BUSINESS CASE (WATERFALL)
Operational Excellence — Note Counters
Change Excellence Framework
Strictly Confidential
POL00448358
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Post Office Limited - Document Classification: STRICTLY CONFIDENTIAL
1. Name and Sponsorship
Operational Excellence — Note Counters
Business Sponsor Melanie Parks
Decision Required by 05/03/2024
2. Executive Summary
Following on from the 40 branch Note Counter trial activities, this new business case specifically
requests authority to purchase and deploy new note aba wish counterfeit note detection to
Excellenice programme.
Reducing the volume and value of discrepancies and counterfeit bank notes (that are increasingly
sophisticated and difficult to detect) in the network, helping our Postmasters run operationally
robust and sustainable businesses and in turn reducing the cost impact of losses, is one of our key
Retail objectives..
The benefits resulting from this business case which broadly fall into three main categories:
1. The savings to POL from reduced losses arising from branch discrepancies and
counterfeit notes (net of maintenance Opex) estimated at! I
table at section 10 for a breakdown of these savings).
2. Postmaster profitability: Time saving when transferring cash from the till to the safe.
Time savings when accepting deposits from the customer. Preparing cash pouches —
preparing the pouches will be quicker and more accurate. Estimated at
recurring.
a Banking Framework 4 (‘BF4’) negotiations: I.
IRRELEVANT
The rationale for bringing forward this business case now rather than waiting for further date
from the 40-device trial is threefold:
1. Weare announcing the launch of the new Operational Excellence Incentives in March (for
implementation in August) and based on extensive postmaster feedback note counters are
viewed as a critical component of this package, ensuring branches have the basic tools to
process cash accurately and efficiently.
3. As part of the wider push to close the 2024/25 budget gap, a savings opportunity has
now been incorporated into the Retail budget — this figure is only achievable if we are able
to place the order fori
While waiting for further data from the trial would have provided a more robust evidence base,
we believe there is adequate relevant data from the note counters deployed to date and the Tele
Cash Recyclers (TCRs) trial to support the estimated benefits, and the view from the relevant
subject matter experts is that the benefits stated in this business case are likely to be on the
cautious side (i.e. understated).
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3. Proposal detail
This business case requests authority to purchase and deploy new note counters with counterfeit
note detection to an Post Office branches (taking total branches with new Note
Counters (GFS220) t Deployment will be undertaken within fn ‘period from
Business Case approval (subject to hardware purchase/delivery lead time assumptions o'
r. The overall project cost i in FY24/2 n7{Capex /
Supply Chain Director has confirmed that there will be no additional costs for transport/install as
these will be undertaken through existing BAU teams.
The branches have been identified based on the highest return against POL direct benefits and
therefore largest potential risk (e.g. most significant volume of branch discrepancies and
acceptance of counterfeit notes).
Post-deployment, the project will continue to monitor both counterfeit and discrepancy reporting
at branch level for a period of assure the new equipment usage and business
processes is being complied with, in addition to any unexpected technical issues that require rapid
response with the supplier.
4. Scope
The following is a list of in-scope activities/outputs for this project, anything not explicitly listed
here shall be deemed out of scope:
«Purchase of 2,782 Note Counters (GFS220) for “high cash” branches.
e Note Counter supplier (“Glory”) will produce training videos as additional collateral to
support full roll out.
e Creation and application of bespoke asset tags to each Note Counter device (POL property
equipment team).
e Support process documented and communicated.
e Branch visit by POL BAU field team to prepare PM for new equipment delivery.
e Note Counter installation by POL Supply Chain resources.
e Provide a starter kit for each device which includes a cleaning kit.
e Counterfeit note detection packs issued including updated RBS counterfeit detection
collateral, genuine all denom bank note packs allowing branches to compare suspected
fake notes against those issued by central banks.
e Branch summary reports to be shared with programme team weekly.
e KPI's will be tracked via a monthly dashboard including metrics for, Cash transaction
corrections, Branch discrepancies, Cash pouch errors, Counterfeits and excess cash.
e Project KPI's to be summarised and shared monthly as part of both project SteerCo and
onwards to Operational Excellence SteerCo.
« Project completion report and statistics to be shared at IADG / benefits monitoring.
e Analysis and change request (additional funding) to support future enhancement to Note
Counters that extends functionality for branches with ATMs and associated benefits to
both branches and POL supply chain. The Note Counters being purchased fully support
this enhancement / future benefit.
5. Learnings from Prove Stage
The recent Note Counters trial is in process and the initial learnings are noted below:
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Activity Description Expected Outcome Measured outcome Conclusion
Perform trial of new Reduce the P&L Trial evidenced an Trial not concluded
Note Counters at 40 impact of losses on average! however it is believed
branches the pilot reduction in that the
transaction modelled in this case
corrections. remains conservative.
Comments from Postmasters during the trial so far have included:
e “It is already saving time as branch have a high volume of cash deposits.”
« “Counter easy to use and speeds up the process of counting & bagging up cash to REM
out.”
« “The machine has been used constantly since being delivered the branch takes in lots of
business cash deposits as it is set in a busy shopping mall and the machine makes cash
deposits so much quicker and easier.”
Other learnings:
e Branch Hub page now live with links to all online documentation to support the face-to-
face training and hard copy guidance sent with the note counters.
e Glory have received 2 calls to their helpline and both queries were resolved over the
phone (and training materials updated to avoid any further confusion).
e Asoftware update following the new counterfeit variant, will be implemented in the trial
branches by Glory engineers who will also be able to support with any queries regarding
functionality. .
. Purina. the trial period, two different Note Counter models were. considered.
IRRELEVANT
IRRELEVANT
device (GFS220) was consistently reliable and well received by all bar one Postmaster.
« Two branches returned / declined the Note Counters during the trial, one already had their
own device and the other advised that they believed it was increasing their workload (this
is under investigation).
“IRRELEVANT _
ATMs. As we only have} tbranches with ATMs across the network then this feature
is only useful for a proportion of our branches. Future considerations are:
o Would having fitness sorting enable CIT deliveries to be reduced and thus drive
financial savings?
o Would there be benefits from the NCR scheme? nothing has been formally agreed
at this point, so benefits are uncertain.
6. ipsice on Postmasters
savings:
«Time savings when accepting deposits from the customer — relatively small for smaller
deposits, exponentially greater saving as the amount increases.
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e Time saving when transferring cash from the till to the safe — this is likely the greatest
level of saving, as the cash is in higher amounts.
e Preparing cash pouches — if the cash to the safe has been counted by the machine,
preparing the rem pouches will be quicker (no second check) and more accurate.
Our time savings calculations are based on synthetic (perfect) timings. For many branches where
cash is counted twice, or are slower at counting, the savings will be higher (i.e. our estimates are
likely to be conservative for some branches), as evidenced by the back-office time & motion study
we performed in 14 branches last year.
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7. Financials
Specify Cost Centre codes to be used for OpEx : 112816
Is this Client Funded YES/NO?
Explanation for the amount requested in this drawdown
24/25 OPEX for maintenance ((rreevar} highlighted as a risk in commercial - banking
budget. Required to generate benefits
24/25 Remaining costs OPEX costs to be covered by utilising existing budgeted PM
support where possible but otherwise will be additional OPEX risk looked to be covered
internally where possible.
CAPEX identified and held for 24/25 as part of the change stack
Recurring Opex support/maintenance has been agreed to be within the Commercial /
Banking budget submission covering FY25/26 onwards.
Given the delay to implementation, the fe clusion for 24/25 should be considered to
be reduced to ‘0 reflect this business case submission.
Funding (eK) :
Prior
Years 24/25 25/26 26/27 27/28 28/29
Actuals
Total New Total
Request Project
“= __—_s IRRELEVANT
‘impact on EBITDAS ( tangible benefits)
Intangible Benefits
Including
Intangible _ Tangible
~.Banefite...Benefite-snin
IRRELEVANT
Total
23/24 24/25 25/26 26/27 27/28 28/29 prorat
ici
‘Trading Profit
IC2pital Expenditure (Capex)
Project Related
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costs
Cost/Benefit (tite tems) ea
Copy and past the below table into the business case submission
Values
POL Cost/ Benefit Cost/Benefit Type ge Organisation pa FY23/24 FY24/25 FY25/26 FY26/27 FY27/28 FY28/29
lent Funded Project - Resource (blank) i — E e 2
Exceptional Project -Resource (blank) i - - -
Project - Other Other I - - -
One time Capex SProject (blank) io: - - -
POL - Permanent i - - - -
Project -Other other i - - -
Project - Infrastructure other i - - - -
One time Opex Project Suppor / Maintenance and Hostin Other IRRELEVANT) ~ : :
Project - Resource (blank) f- - -
POL - Contractors i - :
SProject-other other i. - -
Recurring Capex Decrease Project -Other other Zz - . 3
Recurring Capex Increase SProject-Other other _ 7 . :
=(blank) =tblank) (blank) _ : : :
Grand Total i - - -
BENEFITS
Cost/Benefit (Multiple items) *
‘Copy and paste the Below table ito the business case submission
Values
POL Cost/ Benefit gl Cost/Benefit Type a FY23/24 FY24/25 FY25/26 FY26/27 FY27/28 FY28/29
ing Opex Decrease ‘Cost Red Non Sta a r
curring Opex Increase [New Rec Cost Non Staff - F
(blank) (biank) : i
Grand Total - F
All Business case submissions must be accompanied by the Business case model
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8. Plan on a Page
SEPTEMBER NOVEMBER DECEMBER
2864 1 18 25 2 9 16 23
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9. Assumptions
Description Owner Accepted I Category I Priority I Impact
Funding will be approved for the purchase of !=="""; note counters by Melanie Parks / Martin I Y Budget/ I High High
i . Edwards Benefits
Hardware ordering lead time is no longer than Wendy Masters Y Planning I Medium I High
/ Benefits
Delivery and installation to branches will be undertaken by POL Supply Russell Hancock Y Planning I Low Medium
Chain resources without additional cost. / Costs
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10. Benefits
Driver Benefit Category Owner Starts Ends Value (£)
Time savings when: Postmaster Soft:Cost Avoidance Martin
1. Accepting deposits from the I staffing / time Edwards
customer savings and Note: Time savings at branch
2. Transferring cash from the improved level are staff related and
till to the safe accuracy therefore within the P&L of
3. Preparing cash pouches -— if
the cash to the safe has been
counted by the machine,
preparing the rem pouches
will be quicker (no second
check) and more accurate.
each branch and would require
a conscious Postmaster
decision as to whether these
benefits will be realised, or
staff members used elsewhere.
Direct savings to POL from reduced
losses (net of maintenance opex)
across Branch discrepancies, Cash
pouch errors and Counterfeits
*see breakdown below this table
Direct savings
reduction of
current annual
losses across
Hard: Cost Reduction
Melanie Parks
Estimated reduction in transaction
correction processing and TC
generation to allow for improved
focus on aged items and other
operational effectiveness
improvements
*see breakdown below this table
POL Benefit:
reduction in
processing
related
activities
Soft:Cost Avoidance
Note: Expectation is these staff
remain within the business and
not realised saving to utilise
within network improvement
activities
Melanie Parks
IRRELEVANT
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IRRELEVANT
Strictly Confidential
I Soft:Compliance/Reg/Contract
Ross Borkett
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11, Risks
Title Owner Current Current Current I Target I Mitigation
Likelihood I Impact Score Score Date
If the hardware delivery lead time exceeds July 2024, there I Melanie Parks 3 3 9 2 30/06/24
will be a month-on-month reduction to net benefit of
The Note Counter trial of 40 branches was relatively Melanie Parks 2 2 4 4 30/10/24
limited in both scale and duration and actual benefit
savings may not be accurate however, SME analysis
suggests that the benefits are likely to be understated.
The Note Counter trial of 40 branches that was relatively Russell Hancock 2 3 6 2 30/10/24
limited in both scale and duration and there is a possibility
that technical issues may not have materialised yet.
Postmasters may reject / return Note Counters resulting in Russell Hancock 1 3 4 2 30/08/24
an excess of purchased equipment and benefit realisation
being reduced.
12). Dependencies
Item FROM this project Item TO this project
Operational Excellence incentive is supported by the delivery of this
project.
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13. Organisation
Organisational Impact
The annual staff savings estimate
Late to staff that are going to be utilised within the
business in the short-term. It should be noted that we have path clearing activities (outside of this
business case) which are due to commence from Jan-26, which will require roles over and above
those to be reduced here for investigations, network monitoring, network development, BSC etc.
Therefore, realisation of the savings would be inefficient to supporting the business delivering
operational effectiveness and path clearing readiness.
The logistics and ownership of post-deployment support is set out, at a high level, below:
e The PO Property Branch Equipment Team will maintain the asset register and the POL
Banking Team will also maintain this record (as the contract owners for the supplier,
Glory)
« The PO Property Branch Equipment Team will manage the site visits / returns /
replacements for Note Counters, with equipment returns transported through CVIT to
avoid additional costs. Faulty equipment will aim to be swapped out within 24 hours.
Engineer visits for issues with the Note Counter will be managed via Glory. The
Postmaster will contact the Glory helpdesk for support and to log requests. POL will get a
monthly service pack with Management Information to show performance.
e Should a branch decide they no longer want the Note Counter, this will be repatriated to
Supply Chain Birmingham via CVIT where the PO Property Branch Equipment Team will
undertake asset check etc. before reassigning.
« Aprocess will be defined, documented, and communicated to advise Glory for
maintenance.
«There are no additional costs anticipated for packaging/transportation pf equipment that is
transported via CVIT.
Project Resources
Role FTE I Start Date End Date
Project Management 0.5
Project Support 0.5
_
Cost (£) _
a IRRELEVANT I
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14. Governance History
This project is proceeding directly to Business Case.
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Appendix A — Approvals
STAKEHOLDER GATING APPROVAL:
The PPMO has reviewed the Stakeholder Gating SharePoint site and confirms that all
Stakeholders have given approval (or opted out) for Gate to Deliver. Guidelines provided here.
Function Role Name Date
SPO PPMO Sarah Amos Insert Text Here
FINANCE APPROVAL:
Assuring the accuracy of the finances presented in this case (cost model), the affordability (tick
one box below), the accounting treatment and impact on financial controls (Financial Control).
Function
Finance Finance Director or Michelle Evans 26/02/2024
Head of Finance
OpEx is: In Budget XI OR If, unbudgeted, is BU funded 1) OR If, unbudgeted, is approved by
OpEx Committee 1
Finance Technical Finance Daniel Ward 16/02/2024
Additional Comments
SPONSOR APPROVAL:
Assuring this case has Business support and ownership:
Role Name Date
Sponsor Melanie Parks (Martin Edwards & Russell I 26/02/2024
Hancock on behalf of)
Additional Comments
PORTFOLIO APPROVAL:
Assuring this case has been reviewed and the project is set up correctly:
Function Role Name Date
PortolioLead I Nikki James
Additional Comments
All submissions must be sent to SPO via your local Portfolio Office.
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Appendix B- Administrative Information
The following information is mandated. Failure to supply it will cause delay.
Information
Response
Portfolio
Business Unit
Official name
Operational Excellence —
Note Counters
Business Transformation
Unit O
Banking, Payments and
Transactional products 0,
Finance 1,
Business Sponsor
Melanie Parks
Commercial Products 0
Central O,
FS, IDS and POI O,
Project Manager Pete Hanley Legal, Remediation Unit & Central Commercial U1, Historical Matters D1,
Inquiry 0
NEW Snow Licence YES/NO Retail bd clo 0, Lec oO,
required?
Is the Project confidential I YES/NO Shared Services 0 Cmmrcl Pling & Strat 0, Mails, PUDO, Retail &
Branch Id. Services X
Should the PPMO be YES/NO. Strategic Platform Communications 0, People OD,
added to the Access list Modernisation (BTU) 0
Finance Business Partner I Charlotte Ukaigwe Supply Chain O coo O, Property 0,
Investment type
Cost Avoidance
Technology 1
Customer Experience (1,
Supply Chain 0,
or sub-project structure.
Delivery Date 30/11/2025
Estimated Final Go Live or End of
Early Life Support
SPO have agreed Prog. YES/NO Mandated supporting documents,
Project size (Gold etc)? Document Checked By Supplied
Business Case Model Finance oO
PID Portfolio Office Oo
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