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POST ‘
OFFICE ;
PROJECT DOCUMENTATION
PROJECT INITIATION DOCUMENT
CONFORMANCE STRAND 3
BUSINESS CASE
Release: Version 0.3
Date: 11/12/98
Author: Clare Dryhurst/ Glenys Davies
Owner: ‘Andy Radka
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Contents
1, CONFORMANCE VS AUTOMATION...
2, POCL CONFORMANCE HISTORY : LEARNING POINTS...
2.4 SAP ADS.
3, POTENTIAL EFFECTS OF NON-CONFORMANCE ON HORIZON
3.1 CURRENT CONFORMANCE STATISTICS FOR HORIZON
3.1.1 Transaction Timings...
3.1.2 Incidents raised by Non Conformance
3.1.3 Pathway Helpdesk Statistics...
3.1.4 Impact of non conformance of suppliers
3.2 POTENTIAL IMPACT OF NON CONFORMANCE DURING NATIONAL ROLL OUT.
3.2.1 Supporting non competent outlets..
3.2.2 Outlets with non standard hardware layouts.
3.2.3 Involvement of Regional Network Managers (RNMs)
3.2.4 Call handling by the new Business Support Centre
3.2.5 Impact on Transaction Processing Business Unit
3.2.6 Impact on Customer Service & Income...
3.3 POTENTIAL IMPACT ON TRANSACTION TIMES & COSTS.
4. MANAGING CONFORMANCE INTO THE HORIZON NATIONAL ROLL OUT.....
4.1 CONFORMANCE PRINCIPLES ....0+
4.2 HORIZON CONFORMING ENVIRONMENT.
4.2.1 Further development of the Horizon training programm:
4.2.2 Implementing a conforming & ergonomic hardware layout
4,2,3 Creation of a Business Standards Framework...
4.2.4 Creating user friendly procedural guides & operational manual
4.2.5 Remedial Support for non competent outlets.
4.2.6 Staffing up for automated reconciliation errors
4.3 EVOLVING PROCESSES TO IMPROVE PERFORMANCE ..
4.4 CAPTURING DATA TO MONITOR LIVE TRIAL AND NATIONAL ROLL OUT
4,5 NON CONFORMANCE BY SUPPLIERS...
4.6 BENEFITS FROM IMPLEMENTING CONFORMANCE ..
5. RECOMMENDATIONS FOR ‘LIVE TRIAL’ .....
fey
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1. Conformance Vs Automation
The Horizon system is the first customer facing automation to be implemented within Post Office Counters Ltd.
As the current network does not have a conforming culture or structure that allows for central and prescriptive
control, Horizon will be seen as the main driver towards achieving conformance. However, automated systems
such as Horizon require a conforming culture to be in existence to enable effective business service
management to be implemented without significant difficulty, and to allow the full benefits of automation to be
Tealised. .
To ensure that POCL can both cope with the introduction of automation, as well as reap the maximum benefits,
a change in the working approach of the branch offices and sub post offices, and their supporting processes, will
need to be developed and implemented to deliver conformance. With low levels of conformance and widespread
lack of understanding of why itis needed, the following problems are likely to occur when the Horizon national
roll out commences :
system processing errors will occur and the.user will need to back track
e system will not allow the user to go any further, user can not proceed with the transaction - call to the
Business Support Centre may be initiated
_* system may fail due to user errors
¢ system may be unable to deliver a successful result for the customer
© user errors may result in corrupt or incorrect data being input to the system
¢ increased transaction time per customer and extended customer waiting times
© upstream data leading to client settlement being unreliable
* additional staff costs being incurred to correct errors
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2. POCL Conformance History : Learning Points
‘The following projects all contained a conformance aspect related to implementation and operational activities
and have lessons that can be learned that can benefit the Horizon national roll out.
2.1 Right First time
The purpose of this project is to'assist the Transaction Processing Business Unit (TP) to save £1.5M on their
annual costs of correcting error. It has been quickly determined that without working with the Regions on
introducing conformance across the network, the £1.5M will-not be achieved. TP have gained support for this
project from the Regional General Managers Forum. A cross Functional Project team has been established.
This project has been divided into eight strands of work which are :
1. Human error study commissioned - two reports created by extemal consultants that can be used to
underpin a national approach for conformance across the network
2. Error Management - on-going refining of TP methodology related to effort assigned to long running
errors, ie assessing cost effectiveness of resolving small or old errors
3. Root cause analysis - holding of workshops for products, currently looking at Lottery, Bill Payment
and Personal Banking. The Root Cause tool id being used to identify areas for resolution.
Awareness for the need to conform has ensure that this tool is also adopted by the Regions and
BSM
4. KPI Matrix - identifying area that can be used as KPIs that will show benefits across POCL
5. Segmentation of data - categorising errors to a further level to increase understanding of where
errors occur and assist with identifying target areas for research or improvements
6. Reporting of data - one data source, ie assigning of data owners
7 Losses - activity to better understand the losses currently posted, therefore enabling r Toot causes to
be identified and improvements implemented
8. Performance indicators - set agreed to targets and implement a process to monitor current error
levels to be monitored against these targets.
The key activities that have been identified that require resource and implementation are :
* maintenance of data regarding on errors and provision of the ability to review / analyse the data
© assessment of ‘common errors’ to enable active management and resolution
° achieve a better understand of the TP processes in relation to other units, eg maintained & error
management, and losses
¢ implementa conforming working environment within the network
* maintenance of the additional error management data will enable the implementation of :
— agreeing performance targets and monitoring progress against these
~ KPIs that are focused on conformance and getting it right first time
BSM has agreed to contribute to this project in relation to the implementation of a conforming environment within
the network. BSM will need to implement a level of conformance during the Horizon roll out to enable the
perceived benefits to be realised.
Fhe-Right rst Ti geod initiative -h The Right First Time was a good initiative, however, the I
eight strands and key activities have not been progressed to full implementation due to lack of resources as this) ~
project is being undertaken as BAU.—Due-te-thetaci-of-pi +i ject tb aii t
the-original-ebjectives Due to the lack of progress this rol ect must be: seen as a failure against the original
» objectives. This project should be seen as a key tool for improving conformance across POCL.
For real benefits to be realised this project should be removed from BAU and moved to an individual project .
status. The outputs from this project would be beneficial to the Horizon national roll out as processes are
required to be in place to ensure trends are monitored and actions are taken to resolve ‘common errors’ or
failures in POCL processes.
Costs related to errors identified in this study are shown below, it is anticipated that Horizon will add to these I
figures :
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Business Unit Costs perannum °
Transaction Processing £4.6M
Regional £10m
Business Centres £0.26M
Logistics £0.78M
Losses £15M
Minimum total for costs per annum due to £30.64M
errors
2.2 ALPS
2.3 ECCO
The initial project was set up as a cost reduction initiative. The scope of this project was changed to enable the
ECCO software and hardware systems to have the ability to accept future upgrades to include counter
automation initiatives. This extended project was know as ECCO+.
The ECCO system that is currently out in the network handles alll the cash transactions and is comparable to a
sophisticated cash register. The system can produce summary and balance reports. The roll out commenced on
the 6” February 1992, this was behind schedule due to lack of a concise functional specification and extended
testing.
The key points highlights of the project are below :
* Management of project
-_ informal processes was in place related to the functional specification which allowed decisions and
changes to be made without formal recording
= lack of management and documentation during the functional specification phase
— business involvement was encouraged
* Design .
~ system performance was an issue as roll out was commenced, the performance of the summary
and balance reports were not acceptable. A new version was released to existing and new sites
half way through the roll out
* Implementation
~ smooth due to district based implementation and training staff to manage the introduction (in stead
of the normal task force approach)
- assess impact of introducing new technology related to customer service / transaction times, eg
flexibility to meet customer demands at peak times
e Business
~ training courses were satisfactory which assisted with the acceptance of the system within the
offices
- familiarisation period with the system varies between offices, not a major issues.
-' staff changes were proactively managed, new duty patterns, agreed prior to implementation with
the District managers
- SLAhas been defined between the business and IT to provide support and maintenance of the
software system
The lessons that have been learned from this project are :
¢ user / functional specification should be under formal control and all discussions and decisions that
resulting in the specification altering should have been filed
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¢ there is merit for the functional requirements being specified by the business
¢ to ensure issues are tackled, the Project Manager requires the authority to make project decisions, as
well as a direct link into the Project Controller to enable issues across business units
«the project plan needs to be achievable and all parties, eg business, contractors, suppliers, signed in'to
deliver against it
© common project planning / tracking tools to enable close monitoring across all parties.
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2.4 Lottery
-’ Authority to proceed was granted for this project in June 1994. The strategic objectives were related to POCL
commercial strategy and included maximising an extension of powers as a Lottery retailer, to act as a catalyst
for change towards the POCL vision and deliver a new piece of volume to offset long term decline in the core
business.
On the day of the Lottery launch 1,207 post offices were operational, with the remaining on-line terminals
installed ahead of the original schedule to meet the 4000 total. As well as the 4000 Lottery terminals, 6000 post
Offices were installed to provide the Instants game only. .
This was a major implementation into the network and some important lessons were learned :
* Lottery was ‘force fitted’ into the cash accounting system with a lack of consideration for :.
- existing cash account processes
- training to a defined competency for outlets and Transaction Processing
© supplier delivery of the LOTTO system was unstable and caused problems at Chesterfield regarding
remuneration to the agents
« Lottery was a post office product on the retail side and needed to be given full considerations to then
operational discrepancies, financial control an processing costs
* negative reactions from the POCL multiples and franchise partners due to the introduction of a product
into their retail side .
© problems occurred where a POCL product was installed into the retail side where this part of the
business was not owned / operated by the subpostmaster.
The impact of this implementation on the operational areas was an increase of approximately 50 people in
Transaction Processing to handle cash account error for Lottery, as well as error resolution and support. The
support team within Transaction Processing developed helpsheets as common errors / problems were identified.
‘These helpsheets supplied a tool to improve knowledge of the Lottery system and hardware across the relevant
outlets.
2.4 SAP ADS
The SAPADS business case was approved on the basis that the feasibility study had shown that SAP would be
able to replicate the future processes of Logistics. On this supposition was founded the plan that all that would
then be required would be to pilot the system in one area prior to a rapid roll-out.
Project delays were experienced in the following areas which resulted in the product that was implemented into
pilot being significantly different to the planned product: ”
° change of hardware (away from Group standard)
¢ delays in Horizon resulted in planned electronic interfaces not being progressed
© scope of project now included the maintenance of existing interfaces with legacy systems.
The Logistics business unit implemented the new SAP ADS system into their pilot site, Hastings, in March 1998
on schedule, However, in order to deliver the project on time, a conscious decision was made to ‘go-live’ without
completing the training of all of the staff. This decision was based on the Hastings cash centre being small and
manageable and that any risk could be contained. It was also seen as a benefit to ‘go live’ to derive feedback
from live working.
The lessons learned from this initial pilot were vital and include :
«ensuring unit receiving new system is fully staffed prior to go live
© -utilising managers as a vital link / resource to delivering success
¢ holding overview training / workshops to put the changes into context
¢ assessing impact of the implementation ie SAPADS was wide as this is a catalyst for major change
¢ highlighting non-added value processes e.g. for SAPADS, returned stock; vouchers etc.; cash account
e enhancing management control.
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At the time of going live at Hastings, it was clearly not possible to roll SAPADS into Dartford in the same way and
the decision was taken to postpone the start date. A rapid internal project review showed the extent of the
problems and the following major activities were scoped :
¢ providing sufficient training - comprehensive training programme and delivered to all staff
provide a support structure - Hastings was supported by the development team.
The temptation was to do a quick-fix and to get Dartford live as quickly as possible. However, a re-planning
activity occurred around the relevant activities, such as training and providing the implementation and
operational support to derive an achievable schedule. The lead time for reviewing, developing and delivering the
training, whether computer-based (CBT) or classroom, was assessed to be a number of months. Due to this
delay the project team reviewed other improvements they could delivered in parallel to these activities. This
comprehensive plan was approved by the Project Board, with a delivery date for Dartford of 15 October 1998.
The main elements delivered prior to the implementation of SAPADS into Dartford were :
* Create a comprehensive training programme and documentation :
- CBT and system documentation developed to reflect system including new improvements
- full review and development of manager and finance training
« Provide implementation and operational support teams :
- recruitment and training of Implementation Support manager and team of 10
- recruitment and training of additional 4 Operational Support staff
e System performance improvements :
— improvements to a number of transaction speeds
- improvements in the speed of a number of download programmes.
The Dartford implementation was achieved on time. However, more importantly, the implementation has been
smooth and manageable. The additional improvements to SAPADS have been a great success, which have
raised the very real possibilities of efficiency benefits never before expected. The staff response to the system
has been very positive and the management contro! possibilities are now starting to be realised.
2.5 Summary of lesson learned related to Conformance
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3. Potential effects of non-conformance on Horizon
3.1 Current Conformance Statistics for Horizon
There have been a number of initiatives to review the current transaction times of outlets using Horizon. There
is one transaction thatis ‘live’ within the network, this transaction is the DSS Group 6 Encashment. Data has
been used from the two measurement projects performed during May and June 1998, and September 1998, to
take a view of the current level of conformance and the impact of the new Horizon transaction times.
A number of key Factors that have been observed from the above data :
* horizon transaction time is slightly higher than the manual process
* benchmark timing is achievable
* contract timing allows for limited error / customer handling
* majority of sub post offices observed did not meet the contract timings
I * approximately 50% of the sub post offices observed did not follow the standard methodology
The data from the measurement projects has been entered into graphs form to show the variances across the
small sub set of sub post offices and counter positions.
Some examples of non conformance are
see Dave Mcl)
A definition of the different types of transaction time measurement and benchmarking are detailed below :
isee Dave McL}
3.4.4 Transaction Timings
3.1.1.1 Conforming Office Timings
Five sub post offices had counter positions where the standard methodology, ie following a process flow that
maximises efficiency by running some steps in parallel, Two of these sub post offices also have counter
positions that are not following the standard methodology.
Where the sub post office did not meet the target times, the additional time was a result of performing additional
filing processes and using a non conforming equipment layout.
2 Benchmark
5 _~a- Contract
B te Timing
Winlaton ingworth Two Ball Brenty Avondale
Lonnen
Offices
A comparison between the measured transaction times at the sub post offices and the Horizon benchmark and
contract timings has been performed. The additional, or reduction, in transaction times have been calculated as
@ percentage of the benchmark and contract times, these percentages are shown below
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a % Contract
te Aug % Bimatk
x Aug % Contract
% Difference
INE
Offices
3.1.1.2 Non Conforming Office Timings
Six sub post offices had counter positions where the standard methodology was not being used, eg waiting for
customer's actions or system responses, and not running actions in parallel. Two of these sub post offices also
have counter positions that are following the standard methodology.
Where the sub post office did not meet the target times, the additional time was a result of performing additional
filing processes and using a non conforming equipment layout.
“—e—Benchmark
—g— Contract
—a~ Timing
Seconds
5 é BE 22 = ¥
2 i e238 fs i
5 g aa s é
Offices
Acomparison between the measured transaction times at the sub post offices and the Horizon benchmark and
contract timings has been performed. The additional transaction times have been calculated as a percentage of
the benchmark and contract times, these percentages are shown below :
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~~ % Benchmark
I te % Contract
I a Aug % Bimark
mye Avg % Contract
Seconds
Winlaton
Coatswith
Little Stoke
Minchinh't
on
S'thmead
3.1.1.3 Conclusions
‘The data analysed from the pilot phase have indicated the lack of adherence to the standard methodology
including non standard equipment layout and adding additional steps to the process will dramatically affect the
national roll out of the Horizon system.
The lack of adherence can be categorised into a number of key areas which are shown below :
§.00
4.00
_ gg Preparing payment I
/ i ti /
4 200 mEquipmentiayout
g i
3 Wait
bis I” system/customer
actions
0.00 I gg Receipt filing (ull
dog cliphoox) i
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The effects of non-conformance on the individual sub post office weekly tansaction handling timings will impact
customer waiting times, office costs and quality of service. The weekly increase / decrease of transaction times
are shown below :
5 I ~~ Additional
= / handling time
mg Ag additional
‘I handling time
sg 5 2 g
= a $
s £ Z 3
=. C3
‘Offices
The direct costs to the business related to the above information for the 204 pilot outlets has been
calculated to be in the region of £385,000 per annum, using the unit cost of 0.7p per second of additional
transaction time per outlet.
3.1.2 Incidents raised by Non Conformance
The chart below represents total non-conformance incidents for OBCS and BES in the 204 outlets currently
performing these services. These outlets have a total of 334 counter positions. The incidents have been
grouped into the two pilot regions, ie North East (NE) and South Wales & South West.
Monthly Non-Conformance inciduats To Date
ake
BSP
a i ee ee ee ee ee ee ee)
Nearly two-thirds of all non-conformance incidents to date are attributable to two types of incidents :
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* 45% of the incidents are forcibly committed transactions, ie a counter clerk performs a BES.
transaction, the clerk does not complete the transaction and the system automatically commits the
transaction alter a defined period
* 18% of incidents are missed and duplicated scans on OBCS, i.e. order books not being scanned
or being scanned twice providing incorrect information to the client.
For incidents where the system automatically completes the transaction, the scenarios that could occur are :
» ifa payment was encashed and the transaction was not committed by the counter clerk, the customer
could present the payment card at another outlet before the system completes the transaction, ie a
fraudulent transaction
* ifthe customer was check payment availability but not collect them, the systern on automatic
completion will assume the payments has been made. This will result in the customer being
unable to collect their benefits at a later date
The affect on the missed and duplicate scans are the long term possibility of errors being issued by the client to
the business and thus could represent a cost to the business. In the case of duplicated scans there could be a
further cost to the business in that ICL Pathway’s charges will be based on the number of transactions carried
out.
From the above graph it appears the number of non conformance incidents has increased since
December 1997, which leads to the assumption that more outlets are becoming more aware of how to
work around the system.
3.1.3 Pathway Helpdesk Statistics
Pathway have been supporting the system queries related to Horizon for the 204 pilot sites. The graph below
shows the number of calls taken related to operational queries, advice and guidance logged by the Helpdesk
from January 1998 to October 1998.
400
50
i)
350
g 300
g 250
ss 200 ‘@ Daily Recon Probs
3 450 ft Advice & Guidance
&
=
z
Jul'98
oO 2 oO
eg 8 & 8 & 8
DR Ba Se
<¢ 8 & & B& §
S$ #« 2 «< 3 4
Daily Reconciliation
Aug'98
Sep'98
Oct'98
‘The numbers in this category have increased as the year has progressed. This increase could be due to I (See
* increased awareness of errors due to feedback from Chesterfield
* temporary staffing over the holiday period.
Advice and Guidance
The above trend indicates that the pilot outlets required a reasonable amount of advice and guidance on the
system 2 months after the roll out of the DSS Group 5 Encashment transaction in November 1997. The
continual use of the system and assistance from the helpdesk has reduced the volume of calls to an acceptable
amount. This leads to an assumption that the training approach, ie subpostmasters received a day's
training and then trained their counter clerks, was inappropriate.
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3.1.4 Impact of non conformance of suppliers
The pilot has experienced a number of non conformance issues with their key suppliers, such as BA and
Pathway, the most recent being the unreadable bar codes on new benefit books. These errors caused each
outlet to contact the heipdesks to seek assistance when the error occurred. The communication of common
outlet problems and corrective actions are communicated individually to each outlet on contacting the
Heipdesk, which has an immediate affect on the volumes of calls. I
include Business Centre mstruction to outiets (See Dave Mcl.) {
3.2 Potential impact of Non Conformance During National Roii Out
In the event that Horizon is implemented without the key conformance aspects being addressed, the areas that
have a potential for being impacted by non conformance during the Horizon national roll out are discussed
below.
3.2.1 Supporting non competent outlets
The current training programme focuses on the Horizon operational aspects, without ensuring that the POCL
processes and best practises are included. Also, there is an assumption that ail personnel have similar base
skills of working with the technology. This approach te training will have a more dramatic affect with the new
release of Horizon as this version of the software includes the reconciliation processes. These processes.
require the POCL perspective to ensure that the daily and weekly reconciliation are correct.
itis the intention to test the competency of personnel after the Horizon training programme, as well as assess
the outlet's competency after the on-site support period at the outlet. If the Horizon training programme has not
been structured to cope with the varying skill levels within POCL outlets, as well as deal with building in
understanding and conformance during the training programme, there will be delays in outiets meeting the
training and implementation competency criteria. Therefore there is a potential that additional resource will be
required to give remedial support fo these non competent outiets. This remedial support will include :
« performing supplementary training to outlets, part or all outlet personne!
* assisting outlets / personnel meet the defined competency criteria.
This activity does not currently have an obvious owner, ie implementation or operational.
On the assumption that a trend transpires where 60% of offices are not fully competent as they transfer
into ‘live’ operation, with 40% of non competent outlets becoming proficient each month, as well taking
into account a potential for a gradually decline in the number of outlets becoming competent due to the
speed of the roll out and strain on support resources, the impact on the number of outlets requiring
remedial support will increase as shown below I
40000
8000 I
6000 I
4000 I
2000
0
tg Non competent outlets
a Competent
Number of Outiets
Jules:
Sep
‘98
Nov
‘39
May
‘00
July
‘oo
Jan ‘00
Mar ‘00
By November 1999 the number of non competent outlets will have exceeded 1200 that require additional
support above and beyond the operational support provided by the Business Support Centre. At this point in
the rofl out programme the support services will be at breaking point due to the speed of the roll out, je
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a further 1200 outlets per month. At this point the number of outlets becoming competent will i increase with 1
the result that the need for additional support will spiral upwards.
3.2.1.1 Scheduled training time Vs actual training time
During the Horizon pilot implementation of the DSS Group 5 Encashment transaction, the scheduled training was
4 day for the sub post masters, with the view the sub post masters would train their own assistants. All the pilot
outlets were familiar with the Horizon equipment as they were using the bar code scanning equipment for logging
and checking BA books. The pilot outlets received a maximum of a day on-site support on migrating to the new
system.
The view of the North East region Horizon regional liaison team was the actual training provided for the DSS
Group 5 Encashment transaction release was an average of 5 days per outlet, the additional training being
handled via ad-hoc visits. The Horizon version that will-be rolled out during the national roll out will contain the
following in addition to the current transaction and bar code scanning facility :
* total cash handling, processing and accounting for the outlet
© automated payments hardware within the new equipment.
The current implementation plan allows for training of one and a half days for sub post masters and assistants
and one day for branch office staff , with implementation support of two days per outlet. This training plan does
not include the course attendees to produce a cash account individually, the tutor demonstrates this process.
With reference to our current experience with the pilot implementation, as well as the lack of individual
training related to the completion of the cash account, the indications are that the level of traning and
support will not be sufficient. If training is supplied on an ad-hoc basis in the same way as for the
current pilot, the regional staff would be unable to cope with the demand. This would result in
increased volumes of calls to the Business Support Centre and cash account errors for the Transaction
Processing department, as well as the potential for loss of business and a reduced quality of customer
service.
3.2.2 Outlets with non standard hardware layouts
The measurement studies performed by O&M at'a number of the pilot outlets indicates that non standard
equipment layout, such as keyboards being stored under the counter and in appropriate location of printers, are
causing noticeable increases in transaction times. There are xx out of the 204 pilot outlets that have non
conforming hardware layouts, Since the implementation of the system, there have been no further checks of the
outlets to determine if the conforming outlets have changed their hardware layout.
A number of other observations have been made relating to non standard hardware layouts :
© overheating of equipment due to a siting that does not provide the correct ventilation
© printing errors due to incorrect printer location.
It has also been observed, that not all outlets have a telephone located close to the counter areas to allow
i assistance via the phone for system incidents.
I If the hardware layouts at the outlets are not standardised, there will be two key areas of impact which are :
I * an increase in transaction times which has a potential cost of £1,890 per outlet per month
* extended assistance calls to the Business Centre from outlets with telephones located away from the
counter areas. The additional call time will be as a result of relaying corrective actions via a third party
or waiting time as the caller has to go away from the:phone to try out an instruction. Using the
assumption that 30% of the outlets fall into this category, the call charges will increase by
£9,000 per week, estimated an calls taking twice as long, with unit per minute for a call being 6p
¢ effect on queue time and customer satisfaction (Glendyr may have something on this),
3.2.3 Involvement of Regional Network Managers (RNMs)
In the event that a proportion of the outlets have problems providing a required level of service to their
customers, there is a likelihood that the RNMs will be required to provide a closer support of their outlets. The
customer service levels could be affected by Horizon system related problems or business transaction issues
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related to non conformance. Additional support would result where the general customer service issues would
need to be addressed, as weil the potential for staff or agent issues relating to the use of the Horizon system
The trouble shooting by RNMs may add further non conformance into the network as they firefight issues across
outlets and advise on solutions.
“ Data to be provided by Sue Huggins - she has some market research figures we should be able to use
{may have to use caveats as these may not have been fully validated by the time the business case is
issued) **
“ Bruce may know, but Dave McL.'s view is the perception is about 20% and this is purely facilitating the
process **
3.2.4 Call handling by the new Business Support Centre
The new Business Support Centre is being staffed to support outlets in the ‘live’ operational environment. If the
outlets are not thoroughly trained, do not have back up manuals to resolve queries easily, as well as the outlets
are not confident using the Horizon system, the number of calls made to the Business Support Centre will be
greater than currently planned.
The 1998 Pathway helpdesk cail trends have been used in conjunction with the projected number of competent
and non competent outiets during the initial 12 month period of the Horizon national roll out. The potential calls
using this information is shown below
14000
42000
70000
8000
6000
4000
2000
0
(Weekly Recon Probs
we Daily Recon Probs
Advice & Guidance
Number of Call
Jule
228 8 8 8
2 a DG 2 ee «
288 228
Mar '00
‘Apr '00
May ’00
June '00
duly 00
The increases in the number of calls to the Helpdesk show the increase related to the number of branches that
have been automated each month. For the Horizon national roll out these calls will be handled by the Business
Support Centre. If the Business Support Centre is required to assist and guide outlets who are not
competent, these calls will last longer than the standard 10mins being used to staff the Business
Support Centre. The impact will be that the centre being unable to support the automated outlets, and
additional resources will be required, refer to section 3.2.1.
The 1898 monthly trend of logged non conformance incidents has been used to generate a picture of the
potential number of incidents that may require handling during the Horizon National Roll Out. A graphical
representation is shown below
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2000
4500
4000
500
] Automated Outlets
No. of Incident
Qa Qa fo
oa oS cod
o 85 25 85
o Fo 2
© $9 3
Mar
Jul’
Due to the speed of the Horizon roll out, as well as the number of incidents increasing as outlets
become more familiar, the number of incidents that will need to be investigated will increase to a rate
that will affect the support services.
3.2.5 Impact on Transaction Processing Business Unit
Once the cash account has become automated, the potential for problems will expand exponentially as 300 new
offices are automated weekly. In brief, there is a possibility of many mistakes in each cash account, which will
result in:
* error rates increasing significantly, resulting in penalties from clients
* difficulty/impossibility of reconciling accounts, resulting in difficulty in settling with clients and potential
impact on treasury
* unable to explain discrepancies, resulting in necessity of writing off significant amounts of money
* urgent requirement significantly to increase staff to handle errors and other impacts
* the real possibility of the centralised processing operation reaching a point of crisis as faulty cash
account information continuously pours in weekly while errors from previous weeks remain to be
resolved
if the approach for the Horizon National Roll Out does not incorporate conformance, and we use the Lottery
implementation as an example, we could expect a level of 60% of outtet's automated cash account
Fesonciiation-tto be incorrect within the initial month after implementation. An assumption has been made
that 40% of this number become proficient the following month. However, there is a potential that the
number of outlets becoming proficient will decline due to the speed of the roll out and strain on support
resources. The potential trend has been mapped for the initial year of the Horizon National Roll Out:
79
wg Transaction Errors
w@Cash Account Errors:
Number of Staff
8
sures
@¢e882828288888
2 S 2 28 € @ &€ B PF @ eS
2§6 $3 8 $$ 283 8 3
Using the above trend for additional staff required to support the Horizon National Roll Out, the potential
staff costs incurred within Transactional Processing for the period above would be Exxxx, where xxx
I has been used as the average monthly cost per resource.
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The system cash account/ reconciliation process should be assessed - contract allows 3% error but the size &
type of the records in error is unknown. .
3.2.6 Impact on Customer Service & Income .
This area is still awaiting data from Ally Oakshot in Research Services (Dave McL) . I
3.3 Potential Impact on transaction times & costs
The measurement studies’ performed by O&M at a number of the pilot outlets indicates that non conformance is
affecting the transaction times of the outlets. This non conformance can-be seen in two key areas, lack of
adherence to the standard methodology and hardware layout. If the assumption is made that at the time of the
studies the pilot outlets were in a stable situation relating to their knowledge of the system, the graph in section
3.1.3 supports this, the costs that follow are likely to be a minimum figure.
The cost of the affect of additional transaction timings as Horizon rolls out into the network have been calculated
on the average increase of timings from the measurement study, and uses the unit cost of 0.7p per second of
additiorial transaction time per outlet.
Take into account and possibly add text and stats for the following :
* only one product
° bigger affect in crown offices due to no of people thru doors / lust for crowns
* customer impact - queues, customer service
* subpostmaster impact
This cost has been calculated as an additional transaction handling cost of £266.5M for the period of the
Horizon roll out, ie as the number of Horizon outlets increase. There will be an on-going cost per annum
of £39.1M after all outlets have been automated.
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4, Recommendation for managing conformance into the Horizon National
Roll Out
The following chapter deals with recommendations for implementing conformance for the Horizon National Roll
Qut. The recommendations below must be seen as the ‘must have! improvements to ensure that the impacts
and costs to POCL are minimised, as well as the benefits from Horizon are realised.
4.1 Conformance principles .
itis recommended that in order for Horizon to be implemented across the national POCL network, a
conformance environment must be created and maintained to support on-going Business Service Management
(BSM). The POCL network does not currently operate from a central and Prescriptive direction, which results in
non conformance across the company. 4tn-orderfor-Hork tional-ROCL
HoH f tb tad-and-maintained-t pport ee ae 5 Seni
Management{BSM)}-
A framework to deliver BSM into a conforming environment is required to support any new automated system
(eg Horizon). This will enable the new systems to be implemented into a compatible environment as well as
mechanisms developed to monitor and improve both system and conformance aspects. This framework should
cover all areas related to culture and mindset, communication and support of the business, use of tools (eg
processes and guides) and the introduction of tools (ie development, piloting, implementation and monitoring
mechanisms).
The basic principles that need to be in developed, implemented and maintained as part of the BSM project to
provide a conforming environment are :
¢ an organisation that shows clear ownership and authority during the ‘live trial’ and national roll out of
Horizon - this will include POCL IT and business staff
© definition of roles and responsibilities for :
- BSM & Horizon staff
~. BSM project's input to existing boards
— new monitoring BSM data forum(s).
* definition of BSM / Horizon communication strategy (eg for Horizon users, into the POCL vision)
¢ definition of frameworks for:
‘— operational standards and procedures
- aligning business standards and procedures
- training of Horizon, ensuring all aspects of culture, personnel capabilities, business requirements
and system needs are covered
— user documentation to ensure it is easy to use and user friendly
= control mechanisms
- recognition and incentives.
The-above activities will create a number of processes and standards that require piloting to ensure that meet
their objectives. To ensure the piloting has the maximum affect, it is intended that other projects such as SAP
ADS, SAP HR and Data Management, will assist with trials and feedback their experiences to evolve these
processes further. The reception from these project to being involved with the piloting activity has been positive.
4.2 Horizon Conforming Environment
The BSM Conformance team have been liaising with other projects that have a conformance aspect to them,
such as Data Management, SAP ADS and Process Management. Where conformance principles or frameworks
are being developed or exist within other projects, the BSM conformance team will use and implement these. It
is the intention that one set of principles will be used across all projects, ensuring a fit with BSM by other projects
by using either BSM developed or adopted processes.
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However, to achieve conformance in preparation for the Horizon national roll out, the following key areas are not
currently being progressed and will needed to addressed to ensure full understanding of the Horizon processes
and support are in place, as well as feedback mechanisms to identify lessons to be learned,
The critical enablers for.a conforming environment must include the following :
4.2.1 Further development of the Horizon training programme
The current training programme needs to be reviewed to ensure it allows the network to continue to deliver it's
business to the current customer service levels. The risk of not addressing this area is a significant
‘building in’ of non conformance to POCL’s operation.
A number of issues were noted during the scoping of the conformance strand which should be included during
this development : °
* appreciation for the varying levels of PC awareness within the network - training created to ensure
levels of PC awareness are as required by Pathway
¢ review the content of the Pathway training sessions to ensure the system actions are shown in line with
the POCL business transactions and accounting processes
© support at the outlet after the training to allow for familiarisation and confidence building
* refresher session as and when BA cards are delivered to an outlet.
Pathway and Peritas are contracted to supply the current training to the network as part of the PFI contract.
However, the content, level and the practical hands on experience contained in this training is not sufficient to
ensure the desired competency levels. It is therefore recommended that the training programme is developed
with a ‘holistic’ approach, using the Peritas within a training programme, supplementing this will POCL specific
training. This approach will ensure that a greatly enhanced training programme can be delivered for the
commencement of the Horizon roll out.
The two areas of training that are essential to be developed are :
PC awareness training
Using the ECCO project as an indicator, 50% of the personnel being trained will require thése skills.
The cost to provide a 1 day course on this topic would be £4M
POCL processes, including cash accounting hands on training.
Itis estimated by the POCL operational training unit that each person would require an additional day of
training. The cost to provide a 1 day course on this topic would be £8M.
4.2.2 Implementing a conforming & ergonomic hardware layout
There are three POCL counter designs that are seen as being ‘best practise’. “At the time of outlet survey and
implementation, these designs are followed as much as is feasible. ‘There may be some valid reason for an
outlet not being able to implement a ‘best practise’ design. In these circumstances, the O&M department and
the Horizon implementation team should assist these outlets to create the best option for that outlet. This may
require additional visits during or after implementation, but this will ensure that the impact on transaction timings
will be minimised.
The telephone location is not a standard part of the outlet survey. However, if the outlet experiences a problem
they may require to contact the Business Support Centre.. For the Business support centre to provide the best
support, the operator should be close to the Horizon work area and be able to attempt any instructions provided.
Therefore it is recommended that as part of the outlet layout, the telephone location is considered. The cost to
include the telephone within the survey for future surveys is negligible, however, for the current outlets that have.
already been surveyed and implementation started. This cost should be estimated and included as an
addition to the Horizon National Roll out budget.
4.2.3 Creation of a Business Standards Framework
Processes must be documented to support the automated transactions and the operational environment. The
Business Service Management Project are creating the processes for the 7 disciplines of Business Service
Management, which as a major part of the control and management of the operational environment.
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A framework is required to define the standards and procedures the business require to document in order to
introduce understanding and conformance to meet their business requirements throughout the network. This
work is currently being undertaken within the current Process Management, Policies & Standards
project. The BSM development team are starting to liaise with this project team to ensure that the framework
can be used to drive forward the BSM development.
The business standards should be developed by each business unit in line with this framework. For the
Horizon national roll out, it is assumed that the creation of these business standards in line with the
defined framework, will be developed within BAU budgets. However, to ensure that these standards are
developed and implemented. it is recommenced that separate projects are intiated.
4.2.4 Creating user friendly procedural guides & operational manuals
itis essential that the outlets are provided with a procedural guide and operational manual that meets their
needs. A framework should be developed that enables POCL to provide such user friendly guide. Some of the
areas that will need addressing are >
* quick reference for common problems and instructions fer resolution
*® easy to read normal transaction flow for a quick refresher
* easy to reference errors that occur at certain points in the normal transaction flow
* direct instructions on when to call the Business Support Centre
» facility to update as and when needed, with speed and flexibility.
The estimated cost for the creation of a framework for user friendly operational manuals is 200 man
days @ £323 per day, resulting in an estimated total cost of £65,000. This cost does not include the writing
of the production manuals, materials, production and their distribution to the network. This cost is assumed to
reside within the relevant BAU budget
4.2.5 Remedial Support for non competent outlets
if an assumption is made that the training programme has been developed and implemented to ensure a fully
comprehensive approach and incorporated the aspects defined in point 4.2.1, BSM are assuming that that the
non competent outlets (refer to section 3.2.1 of this document) will require on average an additional 1 days
training / support time which is assumed will be either via the telephone or on-site training over a period of a
month.
‘On the assumption that approximately 30% of outlets will fall short of skills to be solely supported by the
operational support areas. The following graph illustrates the level of non competent outiets associated with this
assumption.
16060
14000
12000
10000
8000 I
8000
4000,
2000
6
Non competent outlets
Competent
Number of Outlets
$8
Jurse o
Nov
9
dan ‘00
Mar 00
Using the assumption that each non competent outlet will require an additional 1 days training and
support, the staff required to provide this support are shown below :
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©
& :
5 _- Support Staff
s 5 {
a)
> fom 2 S Bo ] =
so 88 $8 88 $88 §8 28
For the initial year of the Horizon roll out, the cost of the above support will be £xxx, where xxx has been
used as the average monthly cost per resource.
{tis vital that the ownership of this remedial support team is established early and how it fits into the currently
defined implementation and operational areas. At present there is a level of confusion.
4.2.6 Staffing up for automated reconciliation errors
During the Horizon National Roll Out, Transaction Processing will be handling the existing manual cash account
as well as the automated reconciliation. To enable Transactional Processing to continue to reconcile manual
cash accounts as well as handle errors associated with the automated reconciliation, an increase in resource
should be expected.
In order for the Transaction Processing unit to support the network through the transfer fram manual to
automated reconciliation, it is essential that this unit received Horizon training. The POCL training that will need
to be created for the outlets related to the POCL processes and cask account could be adapted for Transaction
processing.
ffwe use an expectation level of 30% of automated reconciliation to be incorrect each month after the
outiets initial implementation, with 70% of these outlets becoming proficient during the following month.
this translates into the following trend. The trend nas been mapped for the initial year from the beginning of the
Horizon National Roll Out.
35
3.0
25
20
18
410
os
0.0
t@ Transaction Errors
Cash Account Errors
No. of Staf
Ba
s
ae
8
Nov
‘99
Jan
00
Mar
‘00
May
“00
duly
‘Oo
Using the above trend for additional staff required to support the Horizon National Roll Out, the potential staff
costs incurred within Transactional Processing for the period above would be £xxxx, where xxx has
been used as the average monthly cost per resource.
4.3 Evolving processes to improve performance
POCL needs to take the procedures from the higher performing offices and applying them consistently
throughout the network. There are a number of examples for good and bad practise, with transaction times that
have been recorded by the POCL Organisation and Methods department. The data shown in section 2
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illustrates the varying performance variables within the current pilot population. This data should continue to be
collected during the Horizon Live Trial and National Roll out in order to respond and improve all aspects of the
implementation plan.
SAP ADS have a process in place to update their processes as a result of feedback from their cash centres, as
well as changes to the business. This process will be reviewed by BSM will the intention for this process to be
adopted by BSM.
4.4 Capturing data to monitor live trial and national roll out
The following data should be captured and monitored to ensure that all effects of the Horizon roll outs are
managed and can be pro-actively managed :
¢ delays in outlets passing competency tests.and associated reasons such as :
regional differences
trainers ability
support period after training
type of outlet, ie use of system
¢ total days training for groups of ‘like’ outlets
© errors or failures (each area below should have their own detailed monitoring system which we would
select and summarise)
— number of queries to Business Support Centre
~ Transaction Processing
e transaction trends after implementing Horizon, ie comparison of number of BA transactions handled
* customer service issues reported
« effects of Horizon on personnel by monitoring trends
- staff and agent resignations
. 7 Sickness
¢ impact of KPIs.
The above data should be able to be captured via existing data systems, such as Human Resources and
Transaction Processing. The new business support centre will also be capturing data related to calls, incidents
and problems which are key data inputs.
The data will be analysed by the BSM data analyst with the intention to identify any trends, positive or negative,
as well as exceptions. These events will be investigated and managed by the BSM Conformance manager,
liaising with the BSM, Horizon and business units to ensure corrective actions or ‘improvements are
implemented.
This data can be used to capture the current levels of conformance and track any improvements or drops,
temporary or otherwise. This tracking of conformance data can be a mechanism for setting and monitoring
conformance linked to KPIs.
4.5 Non Conformance by Suppliers
The current pilot has already shown that errors by POCL key suppliers, such as BA and Pathway, can impact
the working of the network and the support services around the network, as well as customer and client
satisfaction. Processes should be designed and put in place to devise an effective way of managing these
problems when they occur. The Business Support Centre is likely to be the first point of reference from an outlet
+ when supplier problems arise. Therefore, it is recommended that a process is available to inform of outlets of
known problems at connection time with the Business Support Centre or proactively into the outlets. This cost
has already been incorporated within the Business Support Centre business case for standard communications
to outlets on connection with the Business Support Centre.
4.6 Benefits from implementing conformance
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The key areas that will assist with the implementing of conformance into the network as Horizon roils out
nationally are :
* amore comprehensive training programme
* .a process to ensure hardware environments allow maximum efficiency when handling a transaction
"e aremedial support unit is available
* a Business Support Centre's in place
© auser friendly guide is available.
If the above key areas can be developed and implemented prior to the Horizon roll out, the potential
benefits to POCL for minimising the increase in transaction time could be as much as 70% of the
Predicted increase as stated in section 3.3 of this business case.
The costs have been calculated in relation to the implementation of the Horizon National Roll out into two types
of environment :
Non Conforming - costs are focused on supporting the business in a reactive mode, with the emphasis
being to resolve / support problems as they occur.
Conforming - costs are focused on training outlets to a higher level of competency and incurring less
operation support costs,
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Environment. Transaction Support, incl Incr. Ongoing
Processing + training, guides + Transaction. costs per
Resource costs costs . Time Cost, annum
incl hiw :
ergonomics
Non Conforming T.B.C + T.B.C + £26.5M £39.1M
Enablers :
Poor training
Larger Support Centre
Multiple, complex -
guides
Larger TP support
Conforming T.B.C + T.B.C + £8M £11.7M
Enablers : ‘
Better training
Remedial Support
Minimum BSC & TP
User friendly guides
The table above indicates that the difference in total costs between the two types of environment during
the Horizon roll out are negligible. However, the real benefit is the reduced on-going costs within a
conforming environment of £17.4M per annum.
The above does not include the savings / prevention of negative impact :
* on additional error correction
* customer / client perceptions & loyalty
© other support services, eg RNMs, helpdesks.
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5. Recommendations for ‘live trial’
To ensure the maximum benefits are realised from the roll out of conformance along side the Horizon system,
there are a number of key activities that need to be in place :
© acomprehensive training programme to ensure high level of competency of staff and agents as they
move into ‘live’ working with Horizon
* aprocess to ensure adherence to the standard hardware environments allow maximum efficiency, as
well as offering assistance to create a ‘bespoke’ layout as a result of special needs of a number of
outlets
© aremedial support unit in place to take the additional requirements of ‘slow to learn’ outlets, with
processes and criteria to ensure the hand over into and out of this area are defined
¢. the Business Support Centre is in place with an expansion plan to deal with the roll out into the network
* a'self help’ culture is being developed by providing a user friendly manual for easy reference by the
outlets. -
The ‘live pilot’ provides an ideal opportunity to implement a number of the above initiatives with a view to tune
and improve them prior to the major Horizon roll out. It is recommended that the following actions are initiated
immediately in order for them to be piloted during ‘live trial’ :
1. Pre-work by outlet -
¢ sending out a booklet for issues to consider in advance, eq assignment of passwords
2. Training programme -
¢ develop a pilot training course for the PC awareness
¢ develop a pilot training course to allow training attendees to work through their own daily ~,
reconciliation and weekly cash account
3. User guide -
‘* create a structure
« develop the aspect that will support the frequent / most common questions
¢ ‘develop this document for use within the trial
4. Review pilot outlets who are not conforming to the recommended hardware layouts with a view to
understanding more the reasons for non conformance and developing ways to assist these outlets
to be conforming (change at outlet or an additional conforming hardware layout)
5. Create a process to monitor the level of additional support required by all trial outlets, ensuring the
two types of ‘live trial’ outlet are recorded, ie Pilot and Non Pilot, feeding back results into :
* training development group
« Business Support Centre
* group setting up of the remedial support unit
« user guide development group.
6. Set up a suite of measure to start to track and ensure the two types of ‘live trial’ outlets are covered.
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