3.3 NS&I recognised synergies between its culture and strategy and those of SBS during contract negotiations. Despite the difficulties faced by SBS in delivering some aspects of the contract, NS&I acknowledges that its partner has worked hard to find solutions and is committed to achieving an acceptable outcome for NS&I, for itself and its stakeholders.
3.4 Both NS&I and SBS now recognise that they seriously underestimated the influence NS&I could have on SBS's operational costs. At the start of the contract, NS&I and SBS had not moved sufficiently away from a traditional customer/supplier relationship: NS&I, did not fully consider the impact its demands could have on SBS's costs, specified what it wanted and SBS delivered it. For example, NS&I does not now require all the management information reports specified in the contract. NS&I and SBS have worked together to redesign the format of management information reports since the start of the contract and although NS&I is demanding less management information than originally specified, it considers the data it receives to be more strategic and useful.
3.5 NS&I's approach to the relationship changed because it realised that there was a need to take responsibility for the costs of the business, issues with transferring products to Thaler and a real risk of qualified audit opinions on its product accounts. It also recognised that, if at the end of the contract the operation is to be low cost, sleeker and more efficient, it must change its behaviour and share this responsibility with SBS.