Outsourcing for Radical Change: A Bold Approach to Enterprise Transformation

By all accounts, NS&I was actually accomplishing the bold agenda it had set forth (see Exhibit 1.9). In the National Audit Office’s first examination of the deal—just six months after it was signed in January 1999—it found that although it was too early to conclude whether the outcomes envisaged in the partnership would be achieved, NS&I had secured a very good deal with Newport Systems. With a contract of this size and scope, however, the National Audit Office would be watching to determine whether the taxpayers really had received the benefits they were promised. The results of its second examination were delivered during May 2003.

Exhibit 1.9: National Savings and Investments timeline.

The achievements that Bareau and his team had delivered in just four years after transferring its operational staff and assets to Newport Systems were:

• 176 million ($292.2 million) value added in 2001/2002, against a goal of 120 million ($199.7 million).

• Introduction of the first-ever equity-linked investment product, the guaranteed equity bond, which offers a return linked to the FTSE 100 index yet provides 100 percent security for capital.

• Establishment of a single telephone number for sales and 24/7 service with the ability for customers to buy seven different products with a debit card over the phone.

• 11.7 million call-center calls, a 57 percent increase over the previous year. Nearly 90 percent of these were answered first, and within 20 seconds, by a person, rather than a machine.

• Launch of a free lost-funds tracing service, which enabled 2,400 customers to be reunited with 3 million ($4.99 million).

• Transition of products to a common systems infrastructure.

• Adoption of a new name and modernized identity for the organization.

• Change from an ‘‘isolationist, civil service culture’’ to a market-led culture.

• Change from a complex civil service pay structure to a discretionary system with clear bonuses based on performance.

• Reduction of staff from 4,153 to 2,050 to create a streamlined, low- cost operation.

• Establishment of a working group with the governments of Canada, the United States, and Ireland to benchmark the best practice cost and service levels for public-sector operations that sell retail debt.

By the end of 2002, the transformation of National Savings and Investments had entered a new phase. Targets for the coming year were focused on extending the wins, continuous improvement, and leveraging new capabilities. Cook recognized that the market’s perception had not kept up with the pace of change at NS&I, and he was considering exactly how to unleash the organization’s power.