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POST OFFICE LIMITED
Brief for meeting with Duncan Tait 11/11/2013
HomePhone Migration
1. Call Centre Performance
Week Calls Calls % Calls Answered I Average Speed to
Commencing Received Answered Answer
02/09/2013 130,029 28,745 22 16.5 minutes
09/09/2013 84,012 23,770 28 15 minutes
16/09/2013 57,701 20,884 36 12.5 minutes
23/09/2013 61,504 25,686 42 10 minutes
30/09/2013 69,332 28,711 42 9 minutes
07/10/2013 61,888 30,112 48 7.5 minutes
14/10/2013 58,155 29,050 50 7 minutes
21/10/2013 64,188 30,671 48 7 minutes
28/10/2013 69,208 34,050 49 8.5 minutes
04/11/2013* 64,252 31,642 49 8 minutes
* Does not include Sunday 10" November Data
Calls Answered v Calls Abandoned
120000
100000
80000
60000 —+ Answered
fi Abandoned
40000
20000 +
o-— — —
02/09/2013 02/10/2013 02/11/2013
This week has been extremely disappointing and progress in improving the customer
experience has stalled despite new agents coming onto the phones. The number of calls
answered continues to go up but very slowly whilst the number of calls being offered is starting
to stabilise but overall abandonment rate is still very poor with 50% of calls being abandoned
against a target of 5%.
Technical Support continues to be the area where customers are experiencing the longest wait
times but encouragingly the number of calls being offered has reduced by 15% in the last
week.
Capita have delivered the additional resource in line with the recovery plan below, however the
additional resource is not having a material impact on performance; this is partly due to speed
to competency:
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Date Number of Agents Line of Business Status
11" November 15 Technical Support On Track
18" November 15 Customer Service On Track
7 Technical Support On Track
25' November 15 Technical Support On Track
2"¢ December 30 TBC On Track
16" December 15 TBC On Track
Total 145 On Track
Fujitsu have put forward a further resourcing plan to ensure they are meeting their contractual
SLA obligations by the end of November. This was presented on Friday 8" November and was
subject to governance with Duncan Tait:
¢ 120 additional agents to be deployed in Leeds or Solihull to become effective within 3
weeks
¢ 90 additional heads to be deployed in the back office in Solihull including 30 heads
from CGI who worked in the previous contact centre in Bridgend. The 30 CGI agents
should land on Wednesday 13" November
e Additionally, as a back-up, Fujitsu are installing a VPN to the CGI call centre in
Bridgend with a view to some services potentially being migrated from Capita.
2. Billing
15K bills a day are being dispatched in order to clear the backlog. 325K bills have now been
issued to customers. However, we have seen a significant increase in the number of billing
related calls into the call centre. A review of the calls coming into the billing enquiries line has
concluded that the main drivers of calls are ‘where is my bill’ and ‘why is my bill for a longer
period’ and there are no issues with bill accuracy. There are also a large number of non-billing
calls going into this line.
On Friday 8"" November, we were also made aware of a P11 incident where Fujitsu had failed to
take 5.5K direct debit payments from customers. These customers will now have to be re-
contacted in order for these payments to be taken in line with the Direct Debit rules. This is
further evidence of the Fujitsu team needing to step up to ensure that they are managing our
customers effectively.
3. Complaints
Our normal run-rate of complaints is around 500 per month and we are currently receiving
around 500 per week. The backlog of complaints is being driven down and Fujitsu have
deployed additional resource to manage this. However, we are seeing far too many customers
having to complain to Paula, Alice and MPs in order to get issues resolved. We have agreed a
revised process to ensure these are dealt with in a timely manner. The main driver of
complaints is the inability to get through to the call centre.
4. Network Migration
The network migration is progressing well. The migration of our customer's call services to
TalkTalk is 99% complete and mop-up activity is being completed to complete the final 5K
migrations. Around 88K broadband customers have been migrated onto the TalkTalk network,
with around 15K to go. This activity should complete by the end of the month, ahead of plan.
5. Potential Financial Impacts
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Goodwill — given the larger volume of complaints, we will be paying customers more in
goodwill gestures. This is estimated to be c. £15K per month
Increased Debt — given the delay in billing there is a potential impact on debt recovery,
however, Jayne Savage does not believe this will be material
Reduced Sales — the network has to a degree disengaged and is not actively driving
HomePhone sales. Additionally it has been agreed that we will push the telecoms campaign
back into Q1 2014/15. This will result in the customer base being c. 30K lower than anticipated
at year end. Whilst this will have no impact on our income for this year, this will reduce our
income going forward until we are able to recover the customer numbers. There would be an
income impact of c. £7m over the strategic plan but will not have a material impact on 13/14
income.
Re-launch — in order to recover our customer base position, we will need to invest more in
acquisition costs in 14/15 to mitigate the risk to the strategic plan numbers. Estimate at £500K.
Increased Churn — we are seeing a higher number of customers leave the service as a result
of the poor customer experience. We believe the impact will be c. £1m over the strategic plan.
Price Increase — we were planning to increase our prices in January, we have had to delay
this until April. This will cost us c.£500K this year.
Summary — the impact on 13/14 impact will be minimal as lower acquisition costs will off-set
any reduced revenues. However, there will be a material impact on the strategic plan unless
we are able to recover the customer numbers in 14/15.
6. Legal Position
Delay Deductions: Fujitsu must pay a fixed amount for every business day it is late in meeting
a key contractual milestone. Fujitsu has arguably not achieved the “go live” Key Milestone 3.
However, this “is a potentially difficult claim to maintain. The maximum amount of delay
deductions paid in respect of a failure to hit Key Milestone 3 is £564,000
Service Credits: These are payable if Fujitsu fails to hit a service level. However, as is not
uncommon in this type of contract, there is a three month “grace period” following the “go live”
date which expires at the end of November
Damages: The default position is that service credits are the only financial remedy available in
respect of service failures. Damages are not available except in three specific situations; none
of which have occurred
Other rights: POL has a number of other rights under the contract, including the right to “step-
in” and replace Fujitsu. However that would be likely to lead to further disruption in practice.
7. Summary
Key Messages
* This is having a major impact on our business both from a financial and reputational
perspective.
e We appreciate the effort that is being put in to improve service but the improvements
are too slow and too many of our customers are having a very poor experience.
e We need Duncan’s absolute commitment that they will be meeting their SLA’s by the
end of November or earlier on both quantitative and qualitative measures.
IT Key Messages
1. Data Centre
Teams have moved a long way towards agreeing the contractual terms. We have issued the
Invitation to Submit Final Tender and I look forward to your response.
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2. Horizon IPR
I'm pleased that negotiations on Horizon IPR are progressing. Brian Deveney is working on this
with Paul Patterson (Fujitsu) and they are looking at an approach whereby we offset some of
the cost against future spend. I hope these can be resolved in the next two weeks.
3. Project Sparrow
The Post Office criminal law team needs to find an independent expert to give evidence about
the Horizon system which was previously provided by Fujitsu's Gareth Jenkins.
Lesley and Susan Crichton have raised this with Fujitsu. The legal team have a meeting
arranged with Fujitsu to discuss this requirement, this will happen on the 21st November.
Following this we will have a better understanding of Fujitsu's view, any impacts and what the
next steps will be.