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Post Office
Transformation Committee
09.00 — 11.00 9t* October 2014
5th Floor Boardroom
Version v 1.0
©
Post Office® CONFIDENTIAL
Agenda — Meeting split to cover Programme Performance and
Enterprise Transformation Themes as separate sections
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Agenda Item
Meeting Focus
ming
8 I 4, introduction For Information Context setting for October's Transformation Alison 09.00 - 09.05
g Committee
E
2
@ I 2, Delivery Performance .
rn . Are we delivering transformation programmes in Change
€ a. Overview For Challenge and line with strategy? Review of top risks, programme 9
—£ - Ss rt ts & benefits and what's keepi Management 09.05 — 10.30
b. Risk Management uppo! costs & benefits and what's keeping sponsors
s ig . & Sponsors
D> awake at night.
F3 c. Programme by Programme
Share planning assumptions as we move from
design to delivery of the Business Transformation
¢ ‘ 5 a including establishing a Transformation Alison & _
» F} 3, Business Transformation Roadmap For Information Management Office to control and track the David 10.30 — 10.45
2 £ performance and progress of the new
5 o Transformation roadmap for the organisation.
2
20
io 5 I 4, Review of Actions For Agreement Alison 10.45 — 10.50
<
r 5, AOB Paula 10.50 — 10.55
6, Communication For Agreement What do we communicate? Paula 10.55 ~ 11.00
3
zs a. Forward Plan Agenda items for future meetings
c
3 b. Previous Actions Status of previous actions
t I c, Capacity Plan Capacity plan for 2014-15 change plan
Post Office®
CONFIDENTIAL
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2a Transformation Change Management Overview
* RAG, cost and benefits based on full programme life
* RAG in brackets indicates programmes view
Programme Benefit Quality
Comment/ Areas for Discussion
Business
Transformation
Following Board review the programme are working on the blueprint and high level roadmap for delivery of the new Target Opera ting
Model, with delivery due to commence from January 2015. This will include developing a transition plan to manage the smooth
transition from a ‘design’ to a ‘delivery’ structure taking into account the current assumptions regarding delivery partners.
Winning in
Mails
Positive engagement with Royal Mail at executive level should further improve collaboration between organisations. Decision t o move
to Royal Mail online mails customer journey (rather than CDP) has delayed implementation of further mails products in new access
points until after Christmas, though 141 home shopping return pilots using paystations now operational. Timescales for bill payment
offering still unclear at this stage.
Following Board update next key activity is the alignment of Network Transformation, Winning in Mails and Business Transforma tion
programmes. High level discussions have taken place between Business Transformation but more detailed analysis needed.
Network
Transformation
Programme remains ahead of target on both contracts and openings. Approach to the ‘cliff will be influenced by future network
strategy with alignment activity commenced between Network Transformation, Winning in Mails and Business Transformation.
Agreeing the Memorandum of Understanding with NFSP is currently a barrier to discussing cliff options with NFSP. Draft business
case for current programme (NT2) produced but not submitted (will be used as baseline for any subsequent changes). Business
Transformation are now engaging with the Value for Money workstream to accelerate cost savings.
Crown
Transformation
The programme continues to deliver in line with targets across branch transformations, training, staff cost reductions, SSK rollout,
mergers and relocations - though P&L run rate £1M adverse at end of Q1 (due to income and business wide cost savings behind
plan). Trading meeting now has Crown specific section to identify and implement actions to address income shortfall in Crown s. List
of options to achieve break even presented at September Crown Steering Group with decision on which to take forward due to be
made at October meeting. Customer satisfaction KPI increased from last month but still slightly behind target.
Branch
Support
Horice pilot (use of real time transaction data to reduce losses) live with programme reviewing outputs to ensure benefits are
achieved. Spend on Case Management tool on hold pending conclusion of IT review, delay could impact achieving related benefi ts.
Accelerating the implementation of online training tool to Jan 15 could realise £ 350K savings in 14-15 with resulting VR activity being
aligned with Business Transformation and being led by HR. Programme tracking support related questions in agent engagement
survey, with 2% improvement for whole survey.
IT
Transformation
The final bidders in the EUC tower have been informed of the preferred bidder outcome. Verbal update at meeting on continuing
alignment of IT Transformation and Business Transformation programmes. The programme business case is being updated to reflec t
the latest position, this will be finalised in November once the alignment with Business Transformation is complete. The prog ramme is
developing a basket of value measures which will proposed to the next IT Transformation Steering group and used as the Qualit y
measure.
Separation
The MSA Extension Letter has been signed, providing revised end dates for the remaining IT separation activity.
The Finance system went live on 1 St September with a small number of post go live operational issues being managed via the
programme. Decommissioning of the previous system commenced and post implementation review is now underway.
Other workstreams are ontrack against the revised timelines agreed in the MSA
Post Office®
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CONFIDENTIAL
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2b. T f tion C ittee Risk S
l diy SS ea SET ERC RDB SSPE civ
1) suaurenan for Business Sponsors to undertake more
Inecytetoensure eer sight ct waratns rom expecta
cross ature ot enange sae i an naresing sk nt cu lene end any necesseryremectal ecton tobe undertaken
, [Rosstomaton preorenmestoseiver _fooafammes win Transformation [eg Newont and Trenstormeto) 5 ;
Programme and forecast benefits and +4 !2) in-flight projects/programmes reviewed to ensure alignment
pores, mpoctngachieversen of 2020
porto iciverstateay Peres fvin Busnecs Tonstomatoncbjectves. Key nitatves have
ay. \satisfied the assessment criteria (addressing our cost
Idriving profitable growth, changing the way we work) and are
em atowea to pogress
1) Integrated transformation plan created to identify & track key
IThe scale of change planned across the jinter-dependencies and milestones. This will be superceded by
pusiness to detver he stategy resus [nc emerging Business Tanstomaton deWveryroadmep
fnutnie complex dependencies, lck o change Management Team to revew shor term pln 0
2. rss Programme Insuttctent capacy to [etenniy or suslect mater experts Sener inatyeopacty constants (see cepesty pln) relin I's ‘ 2
9 Imanagers - leading to bottle necks end lability to deliver the technology elements of the 14-15 Change
fate to delver tenets wibin he svategle ton
ten
tis: aignment ot contictng assumptions between
ross programme fousiness ategiesnih programmes teads to mis alnment wth undertake detaed planing es pat of Business Trenstomtion
3 [eress.Proaramme Petccroperatng Mose! [eusmess Transformation, Tne vesling fraction plan to ensure that a concrentcpete pan 4 2
(rom) mvactsbenetts_laetvery pian mayresut in trget bens prone eevery of he egreca bevels
October update
+ No change in scores for risks
+ The Exco level programme risks previously highlighted to the
Transformation Committee will now be reported through the Exco
performance pack
+ Key risks reported to the Transformation Committee will now focus
on cross-portfolio and those identified by each programme
‘Vary uit thay Senctance ‘aly Vey they
(a)
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Post Office® CONFIDENTIAL
2c Business Transformation Programme
Programme Summary — Design an Operating Model and implementation
roadmap that enables the 2020 EBITDAS strategic plan
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Programme Scale Time I) Ne
Cost c.£7.5m in FY1415 Lifetime cost TBA Cost
Targeted benefits: £150m to £200m central cost :
reduction (28% to 37% of current central costs) linked Benefit
to EBITDAS strategic plan targets Quality
Customers, Colleagues, & Third Party Engagement
Performance Cumulative to P6 Design Phase
Programme KPI ae Actual Forecast
Timely Delivery - 18 weeks Teweeks fl 18 weeks
Deliver within budget I£2,517k est Jf £4,135k
Design Phase Outcomes Accepted : — :
Delivery Financial Glidepath Approved : . :
Deliver incremental savings in FY1415 £0 £0 :
IQuality: stakeholder buy-in to proposed end-state - : Yes
IQuality: deliverables independently assured - - Yes
IQuality: staff engagement measures not negatively impactedI _- : No
(Customers
INo engagement planned during Design Phase to November 2014
Colleagues
The communications team are represented on the programme Steering Group and Core Team.
[Stakeholder management and communications plans supporting radical business restructuring are
being developed to support transition from design to delivery
Status Update
‘The Programme is in the third and final stage of design. An assessment of the current cost dynamic of the
business was completed in Stage 1. Savings potential of £100m was identified and work begun to tum the
initiatives into business cases.
Recommendations for the end state design (Stage 2) were presented to the Board on 25 September. The design
addressed the remaining £200m gap to the £300m savings target. Final adjustments to the design have been
made in response to Board feedback, guidance and critique.
‘Stage 3 will deliver a roadmap for implementation designed with achievable goals, capability requirements and
‘within available funding. 16 proposed work programmes have been grouped and sequenced to deliver phased
transitional states over time to enable the business to change in controlled stages, Key Success Factors and
Key Performance Indicators are also proposed.
Third Parties
Engagement plans are being worked out as we assess partnering options for the delivery phase.
Risks Delivery Plan RAG status (Time)
RAG I Impact I Likelihood
Risk Summary peas [Ui th2%9 current Risk Migaton
/1) Design Phase established, supported by 3rd party. Target Operating
lexpertise, to validate expected programme benefits Team Mobilised “
The ‘end state! operating models 12) Key checkpoints in Design Phase will confirm Model Designed
Inot capable of supporting POL : 3 programme progress towards expected business
business targets for revenue, outcomes Current State i ;
Imargin, EBITDA and profit 3) Risk and Compliance directorate are fully engaged Transformation Design Phase
lo execute ‘three lines of defence’ including Assessment Complete Blueprint Complete
independentassessment
INot all savings identified within the 1) The programme has seta ‘stretch’ target of 300m \
design’ phase will deliver the fll which represents 30% ofcurrent year un rate cos s
value initially thought poss ible or 5 4 I2) Target Operating Model design tes ted through: 2013-14 aN it 2014-15 2015-16
achieve the outcome in the a) 121 and group gis cussion with ExCo and Board
timeframe initaly predicted )Finaneial modeling a4 nl {a2 / 4 Qi Q2
rte is a risk of negative poicl, aT
transformation’ is interpreted as . a deeb a
: : ‘ cialogue
‘outsourcing’slash and bur Op
Dependencies Status Actions:
[Enterprise Risk Management Framework to
crystalise impact of inflight major change
initiatives on steady-state enterprise risk
profile
JBTrhas engaged with PwC to clarify
Jdependency and required output ofrisk
diagnostic
[Action with PwC risk
Jassurance team
2c Winning In Mails Programme
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Programme Summary - To determine the future mix of network models, develop simplified journeys for our customers,
partners and retailers through a new CDP based technology solution (tablet/pay station/EPOS based) and deploy these
solutions into new access points (Mini Post Offices) increasing network size
Programme Scale
Cost c.£3.5 mto Oct 14
Performance (Benefits) Pete Gani Full Programme
(Year 14/15)
Programme KPI tans Actual Target I Forecast
RAG) RAG)
Hit new access points easy 441 (targeting 176) oe 400
\# Average transaction volume per site 10 ‘tbe 30 tbe
Average transaction time <60 secs the < 10 secs the
IEasy to do business with the ‘the the tbe
ICustomer satisfaction tbe ‘tbe tbc the
Status Update:
141 IVY access points are now live (offering Home Shopping Returns only) with a further 35 being rolle
lout by the end of October.
The technological solution & programme plan for access points is being reviewed following the decision
Ito move from POL to RMG online mails solution and other challenges with back end IT integration (trac!
land trace etc).
Final confirmation of solution and plan is expected to be confirmed by October 15th.
Customers: Quadrangle have been engaged to facilitate gaining customer insight around ideal product
propositions. Quantitative and qualitative feedback has now been received, MI collation is being planned
{for the IVY trials and should include appropriate customer feedback mechanisms. Local marketing
underway for IVY trials,
(Colleagues / Sub Postmaster s: Other than local marketing for IVY trials and ongoing engagement with
Ithe NFSP, no colleague or Sub Postmaster engagement has taken place due to the confidential nature
lof the programme.
Third Parties - Stakeholder & PR:
- Commitment made to NFSP to deploy no more than 200 new access points prior to 19 Jan 2015.
Engagement continues to gain NFSP support fow the wider strategy
- Met with CEO of RMG and agreement reached in principle to support Winning In Mails
- Joint Commercial Governing Group has been formed to manage work required for inter-organisation
lobjectives such as commercial alignment, and the associated milestones have been communicated and
agreed.
Risks
RAG
Gross
Impact ILikelihoo
Se (Gross) Id (Gross)
ICurrent Risk Mitigation
We are currently improving our B28.
service offering as well as working up
an ePOS solution. We are also
endeavouring to have partners hold off
on signing new contracts until our
offering is finalised.
[The competition are attempting to sign
preferred retailers to 5 year deals of 4 4
Icombined BillPay and parcels offerings.
Delivery Plan RAG status (Time)
2014-15 2015-16
Q4 Qi
Q3
[Business Case Complete
ai 2
A
liVY / Pay Station 1 Roll-out
To pursue RMG engagement at senior
level and gain decision making
collaboration framework in form of on-
Delayed RMG agreement on process
Ichanges and commercials may prevent 5 3
roll-out of operational solution.
135 Access Points
.
[Technical Solution Agreed
y Sid
site team
INFSP may not support the wider trials <
ursue engagement with NFSP and
oH programe rl out beyond san (28) 4 2 I gale boyin inrough uss of MOU
IRMG Interim Agreement
[Government / BIS unlikely to want
Inegative coverage in run up to election. We have begun negotiating with NFSP
1 Strategic Partner Signed
IRMG Agreement on final
lsolution & commercials
I400 Access Points
[5 Strategic Partner Signed
IRol-out ist Strategic
[Partner Deal
E.g. post office branches being 4 3 I and engagement with BIS to address
Icannibalised and their existence these risks.
threatened by Access Points
Finalise technological solution and
[Current interim programme budget will 5 3 _I delivery plan, confirm costs with
lexpire imminently. suppliers and incorporate into the
funding request.
Delivery risk following the decision to use Finalise technological solution and
IRML online mails a formal re-baselined 4 3 _ I delivery plan, confirm costs with
plan has yet to be confirmed at the ‘suppliers and incorporate into the
lprogramme level & by Accenture/Atos funding request.
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2c Network Transformation Programme Time
Programme Scale Cost
Programme Summary - To deliver a transformed network through the introduction of Cost c.£956M Benefit I
new and viable operating models by 2018 Timescales - complete by Summer 2018 Quality G
N Full Programme
Performance (Benefits) I Periods (sert 14) (Year 14/15)
Programme KPI a Actual Hee Forecast
Contracts Signed (cum) 4,368 ‘4800
Branches Open (cum) 3,134 3708
customer Satisfaction (all branches) - Aug 97% 96%
Cost reduction (CTP savings)-in year Cum. 852.9k 3,460k
Status Update
HThe programme remains ahead of target for both contracts signed and branch openings with all Q2
targets achieved for both metrics. The focus now is to maintain this strong position heading into Q3.
[The yearend outlook although challenging, remains positive.
The overall programme status remains amber on contracts due to the challenges of finding suitable
replacements for leavers and the risk around the Transitional Locals process (which has the potential
{for significant adverse stakeholder reaction).
{The additional opening hours available continue to be well above the target set by BIS and our forecast
financial benefits are higher than planned due to a greater number of Locals being delivered ytd (+87),
jas wellas.a higher take up of option ‘c' contracts signed
Risks
RAG” I impact [Likelihood
Risk Summary Gross I (Gross) I (Gross) ICurrent Fisk Mitigation
inabiity to find replacerrents 1) integrated replacerrent strategy based on
for leavers (mandated and strategic approach to convenience retailers and
Volunteer) as a result of take- symbol groups
up fromstrategic retail 2) Restructured programe organisation in the
partners (predorrinantly 5 3 central team
'TOG), being lower than 3) Local and national communication campaigns to
lexpected support replacerrents;
3) Partnership with Hurrberstones to help source
new operators and sales literature drafted
[Public robitsation against 7) The NFSP are committed to supporting us and wl
guided leavers have alignment with BIS on the need for resiience.
2) National and local communication carrpaigns
continue to informthe public and pro-active regional
5 3 PRand stakeholder management with opinion
formers in place.
3) Transitional Locals pilot (start July 14) will enableI
Us to assess the potential stakeholder inrpact and
refine approach in advance of full rollout.
Customers, Colleagues and Third Party Engagement
[Customers
Measured customer satisfaction continues to be high in converted branches, with both Mains
land Locals consistently scoring in excess of 90%. Queuing performance (waiting times) are also
consistently good against our measurement criteria.
[Colleagues / Postmasters
Satisfaction amongst Postmasters with the new operating models remains above target at 78%
(Mains 81%; Locals 75%).
Satisfaction with the conversion process (RLB (Property) and FCAsupport), remain the key area
lof focus, with actions being put in place to lift perceptions. We should hopefully start to see a
positive change in results from November (when conversions from Sept are researched).
[Third Parties- Stakeholder & PR
Transitional Locals
Engagement with the initial tranche of 48 transitional locals continues, with positive results
achieved to date andit is encouraging that a significant proportion of Postmasters have decided
that leaving the business is the best way forward for their branch. Their have been no significant
issues thus far.
Given the continued success of the pilot, the steering group have given approval to initiate a
second tranche and initial comms are being worked up.
a — es — ntsc enhancers
Delivery Plan RAG status (Time)
2013-14 2014-15 2015-16
‘04 ar a2 03 ‘oa Cr aT
3246 13435 (3639) J3800 (4168) I4226 Ja800
lcontracts signed
2058 asa (2sci) ]2914(2134) J3zag [3708
Branches open
Local performance I Board review +next steps
root cause teeptt Oct
vodel improvement AA
board review (Sept) review Oct
Process improvement Concept development Phaset I stight delaytoT-impact
hworkstream he review work
a and. [ard
st Tranche
Ipitiate ‘cliff preparation
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2c Crown Transformation Programme Programme Scale oo
Programme Summary - To bring the Crown network to a breakeven P&L run Cost - £126m Benefit
rate by March 2015. Timescales - complete by end-March 2015 =
Quality
Performance YTD 2014-15 FY Customers, Colleagues and Third Parties
Customers: The migration of customers to the kiosks averaged 60% in September. PS
P&L runrate £15.4mI Q1 £-1.1m to £-2.6m . -
Number of branch r 243 Ps 204 saw improvement in customer satisfaction, with overall satisfaction in transformed
lumber of branch transformations branches better than in non-transformed branches, despite >400FTE staff having exited
Number of branch franchises 28 P6 53-55 the transformed branches.
Customer satisfaction in transformed branches 81% PS 85% Coll The 503FTE plan fi Ter staff exit a taih ii head
: The jan for counter staff exits is secure and staff are exiting ahea
Queue time satisfacti 83% I PS 85% oleagues:
Cali Rncioill ~ : of plan. BM VR acceptances equivalent to 36.6FTE are secured, broadly in line with plan.
Programme delivery- Retained Branches: The P6 targets for programme delivery have all been - =
achieved ahead of plan. These include projects for branch transformations (243 complete), staff Third Parties: Consumer Futures continue to provide a significant level of challenge,
training (3000 trained), self-service kiosks (424 rolled out), and staff exits (440 FTE of counter staff). arguably beyond their statutory powers. The transition of NCR management to ATOS
Programme delivery- Franchising: Holloway and Barkingside went live to independents on 25th continues — with an interim process for incident management in place
September, bringing the number of live franchises to 28. Whilst up to 17 branches remain at risk of not
being franchised, a number of mitigating actions are being delivered to reduce the associated P&L
risk. This means that £7.5m of the £8.0m Crown P&L benefits of franchising remain secure.
P&L position: At the end of Q1, the P&L using the run rate methodology was -£15.4m against a target of -£14.4m. (The next bottom-up P&L forecast is being built this
month based on the position at the end of Q2.) In P5, transformed branches grew income 6.0% YoY, which was 2.6 times the rate of growth of the non-transformed branches,
this included 23% YoY FS growth in the transformed branches. However this level of growth is still below target and remains the main risk to the breakeven objective being
reached. At the end of P5, total Crowns income was £2.1m below budget YTD and is forecast at £4.9m below budget on a full year basis, with mails under-performance as
the main driver. Considering this, together with all other programme risks and opportunities, it moves the P5 (top-down) view of the run rate forecast to between £-1.1m and -
£2.6m. The programme team are working with the Crown network and FS to develop a set of further candidate projects to mitigate this. These could include; a closure at
King's Walk, Chelsea following eviction notice being served; reconfiguration and partial sub-letting of space at Trafalgar Square; and exiting of under-performing resources
across counter and FS roles using "Leaving the Business with Dignity”. An initial long list of candidate projects was shared with the September CTP Meeting and this is now
being refined for decisions on which to take forward at the October CTP Meeting.
Risks & Dependencies Delivery Plan RAG status
14/15,
Risk Summary BAS a I uk. Current Risk Mitigations BAS I 4 x Be Tania I gutta [Aug-44 I Sep-t4 I Oct-14 I tov-14 I Dect4 I Jant6 [Feb1s I Marts
1) The Trading Meeting is managing the issue of Branch A I ptresctticioen I
Crown income on a monthly basis with Transformations I + retained Crown
income substatntity Below 5 I 5Imanagement information from CTP and finance sis TObranches I 2ambiinches I branches
bd 2) Long list of candidate cost saving projects in tae a t ? ponttanele aa 4 ~
development
Franchisin
1) VR offers issued and vacancies removed to "9 lens A 104 a
We fail to secure enough 4 I 4 ITeduce losses in “at risk" branches. 2) CTP als i" french a hanchises,
franchise partners Meeting have approved a number of alternative A i a A
Solutions to mitigate losses. SOK Rollout I I ;
Targets not met for 280 kiosks rolled out [10 kioskszolled out. S18 kiosks rolled out. I
business wide cost- 1) CTP meeting and finance monitoring and A I A
reductions, pushing 3 I challenging back to budget hoiders where 2 CSC exits I 3417 TE 4I7 FTE
allocations to Crowns over allocations are over budget. 252FTEveleasedvai I eleasedviaVR I releaseduaVR I 8
budaet
2c Branch Support Transformation Programme
Programme Summary - To improve the support we provide to postmasters and
operators in the running of their Post Offices from the moment they join to the
point where they leave the business.
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Time
Programme Scale Cost
Cost C. £4.1m (+ VRc £4m) Benefit
Timescales - complete by March 2015 QualityI c_I
Performance (Benefits) Period 5 Full Programme
Target I Actual I Target
Programme KPI ee YTD ene) Forecast
Operating cost reduction £3m £3m 15/16
Number of spmr suspensions p/a 19 60
Reduction in agent net debt £243k £1M
Satisfaction with training 88% 95% 15/16
Reduction in calls to NBSC 25% 15/16
Target is reduction in >£10k
shortages at audit (28 last year) - 3 14
number shown is actual
Status Update (1) HORice lve into 6 month pilot on 2nd September, (2) Revised compliance
approach launched 1st September reducing time spent on compliance element of Branch physical
jaudit from 3 to 1 hour; (3) Discovery phase completed by Ciber in FSC for case management tool;
(4) First draft of LMS feasibility study received by ATOS cost prohibitive in this version; (5) Stock
Icode data from NSBC completed and passed to stock and conmunciation team for further
improvements to HOL help. Dangerous Goods and RML data capture underway; (6) Bureau second
receipt w ent live on 19th September plans in place to track impact and benefits ; (7) On-line
compliance training for new joiners has revised planned go live date of 3rd Nov EMC required
further time for testing;
Risks
Customers, Colleagues and Third Party Engagement
‘Customers The Programme should have a positive, indirect impact on customer
lexperience. Reducing subpostmaster suspensions has meant reducing impact on
service where suspension occurs for example in period 5 there are 11 cases where
investigation into performance issues at the branch is being conducted with the
postmaster still in post.
Colleagues Following central colleagues and postmasters testing of the on-line
compliance training prototypes and their positive feedback experience EMC option
progressed, rather than staying with Horizon or using ORBIT. Branch User Forum
lendorsed bureau 2nd receipt improvement which has been introduced. Feedback from
Branch User Forum that changes made to stock codes on Horizon were an
improvement. Branch User Forum will be visiting FSC in October. September
postmaster engagement index increased to 47% (+2% vs. 2013)
Third Parties NFSP updated on latest developments and attendance at NFSP NC
scheduled for November.
RAG [impact [Likelihood
Risk Summary Gross_I(Gross) I (Gross)
[Current Risk Mitigation
Delivery Plan RAG status (Time)
On-line training
modules launched
Fujitsu have retumed CR approved and work can now be
lundertaken. Extra budget has been released by
Programme to facilitate extra resource required in Ref
Data team
Dependent on IT and Fujitsu to
[deliver Programme changes and
projects
Continue tracking progress
Than eiart/ataperatiy oath Majege Ba siodice oon Wm ks ernie Reauiatory
eduction 6 dolvered trough v6 optinise redeployment pporuniies and :
eduction in resoutee. Risk to e I 4 I 4 Jest VR however GR may need to Revised HORIce Compliance ee ee
Isavings if surplus pool is created. lconsidered. Timeline currently being mapped SUebeREA launched on-line pilot compliance view too!
[Costs for Dynamics plot provided [Altematives for suppliers currenty being Ps modules roll out go launched
lip Cleer asics piinelive en coped wie supper ten approach live
therefore an alternative supplier 15 6 3 launched
im ay need to be sought. I
Dependencies 2013-14 7 214-15 T 2015-16
Gepindensiee dtatus ae aa uw a3 V
Dependent on Business
Transformation identifying what is in
scope and out of scope to prevent
Jdouble counting of benefits
Programme working with
BTrprogrammeto
acclerate benefits
BTraware of expected double counting of benefits
W\ v a’
<a}
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2c IT Transformation Programme Scale Time
Programme Summary — Define and implement a revised IT Operating Cost C.£53M Cost
Model, secure a new IT supply chain and manage the safe transition of Benefits C £85 M Benefit
services Timescales - complete by 2016/2017 aualin,
uality
‘Year to date ‘Full Programme
Performance (Benefits)
[Target I
Programme KPI (RAG \Forecast
Towers Contracts Awarded
3! parties transitioned to service intagrator (SI)
SI operating model processes accepted —_
Finenclal savings
Employee Opinion & Customer Satisfaction
Status Update
+ Network (NW) — Dialogue continues to strengthen bidders proposals before invitations to
‘submit final tenders are issued in November. In parallel work is commencing with Network
Expansion to assess impact on the IT procurement
+ Back Office (BO) ~ The procurement is paused. Working with Business Transformation to
ensure alignment with future Target Operating Model (TOM).
+ Front Office (FO) - Moderation of supplier responses is complete with recommendations for
down-select to be taken to Programme Committee on Monday 6” October.
+ End User Computing (EUC) - The final bidders have been informed of the procurement
outcome. The Atos ‘Build’ team mobilised and engaged with the preferred supplier. Target
for Contract Award for the end of October and Live service by the end of March 2015.
ks
Risk Summary
Current Risk Mitigation
Insufficient time to migrate all branch.
and central network services provided
I by Fujitsu prior to expiry of the TSS
I contract
should extension be required
Exploring alternative delivery strategies with
the bidder's to front-load the service
transition in advance of service
transformation activities
Modelling cost drivers to understand
‘cost/benefit trade-offs and targeting
transformational opportunities
Pause on Back- Office procurement to
understand Network Expansion direction
and confirm strategic alignment
Running costs for Back-Office and
I Networks Towers exceeds the
I amount set out in the business case
resulting in benefits erosion
Considering negotiation stance with Fujitsu
I Delay in the tower procurements
delivery results in additional cost to
I maintain the incumbent supplier base
I or an extended period
Mobilising next Tower implementation team
to ensure no loss of momentum
Strengthening leadership oversight and
delivery culture within the team
+ Confirmed commitment with Preferred
Supplier to deliver to the target service
‘commencement date
I+ Exploring contingency options with
Preferred Supplier to safeguard service
continuity
I+ Consider negotiation stance with Fujitsu for
service extension if required
Insufficient time for EUC Build to
‘complete the full transition scope prior
to the expiry of 2 key contracts:
Fujitsu Engineering and the
I Separation MSA EUC Service
I Provisioning
Customers
By simplifying and streamlining our IT Supply Chain, we are reducing some of the traditional barriers to change
and creating a more flexible and agile service enabler for our business colleagues.
Greater engagement with Business Transformation and direction from ExCo during the past weeks has
improved the alignment between the various transformation programmes and emerging business model to
ensure IT is investing in the priority enablers for the future.
Colleagues / Subpostmasters
Investment in new technologies in the Network allows our Branch Colleagues to engage Customers in new
and enhanced ways, building a positive perception of the Post Office brand and supporting the 2020 strategy
Fundamental in this is the way we engage our key stakeholder communities across Functions and
Postmasters in specifying our Tower Model requirements and ensuring our selected suppliers deliver to our
needs
Third Parties - Stakeholder & PR
IT Transformation is a fundamental re-shaping of our fT Supplier landscape and ensuring ongoing support of
Jour 3rd Parties during this period is paramount. The procurement process is as per OJEC standards and our
main suppliers are fully engaged in the process. We have announced our Preferred Supplier for the EUC Tower
to bidders and selected incumbents suppliers so that we can start totest alignment with the winning tender.
Delivery Plan RAG status (Time)
2014 2015 2016 2017 2018
nt ServiceTermination
Fujitsu-Mar
Inambent Service
far
Incurpent Service
Tefminati
10
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2c Separation Programme Time_I
Programme Summary — to manage the delivery of Post Office separation of Programme Scale Cost
business and IT services from Royal Mail leaving enduring business Cost C.£43.9M (POL only) Benefit
capability. Timescales - complete by June 2015 Quality kas
: Customers, Colleagues and Third Party Engagement
Performance (Benefits)
Customers
Separation Cumulative to P2 Full Programme The majority of the Separation projects relate to the ‘Back Office’ only and therefore they have no direct
: fe customer impact. As an agreed principle the programme approach has been to separate on a ‘like for
Programme KPI inaat Actual inaes Forecast like’ basis as opposed to separating and transforming at the same time. The one area that is particularly
customer oriented is that of eBusiness. There have been two releases to date providing content and
Paine eal = ce tool and the next scheduled release is Oct 2014.
Separation of Business Services 0 wt
Finance -heade ount reduction. 218 278
Colleagues
Finance -Numberof Incidents 0 ° The contact centre separation has resulted in the TUPE of colleagues, which has been implemented
F Cen ce . ~~] I Iwithout any issues emerging. From a wider perspective delivering an independent Post Office provides
ae ea itene Mum bere neshy a 2 2 the platform for further opportunities for Post Office colleagues to contribute to the vision of the
Eareeh carne Nomen oe) mse : ° Q organisation.
Facilities Management has now been separated and the new suppliers are now live in all sites.
HR -Numberofhoidents 9 ° °
Status Update Told artes '
+ The Finance system went live on 15 September, decommissioning of the Formal agreements have now been made with BT for the separation of the IT Networks, which is
la major achievement. The ‘Safe Haven’ ‘direct award’ with CSC will act as the catalyst for the
previous system have commenced. realisation of future Post Office opportunities.
+ Contact Centre telephony and Case Management capability are now live.
Users are being trained and transferred to the new systems in a staggered r
migration. _ : — . Delivery Plan RAG status (Time)
+ MSA Extension Letter has been signed , providing revised end dates for the
remain IT separation activity. [_w/e03/10 w/e 10/10 w/e 17/10
+ Facilities Management and Grapevine business services successfully 3week Look Ahead (3WLA) IM] 7 [With] F [StiSnj Mj T [WITH] F IStisnIM] T IWITh] F IStsnI
separated on 30‘ September. IIT Networks: Migrations start q
Risks ] [Contact contres:FuiGo-uve ce
[Facilities:Go Live c3
We lls obantshey ita ha mut speroach neues te foto hr IGrapevine: Go-Lve ce
fect nee muri cpacy and can : ; susie pela [Safe Haven:Contract Signed I g
nt ane operational
Rive tatormation Technology Services
[Transformation Programme (ITST): Live ¢
Jany movement h the tn . ;
logrem [Facilities:Go-Live 4
peteai crc ogg te '¢ Desk: CSC On-Boarded into Atos Desk 4
[Vorume of Change over Short Tine Parioa Reduce: Separation w orksteam are larga Iservice Desk:BT On-Boardedinto Atos Desk q
I separation and wider POL business) Independent of each other (continue to vacate)
lvokime of Separation cnange detoveing aver a ; : INetworks: Site Migrations End
lsnort time period
IHR: Common Components Separated <
Licenses: Project Closure [
ISupply Chain:P OL Server Room Set up -
le-Business:Release 5 Live <
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3.1 Business Transformation — Transition Planning
This week October-December Jan-Mar April 2015
Exit criteria
High level assurance of BTr design phase output =» . Finalise OD
——Align BTr design phase output with Board > I an d L&D
+ Recruit
—Close-out 14/15 programmes change roles
—Develop 15/16 roadmap ° Kick-off
——Finalise scope of 15/16 programmes —_————>__ delivery
artners
— Allocate change resource p
+ Launch new
——Commence OD (incl. L&D) —————> programmes
——Establish TMO/ DA and build capabilities I§ ——_> _- Kick-off TMO
__Kick-off delivery partner procurement —_______» I governance
meetings /
——Implement new risk framework =——__—_—4——» __ programme
tracking
——Initiate stakeholder engagement (e.g. RM, Unions) =>
——-Finalise internal comms plan / material ——_>
Entry criteria
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3.2 Enhancing Our Change Capability to have the breath and
depth to support the delivery of the Business Transformation
Blueprint
Context for requirement
* As Business Transformation reaches the end of the design phase and the implementation plan
(blueprint) is approved, and as we will not be using a single delivery partner, we will need to control
and track the performance and progress of the plan
* To effectively manage the progress and performance of the transformation journey, the post office
will need to increase its capability and capacity for central management of the roadmap.
* The approach recommended is to engage a Transformation Management Office (TMO) partner to
accelerate capability and deployment of industry standard programme standards, tools and
techniques.
¢ This will ensure standardisation across programmes, with central management driving efficiency
and providing a platform for continuous improvement.
* This capability will be enhanced on a phased basis, starting in October & November with the aim of
fully embedding by April 2015 (see next slide)
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3.3 Transformation Management Office — Transition Plan
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Phase 1 (October - December 2014)
* Support transition from high
level blueprint to detailed
design
« Design common governance,
reporting framework, tools and
standards for use across all
programmes
* Onboard TMO design partner
« High level performance tracking
and reporting to Transformation
Committee and Board on
roadmap and metrics
Phase 2 - (January - March 2015)
Introduce new framework and
standards to programmes
Consistent roles &
responsibilities for Programme
Director, Programme Manager
and Sponsor
Integrated plan baselined
Resource to new TMO structure
Enhanced reporting and
performance tracking tools
implemented
Phase 3 - (April 2015 onwards)
« All programmes have consistent I
governance, methods and
reporting.
«Fully centralised management
for progress and performance
management of the roadmap
_¢ Transition from consultancy led
to internal led with support
* Platform for continuous
improvement
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Appendix A — Forward Agenda
Transformation Committee I Content (in addition to Standard Agenda)
November 2014 * High level integrated plan with performance metrics agreed
+ Review of Transformation Committee TOR
December 2014 * Review Capex and Exceptional change activity for 2015-16
January 2015 « Agree 2015-16 change plan budgets and priorities
February 2015
March 2015
April 2015 ¢ Agree detailed 2015-16 Change Plan
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Appendix B - Status of Previous Actions
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Open Actions from May Transformation Committee Owner Scheduled
Network Transformation programme to update KPIs following approval of the
programmes updated business case. Financial benefits of the programme that benefit
16/05/2014-03 Post Office should drive the Benefit criteria and financial benefits from the postmasters lan K Carry forward
point of view should be one of the Quality measures.
Open Actions from July Transformation Committee Owner Scheduled /Due by
lan K to provide an update to Transformation Committee (via correspondence) on the
22/07/2014 - 02 output of the Network Transformation model improvement recommendations. lan K Carry forward
lan K to provide a brief summary for Transformation Committee members on the
current view of customer propositions planned to be piloted under Network
ap/o7/2014 09, I beveleprent lan K Complete
October update:
Included in Winning in Mails ExCo and Board packs.
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Appendix B - Status of Previous Actions
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Actions from September Transformation Committee Owner Scheduled /Due by
lan K to ensure that approach to the Network T ransformation ‘cliff is agreed and aligned
to wider business strategies before 25‘° September Board.
October update:
04/09/2014 - 04 Options are being developed but are dependent upon alignment with FS and Business lank Carry forward
Transformation strategies and will determine the ‘Network of the Future’ and ensure fit
with corporate transformation objectives.
Harry C to produce a series of options , for October Transformation Committee, to
achieve Crown break even run rate by March 2015 (including close alignment with
04/09/2014 - 02 Net pguegpment Harry C Carry forward
List of options to achieve break even presented at September Crown Steering Group
with decision on which to take forward due to be made at October meeting.
Martin G and Kevin G to ensure there is no contradiction between the ‘easy to do
business with’ metrics on scorecard and the customer satisfaction metrics within Martin G &
04/09/2014 - 03 I Network Transformation and Crown Transformation programmes. Also consider the Kevin G Carry forward
most cost effective way to obtain data.
lan K and Harry C to quantify how much time, manpower and cost are being spent
managing Consumer Focus across Crown and Network Transformation. Then work with
Mike Granville to make recommendations with options to October Transformation
Committee.
October update: lan K &
04/09/2014 - 04 I Quantification of manpower and costs complete, recommendations to be agreed with Harry C Carry forward
Mike Granville and presented to Crown and Network Transformation Steering Groups
before submission to the November Transformation Committee. The current agreed
arrangements with Consumer Futures are continuing with Post Office Ltd actively
‘pushing back’ on individual cases to ensure on track implementation in the NT and
CT programmes.
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Appendix B - Status of Previous Actions
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04/09/2014 - 05
lan K to provide a weekly list, to Martin George, of the outstanding issues the Network
Development programme need resovling with Royal Mail.
lan K
Complete
04/09/2014 - 06
Lesley S to follow up with Royal Mail to ensure a Royal Mail IT representative joins the
Bishopsgate Network Development team
Lesley S
Complete
04/09/2014 - 07
lan K to ensure appropriate customer communications (e.g, leaflets) is used in the two
lvy pilots.
lan K
Complete
04/09/2014 - 08
David R to review Business Transformation programme RAG status given risk to time
and benefits and update status for September ExCo and Board Pack.
David R
Complete
04/09/2014 - 09
David R to provide a briefing to Paula on current TOM thinking in advance of 12"
September ExCo discussion.
David R
Complete
04/09/2014 - 10
David R, Nick K, Kevin G, Martin G and McKinsey to meet before 12” September ExCo to
work through alignment of Business Transformation, Network Development and
Financial Services Strategies prior to ExCo discussion and then PO Board presentations.
Mc Kinsey (via
David R)
Complete
04/09/2014 - 11
Michael B to update cross programme risk relating to alignment of strategies for
September Board, showing McKinsey co-ordination as mitigating action
Michael B
Complete
04/09/2014 - 12
Neil H to provide quarterly People and Culture update to October Transformation
Committee, update to focus on the change required in people and culture needed to
achieve Business Transformation.
October update:
Reporting will commence following the EXCO conversation on 16th October and Board
on 29th October.
Neil H
Carry forward
04/09/2014
Agreed - There is not a need to continue to report progress on the IT Enablers portfolio
to Transformation Committee, as BCR and POS futures requirements will be covered
under the IT Transformation Programme and the remaining IT enablers will be governed
within the IT area’s BAU governance.
N/A
N/A
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IT & SMEs can still support the
Appendix C High level 2014-15 Capacity Plan I Shange pan
Some projects have amended
View of key Business change milestones & Business events — current month to delivery dates (Wave, Online Mails)
May 2015 + Impact of Business Transformation
TOM on major change programmes in
progress
pois
[ oe T z I = 7 T 3 T w T rv way
( J
Strategic Change
BAU
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