Proposal for the Integrated Single Financial Environment

© NHS Shared Business Services Ltd Page 1 of 48 17/07/2012 In Commercial Confidence

Proposal for the Integrated Single Financial Environment for the NHSCB and CCGs

January 2012


Contents

1 Management Summary ....................................................................................................... 4

1.1 Introduction ............................................................................................................................ 4

1.2 The Integrated Single Financial Environment (ISFE) ............................................................. 4

1.3 Commercial Offer & Commercial Benefits ............................................................................. 6

1.4 Overview of Key Risks and Planned Mitigation ..................................................................... 7

2 NHS SBS Data Management and Information Security .................................................... 8

2.1 Information Governance Assurance Framework (IGAF) ........................................................ 8

2.2 Information Security ............................................................................................................... 8

2.3 Business Continuity ............................................................................................................... 8

3 Scope of Service .................................................................................................................. 9

3.1 Information Technology ......................................................................................................... 9

3.2 Scope of Oracle Applications ................................................................................................. 9

3.3 NHS SBS Finance & Accounting ......................................................................................... 11

3.4 Purchase to Pay (P2P) including e-Procurement ................................................................ 11

3.5 Order to Cash (O2C) ........................................................................................................... 15

3.6 Accounting to Reporting (A2R) ............................................................................................ 18

4 Implementation Plan ......................................................................................................... 24

4.1 Introduction .......................................................................................................................... 24

4.2 Project Assumptions ............................................................................................................ 24

4.3 Implementation and Timeline ............................................................................................... 25

4.4 Programme Governance ..................................................................................................... 27

4.5 NHS SBS Resourcing .......................................................................................................... 28

4.6 Obligations of NHSCB ......................................................................................................... 28

4.7 Key Risks and Mitigation ..................................................................................................... 29

4.8 Implementation Summary .................................................................................................... 30

5 Charging Mechanism and Implementation Charges ...................................................... 31

5.1 The Contract ........................................................................................................................ 31

5.2 Joint Governance ................................................................................................................ 31

5.3 Charges for Implementation and Service Charges .............................................................. 31

5.4 Charging Methodologies ...................................................................................................... 31

5.5 Variable and Committed Charges ........................................................................................ 34

5.6 Service Charges (1 April 2013 – 31 March 2017) ................................................................ 36

5.7 Liquidated Damages Delays to the Implementation Programme ......................................... 36

5.8 Termination as a Result of Failure of the Health and Social Care Bill Being Given Royal Assent ................................................................................................................................. 36

6 Summary ............................................................................................................................ 38

7 Commercial Statement ...................................................................................................... 39


8 Appendix ............................................................................................................................ 40

8.1 Assumptions ........................................................................................................................ 40

8.2 Implementation Plans .......................................................................................................... 43

8.3 Financial Glossary of Terms ................................................................................................ 43

8.4 NHS SBS Background Information ...................................................................................... 45


1 Management Summary

1.1 Introduction

Equity and Excellence: Liberating the NHS sets out a Commissioning Model for the NHS; at the heart of these

proposals is the development of Clinical Commissioning Groups (CCGs), supported by the NHS Commissioning

Board (NHSCB). Subject to the Health and Social Care Bill the NHSCB will come into operation by 1 October 2012

and CCGs by 1 April 2013 and will have the responsibility for the £80bn spend on healthcare across England. The

Commissioning Support Transition Team has been working with pathfinder CCGs, PCTs and SHAs to look at how

best to implement the new commissioning support functions and they have identified that a common single finance

and accounting system would be the most effective and efficient way of being able to control costs and risks i.e. one

national finance system run as a shared service across the NHSCB and CCGs. In July 2011 this proposal was given

the acronym ISFE (Integrated Single Financial Environment). This system needs to be operational by 1 October

2012 (for the NHSCB) and able to support up to 230 CCGS by 1 April 2013. As both the NHSCB and the CCGs will

be new organisations there is a challenge to implement a new financial system across the entire commissioning

landscape in a very short timeframe.

The recently released Operational Framework states that each CCG will have a management budget of £25 per population head. The Commissioning Support Transition Team has provided guidance to the CCGs around the use of Commissioning Support Organisations (CSOs), including the recommendation that CSOs should be used to provide back office support functions to CCGs. It is expected that there will be up to 35 CSOs providing services on behalf of the CCGs and they will be hosted either by the NHSCB or a CCG. Those CSOs hosted by the NHSCB are expected to become independent organisations by 2016. Implementation of ISFE will enable CSOs to support multiple CCGs and achieve economies of scale by taking advantage of the single platform.

Currently NHS SBS provides a Finance and Accounting (F&A) service to 50% of the PCT / SHA community; this

proposal details how NHS Shared Business Services (NHS SBS) can provide the Integrated Single Financial

Environment (ISFE) to support both the NHSCB and the CCGs and how the implementation challenge can be

managed.

1.2 The Integrated Single Financial Environment (ISFE)

The NHS SBS ISFE proposal uses the standard NHS SBS Oracle Release 12 platform to provide a common accounting platform with a single Chart of Accounts (CoA) and standardised processes and reports. This single platform will promote best practice finance processes within the commissioning community and give the NHSCB, the Secretary of State for Health and HM Treasury confidence in the financial governance of the Commissioning Model. The CCGs will be responsible for commissioning healthcare on behalf of their local population and will become statutory bodies from 1

April 2013 following an authorisation process. As a statutory body each CCG will be required

to complete and submit financial accounts to the Department of Health and therefore require their own ledger (set of books). It is assumed that CSOs will be accounted for as cost centres within their host organisations ledger and therefore will not require a separate ledger of their own. In order to provide the ISFE NHS SBS will create a clone of its existing Oracle Finance and Accounting (F&A) platform and the CoA coding to meet the specific needs of the commissioning community, the existing financial processes will remain the same as those currently used by 50% of the current PCT and SHA community and the scope of the service will remain the same.

NHS SBS Service Provision

Independently benchmarked as world class by Hackett and winner of two National Outsourcing Awards in summary the NHS SBS F&A service provides: Management Information and Reporting The reporting service is flexible and reliable, delivering management information using leading edge reporting tools.


Purchase to Pay NHS SBS provide a comprehensive service, from raising electronic requisitions, generation and despatch of purchase orders through to invoice payment and e-Procurement which enables clients to realise significant benefits through provision of intelligent information, procurement dashboards, analysis and modelling tools and price comparator reports. General Ledger and Financial Accounting The General Ledger includes the full integration of the sub-ledgers and the management of standard interface gateways, as well as a comprehensive Control Account reconciliation service. Cash Management NHS SBS work in partnership to improve client‟s cash positions. NHS SBS provide management of all standard banking operations including commercial bank accounts, reconciled daily cashbook balance, control account reconciliations, management of payment runs, cash receipting and allocation and short term cash flow forecasting. VAT Services The NHS SBS VAT experts provide specialist advice on all aspects of VAT and preparation of the VAT returns for client approval through timely VAT checking. Accounts Receivable The comprehensive debt management service provides expertise through a team of experienced credit controllers to enable clients to achieve positive improvements in their cash flows through reduction in days sales outstanding, minimising exposure to bad debts. The NHS SBS service is independently audited and has achieved SAS70 accreditation in each of the previous five years (and is currently being audited against ISAE3402) and has achieved an independently validated and approved IG score of 96% with a Satisfactory rating for its Information Governance Statement of Compliance. Implementation Plan The NHS SBS Implementation Team uses Prince2 methodology and has undertaken over 200 projects to create sets of books for individual clients since 2003. This represents a highly experienced and skilled team to manage this complex and critical implementation programme. The challenges associated with this implementation are mitigated by two important factors. Firstly it is assumed that the NHSCB and the CCGs will have no historical data (known as “green field”) to transfer as they are new organisations. Up to 230 CCG sets of books will go live on 1 April 2013, therefore our standard implementation methodology has had to be adapted to meet the challenge. The emphasis moves from that of training in the systems and checking the historical data being transferred to a very large scale training and education programme in how to use the system and processes and the Management Information tools. Even though the system being rolled out is proven and currently being used by a large population of the NHS the creation of a new commissioning landscape and target operating model means that very strong programme management and change management skills will be required from both the NHSCB and NHS SBS. Secondly NHS SBS currently provides F&A services for 50% of the commissioning landscape and can therefore conservatively estimate that 40% of the CSOs will be staffed by former NHS SBS client staff undertaking activities similar to their current ones although their roles may be different. NHS SBS has planned to deliver full training to all CSOs regardless of whether they are existing clients or not in order to ensure best practice is refreshed, however, familiarity of CSO staff with the NHS SBS system significantly lessens the change management required for the implementation and may well reduce the training requirement. On this basis the key aspects of the Implementation Plan are:

Implementation Project Teams based around CSO geography delivering a service to CCGs within region

Project Boards to monitor progress including a joint NHSCB / NHS SBS Governance Board

IT Readiness to ensure NHS SBS connectivity to each CCG site

Static data to be collected from legacy PCTs from 1 April 2012

Each set of books to be created in three phases o Skeleton set of books created o Common data loaded o Organisation specific data loaded


Training will be delivered to the CSOs as the primary end-users of the Oracle system. Training will include “Train the Trainer” training to enable the CSOs to provide training to the CCGs they support

Where a CCG does not achieve authorisation prior to 1 April 2013 the set of books will be managed by the NHSCB, this does not impact on the implementation plan; similarly if the CCG is only partially approved

The NHSCB will go live on 1 October 2012 with minimal staff in post, it is therefore acknowledged that there will be further training requirements needed for this organisation after 1 October and this is currently scheduled for March 2013.

Dedicated on-site Post Implementation support for 6 weeks from 1 April 2013 in all the CSOs and the larger CCGS.

NHS SBS will need to recruit additional staff in order to resource this project and we will look to our trusted third party partners including Oracle. NHS SBS would also like to consider with NHSCB seconding staff from PCTs / SHAs to assist, thereby increasing their knowledge of the system and ability to train others. In order to train the additional resources the recruitment process for key positions has already started. The following table gives a high level overview of the expected timescales and milestones for the ISFE project: ISFE Key Milestones Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13

Programme Governance Set Up 31-Jan

CoA Definition Completed 29-Feb

Resource Plan Confirmed 29-Feb

PMO Recruitment Completed 01-Mar

Training Strategy Agreed 27-Apr

IT Project

IT Development Platform Built 20-Mar

UAT Environment Built 13-Apr

UAT Testing Complete 27-Jul

IT Production Platform Built 08-Aug

Training Environment Completed 21-Aug

BI Development Complete 10-Sep

BI UAT Complete 24-Sep

IT Systems Live 01-Oct

IT Project Closed 17-Dec

NHSCB Project

NHSCB Set of Books Built 14-Aug

NHSCB Implementation Activity Complete 26-Sep

NHSCB Training Completed 28-Sep

NHSCB Readines Assessment Done 28-Sep

NHSCB Operational 01-Oct

NHSCB PIMs Delivered (2 Stage) 12-Nov 13-May

NHSCB Project Closed 31-May

CCG Project

CCG Static Data Collect Complete 04-Jul

CCG Data Cleansing Complete 28-Aug

CCG Set of Books Built 26-Oct

CCG Connectivity Completed 31-Jan

CCG Data Load Completed 26-Mar

CCG Implementation Activity Completed 29-Mar

CCG Readiness Assessment Done 29-Mar

CCG Training Delivered 30-Mar

CCG Go Live 01-Apr

CCG PIMS Complete 13-May

CCG Project Closed 31-May

By following this implementation plan NHS SBS will be able to mitigate the risk of implementing a new commissioning landscape by 1 April 2013.

1.3 Commercial Offer & Commercial Benefits

Contract Terms The contract will be between NHS SBS and the NHSCB. The contract will be based on the existing NHS SBS Framework Agreement and its terms and conditions. The contract comprises an initial 6 year term, with a non chargeable break option on 31 March 2016.

Service Charge NHS SBS is pleased to make the following offer based on the Assumptions and Charging Mechanism outlined in this document and detailed in the Sections 8.1 and 5 respectively. The Implementation Charges are also detailed in Section 5. An overview of expected charges is detailed below.


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Commercial Process and Dates This offer is made under the remit of the OJEU process that lead to the creation of the NHS SBS Framework Contract and is contingent on the contract being signed no later than 30 March 2012. The service commencement date for the NHSCB is 1 October 2012, and the service commencement date for the CCGs is 1 April 2013.

NHS SBS Licence Fee The DH has previously returned its entire licence fee payment from NHS SBS to the Joint Venture customers. This has meant that in each of 2010 and 2011 in excess of £1m was distributed to the NHS SBS client base in proportion to their share of the Joint Venture‟s revenue. It is expected that this policy will continue and will apply to the Commissioning landscape with the licence fee payment being returned to the NHSCB as appropriate.

1.4 Overview of Key Risks and Planned Mitigation

The key risks associated with the implementation of the ISFE are:

Delays to the Health and Social Care Bill may result in the inability to have a system and service operational by 1 April 2013. o There is no mitigation to this risk; however the costs to the NHSCB are limited by the termination for

convenience clause detailed in Section 5.

The process and timescale for authorising CCGs is not yet confirmed. In order to decide if a CCG set of books is to be set up for management by the CCG or NHSCB NHS SBS will require confirmation of the CCG authorisation status by 1 January 2013. o If the authorisation status is unconfirmed then the set of books will be created for management by the

NHSCB.

A decision is made to transfer historical transactions. o NHS SBS will need to increase the size of the implementation team and the timescale to complete the

implementation will increase. Our traditional implementation methodology would apply. No costs have been included for transfer or migration of historical data or storage or on-going access.

Size and scope of implementation programme. o Although NHS SBS has a very experienced implementation team the size of this implementation means

that we will need to supplement the team by external recruitment / secondment. We will need to start this exercise in January 2012 in order to be able to meet the successful go live date of April 2013.

o NHS SBS currently provides services to 50% of the current commissioning landscape, it is expected that staff from these organisations will take similar roles within the CSO organisations and be the principal end users of the system. This significantly lessens the change management and training aspects of the implementation project.

A change to the assumed training requirement for 40 large shared service organisations (35 CSOs and 5 large CCGs). o If training is required for more organisations NHS SBS will need to increase the size of the training team

but believe parallel training can be achieved within the current timescales. o If training is required for fewer organisations then costs will reduce.

Current chart of accounts structure is deemed inadequate and needs to be redesigned. o There will be increased development and testing required and therefore an increase in costs and risk. o Workshops were held with PCT / SHA finance staff in November 2011 and the consensus was that the

current NHS SBS Chart of Accounts structure was more than adequate.

Additional functionality requirements identified. o NHS SBS has mitigated this risk by undertaking workshops with current commissioning organisations,

to date no additional functionality has been identified.


2 NHS SBS Data Management and Information Security

2.1 Information Governance Assurance Framework (IGAF)

NHS SBS is committed to supporting the NHS Information Governance agenda, and continues to maintain compliance with all requirements of the Information Governance Toolkit (IGT). In financial year 2010/11 NHS SBS has been successful in achieving an overall IG score of 96% with a satisfactory rating for its Information Governance Statement of Compliance. NHS SBS services based in India achieved an overall IG score of 94% and a satisfactory rating. Both of these scores have been validated and approved by the NHS SBS internal auditors BDO UK.

2.2 Information Security

NHS SBS complies with all legislation regarding the UK Data Protection Act 1998 ensuring compliance by the use of the EU Data Protection Directive “model contract clauses”. These clauses provide a legally binding link directly from NHS SBS clients as the Data Controllers through NHS SBS as the Data Processor and the service provider in India as a nominated sub-contractor. These protocols assure the security, confidentiality and data protection of NHS information held for each and every customer in all NHS SBS locations. In 2007 this capability attracted international recognition with NHS SBS named Gold winner in the Excellence in Information Integrity (EII) category, awarded by the Information Integrity Coalition (IIC), an independent and not-for-profit organisation.

With regard to the use of offshoring, NHS SBS can confirm that services with Steria India (NHS SBS), based in Noida and Pune, follow the appropriate NHS SBS policies and procedures for the handling and use of information. NHS SBS has also ensured that there is appropriate security in place with the ongoing attainment of the ISO27001 (Information Security) and ISO9001 (Business Process) standards. All offshore polices and procedures, including information security have been approved by colleagues in Connecting for Health / Department of Health as part of the approval process for receiving an NHS N3 connection.

2.3 Business Continuity

NHS SBS has robust Business Continuity Management arrangements and disaster recovery planning for overall service provision covering buildings, staff, system and technology backup as part of its overall Quality Assurance Program.


3 Scope of Service

3.1 Information Technology

The service will be delivered through an Oracle Rv12 e-Business Suite platform providing Finance & Accounting including e-Procurement. The services are further complimented by the provision of strong management information delivered through Oracle Business Intelligence and Financial Analytics. The IT platform is supported by over 100 skilled IT professionals spread across UK and India. Where additional specific ad-hoc skills are required NHS SBS is able to utilise the extensive wider resource capability of Steria. The IT platform is hosted and managed by a long-standing and experienced partner Capita IB Solutions in an N3 compliant secure environment.

3.2 Scope of Oracle Applications

The scope of the Oracle applications includes:

Oracle Financials Modules

NHS specific Oracle customisations

Oracle Reporting (OBIEE & Financial Analytics) In addition a number of industrialisation tools are employed to enable the NHS SBS shared service capability

Brainware - Automation of invoice processing through Optical Character Recognition (OCR) will convert paper invoices to electronic media for automatic input to Oracle eBusiness suite. Drill down to the stored images is then made available to users.

OB10 eInvoicing. Electronic invoicing will automatically capture invoices from participating suppliers and feed them into eBusiness suite.

Neopost automated document despatch covering purchase orders, remittance advice & sales orders using fax, email or print. Storage of associated images for future reference. Secure cheque printing.

UC4. Automated tool, including period end closure of Oracle sub ledgers and GL.

VQSM. ITIL service management tool, including incident management and changes online and uses a workflow tool to manage through relevant dealer groups.

Associated configuration changes needed to Oracle eBusiness suite to facilitate shared service operation and integration with third party tools.

3.2.1 Operating Hours

The normal service operating hours are 08:00 – 18:00 Monday to Friday (excluding Bank Holidays and Weekends). The system is available to use outside these hours with the exception of maintenance periods which are publicised by the IT Support Team.

3.2.2 Incident and Problem Management

NHS SBS IT provides a full end to end IT Support and Development service Monday to Friday within normal operating hours. Outside of the core contracted hours NHS SBS recognise the need to support its clients and as such the IT Service Desk operates from early morning to accommodate users who may experience problems before the start of the day. The NHS SBS IT Service Desk provides a single point of contact for; Receipt, Acceptance, Escalation, Assignment and Tracking of agreed IT incidents to closure, or progression and ongoing management of assigned incidents to appropriate 1

st, 2

nd and 3

rd line resolver groups, including where applicable 3

rd parties.

All calls are logged on the ITIL Incident Management system vQSM and assigned a priority dependent on the severity of the issue; calls are processed in line with NHS SBS‟ Call Handling procedure.


Priority Category

Example Description Response Time

Time to Fix

Priority 1 Major systems failure, or failure affecting a whole department within the NHSCB or a CCG

10 minutes 4 hours. Dedicated resource until resolved, continuing outside normal working hours as required. Hourly progress reports

Priority 2 Backup failure or single user totally unable to work

1 hour 8 hours

Priority 3 One user suffering restriction which affects business need

4 hours 2 days

Priority 4 One user inconvenienced, business need not affected. Includes user queries with application function on supported applications

1 day 5 days

Priority 5 One user affected, work around available 1 day 10 days

Any occurrence of a Level 1 will initiate invocation of a major incident; this is managed in line with an agreed Major Incident Management process.

3.2.3 Change Management

NHS SBS recognise the need to ensure system integrity and stability. In order to achieve this it is imperative to effectively manage change within the IT and business environments. NHS SBS implement a rigorous change management process to insure the required integrity. The change management process covers all aspects of change to NHS SBS‟ IT application and infrastructure, 3

rd

party suppliers change process must also adhere to NHS SBS‟ Change and Release policies. Governance of all change is underpinned by the Change Control Board (CCB) which meets monthly to approve, prioritise and monitor progress of changes or in the case of Emergency Changes the CCB EC (Change Control Board Executive Committee). All changes are logged on VQSM and assigned a unique reference number and include and supporting documentation. Where the change will involve changes to client processes, a client representative will be asked to input into the process and provide UAT sign-off against the change once tested. Minor changes to the production environment (e.g., system updates of patches and packages) are carried out on a controlled basis, aligned to twice weekly implementation windows, any downtime required is agreed with Capita IB Solutions and communicated to users via the NHS SBS‟ Oracle Homepage and via an e-mail agreed with NHS SBS Client Management. At month end, maintenance activities resulting in downtime are suspended. Where major work requires system downtime, this is scheduled outside of core working hours, normally at weekends.

3.2.4 Systems Backup and Disaster Recovery

Backups to the Oracle Financial application, Oracle Database, and HP-UX operating system are performed by Capita IB Solutions nightly and stored at a secure off-site location. Backups are monitored daily by Capita IB Solutions. NHS SBS and Capita IB Solutions undertake a regular Disaster Recovery test to ensure that the integrity of the backups is validated and validate full system recovery through operational system testing of the restored service.

3.2.5 Business Continuity

Business Continuity Planning is owned by the IT Business Continuity Manager, Business Continuity Plans are updated as required when changes are made to the service. The plan is accessible by all members of the NHS SBS IT Management Team and key NHS SBS stakeholders so it can be invoked as required.


3.2.6 Systems Performance

Service reviews are held regularly between the NHS SBS IT Function and NHS SBS‟ Business Operations Teams to ensure effective delivery of systems and processes. External service reviews are held between NHS SBS IT Senior Service Delivery Manager and Capita IB Solutions; the basis of the meeting is to review Capita IB Solutions Monthly Service Report and discuss the forward schedule of change and associated service issues. Monitoring of the Core Oracle Applications and associated infrastructure is undertaken real time by Capita IB Solutions and reported via a dashboard, the dashboard provides automatic updates and monitors the system usage in respect of users and disk space availability. Capacity management is undertaken by SBS in conjunction with Capita IB Solutions and is based upon, trend analysis, business activity/pipeline and known peaks such as month end and year end to ensure the integrity of the system is maintained.

3.3 NHS SBS Finance & Accounting

NHS SBS organises its F&A service into three core streams:

P2P: Purchase to Pay (Including eProcurement)

O2C: Order to Cash

A2R: Accounting to Reporting These core process streams are supported by a number of other functions, such as IT and client service centre helpdesks. Below is a more detailed description of each process stream and the functions delivered.

3.4 Purchase to Pay (P2P) including e-Procurement

The NHS SBS Purchase to Pay (P2P) service with the eProcurement system provide a comprehensive service that includes raising electronic requisitions, generation and despatch of purchase orders and processing of invoices from receipt and scanning to invoice payment via an electronic workflow. In addition to standard accounts payable functions the P2P service offers a wide range of opportunities including:

A platform for online requisitioning of goods and services by budget holders / end users across every commissioning organisation.

The facility to build and maintain catalogues based on contracted items and prices from preferred suppliers ensure that spend within each commissioning organisation can be controlled.

A wide range of reports and dashboards empowers commissioning organisations to enforce purchase order and contract compliance, highlighting progress in all areas from organisation wide performance down to individual user behaviour.

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Sustainability Reporting providing the carbon footprint of each legal entity as endorsed by the NHS Sustainability Unit.

The NHS SBS invoice scanning and online processing capability operates through customised, NHS specific Oracle software which allows every commissioning organisation to control the timely processing of invoices and gives full visibility and auditability of invoice progress.

Query resolution controlled through the Accounts Payable Helpdesk and supported by a team assigned specifically to each commissioning organisation, enabling you to maintain control of invoice progress at every stage and get prompt help and support when needed.

Query resolution controlled through the Accounts Payable Helpdesk and supported by a team assigned specifically to each commissioning organisation, enables control of invoice progress to be maintained at every stage and help and support to be provided when needed.

3.4.1 e-Procurement Solution

Electronic Procurement (e-Procurement) is the online management of all procurement negotiations and transactions in a paper-free environment using electronic tools and systems to increase efficiency and reduce costs at each stage of the procurement process.


Features The features of NHS SBS‟ e-Procurement service are as follows:

Online: end user friendly web-based requisitioning functionality based around a standard online shopping experience designed to improve end user comfort and therefore encourage usage and compliance

Comprehensive workflow-based approval process with e-mail notifications

Integration with NHS Supply Chain Catalogue (other standard supplier catalogues such as Bunzl can be provided)

Catalogue creation and management tools

Automatic purchase order generation and despatch facility

Receipting, returns and invoice matching capability

Full integration to Payables and General Ledgers. Service The nature of the e-Procurement service is different from other NHS SBS services as, unlike the Accounts Payable or Accounts Receivable services, we do not perform transaction processing for the client. The aim is not to take over the delivery of the procurement function, but to provide the mechanisms, means and information that enable the client to achieve the benefits made possible by the e-Procurement solution. The main function of the service is to provide and maintain the unique purchasing and requisitioning infrastructure such as online catalogues and requisitioning tools for the end-users and to provide integration with NHS Supply Chain and other logistic suppliers where applicable. e-Procurement is our extended purchasing facility providing Catalogue based paperless requisitioning, automated order generation, purchasing intelligence information, procurement dashboards, analysis and modelling tools as well as price comparator reports all of which deliver significant benefits. We currently support smarter buying initiatives across the NHS including Collaborative Procurement Hubs and NHS Supply Chain through shared catalogues and integrations and enable clients to maximise the budgets and resources they use to buy goods and services. For commissioning we will enable Commissioning Support Organisations (CSO) to work collaboratively across the CCG landscape. Easier to use, faster and more efficient than a traditional paper-based system, e-Procurement is also more accurate in terms of data capture and automates processing, reminders and other administrative tasks. As a paperless system, NHS SBS e-Procurement also helps NHS commissioning organisations meet their commitments to reduce energy use and has been developed to meet statutory obligations on reporting carbon footprint reduction.

3.4.2 Spend Analysis Services

Part of the NHS SBS added value proposition, NHS SBS Spend Analysis is a data cleanse, classification and normalisation service with supporting reporting toolset. It uses each commissioning organisation‟s data to provide quality information about your purchase order spend, including spend through NHS Supply Chain. Using proven data analysis comparison and matching logic, the system cleanses each commissioning organisation‟s spend data and compares it with that of other organisations using the NHS SBS F&A system. This comparison enables Buyers to identify opportunities for better procurement practice, informed Supplier discussions and future negotiations. The service identifies three key areas of opportunity for each commissioning organisation to increase visibility, increase control and reduce procurement spend:

Compliance with your own lowest price Goods or services bought at a price higher than the lowest price within each commissioning organisation bought those goods or services for. No negotiation with suppliers needed, this comparison informs each commissioning organisation of where goods or service have been bought at least once at a price that other buyers are not taking advantage of. Knowing which buyers, suppliers and items this is happening with will reduce procurement spend.

Compliance with agreed contracts Goods or services bought at a price higher than the price in your national, regional or local contracts with suppliers. This knowledge will allow each commissioning organisation to ensure maximum compliance with agreed contracts through buyer education and will reduce procurement spend.

Price benchmarking


Goods or services bought by one or more NHS organisations at a price lower than the price each commissioning organisation has previously paid. This is based on the median price point paid for the same goods or service from the same supplier by others, so represents realistic and achievable prices upon which to base negotiation with suppliers. Knowledge of prices paid by others will highlight some areas where your current procurement agreements are more effective than the norm – it will also highlight areas where you can reduce procurement spend. In addition to these three key savings opportunities, Spend Analysis also provides:

A single view of PO spend across each commissioning organisation

Consolidated spend details down to the most granular level - by item and by supplier

Spend by value across suppliers of both PO and AP transactions, this supports the drive towards Purchase Order compliance and the reduction in Non PO activity

The ability to drill through data to identify the department / cost centre and individuals indulging in non compliant procurement activity. With this data it is possible to highlight the cost of non compliant behaviour and educate as appropriate

Savings opportunities identification and measurement.

Contained within the standard F&A offering: The Header Pack This quarterly report is available to all clients and provides high level overview reports on:

Top 20 suppliers by invoice spend

Top 20 suppliers by purchase order spend

Spend breakdown by top level of eClass classification

Compliance with your own lowest price – provides the amount of the total available saving opportunity including details of top ten items providing opportunity

Compliance with agreed contracts - provides the amount of the total available saving opportunity including details of top ten items providing opportunity

Price benchmarking against NHS purchase order spend - provides the amount of the total available saving opportunity including details of top ten items providing opportunity

3.4.3 Sustainability Reporting

An additional part of our value added proposition is that we can also provide approved Sustainability Reporting Packs detailing the carbon footprint of each legal entity. NHS SBS offers market-leading analysis of the Carbon Footprint arising from the non-pay spending choices of NHS bodies. Using advanced algorithms against a carbon database we offer two levels of reporting:

A quarterly summary Header Pack gives a simple indication of carbon "hot-spots" and the top carbon footprint categories.

Full Carbon Footprint Analysis service delivers a quarterly report and dashboard providing sufficient granularity and drill-down that can be used to guide purchasing decisions that support a sustainability agenda.

Contained within the standard F&A offering: Header Pack Carbon footprint by top 5 categories.

Carbon footprint by top 5 suppliers.

Spend-Carbon footprint ratio against peers.

Spend-Carbon intensity ratio against peers.

3.4.4 P2P Accounts Payable

Invoice Processing NHS SBS invoice processing removes all of the paper invoices from commissioning organisations. It offers greater control and visibility as all invoices are scanned and routed to each commissioning organisations through customised Oracle workflow and they are then available to be viewed and worked on at any point by client or NHS SBS officers. The NHS SBS P2P Accounts Payable solution offers:

Invoice scanning with intelligent data capture

Central invoice processing service supporting Paper or OB10 invoice submission

Robust verification and invalid invoice rejection process

NHS SBS maintained supplier master file to ensure data accuracy and integrity


NHS SBS supplier maintenance program actively seek bank details and electronic remit address for new and existing suppliers to facilitate electronic payment and remittance

Robust automated duplicate checking process

Automated holds and invoice query email notifications through purchase order workflow online

NHS customised non - purchase order (Non-PO) workflow – online image, coding and approval providing clear visibility of Non-PO invoice processing across each commissioning organisation.

The Accounts Payable process uses customised workflow to route invoices and queries for action direct to the primary recipient and will escalate in the hierarchy in line with the configuration parameters.

Provide visibility of invoices at any point in the process

Generate automatic reports to guide finance and procurement workload, daily / weekly status reports on invoices and notifications requiring action

Support an organisation specific hierarchy and escalation process generating automatic notifications incorporating out of office and time out functionality

Comprehensive audit trail of all actions. NHS SBS payments process is based upon organisation business rules supported by the additional flexibility of payment runs to assist clients‟ cash management (client‟s ability to edit / hold / return and change to whom and when payments are made)

Accounts Payable Client Service Centre Underpinning the Accounts Payable service is a dedicated Accounts Payable Client Service Centre set up to deal in the first instance with client and supplier queries. This team ensures that client queries are routed effectively and efficiently to the team or person responsible for the action within NHS SBS. They also route supplier queries to the person responsible for the action needed, whether NHS SBS or client officers.

The Relationship The NHS SBS Procure to Pay Teams are set up to process invoices as efficiently and accurately as possible and to provide all the help and support all end users in commissioning organisations may need to do the same. To ensure this vision is realised the teams are configured as either processing or support teams. The support teams are in place to work with commissioning organisations on exception invoices that need some additional work to process to payment. As well as transaction processing these teams will present you with a named contact that will work on your account in their area of expertise. This not only ensures continuity of service but also the opportunity to build knowledge about the commissioning organisations and the people within that gives the feeling of a virtual finance team. The named contacts will further support the commissioning organisations through regular, structured transactional calls to discuss:

Aged invoices and actions needed to expedite

Workflow reports produced by NHS SBS to enhance client visibility and awareness of performance of the whole organisation down to individual users

Invoice on hold reports

Areas for improvement. Through this client focused approach invoice processing is an efficient and effective service with the opportunity for all clients to benefit from the wealth of experience NHS SBS has built up over the past years when dealing with all types and sizes of NHS organisations.

3.4.5 Value Add Activities (P2P)

Above and beyond invoice processing NHS SBS can contribute to the broader, more strategic goals of the NHS commissioning community. NHS SBS offer Best Practice calls / visits for both Finance and Procurement work streams where expertise and experience of NHS SBS staff can be brought to bear when undertaking project and / or transformational work within the commissioning community. Challenges we have helped many client overcome include:

Improving BPPC & reducing invoice turnaround time

Ensuring maximum adherence to client controls

Converting Non PO spend to PO in a controlled and effective manner


Gaining further efficiencies from Finance and Procurement Teams through operating better practices and working in partnership with NHS SBS staff

Ensuring best value for money from Procurement

Catalogue management. These activities operate on a continuous basis and client need varies by organisation. The principle is that whatever your organisational challenges are outside of core processing, NHS SBS has experience of working with clients to achieve change and benefit elsewhere in the NHS.

3.5 Order to Cash (O2C)

NHS SBS offers NHS organisations a complete accounts receivable service, managing the entire invoice-to-cash process from invoice creation to cash application, including a comprehensive debt management solution. Developed by the NHS for the NHS, these services are built on a combination of existing expertise, IT capability and best practice commitment. The O2C Process stream includes:

Cash Management

Cash Receipting & Allocation

Sales Order processing (AR)

Debt Management

Value Add activities.

3.5.1 Cash Management

The NHS SBS Cash Management Team provides daily information to clients on the cashbook, cash flow and bank account financial position. This professional team take responsibility for individual clients so as to establish a close working relationship and gain a full understanding of the goals and objectives of your business. The core service offering, for bank account maintenance, assumes a maximum of one GBS account set, although NHS SBS can be flexible to accommodate your further requirements. The working assumption is that the both the NHSCB and the CCGS banking arrangements will be primarily via GBS. The control of commercial bank accounts by NHS SBS can be factored into the agreement by negotiation. Our service includes:-

Provision of a daily cashbook, cash flow and bank Reconciliation (deadline 10.00am) o Prepared by NHS SBS and sent to client within agreed timeframes o Excel file containing all bank activity across the Citibank, NatWest and Office of Paymaster General accounts o Updated daily with activities for the previous day o Provides control over income and expenditure with consolidated information from all accounts o Includes committed expenditure to give the complete cash position o Key contact details within NHS SBS and their client counterparts listed ensures minimal barriers between the

client and the Cash Management Team exist and communication channels are clear to all parties o Reconciliation by Account: A reconciliation sheet for each bank account for each month in the year to date,

linked and reconciled to the GL coding o Reconciliation by GL code: Each Account has a separate code to assist reconciliation. Matched to the GL

balance to ensure data validity o Combined Account Details: A summary of activity across the 3 accounts, full details by month of the Year to

Date, to allow easy reference o Cashbook

A complete list by account by month of all transactions Broken down by type of transaction and summarised All items are marked with a current status code

o Cash flow forecasting Assist with expenditure planning and income projections and timings Aids investment decision making Ensures maximum cash efficiency

Benefits All bank reconciliations for each day are kept together in a single Excel file


Three way reconciliation between bank account statements, GL and the Cashbooks ensures robustness and data integrity

Partnership working is enhanced by easy to use contact / escalation list detailing contacts for both organisations

3.5.2 Cash Receipting & Allocation

The team take responsibility for the receipt and allocation of income received each day. They liaise with your debtors and work closely with the NHS SBS debt and cash management teams. Providing:

Same day banking of cheques to maximise cash availability

Automatic receipting of electronic income

Allocation details and remittances are attached to the receipt providing full visible audit trail within Oracle.

Key targets and initiatives: ‘Club Zero’ Aiming to allocate all cash first day first time every day this initiative relies on the partnership working between NHS SBS and the client, each playing their part and meeting the criteria below:

Commissioning Organisation input to process: o Timely raising of sales invoices in advance of the income o 24hr turnaround of Refund Authorisation emails / GL code requests o Respond to Unallocated Cash reports within 3 days o Key contacts with cover for absence o Participation in Monthly Calls with NHS SBS o Quarterly responses to regular income updates

NHS SBS input to process: o 24hr turnaround to allocate receipts to GL codes and / or invoices action refund authorisations o 3 days to action unallocated cash replies and clear o Designated contact with cover for absence o Feedback and statistics for Monthly Calls

Government Banking Services NHS SBS has worked with its NHS clients to implement the mandatory change to Government Banking Services (GBS). NHS SBS worked with GBS to shape our solution for a shared services client base, and has developed an automated solution that increases accuracy and speed of banking processes. This ensures that all existing and future NHS clients derive maximum benefit from the new ways of working and new commercial arrangements; this sets us apart from other NHS organisations that simply switched one labour intensive manual process with another. Key benefits:

Automated processing of bank transactions from GBS and OPG bank accounts to provide a consolidated, fully reconciled daily cash position; this provides financial assurance and control over bank transactions and cash positions

Automated sales ledger bank receipts for accurate and timely debt position

IT interface changes to maintain processing efficiency

Re-engineered cash management process providing information on bank transactions. NHS SBS Government Banking Services:

Streamlined transition to GBS

Increased transactional accuracy due to automation

Faster processing of receipts, delivery of daily consolidated cash position and cash forecasting

Enhanced cash management services and consolidation of bank accounts for greater transparency

„Positive Pay‟ is a service provided by NHS SBS with RBS whereby all payable orders are validated prior to clearance. This service would not normally be available to the majority of NHS organisations but is provided as standard for all NHS SBS clients

Financial assurance over all bank transactions reduces the risk for commissioning organisations, helping them to meet the cash efficiency targets and maximising returns from cash.


3.5.3 Sales Order processing (AR)

As a core part of the Accounts Receivable service NHS SBS provides a sales order processing solution which enables a high degree of both functionality and control in the area of revenue generation. This solution includes:

24 Hour sales invoice dispatch following sales order approval including on-line user access for up to the minute activity status and query checking, including a complete database of dispatched transaction images and supporting documents, enabling efficient invoice ordering, approval and creation as well as facilitating effective query resolution. NHS SBS also provide a complete electronic dispatch solution, enabling secure electronic delivery of sales invoices, enhancing delivery accuracy and timescales whilst minimising environmental impact.

Options to centralise / decentralise sales invoice creation to and from local sites and finance teams providing a straight forward, flexible sales ordering system, adaptive to ongoing changes in organisational structure and personnel.

Application of a bespoke user hierarchy enabling appropriate invoice approval and authority limit management whilst promoting intuitive quality control.

Secure, flexible and connected customer databases, designed to enhance the NHS SBS detailed reporting solutions. These include a range of customer billing options from straight forward single use accounts to more sophisticated multiple address site billing options for standing frequent customer accounts and creation of policy holder/insurance provider account relationships. Other key elements include effective, audit compliant account maintenance and detailed customer profiling, enabling categorisation by organisation type and NHS / non NHS status split.

Provision of expert and experienced sales ordering and customer maintenance support. The NHS SBS Accounts Receivable Team provide a direct point of contact and support for commissioning organisations and their user base, co-ordinating best practice delivery, and change management for the Accounts Receivable & Debt Management services.

3.5.4 Debt Management (DM)

Designed to complement an NHS organisation‟s own finance function the NHS SBS Debt Management solution provides the benefit of improved working capital management through enhanced cash flows and reduction of Days Sales Outstanding (DSO) metrics, optimising liquidity, reducing debtor days and minimising bad debt risk. This is achieved through:

Automated issue of overdue invoice reminders and debtor statements compliant to Department of Health standards. Both comprehensive and effective, these debtor specific documents are generated on regular basis forming the first line of debt collection effort. Combined with the NHS SBS electronic dispatch solution, this automatic dispatch enables secure electronic delivery direct to identified debtor contacts and on-demand retrospective review of all reminders and monthly statements generated. These further support the agreement of balance exercise planning and issue resolution.

Expert collection teams experienced in NHS working practices, with specialist team members highly proficient in dealing with dedicated customer profile types and completing substantial proactive telephony and electronic debt collection activity. These teams are supported with effective and business specific call management systems, including automated call recording and playback for full quality control and audit history.

Established relationships with key commercial debtors such as insurance companies and Intra NHS organisations and bodies, including the Department of Health thereby facilitating prompt payment of overdue invoices.

Bespoke strategy and system solutions for high value intra NHS and intra NHS SBS client group SLA invoices, ensuring timely invoice delivery and query resolution to facilitate critical SLA payments thereby providing vital cash flow to Clients.

Application of a bespoke credit and query memo notification system linked to the sales order originator and approver user hierarchy enabling appropriate credit note authorisation, flexible query referral and controlled invoice adjustment.

Clear escalation points for both customer and client support and complex query management, including a dedicated direct point of contact to provide personal support for Clients, ensuring agreed collection strategies are implemented and collection focus points are understood and targeted suitably. These regular contacts liaise with O2C senior management and NHS SBS Client Management teams coordinating face to face client meetings, client workshops and debt management specific working parties, intended to reinforce key behaviours and ensure maximisation of system and process benefits.

Comprehensive, on-demand and monthly electronic collection performance data, aged debtor analysis and DSO reporting.


3.5.5 Value Add Activities (O2C)

The NHS SBS accounts receivable services, support the invoice-to-cash process by means of a number additional activities including:

Full client support and facilitation of quarterly and year end Department of Health agreement of debtor/creditor balance exercise including distribution of comprehensive NHS SBS / client timetables to ensure fast and accurate completion within timescale.

Representation on Department of Health Finance and Reporting group

Review of potential Year End requirements and adjustment to accommodate and deliver agreed Department of Health initiatives such as faster close.

Extended system and support to facilitate meeting initiative deadlines and requirements.

Hosting of Year End specific preparation workshops and online web seminars, outlining key practices and requirements.

Commitment to continuous improvement of process and system solutions, working with existing clients through cross O2C inter NHS SBS working parties and best practice workshops to reinforce key behaviours and ensure maximisation of benefit of any adjustments to service delivery.

Size and scale of banking activity to ensure a presence and influence on national projects such as GBS, withdrawal of the cheque.

Tangible improvement in cash flow liquidity through improvement in Days Sales Outstanding.

3.6 Accounting to Reporting (A2R)

NHS SBS provides an Accounting to Reporting service, which provides robust financial control, based on agreed and documented roles and responsibilities with clear lines of communications. This coupled with the ability to receive budget statements directly to your desktop computer and to dynamically drill to the lowest level of detail, will free up your finance team to work on the more analytical value add work which aids timely decision making, toward the achievement of strategic objectives rather than transactional processing. The NHS SBS team work as a virtual extension to your finance team, with the aim of helping you achieve your objectives. The A2R process stream includes:

General Ledger

Management Reporting

Interface Management

VAT

Value Add activities

3.6.1 General Ledger

NHS SBS will provide you with a secure General Ledger with access only granted following your instructions. The NHS SBS GL and Interface team will take responsibility for maintaining the integrity of data held within the General Ledger and monitor input from the integrated Accounts Payable (AP) and Accounts Receivable (AR) Sub-ledgers, third party interfaces (e.g. payroll, supply chain and pharmacy), and journal entries for both actuals (GBP), Statistics (WTE, hours worked, hours paid, headcount) and Budgets (both GBP and STAT). Month end close and month end reporting NHS SBS work to a predefined and published accounting timetable. The Sub-ledgers are closed at 4.00pm on the last working day of the calendar month, at which time when the subsequent accounting period is opened and a number of reports are made available to each client. These include:

Aged Debtors (including summary)

Prepayment Status Report

AP Trial Balance (including summary)

Non-PO Accrual Report

Goods Received Not Invoiced (GRNI) Accrual Report

Non-postable Holds Report The general ledger is typically scheduled to remain open for a further 7 working days, however this is flexed in accordance with client needs, with some choosing to routinely close earlier, and should any client experience unforeseen circumstances for example an extended close can easily be accommodated.


Pay over of third party payroll deductions Within the standard NHS SBS offering there are two options available for clients within the core service, with clients choosing one option prior to go live. For the ISFE project the NHSCB will choose between these options on behalf of the NHS commissioning community. Option 1 – The client retains responsibility for the payment to third parties of all payroll deductions and the subsequent balance sheet reconciliation. Option 2 - the client delegates the responsibility for payment and reconciliation of third party payroll deductions to NHS SBS. If this option is taken the client has the responsibility to ensure their payroll supplier delivers to NHS SBS the required payroll reports in line with the NHS SBS timetable. NB. Excluded from this option is the reconciliation of accounts in respect of Home Computer Scheme or Child / Crèche fees. ‘Balance Sheet’ Reconciliations These are provided in the form of a „pack‟ made up of linked Excel spreadsheets. Generally two Reconciliation Packs are provided for each entity each month (interim and Final). These are prepared by NHS SBS and sent to the client within an agreed timeframe. The format of the pack helps provide control over monthly balance sheet reporting and gives clarity of the financial position. The pack contains:-

Individual reconciliations for each account which is the responsibility of NHS SBS

Controls to ensure completeness of data

Named contacts and escalations points both at NHS SBS and the client

Diarised meeting dates and times for review of the pack

Comments and actions on all reconciliations

Executive summary for exception reporting and efficiency of high level review by senior managers

A „RAG‟ (Red, Amber, Green) status, based on published criteria, for each account

Full General Ledger Trial Balance

3.6.2 Management Reporting

We maintain and validate coding and reporting hierarchies to ensure reporting accuracy, and maintain a dynamic Chart of Accounts specific to the NHS to ensure compliance with current reporting standards and Department of Health requirements. Additionally we set up and maintain user access rights and privileges for all users in respect of reporting requirements. NHS SBS provide a comprehensive reporting and budgeting service, which ensures that work is completed in line with financial timescales and legal requirements using key reporting solutions:- Oracle Business Intelligence Enterprise Edition (OBIEE) This is a data warehousing solution which provides:-

Integration of data for dashboard drill down analysis and report generation.

User friendly analytical models making it easy for business people to access, analyse and use information. drilling down to source data e.g. invoice image, if required.

Ease of use for key users providing the ability to integrate data with intelligent dashboards to aid control and decision making.

NHS SBS will provide a limited library of predefined reports and dashboards. Users also have the ability to write and save bespoke reports and dashboards in order to meet their particular requirements.

The reporting information within the warehouse database is refreshed overnight. (NB. Various „live‟ FSG reports are available e.g. GL balances report directly from the Oracle E-Business suite environment.).

Budget holder, reports are available from the BI user desktop PC or can be pre-configured for delivery by e-mail, typically to budget holders with few cost centres. Functionality allows the user to drill down from summary level information to the detail supporting the balances e.g. invoice image or payroll names.

The system is a self-service tool allowing financial managers and budget holders access to historical data held in e-Business suite. NHS SBS will provide a basic library of reports and training suitable for fundamental financial management needs, yet the bigger benefit is the access to, and ability to, manipulate data to address specific business issues and problems. The NHS SBS management reporting team will offer best practise guidelines and


support in the use of the system, but full benefit will be achieved by users becoming trained, practised and familiar in the use of the tool and with the data held in the system.

The NHS SBS Management Reporting team can offer additional training or recommend Oracle OBIEE product courses for users seeking to gain additional benefit from the system.

Financial Statement Generator (FSG) These ten standard reports are available for all clients and have been developed by NHS SBS in order to meet client requirements. These reports are run from within the Oracle environment and therefore provide „real time‟ reporting capability. Year and Month End Reporting Processes Business Intelligence operates on a separate reporting database that is refreshed as part of the overnight processes NHS SBS undertakes on behalf of its clients. The BI system will be configured to hold data for current year plus previous two years before being archived. While using a reporting database with information as at the previous day will enable clients to report and make business decisions NHS SBS recognises that at key points, such as Year and Month End, Finance Teams will require up to the minute information. This is why NHS SBS provides FSG Reporting, giving up to the minute reports for specific account code combinations or the entire trial balance. The use of one off queries within the core Oracle system gives the finance department accurate and timely reports while minimising risk to the overall system. NHS SBS offer 1st and 2nd line support on all aspects of reporting via email, telephone or face to face contact and can deliver individually tailored or standard training packages to expert or novice users, both at NHS SBS premises and on customer sites. Our Reporting Customer Liaison Team work closely with dedicated client groups (organisation types) to ensure that the service we deliver is continually reviewed and remains relevant to the needs of each group of clients.

3.6.3 Interface Management

The NHS SBS interface team (along with their GL colleagues) will take responsibility for maintaining the integrity of data held within the ledger and monitor input from the integrated sub ledgers, third party interfaces (payroll and supply chain), and journal entries for both Actual statistics and budgets. Housekeeping activities, such as ensuring journal errors are referred quickly to the relevant client contacts for efficient resolution, are routinely undertaken. Correction of payroll errors, within the GL, are facilitated via an NHS SBS bespoke file upload solution which ensures that both actual (GBP) costs and statistic (WTE etc.) are corrected so as to maintain the integrity of the budget holder drill down facility. The highly skilled interface team act as the link between the client, the interface provider (ESR / NHS Supply Chain) and the general ledger, ensuring the information held is both timely and accurate.

3.6.4 VAT

NHS SBS offers NHS customers an integrated service for VAT management that is both cost effective and tax efficient, adding genuine value and control across every VAT process, from invoice receipt and payment through to VAT recovery and HM Revenue & Customs statutory requirements. The NHS SBS VAT service was developed by the experienced VAT team in partnership with our clients to ensure that it aligns closely with the unique VAT needs and challenges of the NHS, in addition the NHS SBS VAT service enables NHS organisations to fully manage VAT in their business on a day-to-day basis and to significantly improve cash flow via the NHS SBS rapid VAT recovery process. VAT Services:

Production of monthly VAT Return

Daily management of P2P/O2C VAT

Dedicated VAT manager (single point of contact)

Flexible VAT return delivery

Access to our VAT consultancy services VAT+ and CIS+ (at additional Charge)


3.6.5 Optional Additional Chargeable Services

Fixed Assets solution NHS SBS offers a Fixed Assets solution, to complement NHS SBS core F&A processes. Developed in partnership with NHS SBS clients, the solution provides NHS organisations with a comprehensive and fully integrated Fixed Assets management and reporting solution. Our Fixed Assets solution includes:

Centrally hosted service (including full backup & disaster recovery regime in line with our Finance and Accounting service)

Maintenance of asset and financial codes through the existing financials team

Self service fixed assets integrated with financials and reporting services Fixed Assets service functionality:

Standard NHS depreciation conventions following quarter depreciation convention and using straight-line depreciation methods

Use of asset addition clearing accounts per category to aid organisations in the reconciliation of additions

Accounting for Donated Assets - amount capitalised automatically credited to Donated Asset Reserve

Accounting for Assets with Grants - amount capitalised automatically credited to Grant Reserve

Revaluation of Assets with automatic accounting for revaluation of assets

VAT + Services In addition to the standard VAT service detailed above NHS SBS is pleased to offer additional chargeable services including:

Partial exemption

Business activity reviews

Zero rated catering reviews

Capital VAT handling

Bespoke capital advice (PFI / LIFT)

Improved forecasting and cash flow VAT+ services are designed to save NHS SBS clients money through a combination of flexible and cost effective commercial models and a proactive, rather than reactive, delivery model. Our capital VAT handling service enables fast assessment of the percentage of VAT recovery on capital projects such as refurbishments, so that our clients understand their cash position, can better manage risk by avoiding over recovery and, through regular rather than annual retrospective VAT payment, gain flexibility at budget-end. Bringing the benefits together:

Value-based solution designed to save consultancy fees and maximise use of existing budgets

Improved management reporting due to strengthened operational focus on measuring and quantifying VAT processes

Continuity of service and minimisation of risk by tracking activity in key areas

Full integration with the existing core NHS SBS VAT service

Budget & Forecasting The NHS SBS service relating to budgeting and forecasting is provided in two ways, the choice of which is entirely down to individual client preference. Option 1 This provides a number of fields within the Oracle e-business suite to accept budget figures for the original plan, current year to date budgets and a forecast outturn. Clients calculate all of the above budgets outside of the oracle environment and using the upload facilities provided by NHS SBS load these into the ledger. Budget holder reports referring to these fields are produced and budget holders have access to these directly from their desk top. Option 2 This option provides clients with a budgeting and forecasting „tool‟ which will allow them to:


Formulate budgets

Report performance against budgets once set

Forecast an Outturn position. The service is provided such that output can be interfaced to and accepted from the existing e-Business suite modules utilised by NHS SBS on an Oracle R12 platform. As with option 1 budget holders have access to their budget holder statements directly from their desk top. Key features of this budget setting „tool‟ are:-

Control and Visibility of progress is maintained during the Budget setting cycle

Financial GBP values are accepted.

Statistical Values (FTE, hours worked, hours paid, headcount) are accepted.

Other statistical values e.g. Activity and other health informatics are accommodated.

Budgets can be set on all segments of the financial code as well as providing the option to budget on income and expenditure and/or balance sheet code if required.

Scenario planning

Several Budget versions can be held e.g. Original plan, current budget, Forecast 1, forecast 2, etc.

A fully reportable audit trail to reconcile original plan through to current budget on to latest forecast for all budgeted values is available.

Budgets for five years can be accommodated.

Online approval of budgets using a financial and organisation hierarchy.

Ability to reconcile agreed establishment to actual heads on the payroll (ESR) These two options provide flexibility to clients to allow the most appropriate budget setting and monitoring process to be utilised.

Spend Analysis Detailed Data Pack This quarterly pack is detailed line level analysis enabling investigative „drill down‟ to identify specific items and supplier opportunities for all goods and services bought by each commissioning organisation showing: Compliance with own lowest price.

Compliance with agreed contracts.

Price benchmarking against NHS purchase order spend. NHS SBS will work with you to help refine and develop your strategy and understanding of the data to support each commissioning organisation in realising the benefits of this powerful tool, not only through understanding the detail contained within but also in ensuring your end users and Procurement Teams are using the e-Procurement system in an effective manner that enables the identified opportunities to be taken.

Sustainability Reporting Detailed Data Pack

A quarterly report and dashboard showing:

Analysis by supplier

Analysis by e-class

Analysis by category

Analysis by spend

Analysis against peers

Tonnes of CO2

Details of other greenhouse gasses

Environmental benchmark

Drill down to finer granularity

3.6.6 A2R Value Add Activities (A2R)

In addition to the services outlined above NHS SBS aim to continually improve the service available to its clients and the efficiency with which its clients can use the service and access management information. This is achieved in a number of ways including Named contacts for all processes with scheduled review calls to maintain lines of communications and face to face visits to client sites from the NHS SBS team.

GreenInsight by @UK plc

Breakdown of analysis: data.

Spend SuppliersCarbon

DioxideMethane Nitrous Oxide

Hydro Fluoro

Carbons

Prefluorated

Carbons

Sulphur

HexafluorideTotal

Total £345 m 3,358 156,989 t 21,825 t 11,174 t 6,028 t 2,243 t 1,468 t 200,655 t

Line item detail (PO) £114 m 2,423 47,741 t 6,383 t 2,598 t 1,815 t 673 t 444 t 59,941 t

Supplier level detail (AP) £190 m 1,610 90,864 t 12,977 t 7,410 t 3,437 t 1,292 t 838 t 117,333 t

Un-analysed (AP) £12 m 802 5,673 t 793 t 409 t 215 t 80 t 52 t 7,256 t

t o n n e s o f c a r b o n d i o x i d e o r c a r b o n d I o x I d e e q u I v a l e n t

0 t

100,000 t

200,000 t

300,000 t

400,000 t

500,000 t

600,000 t

700,000 t

£0 m £200 m £400 m £600 m £800 m

To

nn

es

of

ca

rbo

n d

iox

ide

Total spend

Carbon Dioxide,

156,989 t

Methane, 21,825 t

Nitrous Oxide,

11,174 t

Hydro Fluoro

Carbons, 6,028 t

Prefluorated Carbons,

2,243 t

Sulphur Hexafluorid

e, 1,468 t

Carbon Dioxide


NHS SBS are invited attendees at:

The National Finance and Reporting Group chaired by DH Financial controller

HFMA Technical Accounting Committee This “front row seat” means NHS SBS are able to respond to impending changes in proactive manner and in many cases are part of the User Acceptance Testing for new requirements. NHS SBS view Year end as mission critical and therefore undertake rigorous preparation and process reviews in order to meet the high standards rightly expected by the clients. These include:

Continually reviewing the Year end requirements

Invitee onto DH Finance & Reporting group

Last year review and „wash up‟

Linking to client quality review panel

Redesign of process to accommodate new requirements e.g. IFRS / faster close

Published year end timetable

Workshops and webinars

Extended system availability and support

„On demand‟ reporting and refresh capability

This attention to detail has led to a more flexible approach and improved client satisfaction with the Year End experience.


4 Implementation Plan

4.1 Introduction

The challenge for the NHSCB in implementing an ISFE comes from the need to change the financial processes of the entire commissioning landscape in a very short time period. However, some of the risks associated with such a challenge are mitigated by the very nature of setting up both the NHSCB and the CCGs as new entities with no historical transactions having to be carried forward from the old systems to the new. The challenge becomes one not of migration of data but of education and training the users in how to use the new system from both a processing and reporting aspect. The proposal to have Commissioning Support Organisations in place to provide the requisite skills and support to the CCGs makes the task of rolling out the new system much easier; we anticipate that the staff within the CSOs will be the main users of the ISFE on behalf of the CCGs (although there will always be a few exceptions where a CCG is large enough to support themselves) and plan to train the CSO staff as Super Users who will in turn train and support the budget holders within the CCGs. At the moment 50% of the current PCT / SHA entities are customers of NHS SBS; they are using the same Oracle system that we are proposing to roll out to the NHSCB / CCGs and are currently in the process of moving from using Oracle‟s Discoverer product for management reporting to the newer Business Intelligence (BI) product, by April 2012 all these customers will be using only BI as their reporting tool. By October 2012 a further 16 PCTs will be live on NHS SBS‟ Oracle platform using the BI system. On the basis that the majority of the end users of the ISFE will be staff from PCTs / SHAs who move into the new CSOs then we can expect that about 40% of CSO staff will need substantially less training and education in the use of ISFE given that the ISFE business processes are the same as the NHS SBS F&A processes. Furthermore we understand that the number of CSOs will be limited to a maximum of 35. Of the 35 approved CSOs we therefore expect that at least 15 of them will be predominantly staffed from PCTs / SHAs personnel who are familiar with the NHS SBS system (both business processes and management reporting). The challenge of rolling out the new system to some 230 CCGs within a 6 month time frame can then be managed as we are now looking at rolling out the system to 35 CSOs of which at least 15 are already very familiar with the system.

4.2 Project Assumptions

The full list of project assumptions is detailed in Section 8.1; however, in order to clarify the implementation approach it is important to note the following key assumptions:

The ISFE will have its own Oracle Instance

The NHSCB will go live on the Commissioning Instance on 1 October 2012

230 CCG organisations will go live on the Commissioning Instance on 1 April 2013

CSOs that are part of the NHS will manage the CCG sets of books their behalf but will not require their own sets of books

The Commissioning instance will be a clone of the existing NHS SBS Oracle system and the service provided to the Commissioning organisations will be the standard NHS SBS service as defined in Section 3

User Acceptance Testing (UAT) of the new Commissioning instance will be carried out by a joint team comprising NHS SBS operations staff and NHS PCT/SHA staff nominated by the NHSCBA.

The commissioning organisations will not transfer any historical transactions from PCTs, SHAs or any other organisation. The commissioning organisations will therefore have no opening balances, also known as green field status

As green field organisations there will be no dynamic data to transfer (see below for more detail). In addition, the majority of the static data will be common across all organisations (see below for more detail).

NHS SBS will develop the current Chart of Accounts specifically for the commissioning based on the current CoA structure but with new codes relevant to commissioning. The commissioning organisations will use the standard Commissioning Chart of Accounts coding on go live and will not have any local coding. Additional codes will be added to the CoA in agreement with the joint NHSCB / NHS SBS ISFE Governance Board post 1 April 2013.

NHSCB will provide a Programme Team adequately resourced and equipped to meet the delivery actions required of them.


Change Management from existing organisations to the new commissioning model is the responsibility of the NHSCB. All commissioning personnel impacted by the shift to NHS SBS services should be fully briefed on the impact the project has on their role prior to training

TUPE applies but NHS SBS is expecting few, if any, staff to transfer to NHS SBS; any redundancy and associated exit payments will be the responsibility of the NHSCB

The NHSCB / CSO / CCG are responsible for ensuring minimum IM&T requirements are met as per the latest NHS SBS Infrastructure document.

4.3 Implementation and Timeline

The approach for creating such a large number of sets of books within this timescale will be:

Creation of skeleton sets of books with “hard coded Oracle information” such as the chart of account, calendar and entity code

Loading of common data such as supplier and customer list o Collection of the majority of static data such as common supplier list and site information will be

gathered from the legacy PCT organisations from 1 April 2012

Loading of client specific data such as approval hierarchy and users o Where unique data is unavailable, due to CCG not being ready, standard NHSCB data will be used and

corrections made after 1 April 2013 as a separate activity

10 days on site Training for each CSO – this could be reduced for those CSOs who have SBS experience

10 days on site training for 5 CCGs who will not be using one of the 35 CSOs

CSO Training will including training staff as Super Users

NHS SBS will train two CSOs per week from 1 October 2012 to 29 March 2013. Factors determining each organisations position in the plan will include: o Knowledge of NHS SBS systems o Authorisation status of client CCGs

Training will include: o A2R:

General Ledger Business Intelligence Reporting Budget Holder

o O2C: Sales Order Raising Cash Receipting O2C Finance Super User

o P2P: Requisitioning Buyer Training P2P Finance Super User

o Train the Trainer Training o Dealing with enquiries to Finance

Super users from the CSOs to train their CCGs

Back-up Webinars and online refresher training on the use of Business Intelligence will be available.

Each User and Super User will be required to undergo an assessment to validate their understanding of system use before being allowed access to, or in the case of Super Users train other staff, in the relevant parts the system.

Post Implementation Support – each CSO (plus the 5 CCGS mentioned above) to have a dedicated NHS SBS person on site over the first 6 weeks following their go-live.

This is a large and complex implementation plan and will rely on confirmation of agreed assumptions and policy decisions being made by the NHSCB in good time. Any changes to assumptions or delay in policy decisions will impact on the cost and timescales of delivery. The key implementation plan milestones are shown below, a high level plan implementation plan is included in Section 8.2.


ISFE Key Milestones Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13

Programme Governance Set Up 31-Jan

CoA Definition Completed 29-Feb

Resource Plan Confirmed 29-Feb

PMO Recruitment Completed 01-Mar

Training Strategy Agreed 27-Apr

IT Project

IT Development Platform Built 20-Mar

UAT Environment Built 13-Apr

UAT Testing Complete 27-Jul

IT Production Platform Built 08-Aug

Training Environment Completed 21-Aug

BI Development Complete 10-Sep

BI UAT Complete 24-Sep

IT Systems Live 01-Oct

IT Project Closed 17-Dec

NHSCB Project

NHSCB Set of Books Built 14-Aug

NHSCB Implementation Activity Complete 26-Sep

NHSCB Training Completed 28-Sep

NHSCB Readines Assessment Done 28-Sep

NHSCB Operational 01-Oct

NHSCB PIMs Delivered (2 Stage) 12-Nov 13-May

NHSCB Project Closed 31-May

CCG Project

CCG Static Data Collect Complete 04-Jul

CCG Data Cleansing Complete 28-Aug

CCG Set of Books Built 26-Oct

CCG Connectivity Completed 31-Jan

CCG Data Load Completed 26-Mar

CCG Implementation Activity Completed 29-Mar

CCG Readiness Assessment Done 29-Mar

CCG Training Delivered 30-Mar

CCG Go Live 01-Apr

CCG PIMS Complete 13-May

CCG Project Closed 31-May The traditional approach that NHS SBS has taken to bringing on new clients has been based on a tried and test migration programme delivered using Prince 2 methodology and controlled through a series of stage gateways as shown in the diagram below:

In summary the key Project stages are: Stage 1 – Initiation The initiation stage of the Project represents the preparation of all the key resources for the successful project, both for NHS SBS and the client. Stage 2 – Situation Assessment This stage provides a high level view of the potential impact to the client caused by the adoption of the SBS solution and validates the assumptions that were used in the business case and SBS pricing. By understanding the current


business needs and processes, this stage defines the activity for the Process Design & Data Capture stage as well as providing an initial view of the change impacts. Stage 3 – Process Design & Data Capture This stage is concerned with agreeing the future processes, defining any necessary local work changes to be used, capturing and cleansing all the key data and ensuring the Project Board is in a position to make a reliable Go Live decision at the completion of the stage. Stage 4 – Transition This stage moves the Project from a „Go‟ decision through to the final loading of data and end-user training through the system „Go-Live‟ and full migration to SBS. Stage 5 – Post Implementation Support (PIMS) & Project Closure This stage involves a period of Post Implementation Support (PIMS) to a position whereby the full operational service is transferred to the SBS Operations team and the project is closed. For the NHSCB we will adapt this process to fit in with the fundamental different requirement of:

Very little historical data having to be migrated

Using the CSO organisations as super users covering a number of CCGs and targeting training at the CSOs

Training for at least 15 of the potential 35 CSOs will be reduced as they will be staffed by existing NHS SBS users familiar with both the F&A system and the use of BI although in our cost base we have included full training for all CSOs

Allowance for 5 CCGs who will not be using a CSO but are setting themselves up as self supporting units. The revised methodology for the Commissioning implementation will be:

Process Design & Capture Stage Transition Stage Stabilisation Stage

IT

Project Activity

Training

Change

Management

Activity

Programme

Management

Operations

IT Readiness

Static Data

Collection

Project Management

Training

HR

Communications

Operations

Post Implementation

Support

Project

InitiationKick O

ff

Additional

Data

Collection

Process Design

Data

ValidationData Load

Application

Clone Go N

o Go

Decision

Verify Data

Process

Walk

Through

Go Live

Project Initiation and Preparation

4.4 Programme Governance

The ISFE Implementation Programme will follow the principles of PRINCE2 for the management of individual projects (such as the NHSCB implementation project) and the principles of MSP (Managing Successful


Programmes) from an overall programme perspective. The governance will be tailored to suit the nature of the programme and with the objective of a light touch regime to expedite delivery consistent with effective control. A three phase programme lifecycle for Initiation, Execution and Closure will overarch the project lifecycle stages described above. There will be a joint NHSCB / NHS SBS governance board that will meet monthly to review the progress of the programme. The terms of reference of this board will be jointly agreed at the first meeting and the board will be guided by a programme progress report and any relevant contractual agreements. Internal NHS SBS governance will revolve around a weekly programme board meeting involving the board members shown in the diagram below. Regular project board meetings will also be held with an action focused agenda; relevant risks and issues will be escalated to the programme level as required. Regular highlight reports will be produced at the project level to inform the project boards and the Programme Director will attend all project and programme board meetings to ensure consistency.

XXX

4.5 NHS SBS Resourcing

NHS SBS will complement its current highly experienced implementation team with members of its own operations teams, trusted third party suppliers (including Oracle) and potentially seconded staff from PCT / SHA or future CSO organisations in order to create a dedicated implementation team. The extended implementation project team will consist of around 100 people at any one time and will undertake the work associated with the implementation project, including creation of the set of books, impact assessment and process walkthrough, data validation and loading and IT readiness. The team will be split geographically by NHSCB Sector and work with the CSOs and their CCGs. In addition there will be a dedicated training team to deliver the training to each of the CSOs as described above. As detailed above this team will deliver training to each CSO (and 5 large CCGs) in parallel between October 2012 and end of March 2013. Specific “Train the Trainer” education will be provided to the CSO Super User who will in turn be responsible for training their CCGs. Access to the system will require staff to have completed the appropriate training and successfully completed the end of training assessment. To support the commissioning organisations post go live each CSO will receive a dedicated on site Post Implementation Support for the 6 week period after 1 April 2013. This resource will be able to support the CSO with any issues that may arise in the first 6 weeks and consolidate the training and change management. NHS SBS recognises that a project of this size will require a Programme Management Office (PMO) to control and monitor the progress. Therefore NHS SBS will form a PMO dedicated to delivering the successful implementation of the ISFE including the IT clone of the current NHS SBS System to provide the Commissioning Instance, operational readiness and the implementation projects. In order to resource these teams NHS SBS will begin recruiting and training staff following approval in principle of this proposal by the NHSCB.

4.6 Obligations of NHSCB

NHS SBS is highly confident in its ability to deliver the ISFE implementation; however, there will be a requirement on the NHSCB to provide resource, equipment, governance and leadership to the programme in order for successful delivery. NHS SBS will train the users and super users accessing the system but NHSCB must ensure that staff are available to be trained. Staff will be required to pass an assessment for relevant parts of the systems before being allowed access; similarly the CSO super users will need to pass a training assessment. Resourcing The NHSCB will need to provide resource to the project at a central and CSO level in order for the implementation projects to be successful. This resource will include central programme management and CSO project team resource to help tasks such as data collection and validation, IT connectivity and training administration. A high level overview is:


Programme Director reporting to Joint Governance Board

One Project Manager per Sector to oversee Commissioning actions

NHS Functional Lead to advise NHS SBS and liaise with CCG staff on Oracle platform and assumption benefits

HR Manager to assist with HR issues including TUPE

Project Team per CSO reporting to Sector Project Manager

Programme

Director

NHS

Functional

Lead

Facilities & IT

Lead

Sector Based

Project

Manager

Comms

ManagerChange

Manager

HR ManagerCommercial

Manager

Financial

Controller

Admin Support

(0.5 per CSO)

Implementation

Staff

(2 WTE per CSO)

It is estimated that there will be approximately 100 roles required, although some of these roles will not necessarily be full time or for the entire length of the project. Governance NHSCB will need to be fully engaged and supportive of the joint governance board and provide adequate governance to monitor the Commissioning organisations tasks and take appropriate actions when required. Leadership Within the ISFE implementation project there are a number of assumptions that have been made, several of which have a material impact on the implementation plan e.g. there are no historical transactions to be taken into the Commissioning sets of books, that the CCGs will have no local coding on go live and that all necessary Change and Communications Management on behalf of the Commissioning organisations will be undertaken by the NHSCB. In some cases these assumptions may meet resistance at a local level and it is imperative that NHSCB provides the necessary support in communicating and reinforcing the reasons for, and benefits of, the approach that has been taken.

4.7 Key Risks and Mitigation

Risk Mitigation

Health and Social Bill delayed No mitigation of this risk

Contract signature delay Commercial cover provided by a memorandum o understanding until contract signature. Contract signature required by 30 March 2012

NHSCB unable to go live on 1 October 2012 NHSCB delay “go live” on Commissioning instance until 1 April 2013.

CCG creation as statutory body delayed beyond 2013 Review by Joint Governance Board with extension to


implementation plan as required

Requirement for CCG to go live before 1 April 2013 Review by Joint Governance Board with adjustment to implementation plan as required

Number of CCGs changes Review by Joint Governance Board in line with contractually agreed method

CCG / CSO not ready to receive training in line with timetable

Review by Joint Governance Board with a decision made to delay actions within plan (taking note of resource implications of this action) or for set of books to be managed by NHSCB from 1 April 2013 with additional project to incorporate CCG information after this date

4.8 Implementation Summary

The ISFE implementation is a large and complex programme of activity; however, as detailed above some of the challenge associated with the implementation is mitigated by the fact that NHSCB will be rolling out an already tried and tested service currently used by 50% of the target population and as such a majority of staff in the commissioning landscape have, or will have, experience of NHS SBS prior to 1 April 2013. Furthermore the commissioning organisations will be green field and will be using a common platform, including chart of accounts, and to a large extent common data. By utilising these factors NHS SBS can adapt its proven PRINCE2 based migration methodology to produce an implementation programme that will deliver an Oracle instance for the 231 Commissioning organisations. NHS SBS is highly confident that utilising the joint governance systems detailed above and with strong leadership from the NHSCB the implementation programme can be successfully delivered in a highly effective and controlled manner.


5 Charging Mechanism and Implementation Charges

The purpose of this section is to present the proposed commercial pricing approach for the ISFE service charge and implementation charge. There are four categories of costs/charges in the ISFE:

Actual structure costs/charges

Apportioned costs/charges

Variable direct costs/charges

Implementation charges

5.1 The Contract

As stated in section 1.3, the contract will have a 6 year term, commencing on 1 October 2012, with a break clause on 31 March 2016 with no penalty to the NHSCB. The service commencement date will be 1 October 2012 when NHS SBS will begin providing F&A services for the NHSCB only. The service for the CCGs will commence on 1 April 2013.

5.2 Joint Governance

The Joint Governance Board will be formed with members of NHS SBS and NHSCB. The purpose of the board is to monitor and agree the performance of the parties against the contract and to ensure prudent financial management. If there is a requirement by either party, to change the project then the Joint Governance Board will review and agree the impact of any proposed change. Where there is an agreement that additional resources are required then the Joint Governance Board will refer to the Variable Cost rates as shown in Section 5.5.2 of this document. If additional third party costs are incurred as a result of a proposed change then these will be charged using a transparent pricing methodology.

5.3 Charges for Implementation and Service Charges

XXX This is forecast based on the day rates previously shared with NHSCB and the resource utilisation detailed in the Implementation Plan contained in section 7.2. NHS SBS will invoice NHSCB monthly based on actual effort expended. Therefore the actual Implementation Charge may vary (up or down) in practice from month to month when compared with the plan. Provided that NHSCB meets its obligations contained in the detailed plan, which will be agreed during detailed negotiations, NHS SBS will ensure that the actual total Implementation Charge does not exceed the forecast by more than 10%. Implementation Charges exclude out of pocket expenses which will be charged at cost. The forecast monthly phasing of the Implementation Charge is detailed below:

XXX

The charges from 1 April 2013 onwards will be based on the charging structure as defined below, and shown in the Table 1, with elements of fixed and variable charges. Once the target operating model is defined in year 1, the aim is to move to a fixed committed charge to the NHSCB in years 2-4. Following the service commencement of the NHSCB on 1

October 2012 a variable charge only will be made to cover

any transactions that may be produced by the NHSCB or any other organisation during the period. XXX This arrangement will continue until 31 March 2013. From 1 April 2013 the full fixed / variable charging regime will come into force.

5.4 Charging Methodologies

Actual Costs and Apportioned Costs Methodology: XXX XXX


Aim: The aim of the charging structure is to ensure a fixed and committed charge for the NHSCB structural costs incurred by NHS SBS with any incremental charge being transparent to NHSCB based upon agreed resource structures and productivity estimates/assumptions. This in turn reduces the scale of the cost variability that will be incurred by the NHSCB as the target operating model is defined during year 1. The proposed fixed and variable charging structure is represented in Table 1.


Table 1

XXX


5.5 Variable and Committed Charges

5.5.1 Committed Resource in Year 1

NHS SBS will have a committed resource base to deliver the service for the ISFE against the agreed assumptions. This resource base will have been built up to capacity prior to 1 April 2013. The costs associated with this resource base will need to be covered in the charge to the NHSCB and CCGs irrespective of the landscape of the ISFE. Once NHS SBS has committed the resource to the ISFE, should the volume not be met, NHS SBS will have to manage that resource into other areas of the business. It is assumed that productivity levels in year 1, by the very nature of the new organisations being put in place, will not be as efficient as those currently being experienced by the mature F&A business. Should the volumes in the assumptions not be met, our flexibility to reduce our variable and committed charges will be governed by the following process: From 1 April 2013 the variable charge shall be based on the assumption that the annual transaction volume produced under the contract shall be 2.776 million transactions. If actual volume is up to 10% less than the 2.776 million transactions then the service charge will be credited in accordance with the calculation methodology in section 5.5.3. Where, following a regular, six monthly base line reviews, the parties expect volumes to reduce by more than 10% then NHS SBS will undertake activities to allow it to reduce the variable service charge from the following April or October onwards as appropriate. This “crawling peg” process will be repeated each 6 months for the term of the contract. If the Joint Governance Board believes that there will be a material change in transaction volumes, which will not be captured by this process in a timely manner, then an exceptional change process will be followed in order to re-baseline the contract volumes and charges. The exact methodology will be agreed during detailed contract negotiations.

5.5.2 Variable Cost Increases Caused By Productivity Issues

Table 2 shows the rate card that will be applied during year 1 of the contract. It should be noted that this rate table is intended to be used by the Joint Governance Board in agreeing joint actions to address specific delivery issues that may arise within the structure of the CCGs during the first year of operations. Such issues may include disruption to work-flow and peaks and troughs in transaction volumes that arise due to issues within the NHSCB and outside of the control of NHS SBS. Day rates in Table 2 assume 100% utilisation for additional work. For the avoidance of doubt, NHS SBS will only seek to increase the charge when a productivity issue is caused as a result of the NHSCB failing to meet a contractual dependency or where an assumption (as agreed by both parties during contractual discussions) proves to be incorrect. NHS SBS will raise any issues and required actions at the Joint Governance Board for review and agreement.


Table 2 XXX


5.5.3 XXX

XXX Below is a worked example of how the variable charges will be calculated and managed through the Joint Governance Board. Scenario: NHS SBS can only achieve 90% of their assumed productivity levels because the amount of incorrect information contained on invoices coming out of the CCG's. Invoice quality is an agreed dependency on the NHSCB. The Joint Governance Board agrees to a 3 month change control for additional resources, based on a commitment from both SBS and DH investing in management effort to address the problem. It is assumed that this management effort is included in the structural management charges, so only the increased direct resource is costed.

XXX

Where:

Actual Transactions per day = 2,776,000/ 252

Days Equivalent = the number of working days in 3 months per FTE

Assumed Monthly/ Daily Transactions per clerical FTE in Contract is based on current productivity levels

Actual Productivity being achieved = transactions per FTE per day at the reduced productivity level

Increased clerical head requirement per day is the increased resources needed to process the contractual volume at the reduced productivity level.

The embedded spreadsheet shows how changes in other productivity assumptions may impact the variable charge. XXX

5.6 Service Charges (1 April 2013 – 31 March 2017)

Should all assumptions and dependencies continue to be met, the annual service charge will remain as detailed in this document for the term of the contract, save for the application of an annual inflation index.

5.7 Liquidated Damages Delays to the Implementation Programme

NHS SBS propose that the standard framework liquidated damages regime applies for the programme with a single contractual milestone of providing the capability to take all CCGs live on 1 April 2013. The accrual rate per day will be 0.25% of the implementation charge capped at a total of 15% of the implementation charge.

5.8 Termination as a Result of Failure of the Health and Social Care Bill Being Given Royal Assent

NHS SBS will allow a termination for convenience in the circumstances mentioned above. Should this occur then NHS SBS would expect a reasonable compensation payment to be made by NHSCB. It will be based on unavoidable costs committed and incurred. For the purposes of illustration these may include:

Actual costs incurred to the point of the termination

Break costs associated with downsizing the project teams

Payment for assets purchased for this project (this may entail covering incremental costs where IT hardware is shared by other services but has been sized specifically to cope with the workload generated by the NHSCB)

Termination fees for third party contracts.


Prior to the adoption of the bill, NHS SBS will inform and seek the approval of NHSCB before committing to any material liability.

In all cases NHS SBS will seek to mitigate these costs.

.


6 Summary

The Commissioning Support Transition Team, and subsequently the NHS Commissioning Board Authority have identified that the most effective and efficient way to control cost and risks across the post 1 April 2013 commissioning landscape is to use a single finance and accounting platform. The NHS SBS ISFE proposal meets the requirement for a single finance platform for the commissioning community, providing the NHSCB, The Secretary of State and Treasury confidence in the financial governance of the Commissioning Model. The single platform will also drive best practice and ensure economies of scale within the Finance community. NHS SBS has undertaken over 200 projects to create sets of books for its clients. NHS SBS will adapt its proven PRINCE2 based methodology to deliver a Commissioning-only Oracle instance with a Chart of Accounts designed specifically for the needs of Commissioning organisations. The implementation programme detailed in Section 4 describes how NHS SBS and the NHSCB can deliver this challenging project with strong governance and partnership working. NHS SBS will provide a Finance and Accounting service based on its existing Oracle platform that services 160 NHS organisations, including over 50% of the current commissioning landscape. This service is:

Proven: NHS SBS has been providing its F&A service to clients since 2003. The NHS SBS staff, many of whom are from an NHS background, are experienced and qualified and therefore able to ensure service excellence to their clients.

Award Winning: NHS SBS has won multiple awards including two National Outsourcing Awards and a Gold award for Excellence in Information Integrity.

World Class: The NHS SBS is independently benchmarked by Hackett and has achieved World Class status for three consecutive years.

Secure: NHS SBS is independently audited against the SAS70 assurance level and will be audited against the ISAE 3402 in 2011- 2012. NHS SBS also maintains compliance with all the requirements of the IG Toolkit and Information Security requirements under the Data Protection Act.

Value for Money: NHS SBS enables an average saving of 35% for its PCT clients against an agreed benchmark.

NHS SBS offers a world class service delivered by a very experienced and service delivery excellence focused team. NHS SBS is externally benchmarked for both cost and efficiency of F&A provision and are proven to deliver substantial savings in operational costs which can be re-directed for investment in front line care. The NHS SBS proposal offers the best opportunity to achieve the stated aims of a single finance system for the Commissioning community providing control over risk and costs within the community and offers significant savings compared to a multiple provider landscape.


7 Commercial Statement

This document (“Proposal”) is presented to assist you in appraising the potential value of the proposed services for

your operation and is based on the information that you have provided to us concerning your particular service

needs. Naturally, your requirements may alter as your operation changes and only you can determine the

feasibility of the proposed services to answer your specific needs. Consequently, whilst we believe that our

recommendations are sound, all conditions and warranties express or implied whether by statute law or otherwise

are excluded and this Proposal of itself shall not constitute an offer nor form a contract.

This Proposal does not represent an offer which is capable of acceptance to form a contract between

ourselves and hence this Proposal is subject to contract.

Tax

All charges are based upon taxes, duties and other similar costs in force at the date of this Proposal. NHS Shared

Business Services Ltd shall be entitled to increase the charges correspondingly if its own costs or expenses in

respect of the services are in any way increased by any new or additional taxes (excluding Corporation Tax), duties

or other similar costs, or by the cost of conforming to any new or additional legal requirements. All prices quoted in

this Proposal are exclusive of Value Added Tax, which will be charged at the rate ruling at the Tax Point.

Copyright, Freedom of Information

The copyright of this document is the property of NHS Shared Business Services Ltd and the document contains

proprietary information of NHS Shared Business Services Ltd. It is supplied in confidence and must not be used for

any purpose other than that for which it is supplied. No part of this document or its contents shall be reproduced,

published or disclosed to a third party without prior written permission of NHS Shared Business Services Ltd.

Furthermore, for the purposes of the Freedom of Information Act 2000 (“the FOI Act”), you are not entitled to

disclose any information contained within or pertaining to this Proposal. All said information is to be considered as

exempt from disclosure under the FOI Act as it is either confidential information, and / or commercially sensitive

information and / or a trade secret of either NHS Shared Business Services Ltd or a third party. If you wish to

disclose such exempt information, you will need to obtain NHS Shared Business Services Ltd‟s prior written

consent. Please submit a written application to the Commercial Office at [email protected].

The written application should clearly state that it is associated with a statutory access request made pursuant to

the FOI Act and includes the name of the person who has initiated the disclosure request together with an address

for correspondence.

Validity

Unless terminated by written notice from NHS Shared Business Services Ltd prior to acceptance, this Proposal will

automatically terminate on 31 March 2012.


8 Appendix

8.1 Assumptions

# Area Assumption Comments

1 Implementation NHSCB to be operational from 1 Oct 2012

NHS SBS will provide a set of books for use by the NHSCB on the Commissioning Oracle Platform by 1st October 2012 for the NHSCB. IF the NHSCB require a finance system before this date NHS SBS will provide a set of books on the existing SBS platform. If the target operating model becomes impractical to deliver by 1 October then a set of books will be provided on the existing NHS SBS platform

2 Implementation CCG's will be operational from 1 April 2013

There will be no transactional activity by the CCG's before 1 April 2013. From 1 April 2013 all CCGs will begin transacting with the set of books managed by the CCG (if authorised) or the NHSCB (if the CCG is not authorised)

3 Implementation There will be up to 230 CCG organisations

Working assumption is that there will be 230 CCGs

4 Implementation There will be up to 35 CSOs Working assumption is that there will be 35 CSOs

5 Implementation

All CCGs will effectively be in existence from 1 April 2013 either as authorised statutory bodies or shadow non authorised organisations

Assumption agreed (see 2 and 5)

6 Implementation

There will be no transactional activity transferred into the new sets of books (they will be "green field")

Assumption is that no historical transactions will be transferred into the CCG or NHSCB sets of books.

7 Implementation

There will be no duplicate transactions between the NHSCB, CCGs and PCT in the period of shadow running prior to 1 April 2013

Assumption agreed

8 Implementation Change Management NHSCB will responsible for all Change Management activity within the Commissioning organisations

9 Implementation Communications Management NHSCB will responsible for all Communications activity with the Commissioning organisations

10 Implementation NHSCB Implementation Team NHSCB will provide an adequately resourced and equipped Programme Team to work with the NHS SBS Programme Team to deliver ISFE

11 Implementation

CSOs that are part of the NHS will not require a separate set of books for their own purposes

Assumption agreed

12 Implementation There will be 1 set of books per organisation

There will be 1 set of books per organisation. Where a CCG is partially authorised then permissions will need to be both the NHSCB and the CCG – this solution needs to be verified during the assessment stage.



13 Implementation

Commissioning staff at all organisations will be available for training as per the timetable laid out in the Implementation Plan

Assumption agreed

14 Implementation Supplier and Customer File

As green field site with specific activity it is assumed that the majority of the Supplier and Customer database files can be created in advance with organisational specific suppliers / customers added later in the implementation process

15 Implementation All users will have access to an N3 connection

Assumption agreed or user will access N3 through recognised gateway

16 Implementation

The Chart of Accounts will be the same structure as the current NHS SBS Chart of Accounts

Assumption agreed

17 Implementation The CCGs will go live with no local codes on 1 April 2013

Assumption agreed. There may be the option to create local codes with agreement of NHSCB. All coding must be in line with the aims of consolidated reporting to the NHSCB

18

Implementation

Training will be provided to the 35 CSOs and up to 5 large CCGs

CSOs will be responsible for training their CCG

19

Implementation

Each CSO will have identified Super Users for each functional area and they will be available for training as per the Implementation Plan

Assumption agreed

20

Implementation

All 231 organisations can be configured and operated on a single instance of Oracle e-Business suite

If target operating model or system limitations prevent this then multiple instances can be created which may incur further hardware, software & services charges.

21

Implementation

Existing industrialisation tools will be scaled to provide the service to all 231 organisations.

If target operating model, system or licensing limitations prevent this then additional hardware, software & services that may be required will incur further charges.

22

F&A Service

The Commissioning Oracle Platform will be based on the standard F&A system and processes with no customisations

No change to standard functionality

23

F&A Service

New Chart of Accounts for Commissioning Platform

New chart of accounts to be agreed but based on the current CoA structure. No impact on pricing

24

F&A Service

All organisations will use the existing Oracle solution for reporting

Assumption agreed – Costing does not include non financial data to Business Intelligence. This will be a future development if required

25

F&A Service

Solution will include a consolidated reporting structure based on a common month end timeline

Reporting solution will be built to roll up CCG reporting into single NHS Commissioning Org reports to replace FIMs etc Reporting to roll up from CCG (230) to Field Force (50) to Sector (4) to NHSCB



26 F&A Service Interfaces

Standard interfaces that exist in the current SBS system for PCT Commissioners will be provided as required (ESR, Supply Chain etc). No additional interfaces are included in the pricing

27 F&A Service Government Banking System will be used by all Commissioning organisations

Assumption agreed

28 F&A Service NHS VAT rules will apply to all Commissioning organisations

Assumption agreed

29 F&A Service All organisations will manage their own infrastructure & PCs

NHSCB responsible for ensuring minimum IM&T requirements are met as per the latest NHS SBS Infrastructure document

30 F&A Service All users will have NHS.net email accounts

Assumption agreed

31 F&A Service Sustainability Reporting

Price per set of books pa as per the NHS Sustainability unit. Header report included in service charge, Detailed Sustainability reporting is an optional extra for NHS CB and priced at £20k pa for four quarterly reports.

32 F&A Service Budget & Forecasting To be an optional extra outside of indicative costs

33 XXX XXX XXX

34 Pricing

Single 4+2 contract based on the existing FWA with NHSCB that consolidates transactional volumes

Assumption agreed

35 Pricing Service Level Agreement and KPI's

Assumed to be as per standard Framework Agreement

36 Pricing TUPE

TUPE applies but NHS SBS is not expecting any staff to transfer into NHS SBS; as such any redundancy and associated payments will be the responsibility of the NHSCB

37 XXX XXX XXX

38 Pricing Attributable Transactional Volumes

20% of total volume is attributed to NHS CB, 80% to the CCGs

39 Pricing NHSCB Transaction Volumes in 2012/13 will be 100 per month

Assumption made on basis that NHSCB will not be doing any Commissioning activities until 1 April 2013

40 Pricing

Technology refresh for routine upgrades is included but the cost of a major upgrade to the Oracle system to be itemised separately

Technology refresh for routine upgrades included. Estimated cost of the upgrade has been provided which will take place around 2015/17 depending on assessments made nearer the time

41 Pricing Pricing of the Service has been based on the productivity levels included in Section 7.2

For the purpose of measuring productivity a transaction is assumed to confirm with our “Good Invoicing Guide” and each invoice will on average include no more than 1.15 invoice lines.


8.2 Implementation Plans

XXX

8.3 Financial Glossary of Terms

Charging Structure The charging structure is to be broken down into three principal elements:

Variable Costs/Charges (variable)

Committed or Variable Costs/Charges (fixed/variable)

Committed Structure Costs/Charges (fixed) Each of these elements is then further subdivided and it is at this lower level that the charging methodologies are applied. Variable Costs/Charges These charges will vary with volume. They will be calculated on a “per transaction” or “per set of books” basis. A further breakdown of this category is given below. Purchase to Pay This includes, amongst others:

Provision of a process for the generation and despatch of purchase orders and the administration and payment on behalf of the Authority of invoices payable in respect of the Authority‟s Suppliers and other sums payable on the Authority‟s request

The electronic receipting of goods or services, scanning, electronic storage and archiving of supplier invoices, electronic workflow processes for invoice authorisation

Provision of an e-Procurement function.

Charging methodology – FTE Resource Methodology Cash Management This includes, amongst others:

A process for the management of the GBS bank account including daily bank reconciliations and a short term cash requirements forecast.

Charging methodology – FTE Resource Methodology Reporting This includes, amongst others:

Provision of book keeping for the Authority, up to the point of trial balance generation.

month end closure

Full reconciliation ledger accounts

Provision and maintenance of a standard interface gateway into the Contractor‟s general ledger.

provision of tools to enable the production of financial management reports from the underlying accounting records

Provision of a standard reporting library.

Charging methodology – FTE Resource Methodology Order to Cash This includes, amongst others:

Provision of a process for the generation of Authority sales orders, sales invoices, credit notes and a process for the receipt and allocation of monies in relation to Authority invoices

Provision of a debt management service.

Charging methodology – FTE Resource Methodology


IT People This includes, amongst others:

IT - Service Delivery Onshore and Offshore

IT - Infrastructure Onshore

IT - Client & Change Onshore

IT - Reporting Onshore and Offshore.

Charging methodology – FTE Resource Methodology IT Other Costs These are third party costs and include, amongst others:

Outbound interfaces

Inbound interfaces

Maintenance

Connectivity (contract central)

Telephones

Office Equipment. Charging methodology – actual cost plus margin Customer Service Desk (CSD) This includes, amongst others:

Ensuring that there is one contact telephone number dedicated to responding to Supplier queries and that this is adequately staffed.

Receiving, logging and responding to Supplier queries using one of the following channels of communication: Telephone, Fax, Letter, email.

Charging methodology – FTE Resource Methodology Committed or Variable Costs/Charges These charges may vary with volume, or may be fixed. This is still for discussion and agreement with the DH. Audit and Governance This includes, amongst others:

Responsibility for the maintenance of a system of internal controls and provision of year-end audit assurance statements to the Authority.

Charging methodology – FTE Resource Methodology System Admin This includes, amongst others:

Provision of a central helpdesk facility to deal with IT related queries.

Charging methodology – FTE Resource Methodology VAT Services This includes, amongst others:

A process to account for VAT associated with sales and purchase invoices.


F&A Management This includes, amongst others:

AP Lead Manager - Leeds

CSD Manager

A2R Lead Manager

CIM (continuous improvement team)

AR Lead Manager.



Note – the F&A Management Team maps into the Charging Structure as detailed below:

SBS Structure Costs: o Chief Operating Officer

F&A Management o Senior Delivery Manager o AP Lead Manager – Leeds o CSC (client service centre - helpdesk) Manager o A2R Lead Manager o IM (continuous improvement team) o AR Lead Manager

Variable Costs o Process Line Managers o Team Leaders o Clerks

IT Development This is the charge for the IT Development Teams, both onshore and offshore.

Charging methodology – FTE Resource Methodology Committed Structure Costs/Charges These charges are fixed. They relate to the overheads element of NHS SBS cost base. Programme Office This is the dedicated team required to manage the programme. Charging methodology – actual cost plus margin Premises This encompasses all premises and facilities costs such as rent, rates, utilities etc. XXX XXX SBS Structure Costs This includes:

SBS Board

Executive Management

Finance & Commercial

Marketing & Communications

Interest Charging methodology – apportionment methodology Other IT Costs These include:

IT Depreciation Charging methodology – apportionment methodology

IT Licenses Charging methodology – apportionment methodology

IT Hosting – CiBS Charging methodology – apportionment methodology

IT Technology Refresh Charging methodology – forecast IT charge

8.4 NHS SBS Background Information

NHS SBS is a joint venture between the Department of Health (DH) and Steria and was formed in April 2005 with the aim of providing a range of cost effective, innovative and high quality back office services to the NHS, whilst delivering significant cost savings.


When formed, NHS SBS was given a target of delivering £230m of operational savings over the next ten years. The National Audit Office has recently stated that NHS SBS is on track to achieve this target recognising £70m of savings since 2005.

Over the last six years NHS SBS has not only become the leading provider of back office services to the NHS, but are a global exemplar for shared services in the public sector. The NHS SBS service has evolved to the point where 91% of customers believe NHS SBS add value to their business, and Hackett has classified NHS SBS as one of only a handful of world class shared service providers. As can be seen below, the percentage of clients that believe “NHS SBS adds value to their business” has increased significantly over the last four years.

Satisfaction has been achieved through an embedded culture of continuous improvement based around the key elements of service:

Quality NHS SBS has used the Lean Sigma improvement methodology to ensure all processes are client focused, free of waste and are delivered to the highest standards of accuracy and timeliness. All processes operate within the proven „Centre of Excellence‟ delivery model which ensures that knowledge and expertise is optimised in one location, providing assurances of both quality and continuity. Key Performance Indicator measures have been consistently met and surpassed over many years, highlighting a real reason why clients continue to rate NHS SBS so highly.

Client Focus NHS SBS has developed a multi layered approach to working in partnership with each individual client whilst ensuring all clients benefit from the huge range of knowledge and experience NHS SBS carries in delivering services to the NHS. Every client has a client manager assigned to them as well as numerous people from within the operational teams who together create the shared service team. In addition each client also has the opportunity to be a part of a number of service line User Forums, process focused Working Groups and various best practice forums designed to add value to clients by facilitating the appropriate sharing of a huge amount of management information, benchmarking data and associated good practice amongst all clients.

In recognition of delivery efficiencies and excellence, NHS SBS has recently been awarded the prestigious

“Outsourcing Service Provider of the Year” award given by the National Outsourcing Association.

The NHS SBS purpose is to provide efficient and effective back office processing for NHS trusts together with high

quality management information. This will support NHS Organisations own Finance and HR professionals to focus

on strategic management and objectives, with NHS SBS providing quality reporting for decision making support.

With over 130 NHS Organisations using the Finance and Accounting Service and over 60 using the ESR Payroll

Service, NHS SBS has more experience of providing high quality back office services to the NHS than any other

shared service provider.

Meeting the QIPP Agenda NHS SBS services are a robust and proven way of reducing an NHS Organisation‟s back-office operating costs and a valid contribution to your QIPP agenda. NHS SBS has been involved with the QIPP back office and


procurement work-streams since February 2010. Many trusts are reviewing the NHS SBS services to help them achieve their QIPP operating targets. The NHS SBS F&A service is able to support QIPP in your trust in the following key areas:

Ongoing investment in continuous improvement and sharing with you best-practice advice and guidance in F&A and Procurement, such as faster month end closing, electronic invoicing and smart procurement behaviours.

Implementing further service lines which will continue to drive out inefficiency and waste and further reduce back-office costs on an on-going basis.

NHS SBS will build into the system design and implementation best practice to be followed by Commissioning organisations in order to maximise the benefits of using the NHS the benefits of using the NHS SBS Oracle platform.


Contact

Dr Hannah Goodman

NHS SBS, Phoenix House, Topcliffe Lane, Tingley, Wakefield, WF3 1WE

Tel: 0113 3071500 or Mobile: 07966 824 984

www.sbs.nhs.uk

© NHS Shared Business Services Limited 2012

The copyright in this document is vested in NHS Shared Business Services Limited.

The contents of this document must not be reproduced (wholly or in part) used or disclosed

without the prior written permission of NHS Shared Business Services Limited.

Documents

Proposal for the Integrated Single Financial Environment