ICL Pathway
Bringing
Technology
to Post Office
Counters
January 2000
Monthly
Progress
Report
POH-404D
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ICL Pathway Monthly Progress Report
Contents:
Managing Director’s Summary
Development Report
Commercial & Financial Report
Customer Requirements Report
Customer Service Report
Quality & Risk Report
Business Development Report
yu
my
Implementation Report
Organisation & Personnel Report
Post Office Client Report
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ICL Pathway Programme Monthly Report Ref: PA/REP/046
Version: 1.0
Date: 16/02/2000
Document Title: ICL Pathway Monthly Report — January 2000
Associated Documents:
Reference Vers Date Title Source
[1] PM/PRO/002 1.0 26/09/96 Pathway Programme - Project
Planning, Reporting and Control
Approval Authorities:
“N
Name Position Signature Date
M. Stares Managing Director
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Managing Director’s Summary
PROGRAMME PROGRESS
e £105m payment for the full first Roll-out milestone was received on time in
early December.
e Rescheduled banking arrangements were satisfactorily concluded during
December. To secure the banks’ co-operation, it was necessary to agree to an
increase in their margins (cost £3m). These are currently being revisited by
Fujitsu directly with the banks.
e Arrangements were agreed with POCL during January, which enabled Roll-out
to recommence on time on 24" January. These involved better definition of
mutual responsibilities as to operating the service, but no new contractual
commitments as such. Specifically, the ‘Third Supplementary Agreement’
acknowledged completion of all final Acceptance dependencies. Acceptance has
thereby been put to bed and a new era begun.
e Roll-out has commenced and is on track with approximately 300 post offices
migrated in the first two weeks. This will quickly increase to 300 per week.
PROGRAMME UPDATE
¢ Development and delivery of the EPOS software was achieved ahead of the end
of December target and operated successfully during the two week evaluation.
This enabled the final acceptance to be achieved along with the decision to
recommence National Roll-out.
ROLL-OUT
e National Rollout,stopped:as planned for an eleven week break over Christmas
and the new Millenium after 1856 Post Offices had been installed and migrated
which was slightly ahead of plan. It re-started on schedule on 24" January and
to date has run to forecast with the 2000" office being migrated on Tuesday 1“
February.
KEY ISSUES
e Two current issues exist that are being addressed:-
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e The plan for delivery of CSR + is still achievable but-has used most of its
embedded float and contingency. This along with the need to intercept a new
Reposte release, which is behind schedule, is putting existing dates at risk.
e Changes in the architecture and components between the X365 PC, currently
used for National Roll-out are larger than expected. This causes a potential —
three month gap in National Roll-out in Q3 with associated P&L implications.
Urgent action is being taken to mitigate the risk. As a result FJ will build
additional X365 motherboards and FSC-will produce additional X365 PC’s
(7,000 offered to date with a target of 13,500). When extra production is
confirmed this will no longer be an issue.
CUSTOMER SERVICE
¢ Since our last report, much of CS energy has been directed at addressing
Acceptance and resolving problems with the Reference Data interface to PO.
HELPDESK PERFORMANCE
e Service provision for post offices that were rolled out in 1999 proved to be very
stable and was accompanied by a reduction in incidents being logged at the
Horizon Systems Helpdesk (HSH). Although we failed to agree with PO on the
achievement of specific performance measures for Cash Account calls, PO did
acknowledge that the HSH had shown a marked improvement. Relationships
between the ICL and PO helpdesk staff are improved
¢ The Corporate Red Alert with OSD for poor SLA performance has been re-
graded to Divisional Alert. HSH Service improvements are still necessary in the
areas of call answering and call abandonment and second line support filtration
rates.
REFERENCE DATA INTERFACE
e The key issues of verifying the accuracy of reference data before its
authorisation by PO for propagation to the live estate, was jointly reviewed and
new plan was produced to enable National Rollout to recommence by 24"
January. A more robust interface agreement was agreed on 14" January.
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KEY ISSUES
Recruitment to the System Support Centre remains a concern. Only 23
applicants responded to a recent national and local advertisement. Key skills
required are Microsoft NT and Visual Basic. These cannot be sourced from
A&TC
Powerhelp system is on Corporate Red Alert suffering from System Performance
and Network problems. This is a risk to roll-out.
NEW BUSINESS
Now that Acceptance has been achieved and National Roll-out continues, there
are signs that discussions will take place again on developing the service. The
main forward move is a joint team meeting with the Post Office Network on 8"
February. The principal aims of this event are to lay the ghosts of the past to
rest and to develop a more positive approach to the future, specifically we want
to establish an MD level Steering Board. We have been warned by PO to expect
a difficult meeting. The principal areas of business opportunity are:
NETWORK BANKING
Post Office issued a Request for Information to the marketplace in December.
The business requirement was sketchy, but we have submitted a comprehensive
ICL response utilising Horizon at.the desktop and the network with a Lifestyle
Banking backend interface to the banks.
Post Office are currently reviewing 15 responses and expect to announce a
shortlist mid-February and to then issue an ITT.
Internal politics within Post Office is complicating this as the tender has been
issued by the new Network Banking unit, led by their IT Director who is not a
fan of Horizon, Our current strategy is to involve Stuart Sweetman, Group
Director who.is responsible for both Network Banking and Post Office Network
and to seek nomination of Pathway as a nominated contractor.
MODERN GOVERNMENT
There has-been very little forward movement on Modern Government. There
appears to be no joined up approaches from government despite the efforts of
CITU and other like organisations. We are in continuous discussions with Post
Office to help find opportunities and Scotland appears'to offer potential as
devolved government allows them to take faster initiatives.
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RE-ENGINEERING
¢ Post Office are in the process of producing a’Service Development Plan which
will define their prioritised list for re-engineering opportunities. This will be in
place by end of February, at which time they should engage with Pathway.
FINANCE/COMMERCIAL/BUSINESS PLAN
e The level of outstanding change control notes has come down dramatically, and
the process is now working as it is supposed to.
« The DSS has settled and paid for the transition assistance we gave them to
migrate off the Benefit Payment card (£2m).
e Significant cash savings were secured in both December and January. Cash
timing savings-at each month end were in the range £5-10m. These. reflected
careful supplier and cash management, particularly around the quarter end.
¢ Real operating spend savings of some:£2im. have been achieved as a contribution
towards cost-down.
e The Business Case is the subject of ongoing review and scenario planning.
e The 1999/00 PBT forecast has been increased by £6m to £38m (£20m PBT
before release of provisions). This project accounting method is agreed with
PwC but the full term profit projection to be used as a prudent basis for profit
recognition has not. A process has been agreed with PwC to do this but until
that has been concluded, the 1999/00 profit increase should be treated as ‘at
risk’ to the level of £6M.
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Development
Report
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ICL Pathway Development Monthly Report Ref: PA/REP/046
Version: 1.0
Date: 16/02/2000
Development Report
MONTHLY SUMMARY
e There have been a number of incidents requiring code fixes to the EPOSS
reconciliation reports facility introduced’ into the network in late December, and
a few faults identified in the counter applications themselves, otherwise the 4°"
line support effort for the live system is in line with our resource planning
expectations. The recent fix to the counter printer has reduced the number of
reboots occurring in the outlets to a level far exceeding the target agreed with
Post Office.
e The results from the Riposte 6 validation exercise indicated that it would unwise
to include it in the C13 release. More intensive testing has been scheduled and
we now plan to intercept Riposte 6 in CI4. The final integration tests for CI3
commenced in January as planned but we experienced severe difficulties with
the network configuration on the resilience and performance rig which delayed
progress. A change in approach was agreed internally which mitigated against
this.slippage and ensured that the level 1 milestones were’achieved on schedule.
The release is due to be installed in the Data Centres'slightly earlier than
originally planned on 26/27" February and is followed by a less aggressive roll-
out. This will enable us to monitor the VPN performance and optimise its
operation before the facility is activated across the entire estate.
e The network/router upgrade agreed towards the end of 1999 is scheduled to
take place immediately following the C13 release. This will-ensure that we have
sufficient capacity to handle the increased traffic identified as roll-out gathers
momentum.
¢ Progress during system testing of the main application release (C14) which
includes KMS, LFS and AP Smart has improved during January and we now
hope to complete the majority of the final passes in February and March as
originally planned. ‘This means that it is unlikely that we will need to invoke the
contingency arrangements built into the joint plan which allowed the final/audit
pass to be run in parallel with the early-stages of customer end to end testing
(PET).
* The main pass of B&TC testing for CI4 is expected to commence on 10th
February as planned. Horizon have agreed to locate their staff conducting the
End to End (PET) and User Confidence Testing (UCT) in Feltham. This is.a
major breakthrough and will contribute:enormously to the success of these
important stages. Discussions regarding the ‘rules of engagement’ during these
testing activities are well advanced and agreement should be reached very
shortly.
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¢ Recruitment is still a critical issue and although progress is being made we have
not achieved the planned resource levels. This has inevitably placed the existing
staff under additional pressure and resulted in some lesser tasks being delayed
e.g. documentation preparation for ISO certification. In addition, the lack of
new development commitments for the future will shortly cause our staff to
look elsewhere for work. It will become increasingly difficult to hold onto the
key individuals.
PROGRESS
e The System Test teams for KMS, TPS, LFS, APS, OCMS and Data Warehouse
succeeded:in recovering-some of the time lost before Christmas and now expect
to complete the main and final passes in February and March respectively. The
EPOSS and infrastructure teams expect to complete theirs by the end of March.
This is a considerable improvement over last month and means that it will not
be necessary to utilise the contingency built into the level 1 plans. This shows
the final.audit pass stages running in parallel with the early phases of the
customers end to end testing.
e Discussions with AP Clients continue to be delayed preventing agreements being
reached on the interface definitions. The programme milestones specify that 13
new interfaces will be agreed by the end of March 2000. This can only now be
achieved if we issue 13 generic specifications for review mid February and resist
as much change as possible. Time will tell whether this approach will be
successful.
e All major Change Proposal (CP) development is complete on EPOSS. Resources
are now devoted to fault analysis and clearance. All but one of the Riposte
desktop 2.2.3 issues have now been resolved. The completion of the TIP repair
facility;committed to in the last ‘supplementary agreement’ is planned to be
completed mid March 2000. Recruitment is still a worry and some lower
priority work is being affected. Unfortunately, this includes corrective action
deemed essential if ‘ISO certification is to be achieved.
e The infrastructure testing (auto-configuration, Tivoli, audit, message broadcast,
training mode, Maestro, FTMS and Network) coritinues to be dogged by
problems in the test rigs. These are being gradually resolved but it is a source of
considerable frustration for the team.
¢ Final Pass system testing of the Data Warehouse is achieving a very high success
rate, 100% from 367 test conditions, but is running behind schedule. Action has
been taken to ensure that the overall end date is still held.
¢ The RODB version 2.6 system test.final pass completed 2nd February and the
report is now iti production. A new plan for introducing the Secure Managed
Environment (SME) later has been agreed with the implementation team. A
change proposal to remove OCMS from the RODB platform has been raised to
ensure that it is not adversely affected by this movement.
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e The validation exercise carried-out on Riposte 6 both here'and in Boston
indicated that it would be sensible to withdraw this version from the C13 release
and plan to intercept it later in the year following further performance and
integrity tests, This was agreed internally and with the customer, as there are no
dependencies with the other software in the release.
e The VPN functionality tests in the large B&TC rigs has been successful and the
focus now turns to the resilience and recovery aspects. The CI3 release will be
implemented in the data centres 1 week earlier than planned and will take 2
weeks longer to complete. This change in approach is necessary to allow for
close: performance monitoring and network traffic balancing to take place before
the entire estate is activated.
e The B&TC main pass testing of the CSR+ software commenced on the 10th
February as planned with the rig building activities. The test scripts will be run
fromthe 19" February onwards until completion 3" March.
COST DOWN
e A detailed review of all current and future expenditure was completed in
January, and asa result a reduction in the 1999/00 financial year and the
overall forecast for development was submitted.
e The Technical Design Authority is seeking ways of achieving a substantial
reduction in the volume of traffic across the network. If successful this will
result in a significant annual cost savings for the remainder of the contract.
CURRENT CRITICAL PROBLEMS
e None
ISSUES
¢ The speed and accuracy of the rig building process continues to demand close
management attention. Improvements are being-made and some results are
visible but further work is required.
¢ We continue to validate the replacement PC’s (Xdi+) for the current 365’s. The
results to date suggest that software changes are required and previously
unplanned regression testing must take place but this is not.as great as first
thought. Recent-negotiations have confirmed that it will be possible to procure
more 365 PC’s which has removed the pressure on the CSR+ delivery schedule.
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¢ BT and Energis have indicated that there will be a significantly greater number
of outlets not able to connect to ISDN than first thought. The model used by BT
to establish ISDN feasibility would appear to have been flawed. They are
siiggesting that we should consider a.satellite solution and this is being
evaluated. A demonstration is being arranged for mid January. We are also
asking them to respond to us formally stating the precise position and
recommending a way forward.
e A proposal for the lightweight mobile configuration required to operate in a
variety of locations throughout the UK, has been submitted to PONU. The
proposal now needs to be formally ratified via the agreed procedures before any
major development or hardware production commences.
e We are currently carrying out a detailed investigation of the Service Level
Agreement Monitoring (SLAM) functionality included in the Data Warehouse.
It is not yet clear whether we have a contractual exposure‘ requiring significant
resources to rectify.
e PONU have recently insisted that we introduce a software interface to a new
type of scales (Avery Berkel 702). These scales enable heavier packages to be
weighed-and are normally shared with a number of counters. This latter aspect
creates several technical difficulties and we are also unsure whether we can
obtain a software driver.
e The volume of messages was reduced by the removal of Benefit Payment Card
last summer but these savings have been offset by a number of factors. For
example, an increase in the OBCS traffic, a larger number of Riposte
administration messages than anticipated and a change in the behaviour at the
counter during cash accounting periods. This will require more power at the
correspondence layer. The-full implications of this are still being evaluated.
e We are contracted to complete the migration of all the AP Client from the
current Post Office HAPS system by the end of roll-out. In order that this may
be achieved we must agree the interface specifications for all clients by the end
of March 2000. To date, POCL have not been able to arrange meetings with
their clients so that this task can be completed. This has been escalated to senior
PONU managers and they have agreed to expedite.
e [tis now very unlikely that the SPM (British Gas Smart Card) will be included in
the CSR+ release in September 2000. They have changed their interface
specification without notifying either PONU or ourselves. They have also
refused to allow ICL Pathway personnel on site to install the required interface
hardware, This issue has.again been escalated to senior PONU management.
COSTS
e The development forecasts demonstrate that even with the additional
development resulting from the rectification plans, costs remain under tight
control and subject to regular financial reviews throughout the year.
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Commercial &
Financial
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Version: 1.0
Date: 16/02/2000
Commercial & Financial Report
MONTHLY SUMMARY
¢ Since signing the Third Supplementary Agreement on 14" January, the focus
has switched away from Acceptance related matters and on to forward-
looking Business Plans, both Pathway’s and POCL’s.
e The Third Supplementary Agreement opened the way for Roll out to resume
on schedule on 24" January. With all Acceprance.related conditions now
dealt with, revenue is being accrued at the rate set out in the contract as each
post office is implemented (at the rate which applies between the First and
Second Payment Milestone).
e Significant effort has gone into calibrating the: Pathway cost base and into
interpreting actual performance as it applies to the various cost drivers.
Month on month spend has been running below Plan since May, due to a
combination of managed deferrals and unplanned.resource shortfalls, but
some cost drivers have been running adverse to the May Business Case.
e The Business Case has been further calibrated against bottom up forecasts by
unit and also against the Risk Register. The Business Case includes provision
for the most likely risk outcome for both Options A and B.
e The main drive has continued to be on Option B, the intention being to
qualify each of the identified opportunity areas under Business Development
within three to six months. The bottom up resource forecasts are based on
“Option A+’, which equates to Option A level of resourcing within an
Option B organisation structure.
© PC sourcing and pricing issues are coming to a head. Progress has been made
on both technical options reducing the risks-considerably, but the cost of the
additional 365s (only just received) has still not been satisfactorily resolved,
with the most recent quote at a premium of £70 on the 365. Without all the
facts, it is impossible to make an objective.assessment of how many 365s to
buy before cutting over to the new PC (if indeed we.do go to a second PC).
e The De La Rue settlement in relation to BPS termination remains to be
confirmed in writing, and this continues to be forecast for mid-March.
© The 1999/2000 profit forecast-has been increased to £38m. PwC have
signalled agreement in principle to the revenue and provisions accounting
treatment, and.have not raised any objections to the 9.3% profit margin
being used for profit recognition (cf. total project to go 12%).. However, this
is not yet a done deal.
PROGRESS
e Restart of roll out, with solid performance achieved thus far.
e Financial performance remains well within forecast.
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RISKS
ISSUES
Convergence of understanding and numbers between bottom up forecasts
and the Business Case continues to improve, with risks, opportunities and
tasks increasingly being accepted as actions by the line unit directors.
The beginnings of a more constructive dialogue with the POCL management
team.
Restart of roll out, with solid performance achieved thus far.
Financial performance remains well within forecast.
Convergence of understanding and numbers between bottom up forecasts
and the Business Case continues to improve, with risks, opportunities and
tasks increasingly being accepted as actions by the line unit directors.
The beginnings of a. more constructive dialogue with the POCL management
team.
Ability of the Post Office to move quickly in relation to ‘new business’
commitments,
The CSR+ delivery schedule is under pressure, particularly in relation to rig
building
Planning and managing the right level of skilled resources to complete CSR+
on the one hand and, when it. does happen, respond to POCL demand for
new business on the other.
Ability of AXTC and OSD to support the necessary resourcing and
performance levels.
The need to establish ‘rules of engagement’ with POCL which will enable
new business without trading off margins.
The PC ‘buy’ judgement. The viability of the XDI+ as replacement for the
current-365 machine is in serious doubt. FJ-S have indicated a last time buy
date of July this year, which is too soon for us. The replacement Siemens
originated machine, the SX, only has two slots against our requirement for
three. FJ-S need to confirm their-ability to satisfy this requirement before we
can judge the last time buy of the 365. The price gap has not yet been
resolved and this plays into the mix equation. MCD are providing assistance
on underlying cost and competitive price benchmarking.
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e Resourcing: current HR direction to do all new resourcing through A&TC,
even for CS activities which will be on-going support requirements for as
long as the contract runs, will adversely impact the Business Case by some
--— £6m-~-Fhe-mix-impact (AXTC versus in-house staff) is aggravated by the
recent sharp increases in A&¢TC man-rates (up by 25% since May and. fast
approaching freelancer rates). A&TC are having to recruit to meet our skills
requirements. Although the cost increase to ICL Pathway only represents a_
shift of profit from ICL Pathway to A&TC, it is actually doing nothing to
increase the utilisation of current staff on the bench and is inappropriate for
long term service related.resourcing (wrong allegiance). Price and allegiance
irrespective, AX TC’s ability to satisfy our needs for skills has been inadequate
thus far. Serious levels of skill shortfall are being compensated by additional
overtime and delaying work.
FINANCIAL PERFORMANCE
¢ The Controller’s report follows, as do summaries of the Option A and Option
B business cases.
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Planning Case:
Pathway Business Case
Option A
March I 1999/ 2000/ I Total Total Project
FISCAL YEARS, £M 1999 I 2000 2001 I TogoI I Total I May99] Oct99
cum
FINANCIAL SUMMARY
REVENUE
Base Contract 2 226 210 899 901 897 900
New Business 0 0 44 44 0 44
Total 2 226 210 943 945 897 944
COSTS
Opex - Base Contract 199 126 126 550 749 731 759
Opex - New Business 0 0 35 35 35
International 2 0 0 3 0 2
Treasury recovery 8 8 -8 -8 -8
Liquidated damages - SLAs 0 0 2 8 8 12 8
Sub-total 201 119 128 585 786 735 796
Depreciation 32 18 33 Vt 143 145 142
Utilisation of BPS Provisions ll “19 -49 -49 -68 -50
BPS subcontractor termination 2 6 8 8 27 9
Losses on forward exchange cover 2 2 4 4 3 4
Interest 18 i i 24 42 38 43
Allowance for Opex Risk 0 s 19 19 0 17
Unallocated Cost Task 0 0 7 -7 0 -17
Transfers (to)/ from WIP 247 65 20 132 “14 “14 “114
PBT before extraordinary item 2 20 23 116 113 132 114
Write off of BPS spend to date 114 0 14 14 14
Provisions for BPS spend not yet incurred 68 0 68 68 68
Release of excess BPS provision -19 0 -19 -19 0 18
Pathway PBT -184 I 38.8 23 134 -50 -50 -50
Group intercompany profits 2 8 6 33 35 35 35
PBT - ICL GROUP -182 a7 29 167 -15 -15 -15,
Project PBT % before extraordinary item 9.0% 11.0% I 12.3% I I 12.3% I 14.7% I 12.1%
CAPITAL SPEND including Risk 56 56 29 86 143 145 142
PROJECT CASH FLOW after interest
Discrete 252 45 “14 203 ~50 -50 -50
NET PRESENT VALUE AFTER TAX (at Pathway level) - 7S I- 77]- 76
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Planning Case: Pathway Business Case
Option B
March I 1999/ — 2000/ I Total Total Project
FISCAL YEARS, £M 1999 I 2000 2001 I Togo Total I May99 I Oct99
cum
FINANCIAL SUMMARY ~
REVENUE
Base Contract 2 226 210 899 901 897 900
New Business 0 0 44 44 0 44
Total 2 226 210 943 945 897 944
COSTS
Opex - Base Contract 199 126 126 550 749 731 759
Opex - New Business 9 0 35 35 0 35
International 2 0 0 3 0 2
Treasury recovery 8 8 8 “8 -8
Liquidated damages - SLAs 0 0 2 8 8 12 8
Sub-total 201 19 128 585 786 735 796
Depreciation 32 18 33 tt 143 145 142
Utilisation of BPS Provisions “ll 19 -49 -49 -68 -50
BPS subcontractor termination 2 6 8 8 27 9
Losses on forward exchange cover 2 2 4 4 3 4
Interest 18 W W 24 42 38 43
Allowance for Opex Risk 0 5 19 19 0 17
Unallocated Cost Task 0 0 -7 7 0 -17
Transfers (to)/ from WIP 247 65, 20 132 “4 -U14 “14
PBT before extraordinary item 2 20 23 116 143 132 4
Write off of BPS spend to date 14 0 14 114 14
Provisions for BPS spend not yet incurred 68 0 68 68 68
Release of excess BPS provision 19 0 -19 -19 0 -18
Pathway PBT -184 I 38.8 23 134 -50 -50 -50
Group intercompany profits 2 8 6 33 35 35 35
PBT - ICL GROUP -182 47 29 167 -15 BE “15
Project PBT % before extraordinary item 9.0% 11.0% I 12.3% 12.3% I 14.7% I 12.1%
CAPITAL SPEND including Risk 56 56 29 86 143 145 142
PROJECT CASH FLOW after interest
Discrete -252 15 -14 203 -50 -50 -50
NET PRESENT VALUE AFTER TAX (at Pathway level) - 75 I- 7I- 76
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ICL Pathway - January 2000 Finance Highlights
£000s Mth. Actual Mth. F'cast Variance YTD Actual Notes
Revenue 4,537 3,471 1,066 166,617 i]
Project Cash.Costs (8,489) (14,497) 6,008 (83,063) - 2
Depreciation (1,683) (1,707) 24 (12,989)
Interest Cost (S11) (588) 77 (9,709)
Profit / (Loss) before Capitalisation (6,146) (13,321) 7175 60,856
Allocation of result before Capitalisation:
(Additions to) / Reductions in Project W (6,635) (13,624) 6,989 45,749
Project Profit Recognised 489 323 166 15,489 1
International Activities (20) 20 (381)
Profit/ (Loss) before Provision Release 489 303 186 15,108
Provision Release - 10.000
Total Profit / (Loss) Declared 489 303, 186 25,108
Balance Sheet Actual Forecast Variance
£000s better/(worse)
Net Fixed Assets 42,658 44,248 1,590 3
Project WIP 83,697 90,685 6,988
Other Working Capital (12,501) (17,092) (4,591) 4
March 1999 Provisions (46,395) (46,395)
Net Borrowings (74,827) (79,000) 4,173
Total 7,368) (7,554)
Share Capital 151,700 151,700
Retained Earnings Deficit (159,068) (159,254) 186
Total (7,368 7,554)
Headcount Actual — Forecast Variance
Permanents 226 228 2
ITs 10 10 0
Freelancers 191 200 9
ICL Contractors 143 127 (16)
Total 570 565 G) 5
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1. Revenue and Profit: Actual Forecast Variance
[Installed Offices at end of month: 1,969 1,922 47 ]
Basis of revenue accrual, re. next Milestone Payment:
No. of installations since last milestone ( 169 122 38.5%
Current accrual rate is £23,351 per office
£000s
Milestone Accrued Revenue 3,946 2,849 1,097
RFI Invoicing 104 100 4
Installation-based Jmplementation Cost ; 425 415 10
CCNs 62 100 (38)
Other 7 (7)
Total Revenue 4,537 3.471 1,066
Profit Recognition for the month was at the rate of 9.3% on year-to-date UK project
expenditure. The £489k profit included a positive adjustment of £67k in respect of
project revenue already booked during the year.
2. Cash Costs
Main Variances arose as follows:
The recent trend of lower than forecast invoicing levels on the implementation
sub-contracts continued in January, with these areas accounting for over £4.9m of
the overall £6.0m favourable cash cost variance.
The OSD charges and Energis network communications charges were also lower than
forecast, as were most resource related costs.
£000s
Operating Costs:
OSD Data Centre Services
OSD Field/Help Desk Services
Energis Charges
Resource Related:
Own Staff and Travel
Freelancers
ICL Contractors and Internal Chars
Subcontracts:
WTL Site Mods & Preps
Pearce Site Mods & Preps
Knowledgepool Training
Celestica Hangaring Services
Exel Delivery Services
Other 3rd Party Services
Actual
544
605
312
950
1,848
1,069
688
313
890
127
84
300
Forecast
683
769
409
1,077
1,995
1,326
2,152
2,004
2,048
311
520
298
Variance
139
164
97
127
147
257
1,464
1,691
1,158
184
436
(2)
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Other Costs:
Maintenance 56 75 19
IT & Communications 94 148 54
Premises 212 240 28
Exchange Differences 177 200 23
All Other Costs 220 242 22
8,489 14.497 6,008 -
3. Fixed Assets
Fixed asset additions were £1.6m lower than forecast, the main variances arising
in counter equipment, network installations and the later than forecast addition of
the additional router capacity at the data centres:
£000s Actual Forecast Variance
Training Systems/Upgrades 26 171 145
Counter Equipment 2,786 3,528 742
Energis PO ISDN Installations 46 323 277
Router Equipment 0 498 498
Own Use IT Equipment 35 32 (3)
Test and Support Equipment 68 40 (28)
2,976 4,592 1,631
4. Working Capital
Core Working Capital (i.e. excluding Project WIP and the March 1999 provisions)
was £4.6m "worse" than forecast, due mainly to the extremely low supplier invoicing
levels for implementation subcontracts and fixed asset additions. Fuller accruals will be
made in.future in order to minimise such variances.
The main elements of Working Capital are as follows:
£000s Actual Forecast Variance
Debtors on invoices actually raised 666 763 97
Accrued Revenue 4,259 3,437 (822)
Escher Licence Fees paid in advance 763 763 0
WTL "Float" 1,250 1,250 0
Other Prepayments 595 1,009 414
VAT 1,342 1,039 (303)
3rd Party Trade Creditors (5,993) (10,909) (4,916)
InterCompany Creditors (8,343) (9,779) (1,436)
Accrued.Expenditure (5,040) (4,663) 377
Portion of £8m Treasury Cont'n not yet! (2,000) 0 2,000
(12,501) __ (17,090) (4,589)
The forecast omitted to include the £2m Treasury contribution balance. If this had been
included, the variance would have been larger, but in line with the expenditure variances.
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5. Headcount Analyses
Thanks mainly to the central layoffs in the January Forecast submission, overall headcount
was close to forecast. However, the underlying trend of incorrectly overestimating short-
term increases in staff movements within the actual month of the forecast is still a worrying
feature, particularly within the Development departments.
Development & Programmes
Permanents
ITs
Freelancers
ICL, Contractors
Total - Development/Programmes
Customer Service
Permanents
ITs
Freelancers
ICL Contractors
Total - Customer Service
Implementation
Permanents
ITs
Freelancers
ICL Contractors
Total - Implementation
Central Departments
Permanents
ITs
Freelancers
ICL Contractors
Total - Central Departments
Central Forecast Adjustments
Permanents
ITs
Freelancers
ICL Contractors
Total - Central Adjustments
Total Company
Permanents
ITs
Freelancers
ICL Contractors
Total - ICL Pathway
Actual Forecast Variance
56 65 9
4 3 (dy)
179 194 15
121 126 5
360 388, 28
58 37 2
4 5 1
3 3 0
9 7 (e)
iI 2 !
82 82 0
0
7 7 0
ia 18 7
100 107 I
33 36 3
2 2 0
2 0
2 6 4
39 46 z
(12) (12)
0
(6) (6)
(30) (30)
0 (48) (48)
226 228 2
10 10 0
191 200 9
143 127 (16)
570 565 (3)
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——————
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—
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Customer
== Requirements
Report
FUJ00058189
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ICL Pathway Customer Requirements Monthly Report Ref: PA/REP/046
Version: 1.0
Date: 16/02/2000
Customer Requirements Report
MONTHLY SUMMARY
With Acceptance now behind us,-except for some inevitable loose ends, the
team has restarted Requirements work, producing business case material for
Network-Banking, and Pen Pictures of the propositions for each prospect area.
It has also picked up activities in the CSR/CSR + areas that had been put on the
back burner.
DETAILED PLAN ACTIVITIES
NEW BUSINESS REQUIREMENTS.
.
We contributed to the Network Banking response to the Post Office’s RFI,
reportedly well received. The key issue remains the practical nature of the
business engagement model between POCL and the banks, and the:associated
end-to-end business case .
A basic cost-revenue model was produced. There is work to do on re-
apportioning costs, but the business case is not strong unless more substantial
business volumes can be generated (more than eight major participating banks)
or the 2005 limit of the current contract can be extended. Boiled down to one
vector, a POCL transaction charge of 60p to the banks is currently indicated,
whereas 40p is probably all the market will bear.
The relationship of this initiative with that on POCL ATM provision is not
clear, either in terms of business objectives or any potential technical synergy
with the Horizon infrastructure. Ivis not really sensible for whoever wins the
suburban/rural ATM business to install their network connection when our
ISDN circuit could be used in a choice of ways.
“Pen pictures” for the prospect areas of new business were prepared and will be
pursued individually.
The decisions of the rapprochement meeting with POCL of 8/2 will cause this
area to take over as the main activity.
ACCEPTANCE LOOSE ENDS
If pressed POCL would agree that Als 342, 372, 376, 378, 218, 391 are Closed
/ incapable of further update. Their Acceptance Manager is leaving the project
at the end of February. The formal timetable was updated, and we are down to
minor points. The formal measurements for Als 376, 408 and 298 continued
until the end of CAP42 (12/1) and are now completed.
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¢ The outturn on AI376 was 0.06% Cash Account Discrepancies, exactly an order
of magnitude better than the target. Under this activity John P made significant
contributions to the Third. Supplemental agreement, specified the committed CS
Repair Facility, aligned the operating agreement on Reconciliation to support
the contract, and sorted out the necessary PinICLs to clear.
° Discussions to change to the migration utilities and EPOSS for force-balancing
under AI 211, Receipts not equal to. Payments, have continued to the present-
day and now require a paid study before the CRs can be raised:
e The outstanding queries on AI 372, Software Distribution, were cleared up and
the incident closed. Monitoring for corrupt DLLs continues and any issues that
now arise will be taken through CS.in the normal way.
© AI 298 authorised reboot counts were down to half the limit in January and
further declined following changes for the counter printer faults, which had
represented about 60% of the problem. CS is replacing the current manual
reporting process with automated weekly reports covering the whole-cstate now
that roll out has restarted.
e The last of three Appendices, Systems Management, to the Generalised API for
OPS/TMS was published on 28/1. The main document is in for sign-off and a
revision of Appendix A, Smart Cards, completed. There are a few comments
on Appendix B, Cryptography & Key Management, that seek information
outside the contract. There is a backlog of comments on the OPS and TMS
Architecture specifications to bring these up to the same level as the Generalised
API.
e The AI 369 pilot test report demonstrated the poor quality of OBCS bar-code
printing. Although there are no outstanding actions on Pathway while the
negotiations between POCL and DSS to roll out OBCS continue, the clock is
ticking and the spike of network traffic that will occur when a rollout is
sanctioned is growing with every installation.
e AI 391, Physical Security, was Closed without a re-inspection at Bootle / Wigan.
e Closure dates, actual or forecast, were provided for all the Low Als. One, Al
232, concerning the consequences of untimely deletion of a stock unit, remains
in dispute in the contract forum. Dave C has provided an update to Bob Booth
on the remaining Low POCL Infrastructure Acceptance Incidents. Only one
remains with Pathway - a statement on time standards used.
CSR / CSR+
e Responsibilities in POCL for Invoicing and Transaction Reconciliation reports
have shifted from Liz Tuddenham to Jerome Brice. Verbal assurance on the
acceptability of the proposed report layouts, sent to POCL last month, has been
received. A copy of the updated version of the Invoicing Reconciliation
document was also produced. Comments are being generated on the MIS High
Level Test Plan so as to ensuire these aspects are correctly delivered.
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e Answers to most of the issues raised atthe APS demo have now been supplied.
One issue remaining is a requirement to be able to perform SPM reversal from
within a customer session. This is now being addressed jointly by the APS and
EPOSS development teams.
e Dave C prepared the AP Client Specification proforma and the initial 13 APS
Client specifications to support Client Migration. These are required to be
agreed by POCL by 31/1 to hit one of the programme milestones. =
e Necessary contact with AP Clients is not being achieved. The blocker is the
POCL Client management team not engaging with Clients on migration.
Pathway has a clear commitment to achieve migration before the end of national
rollout, to which the final stage payment is tied. But in view of the poor
progress we should press to remove this dependency now.
e The Euro strategy paper and plan was completed and informally discussed with
Nick Beal. Note this has not been formally published to POCL. He and the rest
of POCL were not.at all happy with the cost (£370k) foreshadowed for the plan
stage, but he could not immediately fault the approach or content. The POCL
Euro team is now considering this paper.
« Siemens is making changes to both SPM and Quantum token technology
specifications, previously unannounced. They have decided to change the
identification code used on the SPM tokens for live operation and want Horizon
to recognise and reject a number of old Quantum cards being used by some
early customers. Both tasks require disruptive code changes, and will affect the
testing cycles.
e Tony H has produced a report on how the end-to-end distribution of Reference
Data should could best be strengthened to protect the contract requirements.
The POCL Reference Data Business Rules have to be agreed and validation
performed accordingly, and the “Attribute Checker”, now written into the
contract, has to be in satisfactory service by end March. These items are now
being.handled by CS and Systems.
e A short-term solution remains outstanding to handle outlets closing temporarily
for over three weeks where message stores have been archived of essential data
by the time the outlet re-opens. A long-term solution has been identified for
implementation at CSR+.
e The Security Functional Specification was issued at 4.2 for POCL comment.
The Access Control Policy is being updated to issue 3.2 for wider review. The
HSH Continuity Plan was issued for approval, which should in turn clear
CCN457 and sundry A2As.
e The Huthwaite Disaster Recovery proposal is being prepared (by Nial Finnegan).
¢ John D has obtained a full set of mobile configuration site addresses from POCL
and provided a completed response to the POCL ergonomist’s comments.
e An attempt has been made to persuade POCL either to remove the A706 scales
support capability from CSR+ or to buy us some three months time to allow
them to be brought in later.
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OTHER ACTIVITIES
e This month we-waved goodbye to: Dave.Jones.who has now transferred to UK
Finance. We wish him well.and.all thank him for his success in-bringing the
Security area through Acceptance.
e Participation continued on the [509001 Programme Board. Gap Analysis to-
identify the processes that are/are not covered showed that the three main
Customer Requirements processes, Business Development, CAR, Acceptance, all
exist. They will be transferred to the new intranet site. We are hoping not to
use the Acceptance process again!
CURRENT CRITICAL PROBLEMS
¢ The delays in getting throtigh to migrating AP Clients.must be confronted now
if we-are to foréstall any arguments about the May 2001 stage payment.
ISSUES
e None.
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pwuoIsny =
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"IIT
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ICL Pathway Customer Service Monthly Report Ref: PA/REP/046
1.0
16/02/2000
Customer Service Report
MONTHLY SUMMARY
¢ In January, much of CS energy was directed at addressing Acceptance and
resolving problems with the Reference Data interface to POCL.
e Service provision for post offices that'were rolled out in 1999 proved to be véry
stable and was accompanied by a reduction in incidents being logged at the
Horizon Systems Helpdesk (HSH). Although we failed to agree with PO on the
achievement of specific performance measures for Cash Account calls, PO did
acknowledge that the HSH had shown a marked improvement. Relationships
between the ICL and PO helpdesk staff are improved
¢ The Corporate Red Alert with OSD for poor.SLA performance has been re-
graded to Divisional Alert. HSH Service improvements.are still necessary in the
areas of call answering and call abandonment:and second line support filtration
rates.
e After only two incidents, one resulting from a mistake by PO and another from
an error in Pathway’s systems, it was clear that the processes for Reference Data
Management and Authorisation were inadequate. The key issues of verifying
the accuracy of reference data before its authorisation by PO for propagation to
the live estate, was jointly reviewed and new plan was produced to enable
National Rollout to recommence by 24" January. A more robust interface
agreement was agreed on 14" January.
¢ Recruitment to the System Support Centre remains a concern. Only 23
applicants responded to a recent national and local advertisement. Key skills
required are Microsoft NT and Visual Basic. These cannot be sourced from
A&TC
e OSD’s Powerhelp system is on Corporate Red Alert suffering from System
Performance and Network problems. This is a risk to rollout.
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Version: 1.0
Date: _ 16/02/2000
VITAL STATISTICS
Estate: 1966 Post Offices, 4413 counters
Total number of OBCS transactions to date 40,600,000
Total value of OBCS Transactions to date not available
Number of OBCS transactions in January 2000 14,900,000
Value of OBCS transactions in January 2000 1,170,000,000
Total number of books impounded to date 40,570
Potential Benefit Encashment fraud avoided to-date £4,500,000
Total number of EPOSS Transactions to date 48,700,000
Total value of EPOSS Transactions to date £1,500,000,000
Number of EPOSS transactions in January 2000 11,300,000
Value of EPOSS transactions in January 2000 £750,000,000
Total number of APS Transactions to date 9,100,000
Total value of APS Transactions to date £222,400,000
Number of APS transactions in January 2000 2,500,000
Value of APS transactions in January 2000
£74,600,000
INFRASTRUCTURE SERVICES
Strategic Services Unit
Outlet Change
Work In Progress
Outlet Change Type Target Delivery Date
Westfield Reopen 4/2/00
William Street — I Outlet Conversion B/F at POCL request to
5/2/00
Highfield Relocation & Counter 7/2/00
Increase
Fullwood Refurbishment 18/2/00
Whitehall Refurbishment 21/2/00
Cancril Farm Counter Increase 28/02/00
Fairford Relocation 28/2/00
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Cwmlynfell Relocation & Counter 03/03/00
Increase
Manorbier Refurbishment 05/03/00
Stranmillis Road I Relocation 20/03/00
Parkmount Relocation 20/03/00
Dymock Permanent Closure 31/03/00
Wythenshaw Counter Increase Complete
Knutsford Counter Increase Complete
Eldwick Refurbishment Complete
Hingham Equipment Move Complete
Seskil Green Outlet Closure Complete
Powburn Reopen TBC By POCL
Drumo (Belfast) I Emergency Closure TBE by POCL
Bath Relocation TBC By POCL
Legahory Relocation TBC By POCL
Work Completed in January
Change Type Volume
Permanent Closure 12
Outlet Refurbishment 7
Counter Gonfiguration Change 7
Temporary Closure (& Reopening) 3(3)
Relocate Outlet 3
Live Operation
¢ POCL?’s audit of the delivery of the HSH Service at cash account has now ended
and an improvement plan to rectify outstanding issues of concern to POCL and
ICL Pathway has been put in place. All deliverables of the improvement plan are
progressing to target.
« A Helpdesk Review Forum has been established and the first meeting between
HSH and NBSC was held in Stevenage on 27" January. The forum will be of
value to both departments in improving the delivery of their respective
businesses. Monthly review dates have been set until September. The next
meeting will be held at HSH in Manchester on 28" February.
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¢ The-development of the HSH/NBSC interface agreement is progressing well.
This is a joint activity with staff.from both NBSC and HSH making an excellent
contribution to the development task. Version 0.1 of the agreement has been
released and revicwed by HSH and NBSC. Incident management responsibilities
of both departments have been agreed and will be detailed in V0.2 of the
agreement which was issued on 07" February.
« An update of software released to 1100 counters had an adverse operational -
impact on post offices:
¢ Reversals carried out were not shown on the Giro Bank report although the
transaction stream reported to TIP was correct. If'a Postmaster carried out a
multiple reversal a discrepancy occurred. Because there was no entry on the
report he did not realise he had completed the initial reversal.
e Where errors occurred Post Masters could not cut off giro bank reports at the
end of day
e¢ MSU managed out discrepancy issues with TIP. ICL Pathway technical teams
produced and released fixes for the problems on Monday evening (31/01/00).
MANAGEMENT SUPPORT UNIT
Management Information
« ICL Pathway is being monitored for the life of the contract on the volume of re-
boots occurring as a result of system problems being reported to the HSH. In
ordér to provide this information, we are monitoring the level of system calls
received against the re-boot or ‘work around’ information supplied by the
Horizon Systems Helpdesk. Re-boot information will be provided to POCL via
the Horizon.service Review Forum to allow them to monitor our performance.
The entire analysis of system problems / re-boots and ‘work around’ will be
incorporated within the weekly report.
« MSU are working on the production of the Service Review - Performance
Statistics user guide and the ‘Remedial’ payments reporting ‘process. Target date
is 23" February.
e The first meeting with POCL to discuss CSR+ benchmarking will be held
during the second week in February.
Business/Reconciliation Incident Management
¢ MSU has been working successfully with POCL to close down long: outstanding
PinICLs and issue final versions of all outstanding RED reports. The team is
now getting ready for the introduction of new incident management procedures
following the resolution of AI376.
« The ‘TPS Reconciliation and Incident Management’ document is complete and
agreed as being conformant to contract (by ICL’s solicitors). It has yet to obtain
approval from POCL, which is anticipated to be given during February.
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« MSU has now taken delivery of a new version of the non-polled. outlet report
and are conducting some routine testing. Procedures will be re-written and
agreed with POCL as soon as we are confident that the report is working
correctly. We now expect to be able to advise POCL which offices are
consistently offending by switching off their counters:
OPERATIONS SERVICES
Service Availability
Systems Operations
Host / EMC System
« There have been-no significant problems with the Host Systems.
Correspondence Servers
¢ There were 2 correspondence server problems in January that followed a period
of 8 weeks without failure. CS2 in Bootle was the main issue and investigation
found the problem to be associated with HOTBIAS. A fix is currently under test
with OTT and will be applied as soon as possible. Servers are back in service and
fully operational.
e We will soon be switching on Archiving again starting with CR4 in Wigan, to
prove that there are no issues with Archiving. ”
Audit Server
« ICL OSD staff are investigating missing Tivoli files and checking the-current
state of the Audit Servers with Quality & Risk Directorate.
Data Warehouse
e Data Warehouse is now running correctly - one day in arrears.
Availability/Business Continuity
e The overall availability of all of the data centre systems has again been extremely
high, with only 2 correspondence server failures. No outage was experienced by
POCL as on both occasions the service was failed over to standby systems.
Major Incidents
e Two Major Business Continuity Incidents are currently open.
¢ The first, from 1999, on the Correspondence Server index corruption is planned
to remain at open status until Riposte archiving is re-enabled.
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¢ The second on the Powerhelp server is planned to remain open until the
secondary Powerhelp server is relocated to MANOS and the network
performance improved.
General
¢ Version 1.0 of the Business Continuity Operational Test Report (1999)
CS/REP/046 has now been produced and submitted for approval.
¢ Version 2.0 of the HSH Business Continuity Plan has been produced and
submitted for approval
e A draft SSC Operational Test Plan, CS/PLA/046, has been produced and the SSC
disaster recovery test was successfully conducted. The report is currently in-
progress.
e The Systems Operation Service operation test is planned for Thursday 10th Feb
in Belfast.
¢ = The.additional ‘hot standby’ equipment for the Bracknell site disaster recovery is
now available and arrangements are being made to configure these workstations
on.the Private LAN so ICL OSD can. maintain them at the latest build state.
There are still outstanding actions on the ‘FELO1 permanent’ kit required for
OTT and Reference Data.
e The féeview of the Business Continuity Framework document for CSR+ changes
was held and changes identified.
Networks
¢ On Wednesday 26" January there was a network failure that is believed to have
been caused by Energis carrying out work that had to be regressed. Reports
from Energis and also from OSD Networks are being prepared. There was no
loss of service, although the overnight schedule had to be carried out manually.
APS AND TIP SERVICES
Automated Payment Services
e There were no file delivery issues.
Client Take-on
¢ CRs forthe new Token Verification Service and to introduce additional mini-
schedules before June are expected in the next few days.
° The CTO42 validation file was delivered to POCL late in January. We could
not get the reference data downloaded to our test counter because of a technical
problem. A report has been submitted to POCL explaining the reason for delay.
The problem has been rectified and will not be repeated.
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AP client Migration
* The problems we experienced with POCL not involving Pathway in discussions
with their AP Clients are still an issue. This is receiving more attention now at
the Horizon New Development meetings.
TIP
e There were no transaction file delivery problems in January other than those
caused by post offices that had their counters switched off overnight and
therefore were not polled.
e A text has been agreed with POCL to be included in the April Counter News to
remind Postmasters to not turn off their Horizon base unit.
« ACPis to be raised for the production ofa sticker to be placed on all counter
system base units reminding Postmasters not to'turn them off.
CHANGE MANAGEMENT
Reference Data
« The Reference Data Review Group has now had its final meeting and
outstanding activities have been handed on to other groups.
¢ A solution to the problem of RDMC releasing new data when earlier versions
are being verified is being tested. Release was scheduled for the weekend of 5/6
February. °
¢ The Reference Data Interface Agreement - version 3.0 has been presented along
with a CCN for final sign off.
e A total of 427 reference data.changes were released to the live estate since the
last report. There were 26 correction files, 13 migration special files and 8 files,
which contained rejected rows.
* RDMC fejected rows -:a report was submitted to the Reference Data review
forum, which showed progress on resolving the:issue of rejected rows. ICL
Pathway is still reviewing this report.
¢ There have been a number of problems with the processing of Reference Data in
the last:two weeks. These include:
« A number of files were sent to RDMC that were thought to be benign to the
Horizon system. This was not the case as it caused some changes to occur in the
Horizon counters that may not have been expected. The problem was due to
POCL failing to supply required data to a previous OBC in September 1999 to
ensure that a change in AP client names was propagated to all associated AP
tokens. The Reference Data Comparison tool successfully identified this
problem.
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A number of files were sent to RDMC that contained a change to the Cash
Account type for both live and non-Live outlets. Unfortunately a process issue
had allowed these changes to be supplied by POCL as Help Desk changes only
and RDT were also not informed that the files contained such data. As a
consequence RDT were unaware of the urgency with which the files were
required and had not progressed them for release. The problem was further
complicated in that some of the files had dependencies on others for which RDT
were awaiting action both from POCL and from ICL Pathway. RDT were able
to progress the files slightly later than required but we believe that this has nor
caused any problems to Live outlets. The underlying cause of.the problem is
being addressed and additional processes are being established within POCL to
ensure that this does not happen in the future.
An outlet’s FAD code was changed in anticipation of the outlet moving to a new
location and franchise however the actual change was delayed but this was not
reflected by POCL within the Reference Data. This caused problems for ICL
Pathway data processing. The immediate problem was overcome by. provision
of corrective Reference Data however the underlying issue is still under
investigation.
Software Distribution
46 Release Notes have been raised over the reporting period and 31 have been
authorised for live. 12 Release Notes have been withdrawn over the same
period.
The update of the remaining counters with the new Eicon drivers is now
complete. Measures to deal with the operational problems identified during the
download are still under review.
The new Celestica baseline was implemented over the weekend of 22/23
January. Although the implementation was trouble free, problems were
encountered in the week immediately following with baselines in the wrong
build being introduced into offices. This highlighted the need for stricter
controls when two counter baselines are in play, which is expected to be the
case while C13 is being rolled out. It has been confirmed that TIVOLI will be
able to cope with two spares baselines at the.same time at CI3 but NOT two
tollout baselines i.e. rollout sites cannot be included in pilots.
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Quality & Risk Report
MONTHLY SUMMARY
e Security. The implementation of KMS will involve a significant.amount of
resource, and a workshop is planned to involve all interested parties.
Procedures for key management for CI3 (VPN) have been implemented. An.
interim solution to the DPA issues has been agreed. There is still some concern
over the security of RODB, although a pragmatic way forward has been
agreed.
« Risk Management. The Business Risk Register has been reviewed and updated.
The weighted overall risk exposure now lies at £22mn, up from £17mn. Both
risk staff have left Pathway; A&TC replacements have been recruited.
e Quality. IS09001; gap identification has moved ahead and a draft plan is
being produced. Discussions have been held with ICL Group Quality and
changes to the QMS are’ planned. A roll out DQA has begun.
e Audit. There has been no agreement on the Development ‘minimum
documentation set’. This has potential implications for the-achievement of
ISO9001 and in the longer term, supportability of the system. Audits were
conducted of the Implementation 11 Week Plan and the Planning’process. .
The provision of data for investigations still proves to be an issue — it ts now
with the lawyers.
PROGRESS
Risk Management
* Graham King, Risk Manager left Pathway in January,
has been replaced.by Nigel Kermode. A replacement for
left in December, will start in February.
e The Business Case Risk Register has been reviewed by the Management Team.
The overall risk exposure is now £90mn, weighted exposure increased from
£17mn to £22mn. The major risks are:
e PC compatibility; the change to pe specification
e Delays to CSR+, and increased support costs as a result of insufficient
quality
e Operational costs including communications, remedial work to sustain
SLAs, Help Desk
e Release 3 and 4 costs - development and support
e Implementation; ntl performance, low beat rate or break in roll out.
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SYSTEM SECURITY
General
© AI 391. All actions have been completed and PONU have signed off. Agreed
security procedures will need to be the. subject of regular compliance audits.
Ongoing maintenance will also be required.
e DPA. A successful.meeting was held with PONU to establish our respective
status under the 1998 Act. Requiréments emerging from this will form the
basis of-contractual negotiation. An interim solution for the provision of
training information by Knowledgepool to POCL was also agreed.
CSR
¢ SEM monitoring/refinement is continuing. Random checks of privileged
accounts have been satisfactorily checked. VPN events have-been reviewed
and classified accordingly for initial capturing. Version 0.6 has been
régistered in PVCS.
¢ SecurlD/RSA Secure-Care Plus. Technical support and major upgrades are
now covered by a consolidated support contract to cover 250 users.
° VPN. A significant amount of work has been done to implement the physical
and procedural security required for handover of VPN keys at CI3.
¢ RODB. Actions identified from workshop have been progressed. The agreed
implementation strategy will require security input and sign off before
deployment.
CSR+
e Work on. KMS User Guide and review of related documentation continues.
An additional author has been taken on to write some of the more technical
sections.
e KMS Implementation. Workload and timescales continue to be defined. A
scoping paper has been produced that considers what needs to be put in place
before the KMS service can be implemented. This will act as a precursor for a
workshop discussion amongst those areas involved. It is already clear that
significant additional resource will.be required to. implement the service
within proposed timescales. A dedicated project manager may be needed to
drive forward the overall programme.
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QUALITY
® 1§09001. Reviews have been conducted with ISO Board members to support
the identification of process gaps. An overview of process gaps and of
external impacts on our registration activities has been prepared as basis for
planning. A draft plan for registration is being developed for review at the
February ISO Board
= Revision of QMS documentation is underway to.incorporate an overview of
the QMS and establish links from the One ICL Processes. This should
facilitate incorporation of Pathway within the ICL Registration.
® A DQA Plan has been developed for visits during the first 4 weeks of roll
out, involving 4 members of QRM. Preliminary results show significant
improvement in infrastructure preparation with some persisting issues.
AUDIT
e Audit Programme. The 1999 Resume and 2000 Plan have been issued.
e Internal audits:
e Customer Services Audit. 1-action remaining open in the CAP.
e Change Management Audit. 6 actions’remain open I the CAP; to be
reviewed during February.
e Implementation Audit. 1 action remains open in the CAP.
e CSR+ Development Audit. The constitution of a ‘minimum
documentation set’ has still not been agreed, despite several meetings and
many email exchanges:
e 11 Week Plan. The audit indicated that the Plan had been successfully
executed with PowerHelp and its use in the ROHD being the sole area of
concern.
e Planning-Audit. The high level result is that Pathway does have a sound
Planning Process but it is not being exploited to its best and, in some
instances, is being undermined by poor time reporting.
Audit Solution Problems. There are still a large number of audit solution
problems that-need closing down with OSD.
YEAR 2000 CONFORMANCE
© Compilation of the Y2K compliance audit trail, required by ICL-group; is
nearing completion. No major issues found or expected.
e Informal discussions as to any actions needed to manage any risk arising
from Leap Day have taken place. ‘The concensus view is that the event is low
risk and that no special action is required though all.should be vigilant.
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ISSUES
e Little progress has been made on the Development ‘minimum
documentation set’. This has potential implications for the achievement of
1SO9001 and in the longer term, supportability of the system.
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Date: 16/02/2000
Business Development Report
MONTHLY SUMMARY
e Network Bank proposal is being evaluated alongside 15 others. I expect a
shortlist to be announced by mid-February. In the meantime, there have been a
number of internal strategy sessions on the subject, the main outcome:of which
is a proposal to Post Office that they ‘firewall’ ICL Pathway as a nominated
subcontractor and work closely with us to ensure the best solution for Post
Office. [CL may still bid for the total package but with Pathway as a
subcontractor.
¢ The long.awaited Service Development Plan PONU's view of the new
requirements of themselves and their market facing units is due to be shared
with us by mid-March. This will enable us to take a view of PONU's prioritised
requirements and to assess our own forward development plan.
« The biggest issue co face in going forward is the prospect that the Post Office
does not have any money to invest ih new products. This will necessitate any
change needing a sponsor or an external client, which will affect timescales.
e Press coverage has continued with the main focus still on the government's
decision to pay benefit by ACT and the consequential impact on rural post
Offices. This campaign is set to continue for some time.
e A press release heralding the installation of the 2000" post office was issued.
This is the first time an agreed (with Post Office) press release has been issued
albeit there was a Post Office one and a separate ICL one. However, this was
still a very positive move.
© We (ICL and ICL Pathway) have submitted a PR/press proposal to Post:Office.
This is aimed at a set of activities throughout this year to promote Horizon and
the impact on Post Office. We still await feedback.
e We must keep pushing for a joined up campaign internal to Post Office to
promote Horizon. There are far too many misconceptions about which vary
from out-of-date technology to-a batch system to "it will take 3/4 years to
complete roll-out."
e There was a long debate on Post Office in the House of Commons on 17"
January during which there were many references to Horizon, almost all
positive in nature, including a reference to an MP visiting ICL Pathway in
Feltham to see the system, We must keep pushing this particular door in pursuit
of getting the message to a wider political audience.
PROGRESS
Business Development:
¢ EMU: A CCN has been submitted on EMU. This specified a £374K bill to
undertake a detailed study of the impact of EMU. This has had a negative
impact within PONU in that other suppliers have undertaken this study work
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free of charge. We need to re-consider this piece of work and re-submit a less
detailed proposal with caveats.
e Training: A response to a change request for CSR+ backfill training is currently
being prepared. While we have responsibility for new training, PONU have the
responsibility to train the staff already trained on Horizon. There is also the
requirement to train for LFS, which is an additional requirement to the
contract. 7
Marketing Communications:
Internal Communications in {CL Pathway
Communication regarding the appointment of Mike Stares continues. So far
communication has been via ICL Pathway staff, ICL staff via CASCADE and
CafeVIK.
Staff briefings are being arranged for all three ICL Pathway locations in
Feltham, Kidsgrove and Bracknell.
Proposed agenda is for Mike to introduce himself and explain what his new job
title incorporates. Also updates on National Roll-Out and Business
Development.
The new Induction events (demo day and old induction event merged) are
taking place on Thursday 10" and Friday 11" February. Communications are
helping out by taking about ICL Pathway and ICL— what we do our history and
information available.
Work continues in relation to Gold Excellence Awards within ICL Pathway.
Working with Jim Flynn and his DR’s to improve communication within
Implementation and the regions.
Dress down day held on 27" January and raised just over £270.00. We intend to
have three new: charities this year and will get staff to vote to the top three.
External Communication
°
ICL Pathway’s new ‘Community’ is up and running on CafeVIK. We will
supply information to the site such that everyone in ICL can view.
A ‘Community’ site has also been set up for Kieran McGuirk and the Post Office
Virtual Account team.
An update article has been written for the ICL Magazine. The feature includes
Christmas break activity, automation of the Dome post office, 2,000" post
office and the appointment of Mike Stares.
Exec Relations work continues with Debbie Eldridge. ICL Pathway is
considering the different events available against the target audience within the
Post Office.
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POCL Communications
e Press release written, approved and distributed on the 2,000" post office. This
release has generated a number of calls from.the Trade press, which the ICL
Press Office and the Post Office Newsroom are dealing with, including visits to
automated offices.
e Proposal for future releases is with Keith Hardie for comment.
Government communications
e Following on from the successful PITCIM visit to ICL Pathway, the next
edition of the PITCOM Journal has the visit as lead story. ICL Pathway and the
Post Office have an editorial running to coincide with the article. This is a first
for us as the Post Office had never given approval before.
International:
e The Deutsche Post work has been completed.
e The Namibian work continues but without-any on-going [CL Pathway
involvement.
CRITICAL PROBLEMS
« None
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Implementation Report
MONTHLY
¢ National Rollout re-commenced with installations from 24" January 2000, and
is now into its third week. To date installation beat rates have been achieved
broadly in line with plan, although maximum beat rate will not be exercised _
until 14" February. The 2000th installation of the Horizon system in Post
Office outlets took place on Monday 31° January 2000 and, as of 4" February,
2155. outlets had received their Horizon system.
« Process improvements to assist National rollout, implemented over the Xmas
break, appear on the basis of rollout to date, to have been successful with rollout
activity so far making steady progress. There have been no major process or
system failures since rollout re-started indicating a degree of stability and
robustness in the existing tools and processes in use.
« Current predictions indicate that the next rollout payment milestone will be
achieved at the planned date of 1* May 2000.
¢ The critical issue of the interception of a replacement PC for the X365 and the
likelihood of this causing a gap in rollout later this year, reported last month,
has been managed to a satisfactory conclusion. Fujitsu Siemens will now
manufacture a further 13,500 X365 units to continue the rollout with the same
PC product. Delivery dates will enable the gap in rollout to be closed completely
and the remaining rollout payment milestones will be safeguarded by the total
available quantity.
¢ Pathway’s Implementation team is currently working with the ICL PFI Group to
provide management and direction for their project rollout requirements. A
strategy document has been prepared to ensure the risks are fully understood
and that Pathway’s rollout programme is.not impacted. Costs for this activity
will be borne by the PFI group.
PROGRESS
¢ Only two vacancies remain in the Implementation headcount plan before the
team is fully staffed for National Rollout.
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e Following the last release of RODB software there are no longer any major
concerns with the quality of the system and its data integrity. Further
improvements to the RODB are planned to reflect recent process improvements
and assist suppliers in maximising the benefits from the system. A 15 day delay
to the next release, now due on 21% March 2000, has been accepted by
Implementation in order to include these latest important improvements. The
Secure managed Environment (SME) RODB software release is due two months
later.
e During the two and a half weeks of installations.since National Rollout (NRO)
recommenced, actual installation dropout rates have matched the planning
estimates and installation process improvements appear so far to have been
effective. However, it is.intended to monitor these rates continually to assess
and identify trends as they emerge, particularly once maximum beat rate has
been exercised and sustained from 14" February onwards. Contingency
measures to ensure installation plan rates are achieved will be maintained at
least until early March. A review of the necessity of contingency measures will
be made on 11" February, using evidence from the first 3 weeks of rollout, to
determine whether the contingency measures can be lifted. In any case several
weeks notice is required to cancel these measures enabling a decision to be made
on 11" February to cease the measures in March.
¢ The installation of ECCO outlets on Wednesdays has been proven for the first
time in the early weeks of 2000 and will now become a normal planned activity
for future weeks.
¢ No new outlets have entered the initial stages of the infrastructure programme
yet this year (see statistics below). This is a consequence of the infrastructure
programme being well into the tail.and surveys are now undertaken against a
pre-defined plan where work efficiency determines when work is undertaken.
This means that, for reasons of economic efficiency, the first surveys this year
will not be undertaken until week commencing 31% January 2000. The survey
programme will conclude at the end of April. It is also anticipated, from recent
joint planning between PONU, Pathway and nd, that preparation activity will
conclude during July this year. This includes all sites visible to Pathway, which
require infrastructure activity. Any additional sites identified by PONU will, by
agreement, be undertaken as part of the Operational Business Change
Programme.
« A quantity of approximately 2000 more than usual completed preparations is
reported this month (see statistics). This has resulted from.a change in reporting
definition for preparations such that sites not completed on the scheduled date
but which have later been completed are now included. The quantity reported
is therefore now the total number of completed preparations.
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Detailed planning for the CSR+ live pilot, due to be run in August this year is
now well underway. The pilot will be made up from 285 existing live sites,
upgraded with the CSR+ release and 20 new installations where CSR+ will be
the built release. The selection and identity of the 305 offices is underway and
likely to be concluded by mid-February.
The rollout training programme is well underway with all training events having
been. exercised again this year. Although there have been some minor training
scheduling issues there are no major concerns and the training programme,
which achieves maximum beat rate of 306 outlets w/c 7" February, is considered
to be robust and stable. A change request has been received from PONU for a
proposal to provide CSR+ backfill training to the approximate 11,000 outlets
that will be live on Horizon using the CSR release at the point.of introducing
the CSR+ release. A proposal will be submitted to PONU in mid-February.
Discussions are underway with PONU to monitor and improve training course
occupancy levels, particularly on the Pre-entry event where occupancy levels
have been consistently low. PONU recognise that responsibility for occupancy
on the Pre-entry event rests with them.
IMPLEMENTATION STATISTICS (TO 28" JANUARY 2000)
Activity Change Cumulative
IRGM letters issued 0 17,563
Site surveys undertaken 0 17,131
Site re-surveys required 0 6,647
Site re-surveys undertaken 50 6,595
Site modifications done 179 5,268
Site preparations done 2,380 13,269
Sites RFI 2,514 12,866
RGM2 Letters issued 530 6,771
ISDN lines installed 305 3,123
Sites installed 111 1,976
Sites migrated and Live 111 1,968
Counters Live 295 4,393
INFRASTRUCTURE PROGRAMME
INSTALLATION PROGRAMME
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CURRENT CRITICAL PROBLEMS
¢ Considerable progress has been made to resolve the programme risk of a gap in
rollout, originally caused by the time required to validate a replacement PC for
the X365. Negotiations between ICL and Fujitsu Siemens, with considerable
assistance from Fujitsu to escalate the issue.and identify a solution, have resulted
in Fujitsu Siemens determining that X365 components can still be procured and
committing to manufacture a further 13,500 X365 terminals. Delivery of the
initial units is within the time scales required to fill the potential gap in rollout
and the total quantity will enable achievement of the'fourth rollout payment
milestone, in terms of available counters, to be guaranteed. Sufficient time is
available to enable interception of a future generation PC prior to the tail of the
installation programme that follows the fourth milestone. It is likely however
that a last time buy of the X365 will be required before the end of February
2000 requiring a considerable up front financial commitment and detail accurate
in the forecasting of counter requirements for the next 12 months of rollout.
¢ The only other critical item to-report is the continuing concern over the quality
of service for the Powerhelp helpdesk.call system used by the Rollout Helpdesk
(as well as the Horizon System Helpdesk). System response times and system
availability have been persistently poor and despite management attention,
although some improvements have been achieved, the setvice level remains a
concern and a risk for sustaining rollout at maximum beat rate. Some progress
is being made in identifying potential infrastructure problems, which may be the
cause of the poor system response and availability, but this must be improved
very soon. Currently attempts to reduce a backlog of-calls at the rollout
chelpdesk are being hindered by the difficulties. surrounding Powerhelp. The risk
is that with call levels increasing following the re-commencement of rollout and
maximum beat rate yet to be exercised, the backlog of call will grow and may
become unmanageable. Eventually this could threaten the continuation of
rollout if not resolved within a few weeks.
ISSUES
(Including progress.on issues reported last month)
¢ Progress with ntl on improving the quality and timeliness of preparation activity
completion continues and there has been no major impact on rollout. However,
there is still evidence of quality issues continuing to arise and this must be
addressed in order to ensure the Field teams are not swamped with issues to be
resolved on installation day. The consequence of not addressing this is that the
current provision of expensive contingency measures would need to be extended
to ensiire dropout levels are kept at an acceptable level to ensure the next
payment milestone is achieved on schedule.
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e As reported last month, 54 outlets in the Hull district have been suspended from
the rollout programme in February due to anomaly in ISDN circuit connection
in that region. A software modification available in March will enable
connection for these outlets to be re-scheduled and installed later in the rollout
programme. This is not considered a serious threat to achieving the next
payment milestone and is a much lower risk than attempting to provide an
interim solution.
COSTS
¢ Consolidation of the Business Case Risks with the Implementation risk register
is virtually complete and changes some variances have been identified which will
require alignment.
e Implementation’s current cost forecast has a negative variance of £500K,
relative to last months report, following the necessary extension of the
infrastructure programme to accommodate the remaining tail activities. The
additional cost is created from the need to extend the overhead facilities longer
than originally planned and from a less efficient schedule of activity. The plan
for this activity is however concluded and the costs are therefore considered to
be complete.
e The Knowledgepool contract will be signed during February.
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MONTHLY SUMMARY
e A positive conclusion was reached to the investigation into the causes of the
two Health and Safety incidents arising from preparation work in the Post
Office estate. Improvements to procedures were identified and introduced.
e Recruitment activity to support Customer Service and Implementation
continued successfully although there are still a number of. outstanding
vacancies.
PROGRESS
e Appointments in December:
External Recruits
Transfers
A&TC
LINKwise
Freelance
Tem/Fixed Term Contracts
Total:
e Known Joiners:
External Recruits
Transfers
A&TC
LINKwise
Freelance
Tem/Fixed Term Contracts
Total:
¢ Offers.outstanding:
External Recruits
Transfers:
e Leavers in December:
Permanent
23
wok ON NO
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Freelance 2
Temporary 0
Transfers 3
Total: 8
e Recruitment activity accelerated as new requirements in Customer Service,
Technical Integration and Implementation were filled. The vacancies in
Customer Service remain critical to fill quickly as the live estate. grows daily
as national Rollout progresses. We are working closely with A&TC on a
recruitment programme to fill these vacancies. By the end of January 50% of
the positions had been filled.
e As ICL Pathway take on more people from A&TC, regular-reviews are now
in place with [CL Pathway and A&TC HR to ensure common working
practices are agreed and communicated to employees and managers. The
main area of activity is currently the introduction of a common Additional
Working Hours Framework, which has been needed especially to
accommodate weekend working and on call support.
e The Induction Programme has been restructured and the first:two sessions
will be held on February 10" and 11".
e A review of Project Managers within ICL Pathway was undertaken jointly by
ICL Pathway and the Project Management Community Leader to confirm a
group of 15 Project managers and Project Control Officers in. the
Community and to agree their benchmark level. This was successfully
completed and the individuals will now be confirmed as members of the
Project Management Community.
e Agreement was reached on 35 positions currently filled by freelancers which
could be filled by ICL employees with the right skills. A&TC have been
tasked to come back by 10" February with a plan to fill as many of these
positions as they can. Once this has been completed another 20 roles will be
targeted. A weekly monitoring meeting has been established within Pathway
to keep the pressure on this replacement process.
e ‘The investigation into the two Health and Safety incidents in the Post Office
estate was completed. It was agreed with the Post Office that ICL Pathway
would make a specific response to Mike Cakebread (POCL), following the
conclusion of the investigation into the Patrington incident. This was made
on 28" January. Asa result of the investigation, ntl , the subcontractor, has
issued a reinforcement and clarification Site Update Notice reiterating the
need for best working practice to be followed during installation to ensure
cables are not subject to abrasion damage. Changes to the Field Operations
Manual and to the Post Preparation Quality Audit procedure have also been
made. A sample audit of the offices installed by the ntl employce responsible
will be complete in early February. Should this reveal any further problems,
then a full investigation of all the:sites installed by him will be undertaken.
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The Post Office - Client Director’s Report
MONTHLY SUMMARY
Two new appointments for eBusiness are being made; in different parts of PO.
Revenue year to date at Dec 1999 ie 3 quarters
A+TC 468k
MC 10,606K
GOVT 1,280k
OSD 13,640k
PATHWAY 162,026k
Total £188m
eBusiness.
e Following the PO Exec Board policy statement of 23 Dec, Dick Wheelhouse
has now been appointed MD of "e-Enterprises", reporting to Richard Dykes.
Another MD appointment is imminent, of a new "c-Infrastructure" unit to
design and operate common internal processes needed to support external
eBus eg intranets: reporting to Stuart Sweetman.
e Our next task is to meet these new players.
e Meanwhile other lower level activities are being pursued:
* X500 Directory Assistance provided to Peer Logic to put in a response which
emphasised the need to integrate a PKI solution with ICL's E-business
solutions. Apparently this was the "most comprehensive" document submitted
but they (now part of e-Enterprise) are now going into RFI mode (with no
business case).
¢ PORG Meeting with ICL Research/PORG at which focus was placed on the
need to improve the logistics and supply chain in ordef to provide improved
delivery capability. John Elmore will follow up with an agenda and workshop.
e SAP Exploratory discussions on how we can work together - an imaginative
practical solution needed.
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SERVICE MANAGEMENT PRODUCTIVITY PROGRAMME
e The key requirement for an asset register, prior to April 1 when IT Services
take on responsibility for all PO desktop PCs, is being developed by
A+TC/OSD using Peregrine software. However. this work is all running late
and we have reports back of slowness, poor overall project management and
dubious quality of resources. The POITS budget cut also has impacted.
e There is.a substantial longer term opportunity to design and/or operate PO
infrastructure. I have loaned Caroline Simcock to Andrew Auty to help.get
through the immediate problems.
ICL Onsite/technical resources (bodyshopping)
© — Still no agreement on the new pricing submitted by ICL Govt for ICL
resources (it exceeded the 8% CEL limit) and, in any case, POITS aren’t using
sub-contractors, so little revenue. Onsite's backlog of work-packages
completed but PO refusing to pay for those that scored poorly on the
satisfaction measures. This results in approx. £30k of debt which A&TC are
trying to sort.
ICE _(SPICE/CRM )
e Deloittes contracted for scoping analysis meanwhile other SPICE bidders have
been asked to consider SPICE training. KnowledgePool assisted by John Bell
have moved to a shortlist (+ Druid, Parity) and first phase estimates in the
order of £2m.
MC - One Stop Shop
e MC suffering from low orders which will continue for the next 2-3 months ie
there will NOT be an end of year rush. This coupled with the change in
account manager, CCenter's increasing percentage share, CC's apparent ease
of ordering compared to Exc, and CC's increased visibility needs determined
action by MC to resolve. I have escalated to Norman Kough.
Enterprise Agreement
e John B assisted MC to put in response which linked software licence asset
management with SMPP. Margin on annual.revenue of approx. £3m only at
3%, Decision "imminent" - vs Ccenter.
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FUJ00058189
FUJ00058189
ICL Pathway The Post Office - Client Director's Ref: PA/REP/046
Monthly Report Version: 1.0
Date: 16/02/2000
Modern Government
Opportunities and joint initiatives continue to be put to PO: Under26 Cards
in Scotland “Young Scot”; the “me.gov” CITU procurement; and-now the
DfEE Youth Card. The relationship with Dave Waltho and team remains
good, though arms-length. Dialogue being extended to include PO Corporate
Client Directors. -
OTHER ACTIVITIES
Core Account team CafeVik intranet - slow progress now due to lack of
resource .
Next Account team meeting 9th Feb in MC Warrington.
We have arranged for two PO representatives to join Elizabeth Lank's
Knowledge Club. Hard to know how this could be moved forward.at this
stage; it builds contacts and influence.
Lifestyle Network discussions resulted in the conclusion that PORG and ICL
doing the same sort of things so they'd attend joint seminars but not become
full members of Gill Ringlands club.
The Post Office Supplier Management initiative will involve.close working
with Jim Arnold and Annmarie Byrne for whom a complex document must
now be developed - John B is leading..
COST DOWN
No change.
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