The Post Office is looking for a supplier to provide front office IT application services worth up to £636 million over 10 years.
The procurement is to support the transformation of the Post Office following its separation from Royal Mail. As part of its long-term strategy published at the end of November, the Post Office outlined plans to modernise its business to become a modern, digital, multi-channel retailer.
After reviewing its existing supply chain, the Post Office said it has decided to adopt a service towers operating model, similar to moves by central government over the past few years. In October 2013, it appointed Atos IT Services UK as its Service Integrator and Service Desk (SISD) provider, responsible for managing the service towers.
The front office application services contract will cover customer facing transactions across multiple channels, including the Post Office’s nationwide network of 11,500 branches, website, mobile and call centre.
Fujitsu is the current provider of the Post Office’s branch IT system, known as Horizon. The system is at the centre of controversy over allegedly problematic accounting which has resulted in legal battles with sub-postmasters who claim to have been wrongly accused of fraud. A number of sub-postmasters were prosecuted as a result of the accountancy problems, which saw thousands of pounds go missing, and in some cases were jailed.
A recent independent investigation uncovered software problems in the Post Office Horizon system that led to cases of branch managers being overcharged. The Post Office cancelled these particular losses and sub-postmasters were not held accountable. The Post Office, which commissioned the investigation, claimed that the review highlights that there are no "system-wide problems" with the software, but that training issues were raised instead.
Examples of the Post Office’s existing front office applications include banking, branch accounting, branch administration, branch communications, branch support, bureau de change, cash and stock management, electronic top-up, in and out payments, postal services, retail and stock sales, management reporting, DVLA transactions and Environment Agency rod fishing licences.
Under the contract, the Post Office plans to transform its front office applications, which could involve transitioning from its "incumbent estate" of some of its current systems to the front office tower supplier.
It also wants the provider to manage the operations of the tower, and provide development, integration with devices, maintenance and support for the front office tower applications. In addition, the Post Office is seeking to acquire services including hosting and infrastructure support and management services.
“A scalable and flexible solution is required to allow Post Office to grow with customer needs and to support increased product diversity, reduced running costs and faster integration with its partners and suppliers,” the Post Office said in a tender document.
The estimated value of the contract is between £168 million and £480 million for the initial seven-year term of the contract, and up to £636 million including the optional three-year extension.
Last month, the Post Office published a tender for back office applications and network services.