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Dargie Tomoko
From: Business Assurance
Sent: Thursday, April 11, 2002 12:07 PM
To: ~ Business Assurance; Colley Justine; Lush Paul; Nagai Atsushi; Payne Sue; Coombs
Martin; Stanley Kate; Foley Liam; Muchow Stephen; Jarman Andrew; Lenton-Smith Colin;
Underhill Clive; Hosford Ann; Henfrey Neil °
Ce: Neal Carys; Frost Gina; Imanishi Hodaka
Subject: RE: Post Office Group BNB Review
Please disregard the presentation slides sent through earlier on and replace them with the enclosed.
Regards
Business Assurance
Business Opp Review
‘1 1Apr02.pp.
--~-Original Message-----
From: Business Assurance
Sent: 10 April 2002 17:27
To: Colley Justine; Lush Paul; Nagai Atsushi; Payrie Sue; Coombs Martin; Stanley Kate; Foley Liam; Muchow Stephen; Jarman
Andrew; Lenton-Smith Colin; Underhill Clive; Hosford Ann; Henfrey Neil
Ce: Neal Carys; Frost Gina; Imanishi Hodaka
Subject: Post Office Group BNB Review
<< File: Business Opp Review 10Apr02.ppt >>
Please find enclosed the documentation for the Post Office Group BNB due to take place at 16:30 on 11/04/02.
Regards
Business Assurance
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>Working Together
»Siebel Reference LLFO019
Bid Review Process — Bid/No Bid 1
V3, September 2001
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Objectives of Review
> Qualify the opportunity.
> Decision to bid.
> Approve bid budget.
> Agree the sales strategy
>» Set critical success factors for the opportunity.
> Ensure that the resource is available for bidding.
Bid Review Process — Bid/No Bid 2 FUJ TSU
V3, September 2001
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Background
> Post Office Ltd was established as a part of Consignia plc in
October 2001
> 17500 Post Offices, 38K counters - the Uk’s largest retail network
> The Horizon project, historically run by ICL Pathway, brought automation to
every UK Post Office in the largest non military IT project ever undertaken in
Europe
> Post Office Ltd are currently suffering severe commercial losses as a result of
declining revenue streams (e.g. benefit payments)
> Dual role - Post Office as a community service (particularly in rural areas), Post
Office as a commercially driven organisation
> The Opportunity
> The current Horizon contract worth approximately £1bn, due to expire in 2005
> Post Office want to reduce IT costs now - prime opportunity to renegotiate the
current contract into something more attractive, which could include:
> Substantially increase current term beyond 2005
» Increase scope, potentially to include outsourcing of back office systems
» Renegotiate contract terms to simplify contract and service management
> Develop Strategic Partner role with Post Office - new era for Fujitsu Services
Bid Review Process — Bid/No Bid 3 FUJITSU
V3, September 2001
Vv
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Customer Requirements
The biggest business driver in Post Office at present is to
reduce cost, in particular IT costs which are currently running
at £200M p.a., 16% of revenue
A more open approach to architecture - to increase flexibility
of solution and reduce time to market for new products
Ability to introduce 3rd party products more easily
Strategic collaboration with Escher - leading software supplier
in the Post Office market
Move to collaborative working - Fujitsu Services and Post
Office Ltd working more effectively together
Bid Review Process ~ Bid/No Bid 4 FUJITSU
V3, September 2001
I I Value Proposition
> Fujitsu Services will do :
> Reduce annual Horizon cost to Post Office by £30m (approx. 20%)
in 2002/2003, ways this could be achieved include:
> Restructuring finance by extending contract over a longer term
> Implementing more effective ways of working which reduce overheads
>» Implementing new SLAs that cost less
> Less burdensome terms and conditions
» Redesigning architecture to reduce operational cost (medium term)
> Fujitsu Services must implement a new contract with the customer
with broader scope of services, for example
> Ongoing operation and maintenance of the Horizon solution
> Incorporate Post Office Back Office System outsourcing
> Development of Banking business
> Possible technology refresh
> Joint architecture/programme management
> The value of the base contract is likely to be in the region of £600m
over 6-7 years
> This negotiation to conclude Heads of Agreement is due to be
completed in June 2002
> There is a need to reach understanding via Heads of Agreement
—— —before-Consignia-scopes-a-group-wide-outsourcing-FT,at-the-end— a: on
Bid Review of June A902 {which could absorb Horizon) 5 FUJITSU
V3, September 2001
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Sales Strategy
ICL Pathway has become Fujitsu Services - new style of
relationship with more open, collaborative working
Steering Group and working level programme
New faces - from Post Office and Fujitsu Services
Agreed programme of joint activities “Working Together’:
>
VV VV Vv
>
Architecture
Services
Relationship
Commercial
Finance
Outsourcing
Project and Programme Management
Positive examples of the new style of relationship - for example
Mails project
Bid Review Process — Bid/No Bid 6 FU} ITSU
V3, September 2001
Competition
Competitor I Strengths Weaknesses
IBM Post Office see them as _ I Have just lost Network
a reliable and capable Banking bid to ICL
supplier; experienced in
outsourcing contracts
EDS Systems consulting — Recently announced
largest US player; major I contract win —
IT supplier to UK provision of Universal
government Banking services
Parity Strong relationship with I Positioned as
Post Office — won consultants, limited
highest Consignia delivery experience in
strategic supplier award I Post office
in 2001
Bid Review Process — Bid/No Bid
V3, September 2001
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VV
Vv
Differentiators
Fujitsu Services already have proven capability - current
Horizon contract
Current Horizon contract not due to expire until 2005
Fujitsu Services develop and support the current infrastructure -
uniquely placed to develop new services
Fujitsu Services acknowledged as strategic supplier (Consignia
annual supplier awards) 2002
Strength of the global Fujitsu brand - R&D capability
Potential exclusive Teaming Agreement with Escher for UK Post
Office
Bid Review Process — Bid/No Bid 8 FUJITSU
V3, September 2001
Key Decision Makers
Name
Buyer Role
Fujitsu Services Contact
John Roberts, CEO
Richard Christou/David Courtley
David Mills, Group
MD, Post Office Ltd
Key decision maker
David Courtley
Alan Barrie, Post
Office Ltd Executive
Director
Key Decision Maker
Paul Lush, Liam Foley, Stephen
Muchow
Peter Corbett, Post
Office Ltd Finance
Director
Financial Control
Liam Foley and Colin Lenton-
Smith
Basil Larkins,
Strategic Alliances
Director
Key user
Liam Foley
Gordon Steele,
Customer Services
Director
Key User
Liam Foley
David Miller,
Operations Director
Key User
Stephen Muchow, Liam Foley
Mike Wells, Post
Office Ltd IS
Director_
Key Decision Maker
Liam Foley/Clive Underhill
Bid Review Process — Bid/No Bid
V3, September 2001
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Procurement Process and Timetable
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Milestone Owner Date
Heads of Agreement I Joint June 2002
Contract Joint Sept 2002
Bid Review Process — Bid/No Bid
V3, September 2001
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Proposed Solution (1/2)
> Solution will address :
>
VVVVV WV
Vv
Managed Service to operate, support and maintain counter network
Application support and enhancement
Joint programme and architectural change management
Incremental development projects
Technical Refresh option
Transition from current contract
IPR ownership
Scope extended to cover Back Office systems
>» Anticipated areas of risk
>
>
>
>
Fujitsu (Pathway) & Post Office cultural change needed for success
will not happen
Openness will be used to introduce competition for every
development opportunity
Cost savings not realistic
Getting to “open architecture” cannot be priced
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Bid Review Process — Bid/No Bid 1 FUJITSU
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Proposed Solution (2/2)
> Internal and external supplier details (reference Alliances
Programme as appropriate)
Vv
Contract, project management and design authority: LPD
> Operational Services for base contract - Fujitsu Services Core
Services
> Application Management (Back Office) - Fujitsu Services Core
Services
>» Data Network - Energis
Middleware, GUI & applications - Escher
Vv
Bid Review Process — Bid/No Bid 12 FUJITSU
V3, September 2001
Financial Proposal (early view)
Total Contract Value £560M over 7 years
Costs £420M
Margin 25%
Profit £140M
Cash flow (consider Flexible Finance)
> Positive for managed service and new development projects
> Impact of architecture change and contract transition is TBA
VVVV WV
> Current Contract Value Forecast £419.3M (2002-2005)
> Margin Forecast £72.7M (2002- 2005)
Bid Review Process — Bid/No Bid 13
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Bid Plan/Costs
> 6 “Strands” agreed for joint working:
>
VVV WV
>
Architecture
Services
Relationship
Commercial
Finance
Outsourcing
> Detailed plans are being developed in each Strand
> Aim is to reach Heads of Agreement in June for a replacement
contract agreed by end-September
> Budget £350K
Bid Review Process — Bid/No Bid 14 FUJITSU
V3, September 2001
Bid Team (1/2)
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Key Role Name
Business Owner Stephen Muchow
Client Manager Liam Foley
Bid Manager Clive Underhill
Relationship Manager
Ann Hosford
Technical Design
Graham Brown
Authority
Finance Bryony Carter/Kevin
Balloch
Commercial Colin Lenton-Smith
Legal Chris Jay
Risk Simon Robertson
__ _ Ho nn eg
Bid Review Process — Bid/No Bid 15 FUJITSU
V3, September 2001
Bid Team (2/2)
> The following additional bid resource requirements have been
identified :
» Service Consultant or Service Development Manager
» Identify and specify managed services and SLAs
> Liaison with Service Managers
» Produce service transition plans
> Programme Office Manager
> Develop organisational model for new joint Programme Office. (Fujitsu
Services/Post Office/Escher)
>» Specify processes for joint architecture and programme management
» Identify dependencies on Post Office and Escher
>» Development Manager
> Develop plans and costs for architectural change
> AM Consultant or AM Business Manager
» Specify the AM service for Back Office systems
> Identify 3 party management requirements
>» Develop transition plans for take-on
fo)
Bid Review Process — Bid/No Bid 1
V3, September 2001
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CSLC Status
> Scores — by Sales Stage
> Stage 1 Plan Score Unanswered
Gateways
Requirements
Risk
Explanation
> Customer Requirements are not yet sufficiently detailed
>» Risk analysis yet to be carried out
Bid Review Process — Bid/No Bid 7 FUJITSU
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1
Approval Checklist 4
>Confirrn approvals/authorities obtained ,
>List areas where approval is required and has been \
obtained against Commercial Policy for Authorisation of
New Business;and '
»CSLC approval authorities : Sales, Business Division,
Operations, Project Management/Service Delivery, Finance,
Commercial, Technical (as appropriate)
a _ gy _
Bid Review Process — Bid/No Bid 18 FUJITSU
V3, September 2001