FUJITSU SERVICES MANAGEMENT COMMITTEE
FEBRUARY 2005
FIRRELEVANT!
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FSMC/05/04
Post Office
Financials
December Year to Date Revenue and Operating Profit are £107.9 million and £46.9 million
respectively. These are both ahead of our budget commitment.
Recent Major Releases
S70 (EMV Chip and Pin) and S75 (NBX) have both been successfully implemented during
December. S70 has enabled Post Office to be fully chip and pin ready by 1/1/05, a major
milestone and one which if not achieved would have left the Post Office liable for significant
penalty payments to HM Government. This places Post Office ahead of many of the high
street retailers in the implementation of chip and pin.
S75 was the replacement of the IBM Network Banking Engine. Horizon now communicates
directly to Link (the interface to most high street banks), to Alliance & Leicester and to Post
Office Card Account.
Both of these Releases took place following a risk evaluation with Post Office.
Services
There have been a number of issues with the operational service since the S70/S75
Releases, most notably on 20" December. The main service affecting incident was the
hardware failure of an EMC disc array which caused a loss of the Network Banking Service for
over two hours.
We have established a comprehensive Vulnerability Assessment and Service Transformation
Programme to ensure that we solve the problems and restore confidence. This has been
reviewed with the Post Office and is subject to a weekly progress update.
The issues in the live service have caused us to put Post Office back on Red Alert. The
purpose of this is to make it clear to Post Office that Fujitsu takes these issues seriously and
secondly, to ensure that we have the correct Fujitsu resources available to Post Office
Account to solve the problems.
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COMPANY SECRET
FSMC/05/04
Work in Progress
Time and materials development programmes continue:
1. IMPACT: S80 - the introduction of revised accounting systems for post offices and the
hosting of the SAP system to support it.
2. S90 aimed at October 2005 is now being firmed up with the following:
» Credit/Debit Card acceptance for Bureau transactions
> Postal Order automation
> AP outpayments
> Several S80 hangouts
Horizon Next Generation (formerly known as IT Roadmap)
Post Office has now signed the Heads of Agreement for HNG. While the Heads are non-
binding, this is a major milestone and guarantees that Fujitsu Services has exclusivity
regarding discussions on Next Generation. The Heads also guide the contract model for HNG.
Detailed discussions, both contractual and commercial continue at pace with the aim of
signing a new contract in Q1.
Post Office Organisation
Post Office has appointed Ric Francis to the new position of Operations Director, reporting to
David Mills, CEO. Dave Smith who has been acting IT Director since Alan Barrie’s move now
reports to Ric as General Manager — IT. Ruth Holleran who is our principal services contact
will also report to Ric. Ric joins Post Office on 31% January. He has worked for Safeway, Smith
Group and Pepsico.
HMCE
The HMCE Account will exceed all business targets for this financial year and HMCE have
continued to be a reference customer for a number of Fujitsu Services opportunities.
The activities to upgrade the whole network continue to schedule, with the completion of
phase one in January. We have continued to delay the XP roll out at the request of HMCE,
but have now started re planning with an expect start date of August 2005. We will
commence the roll out using the HMCE desk top design whilst at the same time looking for a
standard desk top to work across both HMCE and Inland Revenue
HMCE have spent the majority of the last few months drafting their strategic requirements as a
result of the merger of Inland Revenue and HMCE. We continue to experience some delay in
making major decisions whilst the two Departments decide on their organisation and approach
to IT. One example of this is the move of the HMCE servers and mainframes from HMCE
owned data centres to a Fujitsu data centre
The financial benchmarking has made progress but there have been further delays in
reaching agreement on some critical areas and this has delayed the whole process. The
process will now not finish before March 2005.
HMCE continue to review their preferred way forward for IT services provision following
Government agreement to bring together the Inland Revenue and HMCE into HM Revenue
and Customs. They have decided to progress merging the HMCE contract with the Aspire
contract. We have been working with both Inland Revenue and HMCE to look at options
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COMPANY SECRET
FSMC/05/04
going forward, particularly where the two Departments require common services across both
contracts as part of the early integration activities.
We are bidding with IBM for the Lorry Road User Charge (LRUC) opportunity and have been
short listed in all three lots. A further down select is schedule for later this year with contract
award in December 2005.
Libra
The Customer Score Card results have now reached their highest ever level of 9.0 for the past
Quarter with 100% of our customers reporting as ‘Very Satisfied’.
We have been put to the test on Disaster Recovery with three separate incidents at the same
time:
= 10/11" January — The Cumbria Flood — Carlisle Magistrates’ Court (20 users)
By noon on 11th Jan we had deployed 20 Dell Laptops & relocated an Equis Server to
Kendal
= 11/12" January — Arson at Bingley in W.Yorkshire (22 users)
Invoked 11th Jan - 1 Print Server, 9 w/s & 2 printers damaged, DR print server and 2 FS
laptops deployed by 12" January
= 12/13" January - Power surge - GLMCA — Haringey (52 users)
Invoked 12th Jan - affected monitors, printers and network switch
13th Jan - 20 FS Laptops deployed
All three recoveries were within the deadlines and the customer is understandably extremely
pleased with our performance.
Project revenue for the period to December 04 amounted to £35.8m, an improvement of
£1.2m over the Q3 forecast. Project margin is standing at £9.8m, showing an improvement of
£1.1m over Q3 forecast. TCV is in line with forecast and should exceed base target by the
end of the financial year. Orders are currently standing at £9.3m against base target of £10m.
Work with Accenture on the Extension of the Help Desk Incident Management Service
continues to proceed well. We are now ready to accept calls and are working on scenario
testing.
The Joint Operational Change Advisory Board with DCA, Accenture and STL is set up and we
are providing a change diary of currently planned changes. A set of tests will now take place
in order to be fully prepared for the DCA’s new application.
The Desktop refresh using Windows XP and Office 2003 continues with customers reported
as delighted. Many have written letters of thanks. Since starting on 13" September we have
rolled out over 5,800 PCs to more than 200 sites and are on target to finish on time by June
2004. 292 of the 404 new print servers have been deployed and we are again on schedule.
The roll out of Technology Refresh was aimed at staying 2 months ahead of the DCA’s roll out
of their new application. The latest information shows that they are not expecting to be in a
position to begin roll out until late summer 2005.
Data centre migration from Fel01 to SDC01 was completed in December. The data centre
server refresh project is underway with the equipment currently being installed in the test
environment and data centres with migration taking place between Jan & April 2005. This will
include a SAN (Storage Area Network) facility providing enhanced resilient storage.
We have submitted proposals for the Unified Administration shared domain and are confident
that we can meet the 31% March deadline.
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Home Office
The Home Office Account is on track to meet its revenue and profit targets for the year.
As expected the contractual charges resulting from the benchmarking process will result in a
significant reduction in Sirius revenues over the remainder of the contract. An initial plan to
reduce the overall cost base has been implemented and the intention is now to create a clear
route back to profitability for the account based on more effective project delivery, process
improvements and significant changes to the infrastructure used to deliver services.
Synergies with the DTI and DWP accounts will also be exploited.
A recent external review of customer satisfaction with the service provided to end users
presented Fujitsu in a very favourable light. We have also received a commendation from the
client for the delivery of the Freedom of Information project.
The very high level of change across our infrastructure, coupled with a degree of overstretch
in some resources, has caused a number of service failures and an increase in the level of
service credits incurred. Actions are in place to address the issues. The changes represent a
peak in project work, including the migration of some 16,000 users to a Windows XP based
environment, the move of several thousand staff within and around London, decommissioning
of the Feltham data-centre and new application releases associated with the introduction of
Freedom of Information legislation.
The Technology Refresh programme continues to progress well. The software roll-out,
upgrading client and server components to Windows XP and 2000 respectively commenced
on schedule with a pilot in June and full roll-out commenced in late July. The immediate
challenge to refresh the 2 Marsham Street users prior to the move to the new building was
completed successfully. Planning is at an advanced stage for the rollout to the Immigration
and Nationality Directorate (IND).
Over the last quarter the project to move staff into the new 2 Marsham Street building has
taken on increasing importance with the Home Office. The building work was well behind
schedule leading to a need for numerous changes in the project approach and plan for the
installation and commissioning of the IT Infrastructure. The project team has coped extremely
well in a most difficult environment and the building now has its first occupants co-existing with
the builders still trying to complete all the outstanding works.
DTI Elgar
The DTI account is on track to meet its year-end profit and revenue targets, despite
considerable pressure on IT spending resulting from the Department's efficiency measures
and associated headcount reductions (400 staff leave in March 2005 on a redundancy
programme).
A reform plan is now being implemented by the account team to improve the profitability of the
account and to raise delivery standards so that we can position ourselves to win a larger share
of a shrinking market within the Department. This reform plan is progressing very well, and
will exploit both Sense&Respond and Triole to improve the performance and cost profile of the
core infrastructure service. Synergy across the DTI, Home Office and DWP accounts is also
being energetically pursued as a means of sharing best practice and of reducing operating
costs. Changes within the account are being driven by a refreshed but much smaller
management team, comprising 4 key managers in place of the 9 who were on the account on
1 September.
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COMPANY SECRET
FSMC/05/04
The critical area of project delivery in the past few months has been the move of much of the
Department's headcount into 1 Victoria Street, and this complex and high profile work has
progressed well. The pace of delivery on other projects has increased as well, and a great
deal of effort is being applied to improvements in project delivery processes and
methodologies following long-standing concerns about our project delivery ability compared
with our competitors.
Inland Revenue
The operational service continues to be successful with service levels maintained / improved
on those previously being delivered prior to transfer. We have completed the review of the
applicability of the Warwick Data Centre going forward; and have issued a data centre
strategy for the way forward, which encompasses the rationalisation of all the current data
centres in both Inland Revenue and HMCE. We have had some operational issues whereby
the processes we have inherited are not ideal for achieving impeccable service; these areas
are being investigated.
We have increased the TCV forecast to £256m for this year and are building plans to meet
the other business targets. The volume of Change Requests remains high and these range
from major new developments through to minor change, but show a continuing growth in our
services. A key part of the new business is the requirement for capital spend.
We have completed negotiations for Fujitsu to establish a new Print Centre in Warrington to
take over production of NTC Flatpack & Giro from EDS. The P2 colour printing programme
has been put on hold by Inland Revenue due to a fiscal shortage of funds. We are still
monitoring the DWP input/output opportunity which has been delayed by DWP. We are also
looking to bid for the logistics and supply chain opportunity within Inland Revenue, which
arises from the Computer Centre contract reaching the end of its term.
David Courtley
February 2005