Executives from both companies claim that Horizon, the £900m project designed to automate 19,000 Post Offices across the UK, is running smoothly, with touch-screen technology implemented in more than 3600 local branches.
ICL says it is installing equipment at more than 300 offices a week. That's a stark contrast to the saga of problems that ended with the death of Horizon's predecessor, Pathway.
Horizon is the technology platform for the new Post Office, says John Main, sales and services general manager for the Post Office's Eastern network. "We had to do this if we were to take advantage of new business opportunities."New business opportunities made possible by Horizon include providing banking services to Lloyds TSB and Co-op Bank customers. The Post Office is also conducting trials with Barclays in selected regions, and is talking about providing front-end services for the Alliance & Leicester.
Pathway won a standing ovation when it was announced by Peter Lilley, then Social Security secretary, to a Postmasters' conference in 1996. Its aim was to computerise the Post Office's network and automate the payment of benefits to prevent fraud.
The reason behind the standing ovation? Post Office Counters, the front end of the Post Office, receives more than a third of its revenues from benefits paid over the counter. In some sub-post offices, that figure is even higher.
Since the early 1990s, that revenue had been under threat because of proposals to pay benefits directly into bank accounts. This would reduce the risk of fraud and cut administrative costs, but also reduce Post Office revenues.
Pathway offered a way for the Post Office to keep that DSS business, and was warmly welcomed by many postmasters. Not only would it revolutionise the Post Office's IT network, it would also safeguard its biggest source of business.
For ICL, Pathway represented an equally wonderful way forward: a high-profile success story that would put the company back in the spotlight just as it outlined plans to refloat on the London Stock Exchange.
In the event, Pathway was a high-profile flop - and a PR disaster. The reasons for Pathway's failure are numerous. There was dispute over the technology that would be used for the automation of benefits - ICL wanted a smartcard system, while the government favoured magnetic swipe cards.
The project was also dependent on two paymasters: the Post Office and the Benefits Agency. Each had a stake in its delivery, but the problem was that both had their own motivations and demands.
The nature of the contract also meant ICL would be paid per transaction - so, as the cost of the project soared, ICL effectively received less money.
Last year saw the Pathway saga reach not so much a conclusion as a turning-point. The plan to automate benefits payments was canned and replaced instead with a fixed-cost contract to automate Post Office Counters.
It wasn't the happiest of endings. In May 1999, ICL and the government were forced to write off more than £300m between them. There have been rumblings since that it was a political decision to award ICL the Horizon contract without putting it out to public tender first.
For the moment at least, both the Post Office and ICL are keen to dwell on the positive aspects of Horizon. It is, after all, still one of the largest such projects undertaken in Europe, and one with some unusual challenges.
The story so far
- May 1996: ICL wins Pathway contract to automate benefits delivery over a secure network for 19,000 post offices. Project delivery set for end of 1998
- November 1997: Computing reveals that ICL has moved the deadline to 2000. ICL blames changing requirements
- July 1998: The project is reviewed by the Treasury
- May 1999: The government axes the automated benefits part of the project
- 2001: Horizon is scheduled for completion.
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