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Royal Mail Group
Review of Network Business
Support Centre Processes
Post Office Limited /
Royal Mail Customer Services
Internal Audit & Risk Management
Report: 09/013 July 2009
CONFIDENTIAL
Contents & Distribution
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Contents
Executive Summary
Overview
Control Assessment and Key Findings
by Scope Area
Appendices
Appendix A — Detailed Findings
Page
Distribution
Executive Summary & Appendices
Helen Bentley, Head of Consumer, RML
John Cawthorn, Dearne Consumer Manager, RML
Kendra Dickinson, Relationship Manager, RML
Gary Hardy, Head of Doxford Contact Centre, RML
Lynn Hobbs, General Manager Network Support, POL
Dave Hulbert, Systems and Channels Manager, POL
Mick L Martin, Director of Customer Services, RML
Mark McLean, Senior Partnership Manager, RML
Andy Z McLean, Head of Operations Control, POL
Steve P Rooney, Head of Group Shared Services, RML
Paula Vennells, Network Director, POL
Executive Summary
Post Office Limited Executive Team
Doug Evans, General Counsel
Derek K Foster, Internal Audit & Risk Management Director
Ernst & Young, External Auditors
Review Team
Stephen A Collins, Mark Fitzmaurice, Peter Nutbein
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Executive Summary: Overview
The Network Business Support Centre (NBSC) was established in 1999 to support the rollout of Horizon in the branch network. Today, the NBSC provides
Background J] support to all Post Office Limited (POL) branches for all policy, procedure and product enquiries. It is operated on behalf of POL by Royal Mail Customer
Services (RMCS) via Group Shared Services (GSS), who manage the interface. The NBSC is located on 2 sites - Dearne House in Barnsley and a smaller
operation at Doxford in Sunderland. It employs around 60 staff and in 2008/9 handled 512k calls, around 1,600 a day, from the POL network.
In November 2007 a voice mailbox system was introduced for non-urgent (eg non-customer waiting) calls to smoothe peaks and troughs and allow prioritisation of
inbound calls, whilst at the same time contributing almost £500k pa in cost savings. Live calls are subject to a grade of service (GoS) target of 80% of calls
answered within 20 seconds. In 2008/9 reported performance was 84.3%. The target for voice mailbox calls (established during 2008/9) is that 97% of calls are
returned within 24 hours. At period 2 in 2009/10 performance was running at 95%.
The NBSC is financed via an inter-business charge by RMCS to POL which, in 2008/9, was £2.8m.
To perform an independent review of the processes deployed in the NBSC, specifically in order to determine whether:
Objective + Effective policies and procedures exist, are deployed and are regularly reviewed to ensure the controls in place mitigate the risks;
and Scope * Management information is fit for the purposes of end users;
P + Service provision is cost-effective and meets the requirements of current Service Level Agreements; and
+ Effective business continuity and disaster recovery policies and procedures are in place, functioning appropriately and are tested regularly.
ri RISK TO GROUP: The NBSC represents a Low risk to Royal Mail Group in terms of Group materiality, but a Medium risk to POL in view of the potential impact
Rating on its ability to transact business.
CONTROL ENVIRONMENT: Some Improvement Required. The arrangement between RMCS and POL is not supported by any signed contract or service
level agreement (SLA), nor is service provision formally discussed between the parties. POL have concerns over the quantity and detail of the management
information they receive and the GoS calculation contains a correction factor that is now inappropriate and artificially inflates the reported figure in some
circumstances.
The standard of service provided by RMCS has not been formally agreed with POL by means of a contract underpinned by a detailed SLA. GSS have drafted an
Summary SLA for general contact centre service provision and a further SLA covering voice mailbox calls, but these require augmenting with detailed key performance
indicators before formal agreement with POL.
The management information provided to POL is limited to the GoS performance and a brief explanation where the target is missed. Greater transparency of
reporting is required, especially of the GoS calculation and reasons for failure. POL does not currently receive wider service quality information, such as first time
call resolution, cost per call or time taken to resolve referrals (where advisors are unable to answer queries immediately and so pass them on to a referrals team).
POL’s requirements of RMCS, in terms of the provision of management information, should be detailed in an SLA.
Consultants have reported previously that, in relation to external contact centre service providers, the NBSC offers a good overall service at a lower cost than
comparable operations. Current performance is comparable to this benchmarked level however work is currently ongoing to establish if NBSC costs remain in
line with industry standards.
The number of complaints about the NBSC from the network is low, averaging 1 for every 3,500 calls into the NBSC, indicating that branches and subpostmasters
are generally satisfied with the service. GSS have initiated proactive calls to branches who either make no or excessive calls to the NBSC and work with
subpostmasters directly to discuss and improve service provision
Both sites are covered by crisis and continuity plans and external assurance has been provided on the ability to continue operations at an external backup site in
the event of a major incident at Dearne House.
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Executive Summary: Control Assessment and Key Findings by Scope Area
Objective: To provide an assessment of the processes deployed in the NBSC.
Scope Area Key Findings Ramat
Effective policies and procedures exist, are
deployed and are regularly reviewed to ensure
the controls in place mitigate the risks.
There is no agreed contract or SLA defining the requirements and obligations of each party. Both POL and
GSS have drafted SLAs, based largely on historically agreed KPls, but neither has been agreed or signed
bilaterally. Data to support analysis of the reasons for GoS failures is limited so failures are neither well
understood nor well reported, hampering the identification of corrective actions.
Management information is fit for the
purposes of end users.
POL receive a weekly report and a monthly summary covering all contact centres but do not consider that
the management information they receive is adequate or meets their requirements. The reported GoS figure
contains an outdated correction factor that means that under some circumstances it will be higher than the
actual GoS. The reported GoS is further inflated by the inclusion of voice mailbox calls in the calculation
and GoS is not calculated for queries that have to be passed to the referrals team. Exception reports are
produced in the event of GoS failures but there is limited detail on reasons for failure.
Service provision is cost-effective and meets
the requirements of current Service Level
Agreements.
No SLA, defining service requirements, has been agreed but complaints about the NBSC from the network
are very low, indicating postmasters are generally satisfied with the service they receive. Previous external
benchmarking concluded that NBSC compared favourably with similar external contact centre service
providers on both service and cost. GSS make proactive calls to branches who either make no or excessive
calls to the NBSC and work with subpostmasters directly to discuss and improve service provision.
Effective business continuity and disaster
recovery policies and procedures are in place,
functioning appropriately and are tested
regularly.
Crisis and business continuity plans exist for the Dearne House site (including NBSC) and are tested
annually in the form of both a simulated (desktop) walkthrough and a physical disaster recovery test. Both
tests were regarded as being successful when last run, with external assurance from CSC being provided on
the capability to physically continue operations using the external backup site.
Ratings:
Implementation timetable by quarter
Importance _No of actions Completed By Dec 09
Priority 4 1 - 1
Priority 2 3 - 3
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Appendices
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Detailed Findings Appendix A
The following issues were identified during the review and the corrective action and timescale were agreed with the business. All of the actions shown are deemed important. However,
a further ranking (1-2) has been provided to assist in prioritisation. Priority 1 relates to the higher risk issue.
Issue Agreed Action Plan Action Owner Timing
4. Policies and procedures
1.1 Contract/SLA
Although each party has drafted their own SLA, there is currently no jointly agreed contract or . Co-ordinate the compilation and Kendra Dickinson / Oct 09
SLA in place. As a result POL’s requirements of RMCS, including the provision of management agreement of an SLA governing Dave Hulbert
information, are not defined, nor are RMCS’ requirements of POL in relation to lead times for the the standards of service, cost
notification of changes to the network that impact the NBSC. The contract/SLA should also be effectiveness and management
transparent in terms of the costing and pricing structure for current and potential future services information provided by the
provided. Both current and ongoing POL requirements should be channelled through a central NBSC. All current and future
coordinating contact. POL requirements to be collected
by and channelled through Dave
1.2 Grade of service failures Hulbert.
Causes of GoS failures are neither well understood nor well reported. Potential reasons for (Priority 1)
failures such as late notification to RMCS of changes to the network or postmaster non-
conformance (eg not reading promotional material) are not captured and no detailed variance
analysis is carried out. Failures are not adequately explained by variations to forecast of call . Provide detailed reasons for GoS Kendra Dickinson Dec 09
numbers received and very little detail is provided to POL. failures in line with the
specification provided within the
1.3. Voice mailbox volume forecasting SLA and extend call forecasting
The number of voice mailbox messages is not forecast. Forecasting these calls, which comprise to include voice mailbox calls.
around 20% of offered calls, would improve the accuracy of the overall forecast and so assist in (Priority 2)
staffing to workload
Business Impact:
Without a detailed SLA between the parties, there is a risk that the NBSC does not meet the
requirements of POL management or of the branches/subpostmasters — either because RMCS
fails to provide the required grade of service to the network or because POL fails to meets its
obligations to RMCS to facilitate this.
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Detailed Findings Appendix A
The following issues were identified during the review and the corrective action and timescale were agreed with the business. All of the actions shown are deemed important. However,
a further ranking (1-2) has been provided to assist in prioritisation. Priority 1 relates to the higher risk issue.
Issue Agreed Action Plan Action Owner Timing
2. Management information (Ml)
2.1 User requirements
POL do not consider that the MI they receive is adequate or meets their requirements, See action 1 above.
particularly in relation to cost and quality of service provision. GSS collect more performance
data than is reported to POL, who have yet to determine and agree their requirements with GSS
by means of a formal contract or SLA.
2.2 Grade of service calculation
The reported GoS figure does not always reflect actual performance. A correction factor exists 3. Cease the adjustment to reported Kendra Dickinson Dec 09
whereby if either the number of received calls or the workload (derived from the actual handling GoS based on calls above
time associated with each call) are greater than 5% above the forecast values, then the reported forecast.
GoS figure defaults to the 80% target. This adjustment dates back to when the forecast was (Priority 2)
provided to RMCS by POL but, since forecasting is now done by RMCS, is no longer valid as it
may drive inappropriate behaviour. Additionally, voice mailbox calls, which are automatically
answered within 20 seconds, are included in the calculation, artificially inflating it.
2.3 Referrals
GoS is not reported for referrals (where the adviser is unable to resolve the query and so passes See action 1 above.
it to a referrals team). No report is available detailing when a query was passed to the referrals
team or when they resolved it.
2.4 Logging of message broadcast system (MBS) code
Causes of surges in call volumes are not captured or reported. Changes which require attention
by branches are frequently notified to branches via the MBS facility on Horizon. These
messages can result in surges in calls to the NBSC and so affect GoS, but the message
reference number is not captured. As a result actual call volumes attributable to individual MBS
are not known, hampering reporting in the case of GoS failures.
Business Impact:
Without accurate, comprehensive and timely management information, the identification and
implementation of performance improvement activities is restricted.
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Detailed Findings Appendix A
The following issues were identified during the review and the corrective action and timescale were agreed with the business. All of the actions shown are deemed important. However,
a further ranking (1-2) has been provided to assist in prioritisation. Priority 1 relates to the higher risk issue.
Issue Agreed Action Plan Action Owner Timing
3. Service provision
3.1. Meeting the requirements of the network
The business requirements of the network have not been defined, documented or agreed within See action 1 above.
the context of a contract or SLA. As a result it is not possible to conclude whether the various
service standards in place are appropriate or are driving appropriate behaviours.
RMCS record incoming calls and use these for internal quality assurance and training purposes.
Work is underway, via the Making Branch Life Easier initiative, to establish how service
provision can be tailored to the requirements of the network (eg pro-actively contacting branches
who either call the NBSC excessively or do not call at all and offering a “nursery group” for new
subpostmasters). GSS have also been working with subpostmasters, both via presentations to
the National Federation of Subpostmasters (NFSP) and a focus group of the NFSP. Although
the NFSP has recently commenced a limited “mystery shopper” initiative, there is no direct
measure of subpostmaster satisfaction with the service provided. Such a measure should be
devised and incorporated into the SLA.
3.2 Cost-effectiveness
External consultants engaged by POL benchmarked the NBSC in 2004 and concluded it was 4. Conclude ongoing external Dave Hulbert Dec 09
“achieving good overall performance” Available data suggests that NBSC’s current analysis to verify that the annual
performance is broadly in line with the benchmarked level, so it is reasonable to assume that a cost of NBSC is in line with the
current comparison would be favourable, especially given that approximately £500k of costs industry standard and whether
were taken out of the NBSC in November 2007 with the introduction of the voice mailbox further savings potential exists.
system. (Priority 2)
Work is currently ongoing to establish if NBSC costs remain in line with industry standards. Any
potential savings identified from this activity will be discussed between POL and GSS.
3.3 Complaints
The volume of complaints concerning the NBSC from the network is very low. In 2008/9, 148
complaints were received arising from over 500k calls to the NBSC suggesting that postmasters
and branches are generally satisfied with the service provided by the NBSC.
Business Impact:
POL may not be getting value for money or getting the optimum balance of quality and cost.
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Detailed Findings Appendix A
The following issues were identified during the review and the corrective action and timescale were agreed with the business. All of the actions shown are deemed important. However,
a further ranking (1-2) has been provided to assist in prioritisation. Priority 1 relates to the higher risk issue.
Issue Agreed Action Plan Action Owner Timing
4, Continuity and disaster recovery arrangements
Crisis and business continuity plans exist for the Dearne House site in general and the NBSC in
particular. These are tested annually in the form of both a simulated (desktop) walkthrough and
a physical disaster recovery exercise in tests jointly administered by representatives from both
POL and RMCS. Both were regarded as being successful when last run (in November and
August 2008 respectively), with external assurance from CSC being provided on the capability to
physically continue business as usual operations using the external Sungard backup site at
Elland. However, there are doubts within POL over whether the cost of the Sungard site is
justified. The November exercise resulted in a number of action points for GSS which still need
to be discharged. A similar continuity plan also exists for the Doxford site, last updated in
February 2008.
Business Impact:
Without robust, documented crisis and continuity plans in place that have been communicated
and are regularly tested, the service is susceptible to disruption causing difficulties for
subpostmasters and branches in transacting business.
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