ICL Pathway
Bringing
Technology
to Post Office
Counters &
Benefit Payments
May 1999
FUJ00058182
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Monthly
Progress
Report
AM
(CL
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ICL Pathway Programme Monthly Report Ref: PA/REP/038
Version: 1.0
Date: 14/06/99
Document Title: ICL Pathway Monthly Report - May 1999
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:
Name Position Signature Date
J. H. Bennett Managing Director
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ICL Pathway Monthly Progress Report
Contents:
a Managing Director’s Summary
Pi
wae Systems Report
2 Commercial & Financial Report
=
ae Customer Requirements Report
r
Customer Service Report
&® Quality & Risk Report
7) Business Development Report
wath
Implementation Report
q
Organisation & Personnel Report
«
et
Post Office Client Report
\
ii
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Managing
Director’s
Summary
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ICL Pathway Managing Director's. Monthly Report Ref: PA/REP/038
Version: 1.0
Date: 14/06/99
Managing Director’s Summary
PROGRAMME PROGRESS
e The final 50 Post Offices were installed to NR2 status on target for Friday
28" May, bringing the total population of live Post Offices to 299. This
allowed the core observation period to begin,.on schedule on the 31° May
and this will run for eight weeks.
° The next scheduled release of software is Live Trial 2 (LT2) which is
scheduled for the 12" July. This will clear outstanding Acceptance
Incidents, include Change Request for all of the improvement to Office
Balancing, and will enable the disabling of the Benefit Payment System to
take place.
@ Work is continuing to schedule and plan the CSR+ release recognising the
removal of BPS related components. The planning date remains April-2000
although this will require special attention to be given to the Key
Management System (KMS) which unless de-scoped or phased will cause the
release date for CSR+ to be rescheduled.
eo All the Year 2000 testing is now fully complete and has achieved full
compliance.
° New work is required on OBCS reflecting .its change of status from a
transition service to a full national service. As a transitions service it
required at any one time only to support 25% of the full network and
clearly now needs to be scaled to cover the 100%. This work is in hand.
e Office Balancing. This has been reported for some time now and the task
remains serious and.comprehensive. We have established a Task Force in
Pathway to pull together actions which spread across several directorates.
The first practical movement has been the rapid inclusion of eight Change
Requests from POCL which should help simplify elements of the system so
far delivered which is conformant to POCL requirements. We are pressing
upon POCL the need for them to put together a Task Force under an
empowered manager, when this is-achieved we then will press to have both
Task Forces joined together. Resolving this in-the short number of weeks
between now and National Roll-out is critical otherwise the risk of starting
NRO on time will be serious as indeed will the subsequent beat rate of
office automation.
ACCEPTANCE
© With the removal of BPS from the contract, seven of the twenty-five
Acceptance Specifications go out of the system and these seven include the
two which were previously outstanding and awaiting agreement.
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ICL Pathway Managing Director's Monthly Report Ref: PA/REP/038
Version: 1.0
Date: 14/06/99
e All the Acceptance Trials Closure Reports have been submitted'to POCL
and of these POCL wish to retrospectively test five of them. This activity is
scheduled to complete during the last week of June.
° There remain just two Acceptance Review packs to be completed and
handed over to POCL. Following the Review Packs there are Review
Meetings to resolve any outstanding issues and so far we are approximately
two-thirds of the way through the Review Meetings with the balance to be
completed around the middle of June.
° In.terms of the current difficult areas to resolve for Acceptance, these now
include Office Balancing, the provision of a third Data Centre and 24 hour
operation. These are quite difficult issues to resolve and we must expect
more to be raised as the deadlines for completion become nearer.
PROGRESS
e ~— As aresult of the ICL plc results announcements we were able to
demonstrate the Pathway system to groups of bankers, financial analysts,
industry analysts, trade press and national press. This proved to be
extremely effective and killed off any suggestions that ICL's software was in
anyway flawed or in difficulty. The net result is that the overall press that
we have received was generally better than anticipated and stressed very
much the issued lay with Government rather than with ICL as a supplier.
Also the position of ICL in its plan for flotation in the year 2000 were
preserved.
¢ We have now signed the first CCN against the new contract and this is for
£300k for smartcard changes for the Bill Payment Service.
e Deutsche Poste have come back into London to discuss with us their
automation programme. This is the first time they have visited us since
signing their contract with Siemens. We are carefully evaluating and
qualifying the opportunity for‘a commercially sound work programme.
COST DOWN
e We have put together a time and materials charging mechanism for work we
are doing for the Benefits Agency to allow them to migrate existing benefit
card holders back to paper order books. Estimates for this work which will
be completed by mid-July vary between £2-4m.
¢ We have begun the process of headcount reduction either by removing
freelance or permanent people or closing down approved vacancies. The
collective position so far is a new reduction in planned manpower in 1999
by approximately 35 staff. Second level reviews will take place shortly and
these will generate some further savings although this task will be somewhat
more difficult than the work so far completed.
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ICL Pathway Managing Director's Monthly Report Ref: PA/REP/038
Version: 1.0
Date: 14/06/99
e All appropriate sub-contracts centred round the Benefit Payment System
have now been formally cancelled and a number of these carry no
compensation clauses. However the two largest ones are with De La Rue
who were contracted to provide the benefit payment card and Girobank for
their Payment Card Help Desk. Negotiations on these compensations have
yet to begin but are certain to prove difficult.
ISSUES
° We need a major programme to re-build customer relations following the
traumatic arrangements which brought the new contract into force. We
have a substantial way to go on this with POCL before this contract is in
good order.
e The deadline of the 16" July for completing the codification of the new
agreement is tight and requires positive POCL attitudes.
e Acceptance is now reaching the critical phase and the next four to six weeks
will increase in pressure.
e We need to continue the downward pressure on manpower planning and
resources and look for imaginative ways of short, medium and long term
cost reductions.
e The management team need to work extremely hard on staff motivation
and morale. This last twelve months has been hard on time and pressure
and uncertainty and changes of direction are unsettling and demoralising.
However most staff do reflect a sense of relief of knowing the way forward
and this is the firm platform to build upon.
e Overall we have to establish a new way of working with POCL, a new style
of contract,.a new form of relationship and a more focussed, energetic and
faster decision making process'to implement this opportunity.
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I
yIodsy
sui3ysAs
iM h
ht
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ICL Pathway Systems Monthly Report Ref: PA/REP/O38
Version: 1.0
Date: 14/06/99
Systems Report
MONTHLY SUMMARY
° Migration of the Release 1c counters to NR2 completed on 7" May as
planned and the Data Centre at Wigan was decommissioned and Bootle
brought online during the weekend 8/9" May. An additional 103 of the
larger outlets, some with 13/14 counter positions were successfully installed
during the period 17" - 28" May.
e Although a few software problems were encountered during this period,
they were low in number and the majority have now been fixed and handed
over for testing and distribution.
e The Live Trial ‘Observation Period’ commenced 31* May and is due to
cease 23" July. A software upgrade known as ‘LT2’ is scheduled to be
implemented 12" July, just before the end of this observation period. This
contains fixes designed to resolve acceptance incidents and implements a
number of change requests to simplify the weekly balancing and accounting
processes. It also contains the BPS disabling changes which result from the
recent POCL/ICL agreement.
e — The Development Directorate has been focusing on fixing live incidents and
addressing the problems found during acceptance testing in the LT2
upgrade which has a cut-off date 7" June. In addition, work has been
continuing on the CSR+ release i.e. LFS,AP Smart, KMS, VPN and the
enhancements to existing products. Development activity on BPS and the
Data Warehouse and the testing activities associated with multi-benefit and
online enquiries has now been stopped.
° The new organisation structure for the Development Directorate became
operational from 4" May but this is now being reviewed in the light of the
recent contractual agreement. The additional and diverse workload
anticipated may not now materialise in the immediate future, so the model
which the structure was based upon may no longer be appropriate.
PROGRESS
e All the regression cycles for LT2 (system testing and business integration
testing) have been progressing well i:e. EPROSS, TPS, Counter Migration,
RDMC, Data Warehouse/MIS, OBCS, APS, APR, Training and BPS
although the latter has now been. stopped.
° The planning and preparation for the Roll-Out Test Bed (ROTB) activities
is also progressing well and on target. This confirms that the end to end
system functions properly support the volumetric requirements of the roll-
out installation programme e.g. RODB, AutoConfiguration etc.
. All the currently planned Y2K tests have been completed and level 5 (full)
compliance attained.
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ICL Pathway Systems Monthly Report Ref: PA/REP/038
Version: 1.0
Date: 14/06/99
¢ Reviews are now taking place to determine the.full impact of removing BPS
on the Host systems layer architecture, throughput sizing, test rig
requirements, the Data Warehouse and Security. In addition, the impact of
the change of contract on the Government Gateway and the Generics
Delivery Streams is being assessed.
e — Some slippage is occurring on the development of CSR+ and each area is
being addressed. There is no indications at this stage that the delivery in
April 2000 is in jeopardy accept for KMS which is on the critical path and
subject to special attention. The delivery plans for CSR+ have not yet been
agreed with POCL so the current plans are draft only, incomplete and
include our assumptions regarding the interfaces with Horizon (e.g. joint
testing) and handover dates. Meetings with Horizon and POCL have been
arranged throughout June in an effort to resolve this issue.
COST DOWN
¢ The manpower implications of the recent Government decision (24"" May
1999) to abandon the Benefit Payment Card will quickly filter through the
Programme in June. The BA Delivery stream will be reduced to only those
people required to close down the BPS service tidily and to determine how
best to remove all the relevant code without destabilising the system.
e¢ The impact of the change on our data centre hardware configurations is
being evaluated and reports are also expected in June.
CURRENT CRITICAL PROBLEMS
e The CCN for the SPM Smart module for British Gas related to CSR+ has
still not been approved by POCL. They have been informed that if approval
is not received within the next few days, the development work will stop.
° Progress on the Key Management System for CSR + is slipping and the
development schedule is being reviewed in detailed to establish whether the
functionality can be descoped or phased, particularly in light of the decision
to remove the BA requirements.
ISSUES
e The removal.of the Benefit Payment Card may have performance and sizing
implications on the Order Book Control System (OBCS). This system was
modelled to handle approximately 25% of the network traffic and now has
to deal with the entire network. The initial indications are encouraging but
further work has been commissioned.
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ICL Pathway Systems Monthly Report Ref: PA/REP/038
Version: 1.0
Date: 14/06/99
e The current system design relies on a reboot of the counter in the early
hours of every morning to overcome memory leakage problems and to
ensure that distributed software and data changes are properly actioned.
This can in certain circumstances mean that we cannot support 24hour
operation, a contractual. requirement.
° BT and Energis have indicated that there will be approximately 85 - 100
outlets with no land network connections possible. They are suggesting that
we should consider a satellite solution and this is being evaluated. If this is
unsatisfactory, we are facing the proposition that these outlets will continue
to operate manually or will be closed. Subsequent negotiations with POCL
are expected to be very difficult.
° We have not yet been able to find an acceptable working solution for the
light weight mobile configurations i.e. those required to be carried and
operated in a variety of remote locations every day, approximately 250 of
this type have been identified.
° The future:strategy regarding the desktop architecture is unclear. This will
be influenced by the future needs of POCL in terms of business process re-
engineering and their approach to Network Banking and Government ~-
Gateway.
* EMC is undergoing trials in the US and the UK. Progress to date has shown
that we can process the transaction volumes expected from approximately
8000 outlets using SCSI and this could be increased to 10,000 outlets if we
installed dual SCSI. This issue-would have been elevated to critical status- r
now if we were still implementing the Benefit Card System. The current
view is that the configuration should be able to handle the combined traffic
of OBCS and POCL transactions for the entire network but this has still to
be validated. Implementing Fibre on NT still has its attractions for balancing
the workload so we are continuing with the testing activities for the time
being.
* Clarification of the LFS/EPOSS requirements for non-valued stock
declaration is required urgently. This is being addressed internally before
engaging with POCL.
COSTS
e The Development Directorate has now succeeded in recasting the budget to
reflect the new organisational structure. The 1999/2000 forecasts will now
be based on this structure and will continue to be the subject of regular
financial reviews throughout the year. The manpower savings which result
from the removal of the benefit card system will be reflected in the July
forecasts.
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Financial
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ICL Pathway Commercial & Financial Monthly Report Ref: PA/REP/038
Version: 1.0
Date: 14/06/99
Commercial & Financial Report
CONTRACTUAL PROGRESS/TIMETABLE
CODIFICATION UNDERWAY
. clauses - 1* draft has revealed some but not many issues to be resolved (e.g.
fraud) - generally positive
° schedules - Version 8.1 baseline agreed
e —CCNs and A2As distilled - high level of agreement - but CCN pipeline and
10 A2As still. to be agreed
¢ Requirements agreed except for 2 issues, perhaps 3
e drafting allocated between parties
© outline Gantt chart shows completion by 16" July
e However, there are some issues of principle --See.Key Legal Issues
KEY LEGAL ISSUES
ACCEPTANCE
¢ — POCL claim right to have us redo all acceptance specs to new contract
(taking out BPC & adjusting for risk transfer)
* concept of ‘new or modified attributes’, hence.new tests
e implication is.delay of. months
‘RELIANCE ON DSS REQUIREMENTS’
. POCL claim that they are entitled to ‘rely on’ certain Requirements which
happened to be specified in the DSS contract but which ‘still apply to the
Core System’
THE ‘WHAT ARE WE BUYING?’ QUESTION
° POCL infrastructure with just sufficient capacity to meet SLAs under ‘Core
System.use, or
e the POCL infrastructure capacity which we would have supplied had BPC
gone ahead?
RATE OF ROLL OUT
e 334 per week or 300 per week?
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ICL Pathway Commercial & Financial Monthly Report V Ref: PA/REP/038
ersion: 1.0
Date: 14/06/99
. more a practical than a legal issue (probably)
DISPUTED REQUIREMENTS
° EPOSS as a separable service (option to delete)
e part of ‘Irregular encashment profiles’ (fraud)
HOW TO TREAT POCL REQUIREMENTS NOT IN CSR
° delete those Requirements (not agreed), or
e list exclusions to Requirements (no mechanism), or
° specify CSR+ with exclusions (requires agreement), or
° leave as is (Agreement to Disagree, later)?
CONFORMANCE OF CERTAIN CCDS
. POCL want SADD, SFS (and Acceptance specs) re-done
CCNS AND A2AS YET TO BE AGREED
° Acceptance spec for POCL Infrastructure (as was)
° 3" datacentre (solution to be tabled/sold)
° PPDs, Report & receipts, Style Guide (conformed)
. Release Contents‘Definition for CSR (conformed)
. RCD CSR+ (identifying Requirement exclusions)?
. Business continuity plans (to be completed)
e — Benchmark transaction times adjusting for BES
° Release policy post CSR+(to be:conformed)
BUSINESS CASE
OVERALL PROJECT LOSS
e £120m loss before refinancing
. £50m loss after refinancing (€£131.7m)
° approaching break even at Group level
e before additional business
GOING FORWARD PROFITS
° £130m at Pathway level (£180m - £50m)
e to be released pro rata to revenue as milestones achieved
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ICL Pathway Commercial & Financial Monthly Report Ref: PA/REP/038
Version: 1.0
Date: 14/06/99
THIS YEAR, NEXT YEAR PROFITS
e subject to milestones being achieved
e £24m in 1999/2000, £35m in 2000/2001
RISKS
‘BUSTED’ POCL REACTS AGAINST PROJECT
e continued £ negotiations with HMG and DSS, plus
¢ strenuous attempts to.recover lost ground from us
° meanwhile, stalling tactics to keep options open
REACTION MANIFESTS ITSELF AS
e — Acceptarice delay'= programme (e.g. cash account) or contractual
e deadlock over interpretations of Letter Agreement and Heads
CONSEQUENCE (MEDIUM TO HIGH RISK)
° Acceptance delayed to.October or later
. Roll Our start delayed to January (high risk) or March (medium)
e Worst case pushes'all POCL spend into 2000/01 (unlikely)
OTHER RISKS
£8M APRIL-MAY FUNDING AGREED BY TREASURY
. rejected by POCL (Treasury did not get their agreement)
DOWNSIZING
¢ adverse impact on other parts of ICL (Outsourcing, A&XTC)
LOSS OF KEY SKILLS UNLESS R3 INITIATED QUICKLY
e POCL need to commission work within 2 months
CONTRACTUAL HANG OUTS
. “3™ data centre’ - technical issue with Feltham / West Gorton
° capacity baselining to BPC level - implies higher comms traffic as well as
more equipment
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ICL Pathway Commercial & Financial Monthly Report Ref: PA/REP/038
Version: 1.0
Date: 14/06/99
© transaction times: 1 second = £5m+ p.a. in LDs
CASH FLOW
VERY SENSITIVE TO DELAY
e Acceptance = £68m
° 1800 post offices (300 + 1500) = £90m
. 2 month slip => £10m -.£100m impact in 1999/2000
° NB. Peak cash goes from £370m to.£470m
e vs. ICL Treasury assumption of £420m
ROLL OUT COSTS ARE BEING COMMITTED NOW
° equipment (PCs, etc.)
° training resources (Peritas)
. post office modification resources (WTL)
° installation resources (Exel, Celestica)
° field service and help desk staff (Outsourcing)
COSTS
e The Controller’s report follows.
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Commercial & Financial Monthly Report
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Ref: PA/REP/038
Version: 1.0
Date: 14/06/99
KEY NUMBERS (£000’S)
Tea can
aa
Ati cust I Fovens
Trading/Project Cost Revenue 32 ‘ST (102)
Desorea PBT Losses the 2 0}
cath eines Open Coit Faw seen] 2085
eee
heuer I roreas
Balance’ Sheet Prec HP 7 =
for ied Aazets “07 0
Tota! Sorowngs asso] 2088
Nonearanent (Ts i Terporaies) % 4
(Meno), Fretanoes proce trough CLIT Conraetr Services 20 2
Summary:
Varlances versus forecast abound this month, given that the (crecast pre-dated the revised contractual arrangements wilh Post Office Counters Limited and
the withdrawal of the DSS from tha previous PFI arrangements. The forecast was also struck befof® the £180 milion provisions were finalised, but relevant
‘comparatives in the cash flow and balance sheet areas have been re-cialed to reflect the provisions,
Project costs were lower than forecast, due to a combination of charges from olher parts of ICL sill being in catch-up mode and lower depreciation because
‘of the March provisions. A credit of £6m was Laken relating to a Goverment contnibulion to costs during the delayed Treasury Review. This is a conservative
2 milion lower than the amount forecast (and invoiced), allowing for the possibilty of a lower auditable figure.
Borrowings levels were over £2 milion better than forecast, due mainly to working captal control
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ICL Pathway Commercial & Financial Monthly Report Ref: PA/REP/038
Version: 1.0
Date: 14/06/99
MAY ACTUALS 1999
PROJECT COST ANALYSIS (£000'S)
onih End of May 1999
Vanance vs.
Actual Actual Forecast
Revenue 2 57 (102)
Direct Cost of Saies 2.329 4,388 802
Gross Margin (Deficit) 2.297) A331} 500,
Oper Labour - Own Staff 947 1048 40
Travel & Subsistence 66 114 3
Freelancers 2,069 4.102 338
ICL Subeontracts 1.887 221 1,003
(Olher Subcontracts 264 680 145,
Depreciation 864 2,390 782
Marketing 21 69 33
Professionat 295 487 Eu .
COtner opex (5.563) 6.181} (1,964
Gross Project Opex 650 5706 Ed
Interest costs, 1.229 2,982 G
Costs before Capitatisations, a6 CIE 82
Declared PBT Losses Ur
Capitaised into WIP during year 13,772
The revenue forecast for the month was based on involcing forthe first month of Pos! Office transactions under the PF) contract, This was partly scuppered
‘by the new contract terms. The accrual forthe part-nonth that can be now be involced (up to 24th May) has been conservatively drawn.
Commants:
Cost of Sales favourable variances of over £600k were mainly centered around lower outsourcing and support charges from OSD.
Freelancar costs wee well dcwn oi forecast, due mainly to lower average hours worked but the main favourable variance arose on ICL subcontracts, where (he
voicing sldation iss sorting itso aut, folowing re-allocation of responsibltes smongst supplying entities, notably the old Ousourcing Division and
ABTC. Other subcontracts were also lower than forecesl, thanks in part toa negotiated reducion in (rau risk management charges from Girobank - a service
‘which wil now no longer be requires
Depreciation charges were £762k lower tran forecas, thanks toe exceptional charges ken against certain assets inte 198899 vccounts; hat of he variance
relates to Apri. The large eit shown in oer Oper includes £6 miion in expect ofthe contin o casts dunng the delayed Treasury review. An wvoice
for £8 milion (he ceing figure) has been alse, bul the re lo project cos ncudes@ hopetly conservative provision for audit adjustments aganat whats
‘8 rather woaly description of what constitutes allowable casts. 7
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Commercial & Financial Monthly Report
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Ref: PA/REP/038
Version: 1.0
Date: 14/06/99
MAY ACTUALS 1999
HEADCOUNT
End ot May 1663
Parmanont Headcount ‘Wariance vs
Actual Forecast
Development 54 SI with the recent contract
Implementation 60 7I revisions, manpower needs
Customer Service 60 11] across the business are
All other departments (UK Project) 51 12I being re-assessed in deiail
Total - UK Project 25 35
Intemational Sales 2 2
Totals - Permanent Stat! Ea 37] Permanent recruitment
continues to tag the forecast
End of May 1685 growth profile.
Non-Pormanent Headcount Variance vs.
Actual Forecast_I A wholesale re-organisation
of the former Systems and
Industrial Tralneos and Temporary Stal %@ TZ] Programmes areas into .
delivery-ortented Develdpment
Freelancers (sourced through streams became effective
ICLIT Contractor Servicos) during May. All ut the.core
Development 7 {4)] sales and project management
Implementation 3 1] resources within the
Customer Service 6 1] Intemational Sates area have
All other departments 19 {1} become pan of the mainstream
Total : UK Project 139 (3)] Development resource.
lnlemational Sales 1 5
Totals - Higher Skills Freelancors 200 2
Totals - Non-Pormanent Statt 22 a ‘
Grand Total - UK PFI Project 436 33 : tu
Grand Total - Intemational Sales 3 z
GRAND TOTALS Er] % . -
w
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PA/REP/038
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MAY ACTUALS 1999
CASH FLOW (£000’S)
Inflowsi(Outfiows)
Net Project Costs - capitalised into WIP
Project costs taken straight 10 P.& L
Depreciation
Movement in other Working Capital tems
Fixed Assel Additions
Business Operating Cash Outflow
Opening Net Borrowings
Closing Net Borrowings
BALANCE SHEETS (£000’S)
Comments:
‘The forecast balance sheet has been adjusted to reflect the £180m Nel Fixed Assets
Proviston taken in March. This was spread as follows: Project Work in Progress
‘Other Working Capital
Fixed Assets: £9.8m
Project WIP: £140.2m Totals
Omer WIP: £30.0m
Share Capital
The lower than forecast project costs, the better than forecast Retained Eomings
‘working capita levels and lower than forecast capital addilions
Combined 10 give @ borrowings level which was £2. 1m lower Group Pooled Borrowings
than forecest thtemat loans
Extemal Losns
At ine time of writing, the EBm invoiced to POCL following the Tota! Borrowings
offer ofthe cost contribution by HM Treasury ha not been
‘received, in spite ofthe supposed 7 day payment terms, Totats
Cumuive
Variance vs
Act Forecast
(13.772) 932
e2a7} (40)
2,390 762)
(9.891) 1,552
6377) 383
a9] 2065
EA of May 1098
Forecast
Tadjustedy
40,078 39,690
97,782 98,695
(41115) 9,563)
Enea aan
20,000 20,000
(182.423) (182,383)
11,029 13.096
75,000 75,000
173,120 173.120
258,148 261,214
Ez Eo
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Customer
Requirements
Report
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ICL Pathway Customer Requirements Monthly Report Ref: PAREE/OS8
Version: 1.
Date: 14/06/99
Customer Requirements Report
MONTHLY SUMMARY
¢ The withdrawal of DSS from the Agreements removed seven of the 25
Acceptance areas. In addition Horizon has indicated that a further area will
not now be pursued. The DSS withdrawal has also removed the two
Acceptance Specifications that DSS and POCL refused to approve, and
several of the issues that were previously a concern.
e The final. Acceptance Trials Closure Report was published and we are now
about two-thirds the way through the Acceptance Reviews and on target to
complete these by mid June.
« There is currently one significant Acceptance Incident and this has been
aggressively dealt with.
DETAILED PLAN ACTIVITIES
RELEASE:CSR
e Tony H and Dave H have helped define and put into effect the plan to
allow the DSS to withdraw from the Agreements and begin the process of
removing the cards from the pilot populations.
e¢ POCL has agreed that Pathway will be responsible.for producing the drafts
of the Requirements and Solutions Schedules for the new contract.
¢ A revision of the Requirements texts has been produced to provide the first
draft of the new POCL Requirements Schedule. This schedule in effect fixes
the Acceptance Criteria for use during contractual accéptance of Core
System Release (CSR). A matching revision of the Solutions texts is in
progress.
RELEASE CSR+
. The Security Functional Specification Version 4.0, originally targeted at
NR2+, was produced, together with the companion Access Control Policy
document.
CCNS / CRS / CPS
° CCN 474, which facilitates the withdrawal of DSS from the Agreements was
raised and progressed through to approvals within two days.
e The eight CPs and the matching CCNs associated with the activities to
address Acceptance Incident #218 were raised. Development is well
advanced and will mostly meet the manufactured build deadline for CSR.
° CCN434b to update the Cash Account format to handle year-end changes
was Output.
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ICL Pathway Customer Requirements Monthly Report Ref: PA/REP/038.
Version: 1.0
Date: 14/06/99
ACCEPTANCE SPECIFICATIONS
e The two specifications on which approvals were outstanding, BES and
Service Boundaries, are now no longer required. Where. Acceptance Criteria
within a continuing specification are affected, revised Review Packs have
been issued showing the new Criteria by striking through as necessary.
° Horizon has indicated it wishes to dispense with the Acceptance Test
“Schedule C3”. This is a particularly complicated area that only references
other test areas in several selective ways. It does not add any real content to
Acceptance but provides scope for disputes.
¢ The revised Requirements schedule in effect contains the Acceptance
Criteria as they now should stand. The changes are nearly all
straightforward removals of DSS Requirements, or DSS-specific elements of
Requirements. The few exceptions concern the transfer from the old DSS or
Joint Agreements material. missing from the old POCL Agreement. The area
at contractual risk is OBCS, particularly Requirement 956.
e We have not yet received formal approval.of the POCL Infrastructure
Acceptance Specification although the associated Change Control Note is
now overdue for approval. It is-not believed to be problematic.
ACCEPTANCE TRIALS
e The “retrospective witnessing” activity is now formally defined to cover five
areas and Horizon has committed to complete approvals by 25" June, now,
in fact, the pacing Acceptance item overall. Horizon has also indicated that
one of these areas, POCL Infrastructure, will not now require this activity.
ACCEPTANCE REVIEWS
° As at 4/6 five of the 17 areas had completed all Reviews. There were 20 of
the (now) 49 or so Review Meetings left to hold and only two further
Acceptance Review Packs are now expected to be needed. The latest review
will be 15/6. There is a lot of rescheduling of these review meetings, but so
far we are holding the line at nothing beyond 16/6.
e — The momentum to clear document dependencies for Acceptance Reviews
has been maintained over the period of DSS withdrawal. The Processes &
Procedures Documents (PPDs) comments were mostly returned on time and
were very few. Final “DSS-free” versions of the PPDs were published 7/6 for
all except the Operating Environment PPD. For this a few comments: were
delivered by POCL late and there is one difficult issue to resolve concerning
how a five-minute desktop reload is to be scheduled during the dark hours
when potentially 24-hour operation of some post offices is required.
e Similar versions of the Reports & Receipts and Style Guide documents have
been produced.
e The several documents describing the Contingency Framework were
produced and reviewed satisfactorily.
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Version: 1.0
Date: 14/06/99
ACCEPTANCE INCIDENTS
. Pathway has provided Horizon with a list of the 32 KPR Version 2.10
PinICLs that remain applicable following DSS withdrawal and the progress
with EOLT (LT2) to date. Of these eight (all Low) remain due for clearance
at EOLT.
e Acceptance Incident #218, formally concerning Managers’ Training but
where the root cause is the need to simplify the accounting processes during
the weekly Cash Account sequence, has been aggressively progressed. Eight
Change Requests have been raised officially by POCL and the associated
development of the first six completed in time to meet the manufactured
National Roll Out build for CSR.
* We are expecting further larger issue-based Acceptance Incidents. Actions
are in place to handle those we predict:
° the-need for a fallback data centre in the even that one of the two
centres is put out of action - or equivalent
° running an OBCS Help Desk Facility from the Horizon System Help
Desk - it was formerly hosted by the Payment Card Help Line now .
cancelled. ai
NEW BUSINESS
° No activity.
OTHER TEAM ACTIVITIES "
e Dave H and Dave J have both been trained in DOORS, the expected
company-standard for requirements management tool under the “IESE”
initiative.
CURRENT CRITICAL PROBLEMS
° None.
ISSUES
° It is essential that:
° the issues surrounding Acceptance Incident #218 are cleared
° the PPDs are approved as soon as possible
° the Reports & Receipts document is approved.as soon as possible.
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JIOds yy
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jowoisn)y ===
ICL Pathway
Customer Service Monthly Report
Ref:
Version:
Date:
FUJ00058182
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1.0
14/06/99
Customer Service Report
MONTHLY SUMMARY
From everyone’s perspective, the day-to-day operation of the CSR system is
going very well with very few outstanding issues.
We have experienced some operational problems on the'SMC Tivoli
systems with event management and software distribution..A service
improvement plan is in place.
Customer satisfaction of the cash account processes each Wednesday
remains depressed. Analysis of the calls to the HSH each week indicates that
the situation is showing clear signs of improvement.
Plans for the withdrawal of Benefit Payment Services have been agreed.
VITAL STATISTICS
Installed base: 299 Post Offices, 753 counters
Number of Cards issued 51,477
Number of Active Cards in use 33,845
Total number of BES Counter Transactions 1,260,424
BES Counter Transactions in month 78,675
Total value of Benefit Payments received £40.2
Value of Benefit Payments received in month £2.8m
Total value of Benefit Encashments made £39.2
Value of Benefit Encashments in month £2.8
Total number of OBCS Transactions 8.2m
Total number of books impounded 21,044
Total number of EPOSS transactions 842,430
Total value of EPOSS transactions £29m
Total number of APS transactions 83,004
Total value of APS transactions £2.5m
PROGRESS
OPE!
RATIONS
From a POCL and Pathway perspective, the migration to CSR continues to
be a major success and no serious issues with the software or system have
been experienced.
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Version: 1.0
Date: 14/06/99
Agreement has been reached with DSS and POCL on the closedown plan for
Benefit Payment Services. John Wright is managing the plan.
e From Monday 7" June 1999, the PCHL customer line will play a
recorded message referring all enquiries on Jost stolen or damaged
cards to the Child Benefit Help-Line.
. DLR will cease to process files from Monday 7® June.
e — Allcard payments will cease on 19" June and BA will issue stops for
all outstanding payments using the online CAPS service.
¢ The PCHL will close down at close of play on Tuesday 22™ June.
e The CAPS network interface will be severed on Saturday 26" June.
° Two copies of DSS data wil! be archived from Pathway systems and
delivered to CAPS from 7" July. Once accepted, the data will be
erased from Pathway’s system.
e A plan for the removal of ICL assets from DSS sites is being prepared
and will be executed in early July.
Take-on of the Wigan data centre is planned for 19"/20" June. Mike
Stewart is managing this activity. There are currently no major issues
identified.
The LT1 to LT2 upgrade is scheduled for 10"/11" July. There are no major
issues with this plan except the overall concern with the SMC software
distribution capability.
Ideally, we require fail-over testing to have been completed before the LT1
to LT2 upgrade to ensure that there is a viable regression plan. The plan
and test schedule to achieve this is being worked up but there is a danger
that resource shortfalls will force a slippage post LT2.
POCL were unhappy that we are planning for a 1 day rather than 1 week
fail-over test but it is felt that this stemmed largely from the requirements
for PCHL availability which is no longer relevant after the withdrawal of
BPS. This is being reviewed urgently by Martin.Riddell.
BUSINESS SUPPORT
°
NR2 has produced very little in the way of incidents received by BSU. There
has been a notable reduction in the receipts of incomplete and non-
committed transactions as well as very few PAS exceptions. We have had no
APS and EPOSS reconciliation incidents save those that are known faults
with the Cash Account process or Postmaster errors.
Staff from the BSU have been in attendance every Wednesday either at HSH
or NBSC to assist in dealing with the high volume of Cash Account queries.
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Version: 1.0
Date: 14/06/99
SYSTEM SUPPORT
¢ SSC staff have been under considerable workload pressure from the Data
Centre Migration weekend onwards. They have been called out most nights
to deal with system problems although most of these have-been repeat
problems rather than lots of-new issues. The PinICL stack has regularly
exceeded 100 calls.
. Steve Warwick has been in attendance at SSC on Wednesdays to assist with
problems relating to Cash Account. Within this context he has also spent
time imparting his knowledge to SSC staff.
e SMC performance continues to be less than satisfactory. A service
improvement plan has been produced and will be managed by Kevin
Dowling. Further secondments from the SMC to the SSC have been
identified.
© — Powerhelp was upgraded during the month but inadequate testing of the
OTI interface caused subsequent problems interfacing Powerhelp to PinICL.
Kevin Dowling has arranged for OSD staff to manually input calls until the
problem is resolved.
INFRASTRUCTURE SERVICES
e Service performance in May was good and no new customer problems with
the system were identified.
e The most serious issue continues to be postmasters’ performance of the
Cash Account process and:rolling over into the next Cash Account Period:
e Customer Satisfaction is still depressed due to the experience of having to
perform an electronic cash account process each Wednesday. Support on
Wednesdays and Thursdays has been increased with ‘expert domains’
staffed by Pathway, Peritas and POCL staff. The week on week view is
positive in that the volume of Cash Account calls has reduced -as a
proportion of the number of live-trial post offices.
tis
CURRENT CRITICAL PROBLEMS
° None
ISSUES
. OSD Service Improvement Plan for SMC.
° Need for an enduring solution to Cash Account processing problems.
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Version: 1.0
Date: 14/06/99
Quality & Risk Report
MONTHLY SUMMARY
° QRM has implemented changes as a result of restructuring the contract - the
loss of Fraud Risk Management and stopping of recruitment.
. Good progress is being made in Acceptance activities in Security, Audit and
Policies and Standards. There are signs of issues emerging regarding lack of
awareness or. inability to take decisions of POCL staff.
° Changes to Risk Management to reflect the new development organisation
are underway, and NRO modelling will be changed to reflect the
contractual changes.
e Y2k testing is complete - no major issues. Ongoing.monitoring of 3“ party
suppliers continues, as will contingency planning.
. Progress on internal audits is being- maintained.
. Good progress is being-made in establishing the security function, including
the provision of PACE certification and evidence.
PROGRESS
FRAUD RISK MANAGEMENT
° With the termination of the Benefit Card service, the Fraud Risk
Management service is no longer required. Support is being given during the
transition period and archiving of data and recovery of equipment from
Girobank is being organised. . .
RISK MANAGEMENT
° Much work during the month which is not relevant-to the revised contract,
including unauthorised encashment and PCHL authentication.
e NRO Risk Register - This is in the process of being restructured to reflect
changes to the contract and the Implementation organisation. The ‘I Think’
model was completed, but also now requires extensive revision.
e Development Risks - As a result of the reorganisation, a programme is
underway to integrate risk management with the working practices of the
Delivery Streams. A pilot is planned.to start in June.
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Version: 1.0
Date: 14/06/99
SYSTEM SECURITY
NEW RELEASE 2
Considerable support continues to be given to Acceptance. A ‘BS7799
Statement of Applicability’ was produced to resolve category ‘b’ incidents.
Security documentation has also been amended and baselined.
Meetings with fraud police have taken place to discuss and understand their
relationship with Pathway in the prevention and prosecution of fraud and
security incidents,
Security events from the first week of Live Trial are being analysed to
determine the final requirements for the automatic download of security
events to the SEM database.
Physical security audits of all the Regional Offices continue; the final report
is due in June. *
Problems have continued with setting up the Securl1D Administration
workstation.
Discussions took place with POCL Investigations and.Legal staff to progress
the provision of Section 69 PACE certificates, POCL are clearly anticipating
a comprehensive fraud and prosecution support service from ICL Pathway.
We have made it clear that this is not in the core contract - it represents an
opportunity for a non core service.
QUALITY
Review of Disaster Recovery Planning. Business Recovery, Incident
Management and Crisis Management Plans continue. Changes as a result of
the Development Directorate organisation are being introduced.
Policies & Standards Acceptance Test
Segment 3 review (QMS) was completed without incident.
Segment 5 Review Pack has been distributed. The response is that the
criterion addressed has been accepted without he need for a formal review
meeting.
The Delivered Quality Audit carried out at Cirencester noted concerns
relating to ECCO migration impact on installation activities, training of
counter staff and office surveys.
AUDIT
Acceptance:
e. Acceptance Trials Closure Report (ATCR) has been updated and
reissued following BA termination: All Acceptance.incidents can now
be closed.
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e Segment 1. The Acceptance Closure Report has been completed - no
Als.
° Segment 2. The scope of this has changed radically - CCS is no longer
required. However POCL commitment for the revised scope is late
whilst they understand the implications of the contract.
e Segment 3, demonstration of extraction facility to POCL is:now due
for 14/15" June. It has been delayed due to equipment build issues.
° Internal audits:
° Security Policy Deployment Audit is due for completion in June.
e Ghange Management Audit is complete.and.a report issued - main
issues include resourcing and implementation of CPs and a lack of
documented procedures.
° Implementation Audit; has started and is due to complete in June.
YEAR 2000 CONFORMANCE
° Y2k testing has completed with no major issues.
e A further meeting on Year 2000 Continuity planning was held with POCL
and Horizon in FELO1 with the following key points:
. POCL cannot yet advise trading days for franchised offices over the
millennium weekend. Crown offices will be closed Friday 31° Dec 1999
through Monday Jan 3“ 2000.
° POCL expectation they will be open on 28" December has not been ratified
by their Board.
e POCL approach is to “health check” the live service early on 1/1/2000 and
then determine if they should invoke their contingency plan. Discussions
continue and will be partly determined by which outlets plan to open on
1/1/2000 or 2/1/2000.
e Third party issues:
e There is concern that some vendors are still changing their compliance
status; monitoring is needed.
COST DOWN
° Activities subsumed in changes to the organisation following the contractual
changes. FRM will terminate, 2 members of staff will be redeployed. All
recruitment has stopped (2). This represents 25% reduction from budget.
ISSUES
e Slowness of POCL response to contractual changes.
° POCL has not declared working days over the millennium.
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e Delays to Audit acceptance review’due to equipment build issues.
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Business
Development
Report
ICL Pathway
FUJ00058182
FUJ00058182
Business Development Monthly Report Ref: PA/REP/038
Version: 1.0
Date: 14/06/99
Business Development Report
MONTHLY SUMMARY
BUS
INESS DEVELOPMENT
Excellent news to have a clear decision at long last and now our priority is
to review where we are and decide on future organisation structure and
modus operandi with POCL. The first major task is to begin re-building
relationships with POCL. The reviews have been on-going for far too long
and people will feel bruised on all sides. I am now building a new
relationship plan to help achieve this main task.
NETWORK BANK
This is now our major ‘new business’ opportunity. POCL are committed to
Network Bank but have yet to appoint a Managing Director of the unit. We
have been undertaking a significant amount of work in specifying a banking
product. The intention is that this product will be used.to satisfy the
requirements of Alliance & Leicester, National Savings and the Network
Banks. A comprehensive set of requirements documents is being produced
to put us in the driving seat when we engage with POCL. The first set of
meetings takes place week of 14" June. The approach at that meeting will
be to understand their current position and to ‘sell’ our consultancy.
resource to help achieve their banking aspirations.
BILL.PAYMENT
Given that our remuneration is not now completely transaction based, we
will take a less forward role on bill payment. We will continue to work with
POCL where required in understanding their business requirements.
RE-ENGINEERING
Product-re-engineering now takes on a more important role than previously.
Re-engineering is not part of the new contract but it should provide.a major
source of revenue for us over the term of the contract.
SPM
The CCN for the Simple Payment Module (SPM) has been agreed and will
be signed in the next few days. This is.the first piece of New Business after
last week’s agreement. The value of this work is approx. £300K with on-
going annual revenue. This sets the trend for the way ahead.
We have now appointed Claire Roberts to be full time programme manager
on sorting out the issues that surround office balancing.
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Version: 1.0
Date: 14/06/99
CUSTOMER EDUCATION & COMMUNICATIONS
EXTERNAL COMMUNICATIONS
« A hectic month for exceptional reasons - this month saw the communication
of the Treasury Review outcome that coincided with, and therefore
dominated, the ICL annual results. Although our progress was iterative, the
outcome was generally better than was anticipated.
e¢ We took the opportunity of demonstrating the Pathway system at the ICL
results announcement. This covered a broad spectrum of bankers, industry
analysts, trade and national press. ‘Ihe demonstrations were received
enthusiastically by all and played a significant part in belying any thought
that the system was technically flawed.
e Anna has had long conversations with over 30 journalists in the last week.
We have been covered significantly in all major broadsheets, trades and the
wires. We also received TV coverage. The coverage in the trades will
continue for another few weeks or so but we will not stimulate any more
interest.
e — Inanalysing the outcome, we accomplished our three main objectives:
e We avoided our association with any delay
¢ We achieved an acceptance of the viability of the “proven” technology
. We did not taint the integrity of the ICL float
. We recovered from the unhelpful DTI press release
. Internal communications and supplier communications were also
harmonised and well received. My feeling is that there is a degree of relief -
people appreciate the clarity and the opportunity to work in an
environment which is now more settled.
INTERNATIONAL
¢ The Namibia contract continues to progress with the first major deliverable
due by end June. Phase 2 is scheduled for September. Any further work will
be the subject of a new contract.
¢ — CTT in Portugal have still not signed their contract with Siemens and
Escher but I believe this is only a matter of time and there is no hope in the
short term of counters business.
¢ Sweden Post have been visited in the past month and are looking at a
Riposte based solution as their future base.
¢ — South Africa Post have now stopped roll out of two of their older EPOS
systems, Olipost 1 & 2. They have also frozen roll out of ExcelPos. This is
to allow them to achieve Y2K conformance and to then review their future
counter automation strategy.
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e Deutsche Post are visiting ICL Pathway on 7"/8" June. This is the first
meeting post award of contract to Siemens where they want to understand
more about the skills and capabilities that we can bring.
e Iam still holding to the view that unless-we have an exclusive agreement
with Escher, we will not bid for future counter automation contracts. These
discussions are on-going with Escher and will be progressed later this week.
. The development team have transferred to Terry Austin’s development unit
under the management of Chris Humphries.
PROGRESS
EFTPOS
° Requirements work on-going with POCL.
e _All customer education activities have been closed down. Contracts with
McCann-Erickson, PWL.and MRM have been formally terminated. Thank
you as well.as termination letters have been despatched. Excess PC1 stocks
will.be disposed of.
° BA have been written to to explain the necessary action that is required of
them.
° IT recruitment has been put on hold
e The Marcomms team must start a fresh. All aspects of its work must change.
Our relationship with POCL will change and hence our role-in exhibitions
and their internal comms. We need fresh and new collateral. We need a PR
approach that is focussed on our outsourced approach to IT. We need to
reinvigorate our internal comms.
CURRENT CRITICAL PROBLEMS
¢ Getting the contractual position is an obvious MUST but I believe that we
must make every effort possible to renew discussions at every level with
POCL. We are in a new regime. No longer does all resource come as part of
the PFI contract. This will take some work to ensure that POCL fully
understand this and adapt to this new way of working.
e Staff motivation is a major worry. The announcement of the Treasury
review was a relief however we must work hard to ensure that there is now
a clear way forward for all staff.
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Implementation
Report
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M Version: 1.0
onthly Report Date: 14/06/99
Implementation Report
MONTHLY SUMMARY
. Following the completion of the Treasury Review, the Implementation team
has identified 2 key areas of change under the revised contract. These-are
concentrated on removing references in various training products to the
benefits payment service and the change to a fixed price contract. The
implications of.the fixed price contract are that 50% of Pathway’s revenue °
forecast are directly dependent on the achievement of installation
programme milestones. Consequently, in parallel with preparation for
National Rollout which starts in August '99, the Implementation team is
being strengthened to ensure rollout volumes and related revenue forecasts
are achieved.
e All Implementation programme milestones were achieved during May. Live
trial installations were completed with a 100% rate for installation and
migration of Post Office outlets.
e There are two critical issues this month, POCL concerns over the planned
‘maximum installation beat rate and potential quality concerns over 32 site
inspections conducted by the customer. Activity is underway to address
these two areas of concern and this is described later in the report.
PROGRESS
e — Recruitment against the agreed Implementation headcount profile has made
good progress and we are on track against the headcount plan to commence
National Roliout. All senior positions are filled and only 8 from a total of
87 are outstanding. Interviewing for the remaining positions is at an
advanced stage. Following the conclusion of the treasury review, and in line
with the agreed headcount profile, a review of manning levels for the peak
work. periods of National Rollout has been completed. From this review
approval has been received to take on 14 additional heads in key areas and
recruitment for these positions has now begun.
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e The infrastructure rollout programme to ensure outlets are ready for
‘installation continues at a significant pace although this is still below target
levels. This underachievement is attributable to the high level of outlet
suspensions from the programme. Three specific actions have been taken to
minimise the rate of suspensions and to achieve maximum efficiency from
the.infrastructure rollout. From mid-June, increased modification cost
thresholds will reduce the level of suspensions generated by cost restrictions.
POCL regional. management has been, and will continue to be, lobbied to
ensure suspensions arising: from late notice refurbishment and relocations
are minimised through pro-active retail network management. To ensure
cost efficiency in the-infrastructure process is maximised, the number of
outlets introduced:to the infrastructure has been increased and will lead to a
greater number of outlets reaching RFI status each week. The combined
effect of these measures will be to reduce the rate of suspensions balanced
with an increasing rate of suspended outlets re-entering the programme.
Gradually it should also start reducing the backlog of suspended outlets.
e During the reporting period, live trial installations were all completed to
plan with a 100% success rate with 299 outlets now operating live. The live
sites also now include a number of large multiple counter outlets and offices
which have, for the first time, proven the ability to migrate from legacy
systems (ECCO) to the Horizon system. The installation and migration
process has settled into a well-practised and efficient operation meeting
service level requirements and receiving praise from the customer.
¢ Effort within Implementation is now focussed on ensuring the readiness of
the project and our suppliers for National Rollout. This includes a series of
reviews with the management teams of each of the key suppliers and a
review of the capability of tools and processes. This includes activity to
baseline the beat rate for National rollout and to respond to concerns raised
by POCL regarding weekly balancing of the cash account.
¢ Several streams of activity are in progress to address the balancing concerns.
In addition to maintaining specialist support for balancing each week
through Customer Services, Implementation are also liasing with POCL to
provide relevant improvements in training.
. Following the withdrawal of the Benefits Agency from the programme,
changes are being made to training courses to reflect the removal of Benefit
Card functionality from the system. The net effect of training changes to
reflect the new contract and the concerns with balancing is to have
significant change to most training courses. This includes training for
Counter Managers, assistants, migration agents (HFSOs) and specialist
courses. Other training amendments are also being made to reflect system
enhancements in the LT2 software enhancement.
e Supplier negotiations have made considerable progress in the month with
conclusions being achieved with WT and Exel. Negotiation of the HFSO
service agreement with POCL is also reaching the final stages. ICL Training
Services have indicated a need to reconsider some areas.of their cost
structure although this is being resisted.
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Version: 1.0
Monthly Report Date: 14/06/99
IMPLEMENTATION WEEKLY STATISTICS
(For week ending 4" June 99)
Activity This Week Cumulative
RGM letters issued 315 14134
MIB events held 6 285
MIB Attendees 297 13466
Site surveys undertaken 293 11006
Site re-surveys required 119 4211
Site re-surveys undertaken 103 3772
Site modifications done 102 2189
Site preparations done 199 4668
Sites RFI 199 4668
Live NR2 Offices None Planned 299
CURRENT CRITICAL PROBLEMS
¢ There are two current areas of concern within Implementation although it is
considered that these are being managed and a satisfactory outcome is
anticipated. ,
e¢ — POCL have highlighted concerns over the increased maximum beat rate for
National Rollout, which will be effective in January 2000. Discussions are
underway between Pathway and our suppliers to determine a compromise,
which can be offered to POCL.
. The second of the two concerns relates to the 32 Horizon site inspections,
16 of which are at Ready for Installation (RFI) stage and 16 of which are
live sites installed during the 103 live trial new installations. Early
indications are that POCL have concerns over the site completion packs, the
quality of information therein and the actual condition of the sites. It is
believed the main contributory factor to these concerns relates to work done
by our survey and preparations supplier, WTL. Early work by WTL had
given Pathway cause for concern previously but reassurances and process
changes had been taken with them. The formal review with POCL of the
site inspections takes place on 15" June 99. Meetings have been scheduled
with WTL immediately after this review to propose an action plan of
corrective and preventive work. In the review on 15" June, Pathway will
demonstrate to POCL that these concerns are being addressed. It is
considered this will minimise the likelihood of the issue being escalated
further.
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Monthly Report Date: 14/06/99
ISSUES
e Following a POCL request, a shortened period of 10 weeks was used for
cutting the first 2 weeks of the National Rollout programme, with 12 weeks
being used for initiation of all future weeks. Consequently the first 4 weeks
of the process will all be initiated together with a bulge of outlets entering
the programme in one sweep. It is-anticipated that all the-suppliers
involved in these early stages will be able to manage although careful
monitoring of progress will be required.
* Suspensions from the infrastructure programme continue to. impact the
target rate of 300 outlets achieving RFI status each week. The combination
of increased modification levels, increased number of outlets entering the
process and pressure being exerted by POCL regional teams to reduce
suspensions for refurbishment should close the gap.
. With the high number of offices currently in suspension from the
infrastructure programme (2,000+), there is a large amount of work
required to reschedule these offices into an efficient catch up programme.
Additional staff are being provided to address the issue and re-scheduling
commenced during May ‘99. Itis anticipated that large quantities of outlets
will be released from suspension during August ’99, which should approve
the ability to re-schedule efficiently.
° Discussion over the National Rollout profile with suppliers has resulted in
ICL Training Services identifying additional work. Talks are being held
with to determine how essential these areas of additional cost:are.
Currently ICL Training Services estimate is £4M although it is anticipated
by Pathway that this will be reduced through negotiation.
e Software enhancements and bug fixes to the Rollout Database tool suite,
although underway, will not be complete until the end of November ’99.
Priorities in the development directorate will prevent an earlier completion
date. Consequently, it will be necessary to make use of manual
communication and data transfer mechanisms until such time as the work is
complete. The lack of full RODB functionality presents a risk to the
National Rollout process:although the risk is minimised by the use of
manual process which have already been proven and the fact that National
Rollout does not hit peak rates until after RODB development is completed.
e Observation of POCL staff performing outlet migration duties for Pathway,
has highlighted a.number of concerns in performance. Unchecked. these
concerns could lead to failure of outlet migrations. Consequently POCL are
being appraised over Pathway concerns in this area and changes to the
related HFSO service agreement for National Rollout are being discussed.
. The HFSO service agreement for National Rollout has yet to be finalised.
Agreement of commercial mattets remains the area of greatest concern
although a negotiating position from Pathway is now possible. It.is
anticipated the agreement will be concluded in early July ’99.
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ICL Pathway Implementation Ref: PA/REP/038
Mi Version: 1.0
lonthly Report Date: 14/06/99
COSTS
e The Implementation team is close.to defining a revised cost baseline to
reflect the new contract. It is anticipated this will be finalised during June
°99. The revised cost profile includes the recent agreement to recruit 14
additional staff, ensuring the Implementation team is‘adequately staffed for
National Rollout.
° Contract re-negotiations with WTL and Exel were concluded during
May’99. ICL Training Services are the only supplier with whom contract
negotiations are still likely to incur additional costs.
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FUJ00058182
Organisation
& Personnel
Report
FUJ00058182
FUJ00058182
ICL Pathway Organisation & Personnel Ref: PA/REP/038
Version: 1.0
Monthly Report Date: _ 14/06/99
Organisation & Personnel Report
MONTHLY SUMMARY
¢ Salary review letters were issued to employees. Recruitment continued.to
take up much of the department's time. The response rate to the Employee
Opinion Survey was good, with 62% of employees returning their
questionnaires,
PROGRESS
e — Appointments in April:
External Recruits 1
Transfers
A&TC
Linkwise
Freelance
CHONnuns
Temporary
Total: 27
° Known joiners:
External Recruits
Transfers
A&TC
Linkwise
Freelance
Total:
e Offers outstanding:
Aeonesosc
External Recruits 3
PROGRESS
e The number of registered permanent vacancies decreased.from 44 at the end
of April to 36 at the end of May. 75 appointments have been made since the
beginning of the year (not including freelance contracts).
e Salary review letters were issued to employees in line with the salary review
timetable. No major issues were identified as a result of this exercise.
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Version: 1.0
Monthly Report Date: 14/06/99
e The new bonus arrangements and particularly the level at which each
employee was placed within EIP, Professional Variable Pay or the
appropriate Professional Community Scheme was reviewed by the
Management Team and:agreed with some.amendments. The next step is to
communicate with employees and for managers to set targets. This will be
done in line with the overall company timetable.
e 62% of employees responded to the 1999 Employee Opinion Survey. This
was a good result, above the company average. The results:are being
analysed and will be communicated when available.
e Final.agreement was reached to transfer some.non-ICL Pathway staff based
at FELO1 to other locations and work:is underway to refurbish and occupy
the resulting space.
CURRENT CRITICAL PROBLEMS
° None
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Post Office
Client
Report
FUJ00058182
FUJ00058182
ICL Pathway The Post Office - Client Director's Ref: PA/REP/038
Monthly R rt Version: 1.0
yiispe Date: 14/06/99
The Post Office - Client Director’s Report
MONTHLY SUMMARY
e The Horizon/Pathway announcements foresee a role.for ICL and PO in
delivering Modern Govt.
MODERN GOVERNMENT
e Following the intensive work completed to present Post Office’s case for a
leading role in delivering Modern Govt, little, if any, was used in the Heads
of Agreement, although substantial input made to the press announcements.
We now await POCL people to return from leave and re-open discussions
under the new Customer Management Business Unit.
1999 BUSINESS
e _ Being the first month of PO’s year, April revenues at £1.8m were well
down, as expected, on March (£4.9m).
Div Rev (£k) Margin (£k)
MC (Desktop supply) 1605 111
CE (Tech Resources) 57 9
OS (ALPS) 119 16
Pathway 29 1
CURRENT CONTRACTS
TECHNICAL RESOURCES SUPPLY CONTRACT
° Following the review with ICL Govt, ownership of this contract will
transfer into OSD from 1* July, where it will be managed by Caroline
Simcock, PO Service Manager.
ONE STOP SHOP
e The April revenue at £1.6m shows a satisfactory underlying run rate. ICL
are now winning 80% of the available business, with ComputerCenter
winning just 20%.
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ICL Pathway The Post Office - Client Director's Ref: PA/REP/038
Monthly Report vate, 14/06/99
NEW BIDS
SERVICE MANAGEMENT TOOLS
° ICL, IBM, DMR as shortlisted bidders.completed reference visits in May.
Our last visit was to STEO9. We now await the selection of a preferred
supplier, who will be invited to negotiate a contract. We have left the door
open with DMR regarding any potential joint bidding/contracting.
SPICE
e° “Securing the Post Office’s.Integrated Commercial Environment”: a broad
ranging invitation covering Customer Contact, Customer Relationship
Management and data warehousing. Initial responses were submitted in
March, RFI response due in 11" June, ITT to selected suppliers 2" August.
This requirement has appeared very early for ICL’s embryonic CRM
capability, we are extremely stretched to locate and commit the necessary
resources. Ability to bid must be a key Qualification criterion before
proceeding to the next (ITT) stage.
REMOTE ACCESS
° Secure remote access to the PO network by 8,000 external users.
Shortlisted, ITT response due 14" June.
LAN NETWORKS
° Supply, service and maintenance of components for 2,000 LANS.
Shortlisted, ITT response due 30" June.
COST DOWN
* No change.
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