HomeMy WebLinkAbout07/16/1991, C-7 - CONVERSION TO CENTREX TELEPHONE SYSTEM �IIIII�IAIII�IIIII��� Ilull� - MEETING DATE;
Ilii c�� of San Luis OBISpo
ITEM Mira COUNCIL AGENDA REPORT NUMBER:
/1_
FROM: William C. Statler, Director of Finance
Prepared by: Jeff Thacker, Chief Accountant.. "
SUBJECT: CONVERSION TO CENTREX TELEPHONE SYSTEM
CAO RECOMMENDATION
Approve replacing the current telephone system with Pacific Bell Centrex and authorize the
CAO to execute the Telecommunications System Request as required under the State of
California's cooperative purchasing program with Pacific Bell.
OVERVIEW
Replacing the City's existing telephone system with Pacific Bell Centrex offers many
advantages including improved service reliability and emergency response capabilities
combined with significantly reduced costs. The present system has become increasingly
obsolete resulting in high maintenance costs, lack of flexibility, and poor performance in
comparison with other alternatives that are available to us at a significantly lower cost.
Both City staff and an outside management consulting firm have reviewed the current
telecommunication needs of the City and have concluded that telephone switches located
at City Hall and the Corporation Yard should be replaced at this time. Converting to the
Pacific Bell Centrex system provides the City with the ability to contain costs and improve
services for many years to come. As discussed in more detail below, converting to Centrex
will not only improve service, but will result in immediate savings in excess of $37,000
annually over the current system.
The only downside to converting to Centrex is the need to change the City's external phone
numbers. However, outside calls can be automatically switched to the new number until
new phone books are distributed by Pacific Bell in October of 1991.
DISCUSSION
Background
The City owns its current phone system which consists of the Dimension 600 Switch located
at City Hall and the Horizon Switch located at the Corporation Yard. The technology for
both of these systems was developed in the early 1970's and acquired by the City through
a five year lease-purchase agreement in November of 1983. The two systems eliminated
the need to install individual business lines to each station monitored by a central switch
board operator. When the phone systems were installed, they provided the City with many
communication features previously unavailable including 3 digit extension phone numbers,
transferring, conference calling, call back, forwarding, call pickup, grouping, speed calling,
and paging. The purchase of centrally located switches was a cost-effective solution in 1983
when compared to the high costs involved in initial setup, staffing, and ongoing costs bf
establishing individual business lines throughout the City serviced by a central switch board.
The decision to implement a City-owned system was also influenced at that time by the
breakup of AT&T and Pacific Bell.
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COUNCIL AGENDA REPORT
In 1987, City staff reviewed its telephone systems and considered changing to a City-wide
Centrex system. However, because the current system was not fully paid for, a change at
the time was not recommended.
Because of recent service enhancements and attractive pricing, another review of replacing
the current telephone switches with Centrex was recently made. In addition, as part of their
review of the City's information and telecommunications conducted in October 1990, the
Warner Group (a nationally-recognized management information consultants specializing
in local government applications) recommended that the current system be replaced in the
near future due to its lack of features, older technology, and expansion limitations.
Pmsent System
The City currently leases 31 trunks from Pacific Bell to connect its telephone system to the
public network. This limits the maximum number of conversations with anyone outside the
system to 31 at any one time, which should not be a problem during normal conditions.
However, in the interest of public safety, the Police and Fire departments have installed
additional business lines so that they have direct public access in an emergency. The City
has upgraded the Dimension to its maximum number of line cards, so in order to add more
lines to the system, a major investment in outdated technology is required. Any upgrades
to City telephone services must occur on a system-wide basis even if only one line needs
additional service features.
Currently, the Dimension system located at City Hall requires a dedicated room which
could be better utilized. Monthly electric costs are incurred in order to provide the system
with special power backup in case of a power failure. The City maintains separate
dedicated emergency lines which bypass the Dimension because it takes approximately 30
minutes to restart the system when the power fails.
Weaknesses in the Present System
Support and Maintenance
In addition to the above system limitations, support and maintenance of the system is a
major concern. Currently, the City contracts with AT&T at an annual cost of $13,800 for
maintenance services. Maintenance support has become less reliable in recent years due
to the inability of AT&T to ensure that it has adequate staff trained to repair the
Dimension. In addition, replacement parts for the Dimension are not readily available.
Currently, City Staff and AT&T in Fresno are responsible for programming phone systems
changes such as adding and changing telephone extensions. As changes to the City's
telephone services are needed, additional staff time by the City Engineer and Information
Systems Coordinator is required.
Customer Service
During a review of customer service programs, the telephone system was identified by City
staff as a major obstacle to improving public service. Limitations in call-forwarding, caller
tracking in the system and messaging are examples of complaints that restrict our ability to
improve service to the public. The current system does not offer the types of features
necessary to enhance public contact.
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MMQa COUNCIL AGENDA REPORT
Lack of Features
In its "Review of Information and Telecommunications Systems" dated October 1990, the
Warner Group concluded that the Dimension system should be replaced in the near future
because it is difficult to maintain, lack of features and cost disadvantages when compared
with newer systems. In addition, the report concluded that the system was nearly out of
capacity and reliability was limited.
Emergency Response
Finally, there exists an emergency response concern due to the difficulty in maintaining the
present system. Although the Police and Fire departments maintain business lines directly
with Pacific Bell, emergency communications would be severely limited in the case of an
equipment failure of the City's telephone system. For example, expected power outages
during an emergency would render the system inoperable until backup power could bring
the system back on line.
Cm&= vs. Present system
Although it may have been appropriate technology in the early 1980's, the current system
is placing unnecessary constraints on both voice and data communication. In order to
overcome some of these deficiencies, various departments have had to install redundant
facilities. This redundancy, along with system trunking and the large number of off-premise
extensions, result in extra costs in order to keep the present system working.
The Centrex system is owned by Pacific Bell and locally operated out of the San Luis
Obispo office. The Centrex service is the most efficient method of linking the City's 31
telephone sites together into one system (Attachment A). All stations, in whatever location
in the City, will function as if they were in the same building. The service can be expanded
or reduced according to the City's needs. In fact, the Centrex system offers virtually
unlimited expandability. In contrast, the present system has reached its operating capacity
and cannot be expanded beyond its present size without a significant investment in obsolete
technology.
With the Centrex system, Pacific Bell provides all maintenance to the telephone system.
These services include adding and changing all programs in the switch; repairing all switch,
line and phone equipment problems; and assistance with any problems and changes the
City requires. Pacific Bell provides equipment redundancy for up to 99.99% reliability and
around the clock monitoring for disaster recovery, with automatic routing to eliminate any
foreseen down time. As previously stated, maintaining the current systems in working order
is becoming increasingly more costly and less reliable because of limited availability of
replacement parts and experienced AT&T repair technicians familiar with the Dimension
equipment.
Centrex telephone service includes a complete, comprehensive training program for its
users. The training would be managed by Pacific Bell representatives and would include
all aspects of telephone usage. Currently, there is no training available as a regular class
from AT&T due to the age of the system, and only specialized consultants could offer
limited training.
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COUNCIL AGENDA REPORT
As summarized in Attachment B, there are significant cost savings available to the City
under the Centrex system. Current monthly costs of the system are $7,228 compared with
estimated Centrex monthly costs of$5,733, resulting in a direct cost saving of approximately
$1,500 per month. The existing maintenance contract with AT&T further augments direct
cost savings by $1,150 monthly. Energy, space, and staffing considerations increase overall
savings to in excess of $37,000 annually. One-time conversion costs include $18,000 for
Centrex installation and $16,000 for station equipment. Therefore, the pay-back period
of switching to Centrex service would take less than 11 months. After this payback period,
the direct cost savings on an annual basis would be approximately $31,000.
Over the past few years, Centrex installations have been the choice for many other local
agencies including San Luis Obispo County, Cal Poly, Cal Trans, Camp San Luis (National
Guard) and the cities of Atascadero, Pismo Beach and Morro Bay. With such a large
installation base, continuing support from the local Pacific Bell office is highly likely for
many years to come.
Future Flenbili'ty
More than a telephone system, Centrex is a powerful network of computerized switching
systems. Since Centrex technology is constantly being upgraded by Pacific Bell, it should
never lag behind the City's needs. New features and new capabilities are continually being
added. As the City grows and requires additional resources, Centrex will more readily
accommodate changes than the current system as new lines and features are much easier
to add or reprogram.
As demands for high quality information services increase in future years, Centrex also
provides an integrated, all-digital network capability that interconnects voice with data with
its Integrated Services Digital Network (ISDN). ISDN provides a standard to unify voice
and data transactions via multi-channel, integrated, end-to-end digital connectivity. With
ISDN, the telephone line becomes an open road for voice and information exchange
including PC networking, file transfer plus high-speed data, voice and data integration.
With ISDN, users can have the same telephone number for both telephone and personal
computer using existing telephone lines. Adding ISDN capability at a future date will
eliminate special cable, modems, wires and controllers now required to connect the City's
computer systems.
In summary, Centrex will provide the City with significant flexibility in meeting our future
voice and data communication needs.
Implementation Issues
Pacific Bell is committed to providing the City with the most efficient and advanced
communications system available in the area. Pacific Bell will assign a team of four
managers (two marketing persons, a data specialist, and a service manager) to manage the
system in the most efficient manner possible. With the City's concurrence, Pacific Bell will
schedule regular monthly meetings with appropriate City personnel to review the City's
needs, discuss maintenance issues, and share information of mutual interest. Beyond this,
Pacific Bell will have an installation and maintenance crew in San Luis Obispo trained and
experienced in Centrex service. The City will assign the Information Systems Coordinator
i11���►►►�Illllp��n��►���u�ll City Of San LUIS OBISPO
1Norms COUNCIL AGENDA REPORT
to communicate on a day-today basis with Pacific Bell regarding orders for system changes
and maintenance service.
Installation of Centrex service will require the City to change existing telephone numbers,
although the internal 3-digit numbers can remain the same. Fortunately, the timing of the
proposed conversion allows any new numbers to be included in the new telephone books
which will be distributed in October of 1991. In the interim, the Centrex system can be
programmed so that outside calls made to current City telephone numbers will be
automatically switched to the new numbers. With this capability, the change in service to
Centrex can be made with minimal disruption in service to the public.
Pacific Bell will conduct telephone training sessions on site and will include a review of
available features and use of the new telephone desk sets. Current methods of transferring
calls, conference calling, call pick-up, and other key features can be adopted and
programmed in the new equipment, thus simplifying the conversion.
The recently-created Office Automation Users Group will play a key role in coordinating
this conversion at the departmental level. The public contact task force will also be
involved in any key implementation decisions affecting service to the public.
An implementation schedule is provided in Attachment C.
Purchasing Procedures
The selection and installation of a new phone system is subject to the City's competitive
bidding procedures, which allow the use of cooperative purchasing with other governmental
agencies (Section 3.24.060 of the Municipal Code).
The proposed conversion to the Centrex System will be administered under the State's
contract with Pacific Bell which provides for the extension of the State's contract terms to
other local governments. As such, the proposed conversion to the Centrex System is
consistent with our established purchasing policies. The request form required to be
executed by the CAO is provided in Attachment D.
Ownership Versus Lease Policy
Staff believes that many of the problems encountered with the current system are inherent
in any City-owned telephone system:
■ Support and maintenance
■ Training
■ Flexibility and expendability
■ System management
■ Technological change and obsolescence
■ Emergency response capabilities
These concerns exist for any medium-sized city; however, they are especially pronounced
for the City of San Luis Obispo due to our geographic isolation from major metropolitan
areas where third-party support and maintenance is a more viable alternative. r�
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COUNCIL AGENDA REPORT
Accordingly,unless there are compelling service or cost issues, the City should avoid owning
and operating its own phone system, but should defer to a company that has a proven track
record of delivering quality, cost-effective phone services: Pacific Bell. If the Council
should determine that a comprehensive, independent review of our telephone options is
required - including purchasing and managing our own telephone system - it is
recommended that this analysis be deferred at this time and considered in conjunction with
the future City Hall expansion.
This approach will enable the City to immediately experience an improved system at a
lower cost with minimal service disruptions while preserving our options to revisit this
decision in the next five to seven years if deemed necessary at that time.
CONCURRENCES
This recommendation has been reviewed by the MIS Steering Committee and the City's
public contact task force, and they concur with replacing the current system with Pacific Bell
Centrex.
FISCAL IMPACT
As summarized in Attachment B, an initial cost of $35,000 will be required for system
installation and new equipment purchases. However, direct annual savings of $31,000 in
monthly phone charges and contract maintenance costs will be immediately realized along
with additional estimated savings of$6,000 annually for electricity, space, and staff support.
The 1991-93 Financial Plan currently designates $30,000 in 1991-92 for the study of phone
system requirements. Rather than contracting with a consultant for the study of system
needs, it is recommended that this funding be allocated instead to installing the Centrex
System.
With the use of these CIP funds for this purpose, the conversion to the Centrex System will
result in a net direct budget savings to the City of$26,000 in 1991-92 and $31,000 annually
thereafter, exclusive of electricity, space, and staffing savings which will also be experienced.
ALTERNATIVES
Two basic telecommunication alternatives are available to the City at this time:
■ Retain the Dimension and Horizon telephone switches
As previously stated, this alternative has many disadvantages including lack of
reliability, support, training, expendability and higher monthly costs.
■ Replace the current telephone switches with new City-owned telephone .switching
equipment
Replacing the current system with another City-owned or leased telephone system
would still leave the City with a less than optimum solution in terms of system
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UNGe COUNCIL AGENDA REPORT
reliability and would require the City to make a large investment in equipment that
would likely become obsolete in a few years. Additionally, acquisitions of this type
are usually based on a comprehensive analysis of communication_ needs which is
subsequently followed-up with a formal Request for Proposal (RFP) and bid
evaluation process. In fact, this was the process originally envisioned in the 1991-93
Financial Plan: $30,000 was allocated in the Capital Improvement Plan for the
study of our communication needs (page E-10). However, based on the ability of
the Centrex System to immediately meet our telephone needs at a significantly
reduced cost over our current system, it is recommended that the $30,000 currently
designated for system study and analysis be used instead to implement a proven
system.
As discussed above under "Ownership Versus Lease Policy", staff believes that the City
should avoid owning its own telephone system unless there are compelling service or cost
factors. Existing concerns regarding system support, service, maintenance, training,
obsolescence,flexibility,expendability,emergency response,and overall system management
are inherent in any City-owned system. As such, staff believes that conversion to Centrex
is not only an excellent decision in the short term but is also an excellent long-term strategy
for the City.
SUMMARY
Due to support, reliability, flexibility, service, and cost concerns, replacement of the current
system is recommended. The system has reached maximum capacity, and maintaining
existing equipment is becoming more costly. With 31 City locations now receiving
telephone service, a single, integrated system provides the most economical and practical
solution. Centrex meets all the City's current communication requirements and can be
implemented with substantial cost savings. The County of San Luis Obispo and Cal Poly,
for example, now have Centrex systems and Pacific Bell continues installing other systems
county-wide. The above reasons plus the enhanced reliability that Centrex offers in terms
of public safety response makes the decision to replace the current phone system with
Centrex both an economical and practical move right now and in the future.
ATTACHMENTS
A. Current locations requiring telephone services
B. Cost analysis of the current system vs Centrex
C. Implementation schedule
D. State of California Telecommunications Service Request Form
ON FILE IN COUNCIL OFFICES
State Contract Centrex Proposal to the City of San Luis Obispo from Pacific Bell (May
6, 1991)
PRONESWENTREX.OF
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ATTACHMENT A
TELEPHONE LOCATION SUMMARY
Location/Department #of Lines Location_s
City Hall 99 1
Library 11 3
Police 59 2
Fire 32 4
Recreation 24 5
Public Works/UtWties/Engineering 122 8
City Council 8 5
Housing Authority 7 1
Other 2 2
364 31
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ATTACHMENT B
COST SUMMARY (Present System vs. Centrex)
Current System Costs
Pac/Bell
Trunking/Off-Prem Extensions $6,434
46 Miscellaneous lines 794
Monthly Operating Charges 7,228
AT &T
Maintenance on Dimension 1,150
Other Monthly Costs:
Staffing, Energy, Space 500
Total Current Monthly Costs $8,878
Proposed System
Centrex
One-Time Costs.-
Installation
osts:Installation (364 lines ® $48) $17,472
Station Equipment 15,852
Total One-Time Costs $33,324
Monthly Recurring Costs
Includes: 364 main station lines, wiring
and jacks, maintenance, etc. $5,733
ANNUAL COST SAVINGS
($8,878-$5,733) • 12 $37,740
PAYBACK PERIOD
Annual Cost Savings $37,740
One-Time Installation/Equipment Costs 33,324
PAY-BACK PERIOD (IN MONTHS) 10.6 Months
ATTACHMENT C
IMPLEMENTATION SCHEDULE Target Date
Affirmative Centrex Decision July 16
Station Reviews July 31
Updated Quote to City August 9
Pac Bell Order Issuance August 13
Technician Pre-fielding August 23
System Training September 6
System Cut-Over September 20
Quality Assurance Critique September 27
REQUEST IS FOR
STATE OF CALIFORNIA „ ATTACHMENT D
L INFORMATION TELECOMMUNICATIONS SERVICE REQUEST
Ki SERVICE AGENCY REQUEST NO.
❑ EXCEEDS SAM- SEE SAM 4500
TELEMIT ALL COPIES.COMMUNICATIONS UNICATONSTACT. TODIVSION ❑ DOES NOT EXCEED SAM- SECTIONS DATE July 17, 1991 _
DEPARTMENT DIVISION. BUREAU. ETC.
City of San Luis Obispo
ADDRESS OF PRESENT SERVICE (INCLUDE CITY AND ZIP) ADDRESS OF REQUESTED SERVICE (INCLUDE CITY AND ZIP)
990 Palm Street 990 Palm Street
San Luis Obispo, CA 93401 ROOM No. San Luis Obispo, CA 93401 ROOM No.
PERSON TO CONTACT FOR ACCESS TELEPHONE NO. LOCATION ROOM NO.
Jeff Thacker ( 805 ) 549-713C Department of Finance
BILLING ADDRESS (INCLUDE CITY AND ZIP) VENDOR ACCT. NO. UTILITY PRIMARY BILL NO.
P.O. Box 8100, San Luis Obispo, CA 93403 1 (805) 549-7100
TELEPHONE NUMBER(S) INVOLVED REQUESTED DATE OF SERVICE I GENERAL SERVICES AGENCY CODE
All City Telephones 10-1-91
CHECK TYPE OF REQUEST: (ATTACH COMPLETED BS 141 FORMS FOR ALL UNE REQUESTS)
❑ BUSINESS SERVICE ❑ ATSS (ATTACH MONTHS Tou STAEMENT REPRESENTATIVE) ❑ ATSS/DS
❑ SINGLE UNE ❑ KEYSYSTEM ❑ PBX ❑ STATE AGENCY
® CENTREX SERVICE ® TAX SUPPORTED (ATTACH COOT OF CHARTER OR OTHER D=IJ.RNTS)
I�} SHOWING TAX SUPMRTED FUNDING I
lC SINGLE LINE 13 KEYSYSTEM 13 OTHER
❑ WATs
❑ FEX ❑ MOBILE TELEPHONE
❑ DEDICATED CIRCUITS ❑ OTHER
BRIEFLY DESCRIBE PRESENT SERVICE
City-owned Dimension & Horizon PBX system
PRESENT EQUIPMENT VENDOR SERVING UTILITY
AT & T Pacifio R 11
BRIEFLY DESCRIBE SERVICE REQUESTED (ATTACH JUSTIFICATION)
Conversion from existing system to City-wide Centrex
TOTAL COST OF REQUESTED SERVICE—SEE STD 20V&20U FOR ITEMIZED PRICING METHOD OF ACQUISITION
RECURRING NON-RECURRING ❑ PURCHASE ❑ INSTALLMENT PURCHASE
❑ RENT ❑ OTHER
APPROVAL BY AGENCY TELEPHONE COMMUNICATIONS REPRESENTATIVE
PRINTED OR TYPED NAME
TELEPHONE NO.
John Dunn, City Administrative Officer
SIGNATURE DATE ATSS:
7-17-91 PUBLIC: ( 805 ) 549-7114
ADDRESS: CITY ZIP
990 Palm St. (P.O. Box 8100) , San Luis Obispo, CA 93401 (93403)
TELECOMMUNICATIONS DIVISION
❑ APPROVED ❑ DISAPPROVED (SEE COMMENTS BELOW) ❑ INFORMATION ONLY
PRINTED OR TYPED NAME TELEPHONE NO.
SIGNATURE
DATE ATSS:
PUBLIC: ( )
COMMENTS: DATE ORDER SENT TO
1 VENDOR UTILITY