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meh WYLIE
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From:
Tel:
Mobile:
Fax:
Date;
Alec Wylie Gov “To: John Bennett/Tony Oppenheim vic’?
Peter Craban/Bruce McNiven.
George McCorkell
Paul Rich/Tim Brown Neh cer, Cok. Be)
Chris Thompson/Sean Johnston
Dave Miller/Bert Bertoloni
Keith Baines/Stuart Riley
Mena Rego
Peter Copping
Deborah Lees
21 November 1997 Pages: This +3
MESSAGE RESTRICTED - MANAGEMENT & COMMERCIAL.
Mid-point Review Meeting on 20 November 1997
1 L have set out below the outcomes and action points from the mecting. I hope they
tally with your recollection of events!
‘Workstreams 1 and 2: Network Coverage and Roll-out Phasing
2 Outcomes were as follows:-
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above 7,500 post offices, there were no benefits from non-automation;
the preferred options for dealing with the smallest offices were Pathway Light
‘(auto)’ and ‘auto) plus’ under which the maximum overall payback for all
parties was at the 6,000 mark, but the benefit was too marginal (£4.7m with ~
caveats) to be of value in solving the business case problems;
however, these options were to be worked up to detcmmins the best option as a
contingency solution for 3,000 of the smallest offices and as a means of de-
risking the roll-out and possibly helping to advance its completion (work to be
completed by 28/11/97);
as the issue of ‘social banking’ was likely to be raised by Ministers as part ofa
wider review of social welfare policy and in the context of the Government’s
teview of the Post Office, Group 1 took no further action on it; ICL Pathway
confirmed that the technical infrastructure being installed would support social
banking. .
there were no benefits to be gained from changing the current benefits roll-out
paticrn; .
various proposals regarding War Pensions card and roll-out were to be pe fully
costed for consideration by BA; 4 . .
gov
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hey
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r ) (8) suggestions as to the flexible application of the extended verification security
procedures were considered but not pursued; .
(®) a full specification for the proposal to urgently install AP only functionality in
2,000 offices would be available by mid-December 1997, following which a
full Programme impact assessment would be undertaken by the PDA;
Workstream 3; Financial snd Funding Profiles
3. Outcomes were as follows:- '
a) under consideration was a suggestion from ICL Pathway that, in order to help
the PES problem, CMS charges in the 2nd and 3rd years (£45m) might be
‘waived in return for extending the length of the contract by 5 years and
deferring price reductions; there were questions, however, such as the possible
breach of the BU procurement rulés, to be further researched;
(b) under consideration was a suggestion from POCL that, mathematically, its bill
to BA next year could be reduced by £25m provided it got the money back
either through an extension of the contract by 5 year (ord) DIVHMT agreeing . X
to reduce its target External Funding Limit (EFL); there were questions of ~
affordability and the amount (possibly around £10m) beyond which the EFL we
target would need to be reduced which needed clarification,
{c) the possibility of ICL Pathway borrowing the £45m (to be able to waive the -
CMS charges in years 2 and 3) from POCL instead of from other financial
institutions needed further consideration but was unlikely to be taken up;
@): POCL was willing to consider the transfer of more risk but more work needed a
to be done; 7 . =
Workstream 4: Re-enforcing the Business Case
4. The Group identified 5 opportunities which, ifimplemented, would improve the :
contributions to the respective business cases, viz:~
@ _ the use of ICL Pathway data, possibly in conjunction with other commercial or
government data, to target claims fraud; further work was in hand by ICL
Pathway on the technical feasibility, by POCL on data sources available to it
and by BA to assess the costs and benefits of the proposal;
(b) the transfer of responsibility for and cost of collecting utility service debts of
its customers from DSS to the utility companies through a household
budgeting arrangement between them, POCL and the benefit customers; POCL
was seeking resource to develop as a formal business requirement and an internal
business case;
(©) __ the replacement of Local Authority Housing Benofit cheques by the Payment 2
Card was worth pursuing in terms of the claims fraud aspect but needed = :
conaiderahle mare wark in light of the Gavernment’s fiture policy for ‘the
benefit and the role of the new DSS Fraud Inspectorate;
Pe cs hig ord Mine
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ALEC LE
@ __ the development of a system for paying in pension contributions and paying
out pensions in place of a State scheme; needed considerable fiirther work to
take account of an imminent discussion document, the target date for ‘go live?
of April 2001 and any associated OJEC timetable, the time needed by POCL
and ICL Pathway to develop a shared strategic approach and the fact that other
commercial concems were interested in the initiative;
© the use of the ‘Horizon’ network to provide information and services under the
‘Govemment Direct’ initiative; needed further consideration in light of the
new Government’s policy (White Paper expected in early 1998), the possible
creation of a ‘social bank’ and other initiatives, the business case for users of
the network and the future development of the Benefit Payment Card.
,
Workstream 5: Supply Chain and Management Arrangements for Release 2 and After
5. Outcomes were as follows -
@) following a fiinctional analysis, processes and activities had been identified for
strengthening and migration from PDA to a new customer/supplier mode}
structure; these would build on those already planned for migration,
(®) a ncw ‘strawman’ organisational structure had been developed for the BA side
of the Programme and for the POCL/ICL Pathway (Horizon) side, involving
the appointment of a Programme Director with full authority and responsibility
for driving the Horizon Programme forward;
(©) __ newstrengthened management arrangements had been developed to run the
Programmo which would remove bottlenecks in decision making and minimise
the current 4-way interface; : . :
> (@) __ there were a. number of pre-requisites to success -
~ clearly agreed and understood rules of engagement with contractual cover
~ suitable and properly positioned Horizon Programme Director
«clarity of responsibilities and accountabilities
~ baselined Release 2 content, Programme plan and milestones
~ effective CAPS and Horizon Programme management functionality
+ regular review of Programme milestones and transparency between parties
+ effective chango control arrangements
(ce) Further work was needed to address outstanding issues:~
- achievability of the pre-requisites
~ availability of skilled resource
~ single point accountability for Horizon és
- assessment and definition of Horizon Programme Director tolerances.
+ positioning of Horizon service management ic
- complete the contractual arrangements review currently inhand - © ==”.
= clear the BA sidé of the ‘strawman’ organisational structure with the CAPS .
Programme Board ~ oe - Gs tg OD
Boos
i
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~ determine the budgetary implications of the new organisation
+ define the acceptance process for Release 2
- develop a migration plan to have the new structure and arrangements in place
by April 1998 if possible or, at the latest, July 1998
(@) —- ROCL needed to undertake resilience testing on how to make the new structure
+ work and how to fit it into its ourreat strategy for change; it was concemed that
there should be no transfer of risk to POCL by default and would take a
minimalist approach to any contractual changes, especially on risk and
liability; there were service management issues and some around the
separation of responsibility and authority for specific activities which needed
further work.
Workstream 6: Synergy between ICL Pathway and POCL
‘ 6. The Group had focussed on the linking of TIP and TMS and on the possible use of
data-warehousing (including the use of an ICL Pathway warchousc); atechnical _
I review was being undertaken to confirm the feasibility and possible benefits; there
i were also procurement law issues and the impact on the Post Office Group’s IS/IT
strategy which included 'a dependency on TIP,
' Development of a Coherent Programme of Reconstruction
; 7. Agreed that Peter Copping should present the outcomes from the Workstreams to the -
Workshop No 2 as a coherent programme of reconstruction and that he should lead a
: ; smaller group to bring together those outcomes (including any further work currently
. in hand) to produce such a programme, including the finalised Release 2 Plan, the. -
' assurance on the Escher dependency and the up to date position on tactical action’
: Plans. Progress towards development of this programme, which would inchide all
necessary impact analyses (technical, cost, business case, customer service, staff,
clients, etc) and highlight any residual issues to be resolved and any for PSC
Workshop/CE decision, would be considered at a further Checkpoint mecting before
the Workshop No 2 at Hedsor House. .
I Action Point 1 Peter Copping to lead a team of Keith Baines, Tim Brown,
I Tony Oppenheim and Stuart Riley to carry out the work at para 7 in developing a
coherent programme of reconstraction and to report progress and any issues for
“resolution to a farther Checkpoint meeting of core PDA members on Thursday, 4
December 1997 at 12.00 noon in Conference Room 6 in King Edward Building.
Action Point 2 Peter Crahan and Mike Coombs to input on Release 2 Plan.
_ Action Point 3 Jota Bennett to input as regards the Escher dependency. ‘ #
~ “Action Pont4 = Mis Bennett, Crahan, McCorkelll and Rich to update and”.
clreulate thelr tactical action plana to PDA Board members and to Peter Copping
ponend by 30 November 1997, E FE . :
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In Strictest Confidence
Draft Letter to Alec Wylie re Notes of 20 Nov Mtg
Dear Alec
Notes of mid-point review meeting 20 Nov 97
Thanks for sending out your notes so quickly.
There is just one point of clarification in para 3(b) which might avoid disappointment later. Whatever
level of price reduction to BA in the arithmetic calculation, it would almost certainly need debate with
Government on POCL targetry. My comment about the materiality of £10 million for POCL should not .
have indicated that this might be a threshold for DTI / HMT discussion. Our plans for next year are far
too tight for that!
Tleave it to you whether the clarification might go out now or at the next Checkpoint meeting on 4 Dec.
Yours sincerely
Paul Rich