\o-
av \
aw
FUJ00077839
FUJ00077839
PATHWAY GROUP LIMITED :
MEETING OF THE BOARD OF DIRECTORS
TO BE HELD ON WEDNESDAY 21ST FEBRUARY 1996
AT
PATHWAY, FOREST ROAD, FELTHAM, MIDDX
AT 10.00am - 12.30pm
vevee ili
I
87D
2. Minutes of Meeting 17 January 1996
(Previously circulated)
2. Managing Director's Report J H Bennett *
(Paper attached)
3. Financial Director’s Report A E Oppenheim
(to follow)
4. Sales Review J A Jones to present
5. Programme Status Review T Austin to present
6. Risk Register M Bennett
7. Any Other Business
8. Date of Next Meeting:
To agree dates for the meetings in 1996.
Note: The Board Meeting will be followed by a meeting of
representatives of ICL, De La Rue and Girobank from
12.30pm - 2.30pm with lunch for those present.
FUJ00077839
FUJ00077839
MANAGING DIRECTORS REPORT
Board Meeting 21 February 1996
1. INTRODUCTION
The last four weeks has seen the workload on the
procurement increase significantly. The customer remains
determined to issue the ITT at the end of February,
notwithstanding the fact that a lot of work has slipped and
outstanding activities continue to pile up. No one is
prepared to admit failure at this stage.
Equally importantly, there is a growing recognition that
the requirements are still being defined at a very high
level. Too high in fact for a safe contract to be awarded.
Discussions have taken place to underpin the need for all
functional requirements to be spelt out such that the
winning service provider is able to enter into user
acceptance tests which will be acceptable to the main
sponsors. If this work is left until after Service
Provider’s selection then it is difficult to see how a
binding contract could be entered into and accepted by
either party. How this point is handled will be a critical
issue over the next few weeks.
2. PROCUREMENT PROCESS
The requirement catalogue continues to grow and there
remains a stubborn list of new ones being issued on a
weekly basis. This activity is now many weeks behind the
milestone plan.
Fresh sets of contractual clauses are issued as promised
every Friday and although movement has been achieved the
whole subject of financial guarantees and their structure
remains top of the outstanding list. Close behind this is
a the subject of fraud liability and reaching an acceptable
position as to how the risk of this is shared across the
people best able to handle it i.e. BA/POCL and the Service
Provider, This causes disagreement between the sponsors
themselves particularly with POCL being pressed into
accepting elements of fraud risk which in the past they
have substantially been protected from. There is a growing
awareness that the structural weakness of this procurement
is having two customers who see the world from quite
different perspectives.
The Risk Register has been managed over the last few weeks
with several risks being removed or reaching a point where
they now go forward onto a final Risk Register. The two
most significant risks are how we handle the Escher
relationship (see below) and more recently how we resolve
the most appropriate card technology for the benefit card
system. We have proposed a simple form of smart card to be
introduced from day one to remove risks which cannot be
addressed by the more simple magnetic stripe card.
However, this has been rejected out of hand by the
customer. Our baseline is therefore still based upon a
magnetic stripe card.
COMMERCIAL-—IN-CONFIDENCE
jhb/1c Page 1 of 3 14 February 1996
FUJ00077839
FUJ00077839
Although the demonstrator phase is formally ended, we
continue to have major events to run including focus groups
for BA and POCL staff, major presentations to the
Federation of Sub Post Masters and. a Showcase Event in
Dublin to all those Senior Managers who have not been to
see the system or presentations so far. The overall
assessment must be that we will continue to need a
background demonstration activity using our model Post
Office facilities probably all the way through till
contract.
3. PATHWAY ORGANISATION
The changes introduced at the beginning of the year have
worked well and as a result there is a clearer sense of
responsibility and ownership as we begin to plan for the
development, testing and implementation phases. We now have
a milestone roll-out plan which will be non-compliant
unless there is a greater sense of realism taken on board
by the programme. This is a very sensitive area and one
which we are endeavouring to handle.
4a. PATHWAY SUPPLIERS
We have now appointed BT as the prime contractor for the
ISDN network. Because of the uncompetitive nature of their
regulated services they will be providing the network
subcontracted to Synergis who substantially undercut BT
standard tariffs. This has led to a unique contract
whereby BT effectively have a responsibility to ensure that
we stay close to benchmark prices in the marketplace.
BT together with Oracle are now principal subcontractors.
Microsoft have come off the fence and strongly backing
Pathway. In order to harmonise the supply side even better
we now have.in place monthly Supplier Forums which we shall
use as a form of communication as well as an attempt to use
their sales channels to get our message across to the broad
BA/POCL audiences.
5. PARTNERSHIP DISCUSSIONS
Encouragingly these are still continuing alongside the main
thrust of the procurement. As a result much more thought
is now being given to the customer education campaign and
the work done by McCann Erickson which is very impressive
in terms of demographics and Post Office network coverage,
is one which is scoring high points with the business
managers in POCL. I feel we are making good progress with
this group.
6. COMPETITION
The recent dreadful publicity on NIRS2 or Andersons cannot
be doing their bid any good. I sense that IBM are a step
two ahead of us at this stage, mainly because they have a
clearer run on financial guarantees, they have gone firm on
a watermark card system although this may yet cause some
headaches later on and they have avoided areas of sensitive
exposure like the current relationship issue we have with
Escher.
COMMERCIAL—IN-CONFIDENCE
jhb/1le Page 2 of 3 14 February 1996
FUJ00077839
FUJ00077839
7. PROGRAMME PLANNING
We have begun the preparation for the European Development
Centre (EDC) based in Feltham and are currently equipping
this with terminals and staff to begin work in the first
instance-on EPOS. For this to be really effective it does
need the whole hearted support of An Post and Escher and
this is required urgently.
8. ALPS CONTRACT
ICL Sorbus have now taken the front line ICL responsibility
for the safe running of the ALPS contract and have
appointed a client manager to look after this. This is
beginning to stabilise the basic support infrastructure and
is making steady progress with a customer. The key
outstanding issue remains the fragility of our support.
routes for ESNS which again leads us through to the support
arrangements we need to have in place with Escher.
9. SUMMARY OF KEY POINTS
Ly Escher Relationship
Establishment of the European Development Centre
Contractual Negotiations
- Benefit Card Resolution
. Fraud Liability Resolution
Issue of ITT on Time
AuUPWN
John Bennett
COMMERCIAL~IN-CONFIDENCE
jhb/1c Page 3 of 3 14 February 1996