Northumbrian Water benefits fully from the
company’s migration to Bacstel-IP
with Experian Payments Gateway

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Northumbrian Water Limited provides water and wastewater treatment services to 2.6 million customers in the North East and water services to 1.7m customers in Essex and Suffolk.

The company employs more than 2,500 staff and has an annual turnover in the region of £450m.

Three departments at Northumbrian Water submit Direct Debit or Direct Credit payment files to Bacs: Accounts Payable, Customer Billing and Payroll, which in turn is divided between North and South offices. Using the traditional Bacstel delivery channel, these three departments operated as wholly autonomous units, with the company's IT department responsible for all actual submissions.

As a result, with the announcement of the launch of Bacstel-IP and the requirement to implement new submission software, all three departments found themselves approached by software vendors and the banks promoting their Bacstel-IP services.

A uniform approach to Bacstel-IP

The desire to adopt a common approach to Bacstel-IP across all departments was quickly established following the formation of a working group in September 2003, led by Richard Moss, Finance Systems Programme Manager. Comprising users from each department, the working group was established to identify the company's requirements, evaluate the options and assess the impact on the business of migrating to Bacstel-IP. This working group soon became the Project Team, accountable to a Project Board chaired by the Financial Controller and included the IT Director, Head of Audit, Customer Services Manager and Payroll Manager.

The most pressing issue initially was the timescale, explains Richard Moss. "As users of the X.400 messaging service for ARUDD (Unapplied Direct Debits) and ADDACS (Direct Debit amendments and cancellations) reports, this meant our deadline was effectively the 31st March 2005. In addition, in the water industry we spend much of January through to March getting ready to issue bills to customers. So, in reality, our real deadline was 31st December 2004, not 31st December 2005."

Software selection

The search for a replacement ‘submission software' solution began in earnest with the issuing of a ‘Request for Information' to all approved suppliers listed on the Bacs web site. Of these half a dozen replied, spanning a considerable range in both functionality and price.

"We had some specific requirements", explains Richard. "We wanted to adopt a common approach throughout the organisation and we had some specific audit issues we wished to address through the migration. Resilience was also an issue and we needed a platform that could help deliver some future business process improvements such as the ability to refund customers by Direct Credit rather than the more expensive cheque run."

As a result of issuing a ‘Request for Proposal' document in January 2004, the decision to implement Experian Payments Gateway from Experian was confirmed in April. This followed an exhaustive process in which each supplier and their solution were scored against an extensive list of criteria. Northumbrian Water also ran a full-scale ‘performance' test of one of their major files on Experian Payments Gateway at Experian's' offices in Rugby.

"Experian came out on top with the highest weighted score. The decision was partly a reflection of Experian's all inclusive pricing, partly a reflection of user reaction to Experian Payments Gateway during the demos, and because we found Experian a credible and responsive company to deal with", says Richard Moss. "We also found Experian Payments Gateway to be well suited to our technology requirements - for example, the ‘client' software is able to run on our existing PCs either directly (necessary for Smartcard use) or via our Citrix servers. Why incur additional IT costs if you don't need to?"


Rather than rushing into implementation, pre-implementation workshops were held to enable both Northumbrian Water and Experian to identify any issues that needed to be addressed ahead of installation. They also provided the foundation for a realistic project plan. The implementation stage itself identified further configuration refinements. These included Northumbrian Water's need to define roles to view the detail of submitted payment files from within Experian Payments Gateway, the ability to import XML reports directly into source applications and a requirement for the solution to meet a higher audit trail standard. "Experian have always responded quickly with appropriate advice or action to help us resolve such issues and stay on track", explained Richard Moss.

Northumbrian Water submits around three quarters of a million records a month. Due to the volumes and business criticality involved, testing was paramount and throughout August 2004, with initial installation and configuration complete, a full month of parallel submissions to Bacs via Bacstel-IP and Experian Payments Gateway took place. Apart from a few ‘resubmits' being necessary when the Bacs test site was busy, all of the trial runs progressed smoothly and successfully.

Bacstel-IP issues

"Our satisfaction with Experian, and the implementation of Experian Payments Gateway, is considerable and they have welcomed our suggestions for some potential refinements and enhancements to the product in future releases. In addition we have also highlighted to our bank aspects of Bacstel-IP itself where we felt they too had more potential," comments Richard Moss.

"For instance we have had difficulties in completing the ‘end to end' testing of some XML reports prior to going live. Also, we're not aware of any Bacs user documentation for XML reports beyond the broad definition of file formats. There was also the need to issue users with multiple Smartcards if their user permissions differ from one Service User Number to another. We do however recognise that we were an early adopter of Bacstel-IP and believe our comments have been welcomed."

Business Service & Continuity

One aspect of implementing Bacstel-IP that Northumbrian Water has taken very seriously relates to business continuity and disaster recovery. There is no aspect of the entire Bacstel-IP system - including communications - that is vulnerable to a single point of failure.

Although Accounts Payable and Payroll have one day's contingency, no such buffer exists within the customer billing system - it is a business objective to ensure that customer records are as up-to-date as possible in case they need to make an enquiry. As a result, each application area has at least three routine Smartcard holders to ensure the continuous ability to submit files despite holiday, sickness and off-site absence. The company has also established clear internal principles to ensure functional separation of duties: "With around half a billion pounds flowing through the system annually, it is important to effectively implement this principle, a clear audit trail and verifiable controls," stresses Richard Moss.

Northumbrian Water has also established a retainer relationship with an established bureau that can, if necessary, provide it with fully-tested contingency services. With the bureau covering the unlikely eventuality of a software failure, a duplicate IT infrastructure off-site protects against hardware failure.

Business Process

Improvements Richard Moss is pleased that the project has been a success and will deliver tangible benefits to the business:

"Had we simply upgraded our existing system rather than ‘think afresh' to implement Experian Payments Gateway, we would have managed the migration to Bacstel-IP but gained little business process improvements. We now have a universal model across the organisation with common roles, procedures and definitions. Underneath the file submission process, everything is smoother, more professional, secure and accountable. Our internal auditors are particularly pleased with the separation of functions and duties and the audit trail is much improved.

Although not reducing the number of staff involved, we can now operate ‘paperless' with users now directly importing their payment or collection files into Experian Payments Gateway, checking it themselves within Experian Payments Gateway and then either submitting it themselves or authorising IT to do so for them. Except for the very largest files, the report confirming a file has safely arrived at Bacs is now available to users within minutes, enabling them to safely continue with other related work. Users are delighted."

The future

The adoption of Experian Payments Gateway makes potential new initiatives much easier. For example the extension to Direct Credits for customer refunds or the potential to automate the payments process to increase the flexibility either of payment plans for customers (without incurring any additional operational overheads) or supplier payment dates (to optimise discounts available and corresponding bank charges). "Experian Payments Gateway has generally proved simple, effective and reliable to use and is a good enabler for further innovation in our payments processing areas," concludes Richard Moss. "It has reduced the resistance to business process improvements and allowed consideration of further improvements downstream."

Richard Moss
Finance Systems Programme Manager
Northumbrian Water


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