4.11 NS&I expected to make minor variations to products and channels which would not attract a charge. In the event, many of the changes NS&I considered variations were actually quite complex and required significant work from SBS. NS&I was also designing quite complex products without considering the consequences on SBS's operational costs.
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| Summary of Key Performance Indicator (KPI) review | ||
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| KPI amendments Reduction in the overall number of KPIs from 37 to 23. N.B. In April 1999 there were 42 KPIs but some of these have now ceased. |
| Rationale for change NS&I has merged a number of KPIs ensuring that overall, SBS is required to meet the same standards. For example there were previously four separate KPIs for sales. Targets for responses to customers a) buying directly, b) through an Agent, c) over the phone, or d) making general sales queries. NS&I has merged these into one sales KPI while ensuring service to customers is maintained. |
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| Extension of the process time for specific processes within KPIs for the period up to 1 January 2004. |
| NS&I has relaxed some KPIs for a temporary period to allow SBS to manage further process changes required to achieve the full business transformation. |
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| Reduction in the performance deductions of Platinum and Silver KPIs. |
| Potential performance deductions for some KPIs bear no relation to potential loss incurred by NS&I or HM Treasury or actual deductions made by NS&I during contract period. |
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| Reduction in the escalation of performance deductions for repeat failures. |
| Escalation for recurring failures particularly on Platinum KPIs deemed out of step. Again changed to reflect real liability faced by NS&I and its stakeholders. |
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| Source: NS&I. |
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4.12 NS&I felt this was unfair and that they should pay a fair contribution to these development costs. NS&I and SBS, therefore, agreed definitions for product and channel variations, product and channel enhancements and new products and channels to add clarity to the existing contract. They also agreed SBS's cost liability for any variations, enhancements or new products and channels as shown in Appendix 7. The new definitions may result in increased or decreased costs to NS&I depending on actual development costs and the scale of the change. The aim is jointly to develop low cost enhancements costing ideally no more than £300,000. If costs exceed £300,000 NS&I is liable to share the excess. For the development of low cost products, the aim is jointly to develop them within £600,000 and ideally for less than £1 million. If costs exceed £1 million, NS&I will share the liability with SBS. The arrangements incentivise both partners to design products that are less costly to deliver and operate on an ongoing basis.
4.13 The agreement also clarifies contract terms on other product-related issues such as product connectivity, product closure, fundamental product changes and overseas transactions. The agreement allows NS&I to make milestone payments to SBS for the introduction of new products and other services, which can smooth the financing requirements for SBS and decrease the overall costs to NS&I.