BACS has a unique position within the Financial Services Industry. It is the world's largest Automated Clearing House wholly owned by the Clearing Banks and Building Societies. It provides a centralised service.of Electronic Funds Transfer between the Members who, unusually, are also its primary customers.
The company was formed in 1968 as the Inter Bank Computer Bureau and renamed in 1972 as Bankers Automated Clearing Services. In 1980 it formally adopted the acronym BACS as its registered name.
BACS has been encouraged to expand its clearing service consistently each year. The first transactions accepted were Standing Orders. In 1970 Direct Debits were added and these were followed in 1972 by the introduction of Customer Credits or Pay Files.
Initially BACS Systems could only accept payments on 0.5 inch Magnetic Tape or Paper Tape. Other input mediums such as cassette and diskette were added. The most notable addition, however, occurred in 1983 when a Telecommunications Input Service (BACSTEL) was launched. This allowed Users to transmit items to BACS using either the Public Switched Network or, if volume and speed of transmission were significant, leased lines. Today BACSTEL accounts for over 80% of all submissions and over 50% of the 2.25 billion items processed annually by BACS.
Further extensions to the product services, in conjunction with developing technologies, are being considered. An example of this has been the IBDE contract (a cheque reconciliation settlement system) awarded to BACS. This has involved the establishment of a high speed network, managed end to end by BACS, linking the UK payment clearing organisations.
Like many other companies within the Financial Services Sector BACS is undergoing significant change. The change is influenced by the need to:
Within this environment BACS has set itself the objectives of continuing to be successful whilst establishing itself as a Total Quality Company.
This requires a different culture and a new mind-set on how the business is managed. In particular this has demanded new emphasis on the reporting of results, their analysis and interpretation for subsequent actions. To achieve this, new performance measurement systems have been introduced.
BACS high level business processes were defined, agreed and prioritised in March 1995. Our plan is to map from beginning to end all of these and develop new processes that meet our future business needs. This year, significant changes in the form of new mainframes, restructuring of the systems architecture and expansion of network management tools are scheduled.
To achieve these objectives a number of initiatives and process reviews have been added to the existing overall activities. This extra effort has had to be achieved whilst 'business as usual', using core competencies, continues without failing.
Three processes have been analysed in sufficient detail to identify where performance improvements can be achieved. This was achieved by setting up cross functional process improvement teams under a "process owner" for each business process. Quick wins were identified to provide early pay back. The owner is accountable for delivering a new process that meets the needs of its customers. The team have to understand the process boundaries, what is in the process and what is outside.
At several stages during the re-engineering, a more detailed and rigorous analysis of the processes became necessary. At these points, process mapping and simulation were used to describe what is happening at present and to explore alternative options.
The tools and techniques used to analyse a process depend on the characteristics of the process, but have included:
A communication framework has been agreed and it is the responsibility of the team leader to ensure that the milestones are adhered to. It is recognised that it is impossible to use too much communication, the messages however should be simple and honest with follow up briefings supporting the initial statement.
We have learned from implementing change that transforming a business revolves much more around the question of mission, strategy, leadership style, and corporate culture than around issues such as systems, policies, procedures and operational practices. It is essential to recognise that the business remains operational whilst the process re-engineering takes place.
In summary we have realised that looking at processes and everything that follows from this approach is not a 'programme' or something imposed. It is seen as a permanent shift in how we all think about our work. It represents an important step towards our Corporate Goal - "A self sustaining quality improvement culture".
Promoting the necessary changes in behaviour and the development of skills and competencies are high on the list of supporting requirements. Equal emphasis is however placed on performance measurement. To this end the European Foundation of Quality Management Framework is used as one tool to facilitate the measurement of our progress.
Since 1993 the European Quality Award (EQA) model, has been the basis on which many of the individual initiatives undertaken within the company have been justified and positioned. In 1994 the first use of 'Self Assessment' using the EQA model was attempted. Six individuals were externally trained and with the help of managers and staff from across the company a review of all nine criteria was carried out. This information was supplemented by data from the annual Staff, Customer and Supplier reviews (all three of which were introduced in 1993). Two years' date trend analysis has been particularly useful in measuring progress.
Outputs from the Self assessment process were considered by the Senior Management Group and prioritised areas for improvement agreed. This produced a plan for 1995 which focused on Leadership, Process and Measurement. This year we are just commencing our second review and again our performance and progress will be assessed, areas for improvement re-focused and new priorities assigned. This is intended to become an annual activity with output from the process forming a major input to the Quarterly Strategy Review Forums.
An additional performance measurement tool which has been in use for 6 months is the Balanced Scorecard. At the highest or Corporate level the scorecard is intended to be able to measure progress against strategy. It contains a deliberately low number of key measures in each of the four quadrants. In addition we encourage maintenance of lower level scorecards (often divisional/departmental) for reporting measures not considered key (as in the Strategic sense). They are used by managers within the organisation to measure performance and help determine personal objectives.
The Corporate level scorecard should encourage thought and debate about the relevance of the strategies in place, what amendments should be made and what new ones should be added or where appropriate replace existing ones. This aspect is intended for use by the Executive and Senior Management. They are expected to primarily focus on interpreting the Corporate Scorecard Interrelationships and the appropriateness of strategy measures that support the corporate objectives. From this aspect other benefits are also expected to be derived. In particular a heightened sense of team working should result from considering issues that transcend Divisional responsibilities. This in turn helps with the understanding and appreciation of how the overall team role required will assist in the management of change. However this whole area is one in which we have very limited experience to date.
Each level of Scorecard is maintained using Microsoft Excel in a stand alone manner. At present there is no ability to drill down between scorecards or to lower levels of detail. The role of EIS and the use of Data Warehousing in this context are under consideration. Such a facility should give the impetus to centralising the reporting of corporate data (replacing voluminous paper reporting) and through the elimination of the need to maintain duplicated databases (often through transcribing or re-keying existing information.)
The scorecard whilst essentially a strategic performance measurement tool is living in the sense that it remains iterative and requires regular review and challenge of the relevance of the measures it contains.