COMPANY SECRET
FSMC/08/05
FUJITSU SERVICES MANAGEMENT COMMITTEE
MAY 2008
MAJOR ACCOUNTS
NHS
Contract Re-set negotiations have continued throughout the period, but are no
longer under cover of the Memorandum of Understanding (MOU) which
entered a Cure period during January, but was not extended further. The
intent is still to obtain a binding Heads of Agreement as soon as possible,
including financial support for commencing reset delivery activities; meanwhile
we have reverted to the current contract CCN60. The negotiations have
reached a critical juncture where the proposed solution has been accepted,
but the price target has changed. We are working at a senior level directly
with the 3 Strategic Health Authority (SHA) CEOs and the Connecting for
Health COO. We anticipate an agreement in principle during May with a
signed contract change finalised in the following few months.
On 31st March MSB3 (Mid-South Bucks) NHS Care Records Service Release
0 implementation successfully went live across Stoke Mandeville Hospital
NHS Trust. All live sites are running well with 7 out of the 8 having signed off
their Deployment Volumetrics (DV), all but Milton Keynes. The latest for West
Somerset was achieved 45 days after go-live.
Development of the next releases of PACS (Patient Archiving
Communications Systems) and RIS (Radiological Information Systems),
which will connect both systems to the national “Spine”, are on schedule, with
test due to commence this month. Discussions have been opened to agree
the approach to deployment of these releases, which is likely to result in
incremental revenues in 2009.
On 11" of February, Gloucester, and 10 March, Swindon, went Live on the
Interim Child Health system. With six go-lives now achieved we have
completed the deployment of Child Health systems across the entire Avon,
Gloucestershire and Wiltshire (AGW) community.
HMRC (Aspire)
The transformation programme established to drive through cost reductions in
our Data Centre Operations following the signature of the Aspire Challenge
Contract Change Note on the 23 December 2007 continues at pace.
Virtualisation of the HMRC development and test Wintel server estate is
underway. Equipment and software costs, resource costs and other third-
party costs are all being reduced in line with the requirements of the Account’s
2008/9 budget.
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Live Services Delivery continues to provide excellent service to HMRC with
SLA conformance running at above 98%. The HMRC April release
programme went very smoothly with no detriment to the service levels. This
release programme included the going-live of key phases of two customer
critical, infrastructure projects:
e MPPC (Modernising PAYE [Pay As You Earn tax] Process for
Customers) Release 1 delivered a replacement of the legacy
infrastructure at the end of March; and
e Carter DP1 delivered the infrastructure to support the continued
expansion of the on-line PAYE in-year filing system from the 6th April —
the start of the new tax year.
Both of these phases went live with no implementation issues.
Following the high profile loss of customer data by HMRC there has been a
dramatic tightening of all aspects of data security across the HMRC estate
with consequential impacts to the Aspire operational processes and
procedures. This represents an opportunity for additional business for Aspire
over the short to medium term.
HM Treasury's authorisation of HMRC’s Departmental Transformation
Programme (DTP) funding for the financial year 08/09 remains outstanding,
continuing the uncertainty of the department's strategic direction and its
current and future budgetary position.
MOD DIK(F)
Roll out performance during the first 3 months of 2008 has been disappointing
with lower volumes than in the final 3 months of 2007. Implemented
workstations as at end March 2008 numbered over 29000 including, for the
first time, a number of Secret workstations. The user and data migration
issues referred to in the previous report remain factors that are impacting
larger sites.
An in depth review of the Secret and Release 2A programme was conducted
during March as delivery timescales continued to be impacted by slow
progress through testing and trials. The issues have been identified and a
revised schedule has been agreed with MOD that identifies the first MOD HQ
business pilot in operation during August. Whilst overall the Service
Management SLAs are still being achieved, Germany and the Abbeywood HQ
have experienced intermittent performance issues during March which have
now been resolved. The transfer of the DII/C D(S) service to ATLAS has
completed on time as part of Increment 2b.
The Implementation delivery process has also been reviewed. A new
statement of work has been produced by Fujitsu Services that will form the
basis of the new end to end delivery process. The Statement of Work has
been agreed with EDS, and a costing of the new scope of work is underway,
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the Governance approvals will be scheduled during April with end April as the
submission point to EDS.
The main commercial activities in progress are the settlement of claims for
delays to the migration schedule, and the Implementation Statement of Work.
An Interim payment for settling delays to the migration schedule was received
from EDS during December 2007 and this, together with other settlements;
continue to support the forecast lifetime contract margin.
The first price submission for RFC45 was submitted to EDS, confirmation of
the next pricing phases for this RFC is being discussed with MOD including
the forecast date for RFC45 being on contract.
IRRELEVANT
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IRRELEVANT
ROYAL MAIL GROUP formerly POST OFFICE ACCOUNT
Post Office Limited (POL) - Since the last report we have experienced some
program slippage, mainly in counter development and rig build. This has
pushed the HNG-x project plan out by three months and increased the
Estimation To Complete (ETC) up to 105k man days (which includes 8k man
days of change). The relationship with POL remains strong and we are
negotiating the commercial impact of this increase with POL. The target is to
have the commercials agreed and signed in May.
Our service delivery has improved since December and is now at the highest
levels and POL is very happy, this is reflected in our high customer
satisfaction score of 9. We are in the final stages of planning our off-shore
strategy which will be shared with POL.
The Royal Mail Group Digital Media Network (DMN) project remains stable
and continues to deliver value to the senior executives. We have extended a
key aspect (Managed Distribution Services) to co-terminate with the rest of
the DMN solution.
There are a number of sales opportunities within RMG, we continue to focus
on the Data-centre — although CSC has had their contract extended, RMG
have introduced large areas of flexibility within this contract extension which
mean a number of opportunities still exist for Fujitsu Services. The arrival of
the new Group CIO, Robin Dargue has seen upwards of 45% of the IS team
being made redundant and a total restructure. Robin has a track record of
removing CSC, so this may assist us in our sales campaigns.
IRRELEVANT
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IRRELEVANT
HOME OFFICE
As anticipated client budget pressures in all areas of the Home Office have
continued through into the new financial year with significant budget cuts and
with spend on IT services still under close scrutiny. Notwithstanding this it is
expected that budgets will be put in place for major programmes such as
Immigration Case Working (ICW) although this could be on a
restricted/phased approach rather that agreeing a full lifetime budget in one
go.
Service quality and customer satisfaction were at their highest levels during
the financial year with the lowest level of service credit payments since
inception of the contract. Notwithstanding this customer budget pressures are
causing them to call in to question the value for money they receive as we
move toward a contractual requirement to implement a benchmark exercise.
Work has continued on the Points Based System (PBS) within the Border and
Immigration Agency (BIA), as of 1 April 2008 BIA becomes the UK Border
Agency (UKBA), and the first release (R100) of the de-scoped application
service was delivered on time on 28'* February, with a subsequent element of
the release delivered 14'* March. This was a significant achievement but only
possible as a result of the de-scoping of the amount of functionality released
and the commercial debate as to why this was needed continues. Having
now achieved this, we remain positioned to capture the wider opportunity for
ICW although we now think it is possible that the customer will be forced to
run a restricted competition rather than extend through PBS. The key to
winning this opportunity remains with ensuring ongoing success within the
PBS programme.
The new infrastructure upgrade programme within the borders area of BIA
has now been started and is progressing well. We were successful in winning
a competitive opportunity (£6.0m) against Serco to provide a secure
infrastructure project which has now moved into the implementation phase;
successful implementation of this solution could lead to other similar
opportunities.
Relationships between the customer and Fujitsu Services management teams
remain generally positive and continue to grow but at the Home Office
Management level there have again been a number of changes with the
introduction of replacements for the Head of Shared Business Services, the
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Chief Information Officer and the Senior Commercial Manager responsible for
the Fujitsu Services relationship. The replacement of the Head of Home
Office IT is also pending. We have met all of the new incumbents and are
again setting about developing these relationships.
BERR (Business, Enterprise and Regulatory Reform) formerly DTI Elgar
The service remains strong with consistent SLA achievement over the past 6
months. The customer is also pleased that we have implemented the new
government security standards on data encryption so quickly. The successful
Matrix 2 project to upgrade the BERR document management system has
now been formally signed off after a 3 month trial period in live operation. We
have also gone live, on-time and within budget, with Phase 3 of the UK Trade
and Industry Customer Relationship Management System.
The final Gartner report was issued and as forecast in the last report this
leaves us in a strong position to justify our existing ELGAR desktop pricing.
The key challenge we face with BERR going forward is the customer's
shortage of funds over the next 3 years. The Treasury have instructed the
department to make 5% year on year cuts in running costs and BERR has
asked its key suppliers to help in the search for savings, with a particular
focus on 2010. We have entered into negotiations with the customer to
identify if a win win outcome can be achieved through a move to the Public
Sector Flex desktop service in 2010. This would provide desktop savings for
BERR and additional contracted business for Fujitsu Services out to 2017.
Other significant new business opportunities are limited at present with BERR,
due to the funding shortages, and so 15-20% of the BERR Account Team
have been redeployed during the last 6 months onto winning and supporting
new business in BERR’s sister department, the Department for Industry
University and Skills (DIUS). This generated a significant growth in revenue
and profit last year across the two departments and we are targeting
continued growth this year using the same shared services approach.
NORTHERN IRELAND CIVIL SERVICE (NICS) e-HR Programme
The external recruitment service for the NICS has been operational since
October 2007. Thirty six campaigns were transferred to the new service and
to date sixty two recruitment campaigns have been launched, this level of
activity is 150% of the forecast activity and is enabling the NICS to fill
vacancies more effectively. To date we have had no material service failures.
The employee relations service has been operational since Christmas and the
number of weekly calls managed has risen to 6,000. Management of the
service level regime in this service is now fully operational.
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The payroll has now been tested and the first parallel run complete with no
unexplained variances. This remains on target to be implemented in the first
half of this year. The vacancy management and performance management
services remain on track for implementation in spring 2008.
Our relationship with the NICS remains strong and this relationship is being
exercised to manage individual queries through the new service delivery
model.
ALLIANZ
We continue to develop a strong partner relationship with Alliance supported
by strong customer satisfaction scores. Measured service levels for the
service are overall green with one that we are negotiating between amber and
red. The service delivery management team have implemented strengthened,
operational practices which are beginning to show a significant increase in
service quality. All high level design & service documents are in place and
agreed with the customer and we plan to have our Triole for Service test
environment in place during May.
Additional costs have been incurred during the transformation phase, mainly
relating to contractors on the contract that should have been transferred to
Siemens and BT. The program is also running with a delay of approximately
four weeks. A Senior Account Director from the UK has been appointed to
lead the Account . He will ensure that the work done by by the contractors is
invoiced to the customer, focus on transition and transformation and
implement Reform cost reduction programmes to ensure that our account and
programme plans support achievement of the lifetime financial model.
The project for a new insurance application named ABS in combination with
new hardware is still being rolled out we have completed in excess of 10.000
clients in three regions of Germany. We have also completed a further rollout
for more than 3.000 26 inch monitors. We continue to focus on the accounts
financial performance and have delivered 3500 incremental days of additional
projects to support this.
The due diligence for Dresdner Bank branch network and voice support is
underway and the Euler Hermes DMS extension of the ASIC contract has
been signed. We have further opportunities with a thin client evaluation
project for Dresdner Bank, AZ24 call centre project for Allianz Germany as
well a transfer of the t-systems contract CCC, which is voice over ip support
for the customer contact centre of the Allianz Group.
David Courtley
May 2008
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