ‘off the shelf’ product but a basic set up that required much more significant design, build and configuration by the in-house team than had been anticipated. This meant that the team had to amend their detailed plans to re- allocate time for build. This then had a knock-on impact on the capacity available in the project team to carry out testing on the system once configured. The project was working to the hard end date of the Resourcelink contract, so there were tight timescales to meet. Testing was not therefore fully carried out for all of the modules that were installed. 4.4.2 In the early stages of the project, it was not possible to re-direct existing payroll staff from business as usual activities to the project, to the extent initially planned. Additional resources were secured, albeit with limited knowledge of local payroll processes, however, overall available project resources were insufficient and this impeded progress on payroll specific as well as HR workstreams. Attempts to recruit a suitably qualified and experienced Payroll Professional to lead the Payroll Workstream were unsuccessful. This compounded the issue of sufficient time to carry out testing of essential payroll processes on the new system was limited. 4.4.3 Subsequent to configuration of the new iTrent system, the project team embarked on an intensive period of dual running, with iTrent operating in a test environment and Resourcelink continuing to operate in the live environment, prior to going live with iTrent. This dual running was anticipated to be required for 2 months, however, a significant number of unresolved
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discrepancies and errors between the two systems required this period to be extended to 5 months. The Project Team sought to diagnose and resolve as many errors as possible during dual running before going live with iTrent, which necessitated the redirection of project team and support resources from other workstreams to basic payroll support. As such, these other workstreams, which had been planned for, are currently part developed, but as yet incomplete. 4.4.4 Ultimately, with a hard deadline for Resourcelink to be decommissioned by 28 September 2024, the decision was taken to go live with iTrent for Teachers in July 2024 and SLGE staff in August 2024. 4.4.5 From go live, whilst the majority of regular, salaried staff have been paid accurately and on time since August, and are using the self-service HROnline system, there continued to be high volumes of errors and ELT was advised in November 2024 that there were significant issues with the following: • Absence – the system is not calculating entitlements reliably, as currently configured, resulting in additional checking and manual intervention. The team is working with iTrent consultants to reconfigure and maximise automation and accuracy. • Pensions – the monthly i-Connect extract from the system had not been configured leading to delays in the submission of data to the LGPS administrators. There is an external deadline of 31 May for submission of 2024-25 pensions data to the Strathclyde Pension Fund. The team are currently on track to complete the work to meet this date. • Costings – the costing extracts from iTrent do not meet our accounting requirements and this has consumed additional resources through manual intervention, and delayed processing. Work on the system has been carried out and this will be complete and fit for purpose in April, before the Annual Accounts are submitted. • Pay Award – additional consultancy support and a significant level of manual calculations were required to ensure implementation of the new 2024/25 pay rates and arrears of pay to all staff by Christmas 2024. This was successfully delivered on time. • Timesheets – the functionality available for entering timesheets into iTrent as configured is poor, using our current practice. This has created significant issues for both staff entering data, and for Payroll and Project Team resources, with additional resources consumed in providing support to users and correcting input errors. An options appraisal to improve this position is currently being developed to maximise use of the system’s opportunities for automated uploads and input. 4.4.6 The post-implementation issues have resulted in employees across Payroll, HROD and Systems Development prioritising and spending significantly more of their time than should be necessary on manual processing and diagnosing individual pay issues. This has resulted in resource being diverted from the planned programme to complete all the planned system improvements.
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4.4.7 The Executive Leadership Team has requested a report on lessons learned and officers will report back on this in due course. It is expected that lessons learned may be considered and incorporated into operational arrangements for future major projects, to ensure continuous improvement. 4.5 Outstanding Project Deliverables 4.5.1 The Council has been recognised by the Accounts Commission as having a good track record in delivering on transformation and is considered to be ‘ahead of the game in achieving efficiencies, including through its use of digital technology’. This project, whilst having encountered some challenges in its initial implementation stages, is a clear example of the Council building on what the Accounts Commission identified as our culture of innovation by configuring a forward-looking, multi- functional, automated system. 4.5.2 Once complete, the new system will be an important tool in our transformational journey, creating efficiencies for our employees and managers, having a positive impact on our reputation as an employer of choice and our ability to recruit and retain staff. It will also ensure that our processes are better designed, better adhered to and more efficient for managers and employees, leading ultimately to fewer grievances and disciplinaries. 4.5.3 Due to the above mentioned, post-implementation issues with the system, a number of key project elements that were planned have not yet been delivered. These are all included in our contract price, so we are already paying for this functionality. These workstreams have already been worked on by the project team in preparation for final configuration and delivery. They were paused to divert project resources to enable the post implementation remediation work on the issues set out above to take place. 4.5.4 These are all system benefits that add value, improve automation, workforce reporting, employee experience and manager efficiency. The modules that have not yet been delivered comprise the following: A. Recruitment and Onboarding This part of the system will allow us to have an automated end to end process for all new starts to the organisation, improving new employee experience from seeing a job advert to starting on their first day with the Council. This will improve both our reputation as an employer and will reduce administrative work for managers who are recruiting new staff. • We intend to continue using MyJobScotland as our main recruitment site but will substitute Talentlink (the manual input system managed by COSLA) with an automated feed from MHR iTrent. • The pre implementation survey showed managers spend between 3 and 7 hours of their time per vacancy using Talentlink. In 2024 the council advertised a total of 1,212 vacancies (excluding casuals). This means we can expect between 3,636 and 8,484 hours of management time were used for completing tasks associated with recruitment i.e. a management
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time cost to the organisation of around 2-3 FTE for recruitment. The recent employee survey showed managers among the highest proportion of the workforce reporting they frequently have too much to do, citing HR, procurement and other corporate processes as taking too much of their time. • New employees will benefit from a smooth, end to end experience starting with their application form, through to their contract being issued and their induction being carried out. • This interface will allow us to improve efficiency in reporting on recruitment and retention issues to help address workforce planning challenges • We will continue to need resource in HR service centre so there is limited opportunity to reduce back-office resource requirements • Discussions are still in progress with COSLA, iTrent and other Council to configure this. B. Time and Attendance • We aim to use the module available in iTrent to replace the current Crown contract (£10K per annum) for MyOptions This module is included in our iTrent contract price. This will allow us to automate leave management, support associated payroll calculations (unpaid absence and leavers) and improve data analytics on different types of leave. This is important workforce information in the context of increasing sickness absence trends across the public sector. • This will enable all annual leave to be recorded in one system for management of leave and absence, automatically calculate leave entitlement for leavers. C. Case Management The Iken system, which was being used for Employee Relations case management, was discontinued on the assumption that iTrent case management would be implemented. The HR Operations team have therefore had to revert to fully manual case management process. This is currently causing resource pressures for the Employee Relations team who are dealing with increased volume and complexity of case load alongside a manual tracking system. Last year recorded the highest number of disciplinaries since before COVID, almost double compared to year before, which presents us with an increased level of risk as the employer. Implementing this module will offset the need for additional staffing cost, improve efficiency and mitigate that risk. Implementing Case Management will deliver: • All employee case data will be stored securely in one place and accessible by all HR advisors making it easier to understand the stage/advice thus far and easier for all stakeholders to pick up on compliance issues/overdue stages/ timescales. It also reduces the risk of paperwork being misplaced/filed. It will automatically produce a case timeline of actions
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completed by those involved important for dismissal meetings, appeals and tribunals. • Automated email reminders to managers or officers involved will remind them to progress to the next stage/highlight if actions are overdue, supporting cases to be handled consistently and according to our procedures therefore reducing risk and increasing compliance. • As all stakeholders in cases will have access to their cases in the module, this will allow better collaboration between HR advisors and line managers or lead managers allowing advice to be recorded and information shared regarding the progression of the case and reasons for delays. • With all information in one place more detailed reports on case trends, service performance and outcomes will be available ensuring a data driven approach for decision making and proactive interventions. • Dashboards will allow senior HR and service managers to review the cases and their progress across their area of responsibility. • Automatic generation and saving of correspondence within the case management system will save time for managers and officers involved in the administration of these processes and ensure paperwork does not go missing. • Manual recording, reporting and reminders will no longer be used, improving overall effectiveness and compliance. • Managers will save time when dealing with cases. 4.6 Financial Position 4.6.1 Reserves totalling £332k were earmarked to meet project costs associated with the development and implementation of the iTrent solution. The actual project expenditure incurred during 2024-25 is expected to be managed within available budget resources. However, due to the challenges outlined in Section 4 and the required redirection of resources to remediation activities, the earmarked reserve balance will require to be fully drawn down in 2024-25, with no residual resource available to meet the cost of delivering the remaining elements of the project. 4.6.2 It is currently estimated that additional resources of £480k will be required to complete the payroll remediation plan (circa. £155k); and implement the remaining elements of the project (circa. £325k), to fully deliver the expected project outcomes, in line with approved business and project objectives. This comprises additional costs for consultancy (£56k) and staffing (£424k), with a continued requirement for temporary specialist staff and backfill for key posts in the Payroll, HROD and Systems Development Teams. 4.6.3 The profile of required project staffing over 2025-26 to complete both payroll remediation and to deliver the remaining elements of the project is outlined in the table below. The remediation of post implementation payroll issues is expected to be substantially completed by 30 June 2025 (Quarter 1), with delivery of the remaining project elements targeted for completion by 31 March 2026.
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Team Q1 Q2 Q3 Q4 DEV Team 4.88 4.88 2.38 2.38 HR 4.40 4.40 4.26 1.76 Payroll 6.35 0.00 0.00 0.00 Total 15.63 9.28 6.64 4.14 4.6.4 It has been necessary to enter into commitments during 2024-25, to support delivery of the business critical remedial activities in respect of payroll. These commitments extend into 2025-26, with additional unbudgeted expenditure of circa. £75k incurred during 2025-26 to date (8 May 2025). 4.6.5 A review of earmarked reserve balances has been undertaken, in order to highlight potential opportunities to re-prioritise the use of existing resources, in line with the council’s Transformation agenda and longer term financial planning. Previous prudent decisions have allowed for a substantial general provision for future redundancy costs. However, at this stage, this is not underpinned by detailed planning assumptions. As such, it is proposed to release £480k of this balance for the redirection of resources to delivery of the remaining elements of the iTrent project, in line with original project objectives and as part of our Transformation agenda. It is intended to the review the level of the redundancy earmarked reserve, as part of our five year budget approach, with any recommendations in this respect brought back to committee at a future date. 4.7 Cost Benefit Analysis 4.7.1 Given the requirement for additional resources to complete the project, in line with the original specification, it is deemed appropriate to undertake a cost benefit analysis, in order to inform next steps. As such, a cost benefit analysis was undertaken in respect of 5 identified potential options, as outlined below. Description Option 1 Conclude project immediately post payroll remediation Option 2 Procure alternative new system Option 3 Outsource Payroll/HR Services Option 4 Purchase Shared Services (OLA provider) Option 5 Deliver existing project specification (Phase 2) 4.7.2 While it has not been possible to provide fully reliable cost estimates for each option, the analysis outlines key considerations, providing a rationale for the ranking of each option in terms of both costs and benefits. Key considerations for each option are outlined within Appendix 2. 4.7.3 Each of the 5 options have been evaluated on both costs and benefits, based on the considerations outlined above. A score between 1 and 5 has been
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assigned to both costs and benefits, where 1 represents highest cost/lowest benefit and 5 lowest cost/highest benefit. Options have been ranked 1 to 5 based on an overall score, where 1 represents the best option. The outcome of this evaluation is summarised in the following table. Option Cost Score 1 Highest – 5 Lowest (A) Benefits Score 1 Lowest – 5 Highest (B) Overall Score (A)x(B) Rank 1 Best – 5 Worst 1 Conclude project immediately post payroll remediation 5 3 15 2 2 Procure alternative new system 1 4 4 4 3 Outsource Payroll/HR Services 3= 1 3 5 4 Purchase Shared Services (OLA provider) 3= 2 6 3 5 Deliver existing project specification - Phase 2 4 5 20 1 4.7.4 The option that ranks most highly based on the above evaluation is for the council to seek to progress the development and implementation of the remaining elements of the iTrent project (Phase 2), in order to maximise the benefits from its investment, as outlined in the original business case, subject to affordability. 5.0 CONCLUSION 5.1 A number of benefits have been delivered to date, with a remedial action plan in place to resolve a number of unforeseen post implementation issues. Remedial work has required the redirection of resources and the available project budget has now been fully spent. 5.2 There is an opportunity to deliver further benefits, in line with the original project objectives. The continued development and implementation of the remaining project elements, at an additional cost, is deemed to deliver best value to the council and its employees, as evidenced by the cost benefit analysis. 6.0 IMPLICATIONS 6.1 Policy – There are no policy implications from this report.
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6.2 Financial – Additional resources of £480k required, to be met from earmarked reserves. 6.3 Legal – None. 6.4 HR – The final completion of the iTrent project will improve employee and manager experience and efficiency through a fully automate online HR/Payroll system. 6.5 Integrated Impact Assessment - An Integrated Impact Assessment has been undertaken and found to have positive impacts. 6.6 Climate Change – Greater levels of automation, reduction of duplication and reduction in emails general will reduce the energy required for processing. 6.7 Risk – An effective HR and Payroll system that maximises automation of pay and contractual processes will serve to reduce financial, audit and reputational risks. 6.8 Customer Service – The full implementation of the new system will result in improved experience for all employees, managers, starters and leavers through user friendly, automated processes. 6.9 The Rights of the Child (UNCRC) – None. Kirsty Flanagan Executive Director with responsibility for Customer Support Services and Financial Services 03 April 2025 Councillor Mark Irvine, Policy Lead for Customer Support Services Councillor Ross Moreland, Policy Lead for Finance and Commercial Services For further information contact: Jane Fowler, Head of Customer Support Services Jane.Fowler@argyll-bute.gov.uk Carolyn Earl, Interim Head of Financial Services Carolyn.Earl@argyll-bute.gov.uk
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APPENDICES Appendix 1 – Business Case Executive Summary Appendix 2 – Cost Benefit Analysis Considerations
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1 of 3 01/03/20 APPENDIX 1 HR and payroll systems replacement - summary of business case 1. Summary The Council implemented its current core HR & payroll software application, Resourcelink, over 20 years ago. A number of other systems support some specific HR functions. For a number of reasons, set out in the attached business case and summarised below, the core Resourcelink application and associated systems are no longer fit- for-purpose for both the current and the future needs of the organisation. Additionally, support for the main Oracle EBS system used by Financial Services to manage the General Ledger and Accounts Payable functions ends in December 2021. For reasons of PSN and Cyber Essentials Plus compliance, and also broader cyber-security protection of a business critical system the council depends on, it is not practical for Finance to use this system beyond April 2022. The council therefore has an opportunity to look to consolidate the ICT systems for both these services onto a single ERP (Enterprise Resource Planning) system which could support the requirements for both in an integrated manner. 2. Detail The HR and payroll systems are not fit for purpose as they do not provide best value in three areas – a) Effective and efficient way of paying staff - • Resources currently available within the HROD team do not meet processing demand. • Some process automation has been implemented however the volume of transactions has continued to increase due to the changing organisation demographic. • This has resulted in high volumes of payroll errors submitted by services • Unplanned system downtime reduces further the processing time available to the team. b) Efficient and effective way of storing, processing and reporting on employee data - • Employee data is held across 6 systems. Most data transfer between them is manual. • Human error and duplication of data reduces the integrity of reporting. • multiple log ins for different systems wastes time c) Intuitive user interface to manage the employment relationship quickly and effectively - • Customers find the HR systems are not intuitive, and the automated processes are time consuming and create more work for managers and staff. • More errors occur, reducing satisfaction and damaging reputation • Reporting is difficult to access and very limited
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2 of 3 01/03/20 In 2019 the council published Requests for Market Information (RFIs) for the replacement of Oracle EBS and ResourceLink. Responses were received from a range of suppliers, some on the basis of replacing just one of the two systems, but others proposing a single solution to cover both Financial Services and HR/Payroll. A significant commitment of human resource would be required from both services to a project team working on the planning, implementation and testing of the solution for a period of up to 2 years. 3. Options Option 1 - Do nothing – not viable as outlined above Option 2 – Full procurement to replace Resourcelink and some associated systems The responses to the RFI gave a very wide range of capital costs for replacing Resourcelink, whose supplier Zellis declined to indicate any costs at all until a full procurement is undertaken. A reasonable mid-point of capital costs across the responses is £300,000, with similar annual revenue costs of £120,000, as at present. Advantages - Exploring these solutions further in a full procurement would allow the team to fully evaluate the products available, and also the possibilities of using existing corporate workflow management tools such as the Oracle CRM for managing HR functions, perhaps feeding into a separate payroll system that is part of Finance’s solution. Disadvantages - May not provide as efficient results as a single integrated ERP system. Option 3 - Joint approach with Financial Services – single ERP solution There could be significant benefits from implementing a single ERP system to support the needs of both services. These could include: • Reduction in the duplication of data being held in multiple systems • Improved reporting from a single information manage system representing a “single source of truth” that both services can rely on. • Improved data integration leading to faster, more efficient data processing • The payroll function moving to finance in 2020 could increase efficiencies even further Advantages – allows Financial Services and HR/Payroll to fully investigate the potential benefits of a single ERP solution. Similar capital costs to Option 2. Disadvantages – likely involves an overall increase to on-going revenue costs. One supplier (Technology One) responded to the RFI with total revenue costs of £106,700 pa for both Finance and HR, but the other three ERP providers fall into a much higher price bracket: Oracle Cloud approx. £495,000 pa approx. £505,414 pa
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3 of 3 01/03/20 Edenhouse (SAP Reseller) Unit 4 approx. £550,000 pa It is hoped that these increased revenue costs will be offset to some extent by operational savings achieved from the closer integration of Finance and HR processes and procedures. 4. Recommendation The preferred approach is to initially coordinate the replacement of Resourcelink with the EBS replacement. On that basis the business case recommends developing option 3, with the caveat that if after investigation of the ERP approach the cost-to- benefit ratio is unfavourable, an HR/payroll solution would be pursued as outlined in option 2. SMT is asked to endorse the ICT Steering Board’s decision to approve the following ICT capital allocation, and to consider how the staff back-fill and additional revenue costs will be met: • £300,000 ICT capital to allow the procurement of the replacement of Resourcelink and related systems supporting HR functions; • Temporary resource within HR and payroll to be backfilled for the duration of the implementation project, from July 2020 to April 2022, at a cost of approximately £100,000.
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1 APPENDIX 2 iTrent HR and Payroll Systems Replacement Project Options Appraisal - Cost Benefit Analysis Considerations Option 1 Conclude project immediately post payroll remediation Cost Implications Benefits Realisation (Business Case Expected Outcomes) • Contractual commitments - iTrent annual license fees to December 2027 @ £115k p.a. (17 modules) • Opportunity cost of software/systems not decommissioned through development/implementation of residual iTrent modules: MyOptions (Time and Attendance); Totara (Learning and Development); and Civica (Electronic Document Management) • Approved recurring future years savings target not delivered • Opportunity cost - Redirection of resources (service managers) not possible • Opportunity cost – potential restructuring savings (HR/Payroll) • Sunk costs – UAT, systems configuration, training etc incurred to date, in respect of modules yet to be implemented • Basic payroll function operational • Limited benefits realised to date, however, not all modules purchased have been developed/implemented (those remaining would be included as Phase 2) • Functions that were identified as business benefits in the Business Case and PID will not be delivered (automation with improvements in speed and accuracy) and manual processing will continue • Benefits not realised in respect of: Recruitment and Onboarding; Time and Attendance; and Case Management
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2 Option 2 Procure alternative new system Cost Implications Benefits Realisation (Business Case Expected Outcomes) • Contractual commitments - iTrent annual license fees to December 2027 @ £115k p.a. • Sunk costs – iTrent systems purchase, project costs to date • Additional purchase costs of alternative system (2 other bids evaluated, as part of original procurement exercise, alongside iTrent - both £500k higher costs over 5 year period) • Additional project costs of procurement, development and implementation of alternative (2 year lead-in) • Delayed realisation of savings • Risk that existing software/systems may not be fully decommissioned, depending on new system specification (iTrent modules, MyOptions, Totara, Civica) • Assume similar to full development and implementation of all iTrent modules (Option 5), however, element of uncertainty, as not tested Additional Risks: • Reputational damage re ‘sunk costs’
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3 Option 3 Outsource Payroll/HR Services Cost Implications Benefits Realisation (Business Case Expected Outcomes) • Contractual commitments - iTrent annual license fees to December 2027 @ £115k p.a. (17 modules) • Sunk costs – iTrent systems purchase, project costs to date • There are companies in the market offering payroll and elements of HR services but not full suite – elements would require to be delivered in-house – likely to be more expensive overall • Potential offsetting recurring savings from redundant payroll/HR elements • Potential redundancy costs • Client function requires to be retained • Potential additional costs to mitigate increased data protection risk • Additional recurring contract management costs • Basic payroll function • Likely to be limited benefits realised in respect of Business Case expected outcomes Additional Risks: • Reputational risk around potential redundancies • TU engagement/agreement required, potential TUPE transfer • Reputational damage re ‘sunk costs’ • Research (limited) suggests public bodies that have outsourced payroll/HR, subsequently brought back in- house due to cost/quality concerns Option 4 Purchase Shared Services (OLA provider) Cost Implications Benefits Realisation (Business Case Expected Outcomes) • Similar to Option 3, however, potential future shared services model would be expected to deliver savings • Whilst an option in principle, in practice, no proven market or reliable cost estimate • Similar to Option 3, however, potential opportunity for a future model, to realise benefits of shared agreed outputs, service specification etc, although likely to be challenges, where policies, terms and conditions not aligned
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4 Option 5 Deliver existing project specification (Phase 2) Cost Implications Benefits Realisation (Business Case Expected Outcomes) • Additional non-recurring cost estimated at £567k (prior to potential mitigations) over 2 years 2024-26 • Potential additional cost mitigations estimated at £199k (residual unfunded £366k) • Recurring future savings will provide payback for additional investment (extended period) • Additional project costs could be capitalised if more affordable • Potential future opportunity to generate additional income/reduce costs through provision of payroll/HR services to other local authorities (shared services model) • Full benefits realised, in line with project expected outcomes, as set out within original business case