The San Diego City Council unanimously passed an amendment Monday extending its contract with SAP Public Services for an additional five years. SAP has been working with the city on its ERP system since November 2020.
CIO Jonathan Behnke said the Department of Information Technology currently manages more than 100 contracts to provide critical services to various city departments, in addition to the large, multiyear ERP implementation SAP has been overseeing.
That system manages the city’s payroll and timekeeping; procurement and inventory; budget; water billing; financial accounting; personnel, human resources benefits and training; reporting and dashboards; and asset management.
Among the changes approved by the council were an allowable 5 percent consumer price index (CPI) increase in the next five years and 20 percent for “unforeseen future business requirements,” Enterprise Applications Deputy Director Arlo Magpantay told the council.
In addition, the city is modernizing its existing SAP ERP solution, moving it to the company’s S/4 HANA private cloud environment. The completion of that work is expected between fiscal years 2029 and 2030.
The current five-year term — spanning November 2020 to present — was set at an amount not to exceed $30.5 million, with actual spend of $26.5 million. The contract extension amount proposed to the board was set at an amount not to exceed $38.1 million, which includes the 5 percent CPI and 20 percent modernization and enhancement increases.
“As a reminder, this action does not request funding and all related spending is contingent on approval in the city’s annual budget,” Magpantay said.
While there was some critical input about the project from community members during the public comment period, council members voiced their support for the work and lauded the IT department for advance notice related to large expenditures like this one.
"This is just us planning ahead and trying to make sure the contractual authority is there in case those needs come up for the city," Behnke said.
As for future procurements, Behnke said a managed print services procurement is slated for the third quarter of 2026.
San Diego Council Re-Ups ERP Contract With SAP
The company has been working with the city on its ERP system since November 2020. The next five years will see a move to SAP’s S/4HANA private cloud and other modernization work.
