The infamous 1996-1999 Pathway project aimed to computerise the
nation’s post offices and tackle benefit fraud. But 18 months
later, after losing millions and destroying reputations a credible
IT project has emerged.
It was one of the largest roll outs in Europe, and, despite its
complexities, it is now running smoothly, on time and to
budget.
A National Audit Office report stated that up to £1bn of
taxpayers’ money was wasted on the aborted attempt to introduce a
swipe card system. But, even today, the Post Office refuses to call
this a disaster.
In a written response to Computer Weekly, the Post Office
said, “IT projects are complex and difficult to forecast
accurately. It is important to maintain a flexible and realistic
approach to planning and targets throughout the life of a project.
Judgement about whether the project is a disaster should be based
on if it works when installed.”
It is true the multi-million-pound swipe card system worked
successfully, but only in trials. The fact remains that the system
was never installed in post offices. Instead it was stopped. By
anyone’s standards, this was a disaster.
At a hearing of the Select Committee on Trade & Industry in
July 1999, two months after deciding to cancel the swipe card, and
causing a massive monetary loss, three cabinet ministers leaned
heavily towards blaming the supplier, ICL Pathway, for the
disaster.
But the mud stuck. It didn’t help that the scheme had become
known as Pathway since the core supplier was formed specifically
for the project. The real contract name was BA/BOCL. ICL Pathway
did well to keep its head up as the accusations raged and
politicians dived for cover.
But it had little choice. Not only did the company owe its
existence to the project, it had no power to prevent government
ministers from removing the element of the deal that would generate
profit. ICL Pathway would have made money on each transaction by a
swipe card.
The supplier did have enough contractual clout to ensure it led
the refocused and relaunched project to computerise the UK’s post
offices, following Pathway’s demise. The new contract is worth
about £900m up to March 2005. ICL Pathway makes money depending on
the number of computerised post offices that go live. The project,
with the swipe card replaced by a smartcard platform, is known as
Horizon.
Liam Foley, business development director for ICL Pathway, has
been involved with Pathway and Horizon since their inception. The
branding of the aborted project is a thorn in his side.
“The benefits payment card project was not cancelled for
technical but for policy reasons. Every time somebody says Pathway
was not working, it grates,” he said. “The idea that Pathway is
dead and Horizon is alive is wrong. The project has always been
known as Horizon.”
Language aside, Foley is happy to move on from the past. He is
proud of how ICL Pathway is progressing. Today, it is one of the
largest and most complex IT projects in Europe.
Post offices are spread throughout the UK. The project is now
going live as far afield as Shetland and Orkney. Post offices also
come in all shapes and sizes, permanent or temporary, and employ
72,000 people. Getting the whole system functioning as one,
computerising services with colour touch-screen intuitive
technology, and training all staff, is a major challenge. Not least
co-ordinating it all to hit the deadline of spring 2001.
ICL Pathway has 600 people working on the project alongside
approximately 1,000 other staff from sub-contractors and the Post
Office. To convert a post office from manual to computerised
processes and retrain staff can take up to 38 weeks. Some are
transformed individually, others in regional clusters.
More than 300 post offices are converted every week. This is an
average of one terminal every five minutes and one branch every 12
minutes. Almost 72% of the network is now automated, representing
13,109 live offices, 29,900 counters and over 32,200 personnel.
Computerisation is intended to make all post offices more
efficient and effective, but it is also meant to offer new services
such as charging of gas and electricity smartcards, online voting
and network banking. Such applications could save the village post
office, which has been long threatened with extinction.
Despite the enormous task, ICL Pathway is ahead of schedule on
implementation. But is this because the company can see the end to
a project full of woe with years of grief?
“Far from it” said Foley. “We’re very happy to be involved. We
see the important contribution it can make to delivery of modern
government. Anyway, ICL Pathway will continue afterwards as we’re
operating the system.”
The greatest difference between the Horizon project now, as
opposed to under the Pathway label, is that there is now only one
contract between ICL Pathway and the Post Office. Previously, there
had been three. One with the Post Office, another with the Benefits
Office and one with both.
“It was a nightmare,” said Foley. “We had two customers with
conflicting objectives. It hit problems no-one else had.”
Surviving the bruising of the first contract and maintaining
enthusiasm for the second has to be admired. But Foley is clear on
the hard lessons learned.
“Never has a contract with two customers, and clarifying their
requirements in a business sense up-front been achieved. Ensure
what they are asking for will achieve what they want,” he advised.
“I would recommend others to have a period of time at the start of
a contract. This is to ensure requirements are understood, and
drawn up in business terms.”
Foley added, “Shared risk management is also an important
contractual clause.” ICL Pathway has applied its lessons to the
wider ICL Group. The parent company is starting a set of projects
and programme management methods and standards. It dictates how it
interacts with customers from beginning to end. From painful
experience, Foley advises honesty, commitment and openness when
negotiating contracts.
He added, “Our relationship with the Post Office has matured.
We’re committed to its future. The ability to walk away is the most
challenging. But I’m tremendously pleased I’ve worked with it. I
think it’s absolutely fantastic now.”
History of an IT disaster:
- May 1996: ICL beats off competition from IBM and
consortium including Unisys and Barclays. It lands the £1bn
contract to modernise benefits systems and automate 18,500 post
offices
- February 1997: ICL, the Post Office and the Benefits
Agency agree revised timetable
- August 1997: DSS ministers tell Treasury they are
“extremely concerned” about delays
- September 1997: PA Consulting commissioned to review
project after “consistent and chronic slippage in delivery
dates”
- January 1998: Trade & Industry committee is
concerned about delays
- March 1998: Ministers call for second independent report
on project, led by Adrian Montague
- April 1998: Department of Trade & Industry denies
problems and says “subject to successful completion” of trials,
“national roll-out would start in April 1999 and be completed
before the end of 2000”. Post Office takes over line
management
- July 1998: Montague committee reports, supporting PA
Consulting's findings. It says the project could deliver by the end
of 2001. But not without improved management and “uncertain
cost”
- September 1998: Graham Corbett, deputy chairman of the
Monopolies & Mergers Commission, is appointed as
troubleshooter. He is ordered to produce a third report
- October 1998: Deadline for live trial of system is
passed
- November 1998: Secretary of state, DTI, Peter Mandelson,
admits delays. He says he is “confident deadlines would be
met”
- December 1998: Post Office Counters and ICL agree
restructuring of project with both sharing losses. Government
blocks the deal saying it contradicts findings of the Montague
report. Minister Ian McCartney tells Trade & Industry Select
Committee the magnetic strip card project is “critically important
to the future of the Post Office”
- January-May 1999: ICL continues to develop the project.
The Benefits Agency tells the Government it wants to move directly
to automatic credit transfer. Treasury officials study
alternatives
- 25 May 1999: Stephen Byers announces the end of the
payment card scheme in favour of paying benefits through banks from
2003. ICL signs a new heads of agreement contract. As part of
revised plans, ICL will deliver a secure smartcard-enabled
electronic retail platform to all Post Offices. The Benefits
Agency, formerly a client of Pathway, is struck out of the contract
altogether
- September 1999: A Commons committee report concludes the
project was “blighted from the outset” and lists a catalogue of
errors