Title
Receive an update on the Enterprise Resource Planning (ERP) Replacement Project Planning.
Report
RECOMMENDATION:
It is recommended that the Budget Committee receive an update on the Enterprise Resource Planning (ERP) Replacement Project Planning.
SUMMARY:
This agenda item is to provide the Budget Committee with an overall project status update on the ERP Replacement project including project funding and implementation costs to date. As of the date of this report, there is an anticipated cost overrun of $1.6M for FY25/26 as a result of Change Order 7 to extend the HCM implementation to January 2027. This is less than the original estimated overrun of $2M reported in February 2026. This is due to County resource costs being less than estimated and two vendor deliverables that will be deferred to FY26/27. Final FY25/26 costs will be confirmed pending final closure of the FY25/26 fiscal year. The FY26/27 Adopted Budget includes $4.2M for project costs in the current fiscal year.
DISCUSSION:
The last update provided to the committee was February 2026. It was communicated that Change Order 7 was required to extend the Oracle HCM (Human Capital Management) implementation from January 2026 to January 2027 due to County resource constraints and critical tasks remaining to be completed with payroll calculation being the most critical.
The objective is to provide the committee with an update on project progress, expenditures to date, and estimated project costs through FY26/27.
Scope:
Oracle ERP (Enterprise Resource Planning) went Live in Production as of July 1, 2026. The following functions are now being performed in Oracle: General Ledger, Billing, Cash Management, Accounts Payable, Accounts Receivable, Purchasing, Contracts, Asset Management, and Projects/Grants. The following functions will be implemented at a future date: Expenses/Procurement Card Integration and ACFR reporting.
The HCM project team continues to work on resolving Payroll calculation variances, User Acceptance Testing Issues, data conversion, reporting, interfaces, and training preparation tasks. Scope includes core HR functions, Benefits, Time and Absence, and Payroll Processing.
Schedule:
The EPM (Enterprise Performance Management) phase went Live in December 2024, and the County utilized Oracle EPM (Budgeting) to develop the FY25/26 and FY26/27 Recommended Budgets and Budget Books. The FY27/28 budget development cycle is in progress.
The Oracle ERP (Financials) is Live as of July 2026 which was a major accomplishment for the County, as the project kicked off in August 2023. The County and Graviton project team continue to work on post Go Live Issues, enhancement requests, and supporting County Users through this significant transition.
The HCM Project Team continues to work towards a January 2027 Go Live. Due to the manual effort required to analyze and address payroll variances, it has taken longer than expected to achieve an accurate payroll, however progress continues to be made towards achieving this critical objective. The delay is attributed to the complex pay requirements defined within the County’s MOUs. Inconsistencies within the existing CGI payroll configurations and calculations is the most recent finding that seems to be contributing to the majority of the remaining payroll variances. The project team is currently validating this analysis to determine next steps. The goal is to ensure Oracle configurations meet the County’s MOU requirements.
In addition, the HCM project team continues to work on a number of other critical tasks related to resolving and re-testing User Acceptance Testing Issues, data conversion efforts, reporting, interfaces, and training preparation.
Resources:
There are ACO, HRD, and ITD full-time and part-time staff supporting the HCM implementation phase. As of July 1, 2026, County staff supporting the ERP capital implementation have transitioned to supporting ERP operations. Below is a summary of average FTE by department based on Actual Hours logged on timesheets.
• ACO 2
• HRD 3
• ITD 3.5
Key challenges:
• Some key staff are needed to support critical operational tasks
• The same resources are required to support multiple workstreams in parallel
• Dependency of a single resource for knowledge and expertise resulting in a single threaded approach
• Key Functional Leads out on Leaves Of Absence
Budget:
• Due to the additional costs for Change Order 7 to extend the Oracle HCM Go Live from January 2026 to January 2027, the FY25-26 budget shortfall was estimated to be $2M. The actual FY25/26 costs to date have resulted in a $1.6M shortfall. This is due to County resource costs being less than estimated and two vendor deliverables that will be deferred to FY26/27. Final FY25/26 costs will be confirmed pending final closure of the FY25/26 fiscal year (pending August expenses).
• The FY26-27 estimated costs are $4.2M. The overall budget overrun is estimated to be $5.9M (prior estimate $6.2M). A transfer of fund balance from the General Capital Assignment (Fund 001 BSA 3065) was made to Fund 478-ERP to cover the project cost overruns in FY25-26. The FY26-27 project costs are included in the CAO’s FY26-27 Adopted Budget from various eligible fund balances.
• As of January 2026, the total expenses to date including the pre-implementation phase total $22,349,589. With the most recent Change Order, the overall budget overrun is estimated to be $5.9M.
• The estimated overrun includes the following assumptions:
o County resource costs remain within budget
o County resources supporting the system post go-live will no longer be charged to the project
o HCM phase remains on track for January 2027 Go Live.
o Extending the HCM Go Live beyond January 2027 will have additional budget implications.
Change Order History:
Seven Change Orders have been approved to date, impacting the project schedule with the last Change Order 7 resulting in an estimated overall budget overrun of $5.9M. There have been no further Change Orders since the last Budget Committee update.
• CO01 approved in October 2023 to move up Enterprise Performance Management Go Live from May 2025 to November 2024.
• CO02 approved in February 2024 to extend the timeline for Enterprise Resource Planning (ERP - Financials) from November 2024 to April 2025 and Human Capital Management (HCM) from April 2025 to July 2025 to allow address County resource constraints and additional time to design and develop solutions to address functional gaps.
• CO03 approved in September 2024 to extend the ERP Go Live from April 2025 to July 2025 and HCM Go live from July 2025 to January 2026 to grant additional time for the County project team to validate the system design during each iteration and for the Implementor to design and configure the system to address the County’s specific Business processes and implementation approach feedback. The additional cost of $1.9M for this Change Order will be covered by the current project surplus with no impact to the overall budget.
• CO04 approved in April 2025 to revise the implementation timeline for Enterprise Resource Planning (ERP-Financials) from July 2025 - July 2026. This resulted in an overall budget overrun of $2.6M due to the following additional costs:
o Vendor Implementation Services increased by $2,747,524
o Oracle Licensing increased by $1,289,550
o County Resources $211,483 to $4,157,319
o FY26-27 costs for ERP Post Go Live vendor support $696,312
• CO05 approved in August 2025 to separate some of the HCM and ERP deliverables. This was an informational change with no additional cost.
• CO06 approved in October 2025 to extend HCM Go Live from January 2026 to March 2026 Additional cost of $200K. Change Order scope:
o Continue with Payroll Cycle 1 to achieve tolerance criteria of 90% Net Pay within $3
o Address open items in preparation for UAT: Time and Absence, Payroll Costing, New MOU
o Additional Payroll Cycle 3 to validate elements not included in Payroll Cycle 1 or 2
o Add full conversion Dress Rehearsal
• CO07 submitted for approval in February 2026 to extend HCM Go Live from March 2026 to January 2027 due to Go/No Go criteria not being achieved. Additional Costs:
o Vendor Implementation Services $790,200
o Vendor Managed Services $209,000
o County Resources Cost (July through December 2026) $1,302,000
o Oracle Licensing $1,423,471
§ Total Additional Cost $3,724,671
OTHER AGENCY INVOLVEMENT/COMMITTEE ACTIONS:
The implementation project team will be led by the Information Technology Department and will include County Administrative Office, Auditor-Controller’s Office, and Human Resources Department leaders and staff. Other County departments will need to participate as stakeholders and will be engaged throughout various phases of the project. The next Budget Committee Update will be provided March 2027, unless requested sooner.
FINANCING:
With the last Change Order 7, FY25-26 Actual Costs were less than the projected budget overrun of $2M, resulting in a $1.6M overrun. The projected overall project overrun is estimated to be 5.9M. Funding for the project will be provided by Fund 478 (Enterprise Resource Planning), Department 1050 CAO, Unit 8506, Appropriation Unit CAO034, which was established for this purpose. A transfer of fund balance from the General Capital Assignment (Fund 001 BSA 3065) was made to Fund 478-ERP to cover the project cost overruns in FY25-26. The FY26-27 project costs of $4.2M are included in the CAO’s FY26-27 Adopted Budget from various eligible fund balances.
The available fund balance of the Enterprise Resource Planning project on 01/13/25 was estimated at $20,866,883 which includes earned interest. Total Expenditures through August 2026 are $22,349,589 with a current estimated remaining fund balance of $1,961,388.
BOARD OF SUPERVISORS STRATEGIC PLAN GOALS:
In addition to supporting the existing basic ERP functions, the below Project Objectives support the BOS Strategic Initiative for Administration:
A. Enable the County to increase operational efficiencies by implementing best business practices and increased automation.
B. Implement standard functionality and best business practices embedded in the solution to reduce cost, long-term maintenance impacts, and avoid or minimize customizations.
C. Improve quality and accessibility of information through standard reports, ad hoc tools, and the ability to create new reports.
D. Promote a system that provides for self-services to the General Public, County departments, County employees, and external agencies via online and mobile capabilities.
E. Implement a scalable platform that will support future growth and integration without requiring significant upgrades, costs, and County resources.
____ Well-Being and Quality of Life
____ Sustainable Infrastructure for the Present and Future
____ Safe and Resilient Communities
____ Diverse and Thriving Economy
____ Dynamic Organization and Employer of Choice
X Administrative
Prepared by: Michelle Karim, IT Project Manager, 759-6901
Approved by: Eric A. Chatham, Chief Information Officer, 759-6920
Attachments:
ERP Replacement Budge Committee Update