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Mastek / The Child Trust Fund (CTF) Case Study
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Systems for administering the UK government’s Child Trust Fund had to be built in less than 12 months, they had to operate in a low margin business, and had to be able to scale and adapt. Capita, the business process outsourcing provider with responsibility for administering the Fund on behalf of a number of providers, turned to Mastek for IT support. The result was not just a project delivered on time and in budget, but the deepening of an excellent working relationship.
In April 2005 the Child Trust Fund was launched in the UK. This government programme will provide all children born since September 1st, 2002, with a £250 endowment as the basis for a fund to build up over the first 18 years of the child’s life. Coupled to incentives for families to make top-up savings, the aim is that at that age, these young people will have a ready resource to support them as they move into adulthood.
High profile bids
Perhaps the key driver to this partnership was when The Children’s Mutual carried out a competitive bid in which Capita Life & Pensions Services, part of The Capita Group, was appointed as their business process outsourcing provider of choice. Capita’s pedigree in the private as well as public sector is long standing. Since the mid-1980s, the group has grown significantly and today has over 23,000 employees at more than 200 offices across the UK and Ireland.
In just 12 months, the administration of the CTF applications had to be ready and running from what was in effect a greenfield site and prepared for its unique customers, the 670,000 children born each year in the UK. Moreover, the CTF is subject to the so-called Sandler rules: named after the eponymous government review, this states that any such product must be charged capped at 1.5 per cent. In other words, the service providers must be able to work to extremely tight margins.
Capita now supports end-to-end administration services for CTF accounts, including policy administration, call centres, and the management of customer relationships. Capita has also extended the development platform to other customers in addition to The Childrens Mutual.
However, behind Capita lies another partner, namely Mastek, the global software solutions and integration services provider. Capita had already been working with Mastek for 10 years on various software projects. Since Mastek also embraces expertise in IT applications for the insurance industry, it was natural that the company should be brought on board to deliver the IT system for the CTF.
Economies of scale
‘The challenge in the Life and Pensions business is that there is no magic wand when it comes to implementing systems,’ explains Bob Puzey, Capita Life and Pensions’ Services IT Director. ‘Even if company’s buy off-the-shelf products, they rapidly become so tailored that they might as well be bespoke. That is just the nature of the beast.’
Puzey realised that Mastek’s Elixir IT platform would provide a good starting point for the low margin business it was taking on. ‘The vital issue for us is to develop a proposition that readily scales so that any customer can realise the necessary economies,’ Puzey continues. ‘When it comes to IT, this means consolidating onto a modern well architected IT platform.’
Puzey highlights several elements that are critical to ensuring the Sandler cap is met. First, the architecture allows IT systems to be deployed in separate layers: the front end is distributed over the web, meaning that it scales well over any geography; whereas the back office is centralised in one place, essential for effective security and performance, and efficient management and development. ‘All in all, this makes for a low cost of ownership,’ he says.
Second, the platform supports component based design. This means that applications can be deployed piecemeal, or from the customer’s perspective, they can outsource exactly the elements within a system that they wish to – no more nor less. ‘This is also key to developing the economies of scale,’ Puzey explains. ‘As the business process provider, we can supply customers with exactly the business processes that they want, fully customised, and at the same time it can be managed in the same way for us.’
The third element concerns the ability of Elixir to integrate with other platforms. This is important because business process outsourcing is not done overnight. Maintaining continuity of service and managing business risk for our customers means being able to gradually move to the outsourced processes, which in turn means being able to move fit systems together during the transition process.
‘Others are trying to do what Mastek does but the difference between them is that Mastek has a much broader range of applications,’ Puzey says. ‘Again, this is important for us so that we can build in the economies of scale, whether we are handling pensions or the CTF.’
A greenfield site
The CTF operation was built from the ground up. Capita broke the build down into several steps, such as describing processes, setting performance metrics, and designing the front end. ‘In many ways, the IT piece is the final step,’ Puzey says. ‘The technology must support what the business operation requires. So we first ask what we want the processes to look like and then ask what Elixir can do and how it can be adapted.’
Consider, for example, the design of the forms to be used by customers. They are a critical element in the whole operation because in order to work to the tight margins of the business, the handling of forms must be automated – so-called straight through processing – which in turn requires forms to be transparent to customers and systems alike. ‘We use character recognition technology that feeds into a workflow system. The net result is that the system can process anything from a policy application to a change of address without manual intervention,’ Puzey explains. ‘In fact, the Elixir platform could be configured to do this with relative ease.’
The timescales that Mastek had to work to were tight too. Capita first instructed Mastek in April 2004, just 12 months before launch. Moreover, at that point, the Government had yet to specify all the details of the CTF, and so, with Mastek, Capita had to be able to respond to the evolutions in what was required. ‘We were also building the office from the ground up,’ adds Puzey. ‘That includes hiring staff and training them. So you can imagine there were a lot of variables in the air at any one point.’
Online in 12 months
However, by August 2004, Mastek had begun testing the basic functionality. In December 2004, a second round of testing included investment and policy activity. And by January 1st, 2005, the system was online – ready for the April 5th launch. Since then, a third piece has been put in place, the elements that manage the funds over the complete lifecycle.
‘We had challenging moments,’ admits Puzey. ‘That much is inevitable, given that some bugs always needs fixing and a certain amount of functionality cannot be anticipated from the start. But the fact that these all passed is a credit to the teamwork by all parties involved.
In fact, Puzey says that the speed with which they were able to move from start to finish would have been pretty much impossible five or so years ago. ‘The methodology and style of work we deployed would have been very rare then. For example it was important that we shared staff – some of ours went to meet the Mastek coders, and we had other Mastek staff on site throughout the course of the project. This allows information to be continuously shared and relationships to be built – vital on a project like this.’
Key differentiator
At the time of writing, the platform has more than 130,000 accounts being administered on it, a number set to rise to rise significantly as the numbers of parents using their CTF vouchers increases. In three years, the total number of CTFs being managed on the platform will exceed 1 million.
The relationship between Mastek and Capita in this area is likely to grow in the future. For one thing, the CTF is only the first of what will probably be many Sandler products initiated by the UK government: having completed one, Capita Life and Pensions Services will be well placed with a core proposition that can be adapted to other low cost, high volume operations. ‘We want to build on the work done for the CTF and keep developing it,’ Puzey says in conclusion. ‘We can see ourselves using this type of system in a number of future operations. Indeed, I am clear that Mastek will be invited to bid for this type of financial services product in the future.’ |
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