Faced with a need to reduce costs and improve customer perception of its service, the U.K. Post Office (part of Royal Mail Group), in cooperation with IT services provider Fujitsu, launched an ambitious lean IT initiative that continues today, but has already yielded good results.

• Contract management was a critical responsibility for Fujitsu and Post Office, but the success of the lean IT approach relied heavily on the ability of both parties to focus on relationship management to manage change.
• Defining a problem and the relevant solution is only the first step. For companywide lean initiatives to be successful, the internal corporate mind-set needs to change under the influence of a strong top management endorsement.
• Third-party organizations in charge of delivering on-site support are likely to become very cooperative in driving down the number of incidents escalated to their level, but only if the leading provider is successful enough in shifting new work toward them and compensating for their loss of business.

• When deploying lean IT programs, involve the front-office and back-office staff. Front-end advisors deal with the business pressure points daily and can offer extremely good ideas on how to solve IT problems.
• Lean IT initiatives are likely to take time, especially if deployed in large and highly distributed organizations. Thus, the internal IT team needs to set up and communicate realistic expectations when developing a time frame for lean programs.
• To maximize the potential of lean IT, consider removing all deal/pricing aspects that can create a conflict of interest and a negative stance against any change or improvement (for example, services at a fixed price, or services paid on the amount of problems/incidents or number of resources used, regardless of the actual output).

Fujitsu and the Post Office's focus on service delivery is underpinned by lean IT and focused on cost and service delivery improvements. To achieve this while maintaining the expected focus on contract management, both parties prioritized key aspects, such as relationship management, collaboration, communication and alignment among all stakeholders.

Post Office is a separate company within the Royal Mail Group, and is the largest retail and financial services chain in the U.K., with a network of approximately 11,500 outlets and slightly more than 30,000 serving positions. The network includes a wide variety of outlet types, including:

• Mobile van transit units that travel from village to village
• Small, rural branches with a mobile kit that connects to the network
• Sub-post-offices that have one to three counters
• Larger franchise partners, such as WH Smith and other retailers
• Crown offices, which include approximately 15 to 16 key branches

All outlets are supported with a package that includes custom-built keyboards, pay stations, a printer for each terminal and a power supply.

IT services provider Fujitsu has provided a service desk to support Post Office's IT systems since 1996. Fujitsu manages all IT and support for servers as well as LAN and WAN. Post Office manages the provider that delivers telecommunications services as well as its relationship with end users. Fujitsu acts as an end-to-end integrator, handling 11,000 calls per month, and raising 2,500 to 3,000 internal incidents. The firm also coordinates 4,000 engineer visits to the branches each month.

In 2007, to guarantee the requested geographic coverage, Fujitsu decided to subcontract the IT support work/field services to a third-party organization. This change was totally transparent to customers, and to this day, Post Office and Fujitsu hold weekly and monthly service reviews to evaluate the service delivery performance.

Fujitsu and Post Office used to manage and judge the success of their relationship using conventional IT metrics, such as availability of components. Now, they agree that it is crucial to find a way to elevate the relationship to the next level, focusing on quality of service and continuous improvement. As a consequence, Fujitsu decided to support Post Office in improving the customer experience by proactively reducing the number of calls hitting the help desk, while reducing overall IT costs.

Post Office and Fujitsu decided to pursue their objectives through the application of lean IT — an efficiency-driven system based on eliminating inefficiencies — and Fujitsu's Sense and Respond approach, which is aimed at empowering customers and proactively improving service delivery performance and customer satisfaction. When Fujitsu first introduced this concept, Post Office was concerned that Fujitsu's real agenda was to strip service and cut costs. However, when Fujitsu explained the potential of its methodology, Post Office got onboard.

One of the first objectives was to fix Post Office's help line and to increase focus on root cause analysis to reduce the number of calls hitting the help desk, and, consequently, the number of calls escalated to engineers. It was agreed to start conducting user workshops with the aim of identifying the "low-hanging fruit" that could deliver prompt service improvements.

Fujitsu also involved Post Office in the process of focusing on efficiency, and began the initiative by providing training on how to achieve maximum results from lean programs. The training exposed Post Office to best practices and to the results that other Fujitsu customers had experienced.

By using problem-solving sessions and demand analysis, Post Office representatives obtained a framework to define the real value in terms of service delivery. Consequently, its focus was not on traditional IT-based service-level agreements, but rather on key performance indicators designed to measure operational efficiency — for example, aiming to reduce the number of priority calls — while measuring key metrics, such as first-time fix and repeat visit ratios. Ultimately, these matter the most to Post Office's business communities in terms of efficiency.

Between the end of 2008 and the beginning of 2009, thanks to the influence of lean IT, Post Office reported a 24% reduction in incidents per month. Furthermore, Fujitsu and Post Office share a common objective of reducing costs. This is in lieu of their previous arrangement, which was based on a fixed price to support the branches. This shift has enabled Post Office to use funds saved on back-office inefficiencies to reinvigorate front-office capabilities, such as the introduction of a portable point of sale, which enables Post Office to reach customers in rural locations that do not have local branches.

Normally, a Post Office employee with a problem would call the help desk (first level), where the call would be resolved, or, failing that, escalated to the second level. From there, if necessary, the call would go to the third level, at which point an engineer is usually dispatched. Under the current Sense and Respond scenario, focus has intensified on proactively reducing the number of calls that reach Level 1 in the first place, thereby reducing the number of (very expensive) escalations to Level 2 and Level 3. This model, which is increasingly gaining adoption in the help desk outsourcing market, is described as "shift left," or the solution of problems before they actually impact the end user (see Figure 1). So, Fujitsu and Post Office focused on Category A incidents first:

• One example was the "PIN pad refresh" problem. In the past, when there was a problem with the PIN pad, the Post Office branch had to call an engineer. Post Office wondered, "If end users feel they can do it, then how can we enable them to do so?" The answer was to create a new button function to reboot the system that would clear any blockages. The result was that the number of incidents related to the PIN pad decreased from 1,400 per month to about 800 per month.
• Another example was in the area of print maintenance. Fujitsu decided to send an engineer to the branch that was making a lot of printing-related calls and ask them to fix the problems at the source, once and for all.
• A final example was in the area of preventive maintenance. Fujitsu decided to send an engineer to the branches that were making a large number of calls. So far, this action has saved more than 500 engineering visits, driving a 56% reduction in calls logged by these branches, and saving 404 "counter hours" per month.

Another problem was the 40-hour work time that Post Office had been encountering for the replacement of NTE2000, an asymmetric digital subscriber line (ADSL) faceplate, and for rewiring extensions. Not only was this increasing Global System for Mobile Communications (GSM) costs, but also it involved multiple handoffs between various groups. By simply training Fujitsu engineers to pick up this activity, it eliminated the multiple-handoff problem, cut the time for a first-time fix, reduced the cost by £170 ($280) per incident and improved the availability of the NTE2000s. Not surprisingly, in addition to cost reductions, the switch markedly improved end-user satisfaction.

The unnecessarily high average age (time between problem opened/closed) of branch network incidents was an ongoing problem that was hurting the overall perception of Post Office's internal IT team among the individual branches. Using Sense and Respond techniques, Post Office and Fujitsu traced the problem to bottlenecks and duplications of effort among different siloed organizations, which had Fujitsu and Post Office associates chasing incidents — an awkward and expensive situation.

The solution, which cost essentially nothing to implement, was to agree with Post Office's third-party agent (which handled the ADSLs) and allow Fujitsu to become Post Office's agent for ADSLs, and to shift the entire incident-handling process to Fujitsu. This made the Fujitsu service desk communications management team the single point of ownership for these types of incidents. The shift not only reduced the age of network incidents, but also it freed up two other Post Office employees to focus on other service elements, and cut telecommunication service (GSM) costs by approximately £30,000 per month.

Another problem resolved was the management of the OBC request database for Post Office. All requests had to be inputted manually and essentially "hand cranked" into the database, which was consuming unnecessary resources and costs. This solution was obvious and straightforward: Automate the upload of the request forms into the OBC request database, which reduced the resources required, improved the process and saved £15 per change, or about £124,500 ($205,800) in savings for Post Office (to date).

Three elements in particular contributed heavily to Fujitsu and Post Office achieving their objectives:

• Relationship management and flexibility: While, as expected for a contract of this kind, contract management is a critical responsibility for Fujitsu and Post Office, the success of the deal really hinges on the ability of both parties to agree on and manage change. So far, Fujitsu has demonstrated a positive willingness to cooperate and a flexible and proactive attitude. As such, relationship management and change management are equivalent to direct contract management, not the other way around.
• Lean IT needs to involve key interfaces in the relevant business units and subcontractors: To support lean IT, Post Office focused on identifying and nurturing "lean champions" in each department. These lean champions are important allies in helping to involve the relevant people needed to support change. At the same time, to balance the reduction of work performed by subcontractors for on-site support, Fujitsu offered them new work as compensation for the loss of business suffered by engineers who were managed by the third party. As a consequence, the third party continues to offer proactive support to improve efficiency, even if it means reducing the work performed on this specific account.
• Communicating results achieved, and the future is key to gaining and maintaining internal trust: Communicating milestones, and the successes in achieving them, helped generate trust in Post Office, in that the internal Post Office IT team plus Fujitsu would work to resolve the issues affecting individual branches. Communication is becoming increasingly open and positive; front-office people working in the branches can see that similar problems have been experienced, communicated and solved in a different part of the organization.

In retrospect, what would Post Office have done differently? What did the participants learn about best practices?

• Deployment of lean IT programs should involve front-office and back-office staff: Involving the IT team is a necessary first step, but it is not sufficient on its own. People with roles at the front end have a lot of answers, as well as a wealth of knowledge regarding problems and potential solutions, derived from practical experience. Front-end advisors, who serve the general public daily, can offer good ideas on how to solve problems. As such, they should have been involved in the lean IT program right from the beginning.

• For example, the keyboards used in Post Office have a slot to swipe debit cards, as well as a chip and PIN slot. Previously, when faults occurred, Fujitsu had to send engineers to repair them, even when the problem was often simply that the slots were dirty. During one workshop, it was suggested that a credit-card-shaped cleaning device should be developed. Fujitsu did so, and a trial run in 200 branches showed that this solution alone reduced engineering visits by 20%. Post Office went from generating 700 incidents per month to 550. The impact on the front office's ability to perform tasks, and contribute to bottom-line operational efficiency and profitability, was immediate. Previously, the keyboard was supported by a two-day fix service level, while the PIN pad was supported by a four-hour fix level.

• Lean IT takes time: Expectations need to be set up in a realistic way when developing time frames for lean IT programs. Workshops are an instrumental vehicle by which to identify problems and generate solutions, but not everyone can join workshops at the same time. Hence, there are gaps and delays, which means that some initiatives need six to seven months to be finalized. Consequently, it is advisable to carefully finalize and define the process, ensuring that only relevant people work on each stage — from data collection to problem solving. Once you select the ideas to move forward, you engage the stakeholders who will be impacted by them. Once an agreement has been reached on the best solution to address the problem, you debrief. At this time, Post Office still has cases of too many big groups working on selected initiatives. As a consequence, Post Office and Fujitsu are focusing on managing resources carefully, and on identifying the right people at the beginning to ensure that things move forward as quickly as possible.
• Defining a problem and the relevant solution is only the first step: For lean IT initiatives to be successful, the internal corporate mind-set needs to change. This will begin open discussions about what is going wrong. Then it is necessary to engage the relevant people in the root cause analysis. The final and crucial challenge is to understand how best to communicate these results to the branches. This remains tricky because it is challenging to ensure that, in such a vastly distributed environment, the branches read the relevant communication material and deploy the relevant solution. As a consequence, Post Office is testing and deploying a new manner of sending messages directly to monitor screens to ensure that the messages get across. The challenge is that Post Office is not like a normal retailer with common recruiting, rules, environments and so on. Post Office is very distributed and diverse, and, as a consequence, the option to diversify communications must be evaluated.