Strategic Business Case 2017-2022 - GD 2018/0087 - Tynwald
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GD 2018/0087
ISLE OF MAN ISLE OF MAN
1ST
THORNTON AND BREGAZZI 2018
£
1.00
THORNTON AND BREGAZZI 2018
ISLE OF MAN
ROW
THORNTON AND BREGAZZI 2018
Strategic Business Case
2017-2022
REF-V5 - TO BE SUBMITTED WITH TYNWALD PAPER DEC 18
Who we are
Our Mission:
“To provide value added postal, distribution and digital services for our customers and make
a positive contribution to the Manx economy.”
Our Vision:
“Working together to protect the core business, growing profitably and diversifying
selectively to the benefit of the Manx economy.”
Our Values:
• Put our customers first, treating them with respect
• Build on our trusted status
• Conduct our business with integrity
• Protect our customers’ information
• Take responsibility for our actions
• Treat each other with fairness and respect
• Drive innovation and creativity
• Succeed together
Key Stakeholders:
STAKEHOLDER OUR COMMITMENT
Our Employees Our people are our most valuable asset and are crucial to the effective delivery of our
services
Our Customers Our trusted services link people and business worldwide allowing customers to take
advantage of our range of physical and digital services that support resident and business
service needs
Government We provide letters and small package delivery services under the universal service obligation.
We complement this with commercial services that traditionally have ensured we remain a
self-funding Statutory Board
Private Sector We partner with the private sector, delivering services to customers in a commercially viable
way
Strategic We work with strategic partners (key suppliers, other small postal authorities etc) leveraging
Partnerships knowledge, experience and skills to innovate and protect the quality of our service,
competing on a fair basis
Unions We work with the trade unions, maintain and build collaborative relationships with them to
ensure their members’ views are represented
Post Offices Sustain viable community services in the areas of the retail network and universal services
obligation in a customer focussed, efficient manner
iompost.com 2
Our strategies and key objectives:
Strategy 1 Work together
Objectives;
• To develop a modern, engaged and flexible workforce, attracting, developing and rewarding talent
• Continue to build and maintain strong stakeholder relationships
• Live our values, promoting innovation and a commercial approach
Strategy 2 Defend the core business
Objectives;
• Sustained viable community services in the areas of the retail network and universal services obligation
• Use technology, data and new ways of working to improve service, working conditions and service affordability
• Continue to be customer value focused, secure and compliant
Strategy 3 Diversify selectively and grow profitably, to return the business to
a sustainable profit, supporting the local economy and reinvesting
into the business
Objectives;
• Understand customer and market needs and priorities
• Develop current and new profitable products and services
• Develop digital solutions and services to protect and grow our customer base
Programme for Government
Theme and policy statements alignment to which our strategy responds:
Theme Policy statement
Responsible • Demonstrate sustainable public finances with clear recognition of financial targets that
Island support Government priorities
• Make access to our services more focussed around the needs of our customers
• Continue to transform Government Services through the use of digital technology
• Deliver against our commitment to reduce carbon emissions
Enterprise and • Create an environment that allows businesses to thrive and flourish
Opportunity
• Maintain our reputation at the forefront of innovation and emerging technologies and
Island
respond quickly to new business models
Inclusive and • We will work together with local authorities and other partners to deliver the right
Caring Island services in the right place at the right time, making sure national priorities are funded
accordingly
iompost.com 3
Contents
Strategic Business Case
2017-2022
1. Executive Summary 5 7. Integrated Mailing Solutions
2. Overview 6 7.1 Overview 20
7.2 Dimensions 20
3. Current Structure 6
7.3 Reasons for change 20
4. Corporate Division
7.4 Work together 21
4.1 Overview 7
7.5 Defend the core business 21
4.2 Dimensions 7
7.6 Diversify selectively and grow
4.3 Reasons for change 7 21
profitably
4.4 Working together 8
8. Stamps & Coins
4.5 Defend the core business 9 8.1 Overview 22
4.6 Diversify selectively and grow 8.2 Dimensions 22
9
profitably
8.3 Reasons for change 22
5. Mails Division
8.4 Work together 23
5.1 Overview 10
8.5 Defend the core business 23
5.2 Dimensions 10
8.6 Diversify selectively and grow
5.3 Reasons for change 10 23
profitably
5.4 Work together 13
5.5 Defend the core business 14
Diversify selectively and grow
5.6 15
profitably
6. Retail Division
6.1 Overview 16
6.2 Dimensions 16
6.3 Reasons for change 16
6.4 Work together 18
6.5 Defend the core business 18
6.6 Diversify selectively and grow
19
profitably
iompost.com 4
1. Executive Summary
The postal industry is This strategy is required to sustain the business in the
long term as a modern, self-funding Post Office fit for
the future and minimise the risk for a subsidy from
rapidly changing - the Government.
digital era is the game If delivered, this strategy sees the business’s finances
turnaround from a loss to a small profit over the five
changer in the services year period, retaining our position as a net contributor
to the public purse. It has been developed in line
with our mission, vision and business objectives
we provide. and contributes to a number of key themes for the
‘Programme for Government’ and ‘SAVE’ initiatives.
Our universal service obligations of letter mail and retail Corporatisation of the Post Office has been debated
network service transactions continue to decline as since 2003 and the Board believe a change in the
business and retail communications and transactions business’s corporate status is needed to future-proof
move online. the business in the long term. However, the Board feel
the debate should be postponed for the foreseeable
There is an increasing risk that Royal Mail, our main future in order to allow the business to focus on
trading partner for mail to and from the Island, will look delivering its strategy.
to change the pricing structure of our commercial
agreement and seek to renegotiate the fees we Key strategies include:
receive for non-universal service obligation (first or
second class) mail as they seek to address profitability • A review of the Post Office Network to ensure it
challenges. This would have a significant financial impact provides a viable and affordable service in the future
on our income and a reduction in up to a third of our against the backdrop of falling transactions
mail volumes. Negotiations are ongoing. (average -7% per annum)
The current financial year 2017/18 has seen a • Review and modernise collection and delivery
material drop in commercial revenues as the large local service operations to optimise resources using
corporates, mainly banks and insurance companies, technology and modern working practices
have reduced in number on the Island. Those remaining
seek to reduce costs by moving work off-Island to • Introducing a pricing strategy for letter mail to
larger print houses. This revenue is no longer sufficient protect the first class service
to ensure the overall profitability of the business
without material change. • Review our 6-day letter delivery service in line
with reducing customer demand (average -7%
Further diversification into new products and services, per annum) but maintain a 6-day delivery service for
as approved by Tynwald in 2006, has not developed parcels and other time sensitive items
with sufficient pace to replace the overall decline.
With further one-off costs in respect of pension • Increase contracted parcel last mile deliveries
contributions and building revaluations compounding
the sales decline, IOM Post Office anticipates making a • UK sales presence to increase our off-Island
net loss in 2017/18. customer base and UK partnerships
This year the new Board and Executive Team have • Increase the pace of introduction of our new
reviewed the business’s strategy and have agreed services. E.g. MiCard, (Hybrid) Smart Delivery,
strategic changes to more accurately respond to our scanning, more/new direct mail customers
current challenges.
• A review of terms and conditions, employment
practices and job evaluation
• Changes to our pension scheme to ensure it is
affordable and sustainable for the future
iompost.com 5
2. Overview
Isle of Man Post Office (IOMPO) is a self-funding The commercial services IOMPO offers today compete
Statutory Board of Tynwald providing public postal fairly with the commercial sector and are not cross
services. At the turn of the century, mail volumes subsidised. This includes the delivery of parcels - a
started to decline as individuals and businesses started competitive, price sensitive market and therefore the
to take advantage of new quicker and cheaper digital increase in online shopping has only been a small
communications available to them. benefit to IOMPO, with income not replacing declining
letter mail revenue in the way that many may presume.
Mail volumes have halved in the last 10 years. At its
peak mail volumes were declining by 10% per annum Like other postal operators in public or former public
(currently 7%). IOMPO recognised the challenges facing ownership, we have high fixed costs and less flexible
the postal industry and commenced offering a franking operating models than our competitors. Our services,
service (post marking of envelopes) to the high number the prices and the Government levy have only been
of banks on the Island, this was the embryonic stage of sustainable in recent years due to the profits from
the mailing division it has today. our commercial services, primarily large corporate
commercial print and postage contracts.
In 2006 Tynwald also recognised these challenges and
approved IOMPO to “pursue the diversification and IOMPO has needed to find £1m of new income every
development of new commercial opportunities in order year just to stand still. It has successfully achieved
to remain economically and commercially viable and this until now but for the first time in its history, it is
thus enable it to continue to support its public service forecasting a loss for 2017/18. Material change is
obligation i.e. the postal service.” needed to return the business to profitability.
3. Current Structure
We have four divisional areas that report a profit and loss for their respective products and services, together with a
‘Corporate’ division to manage activities that are common to all the divisions.
PROFIT & LOSS DIVISIONS
MAILS RETAIL INTEGRATED STAMPS
MAILING & COINS
SOLUTIONS
LETTERS GOVERNMENT PRINTING & STAMPS
AGENCY FULFILMENT
PARCELS COINS
INCLUDING
SCANNING &
COURIER MICARD STORAGE COLLECTABLES
DRIVING & VEHICLE
LICENSING DIGITAL SERVICES
FOREX
BANKING SERVICES
POST OFFICE
NETWORK
CORPORATE
SHARED SERVICES &
PENSIONS PAY, TERMS & CONDITIONS
SYSTEMS
iompost.com 6
4. Corporate Division
4.1 Overview 4.3 Reasons for change
• Responsible for Executive matters, corporate • Low unemployment on the Island is a challenge
governance includes regulatory compliance, staff in terms of recruitment generally. Some areas
welfare and the provision of shared services of the business have a very low staff turnover,
functions i.e. postal staff. In other areas of the business we
are seeing an increase in leavers and difficulty in
• Shared services functions are internal experts in a recruiting the right calibre of staff. This suggests
given competency, e.g. Compliance. This includes our grading structure and terms and conditions are
shared accountability of results to where the work is not appropriately aligned to the sector specific skills
provided needed
• The Executive and the respective General • The current collective bargaining process provides
Managers of the product and service divisions no opportunity to offer performance related
ensure that the agreed results are delivered based rewards
on defined measures
• Employee engagement survey take up has
historically been low c23%. Take up in 2017 was
encouraging, resulting in 62% of staff completing
4.2 Dimensions the survey and highlighting areas where action can
be taken
• Working from Postal Headquarters, 66 Full Time
Equivalent staff across Executive and shared service • The Postal industry is changing globally. IOMPO
functions: working practices and technology have not
developed in line with changing customer
• Commercial, including Sales & Marketing
demands and volumes. To be successful IOMPO
• Finance & Compliance must engage the workforce to drive the change,
• Projects/Business Change embracing technology, developing working practices
fit for a modern Post Office with sector specific
• IT Delivery & Support remuneration and working conditions
• HR • The use of corporate resources and the allocation
• Customer Services (excludes Licencing team of the associated costs need to be reviewed in line
detailed under Retail division with the changing divisional strategies
• Our last triennial pension valuation (March 2017)
informed the Board’s view that the current defined
benefit scheme, last changed in 2010, is no longer
affordable in its current form due to factors such as
future expected investment performance, increased
life expectancy and inflation.
iompost.com 7
Life expectancies in years in England at age 65 UK Government Bond Yields - 10 Year
25.00 6
Quarterly average bond yields (%)
5
4
3
20.00 2
Males
Females 1
0
15.00
Source: Bank of England - Series IUQAMNPY
• Our customers require us to be compliant and secure in an increasingly regulated environment with high
standards to be adhered to, e.g. General Data Protection Regulation, Equality regulation, Cyber security, ISO
accreditations, Customs Pre Authorisation project etc.
• Declining core services and narrowing profit margins require a more commercial, cost effective approach
4.4 Working together
• We must continue to adapt our approach to be inclusive, acting on constructive feedback, attracting and
rewarding employees in line with market and industry specific expectations across the business
OBJECTIVE ACTION OUTCOME
• To develop a modern Work closely with unions, management and
Feedback / dispute
engaged and staff engagement groups to develop stronger
resolution
flexible workforce, relationships for the benefit of all
attracting, developing
Introduce Employee forums to ensure the voice
and rewarding Feedback/ issue resolution
of staff/access to senior management
performance
• Continue to develop Act on employee survey results Engagement score
and maintain Complete business-wide job evaluation, Pay alignment
strong stakeholder evaluating and simplifying the grade structure and
relationships remuneration, aligning job families to industry
• Live our values, equivalent pay bands
promoting innovation Review role profiles to ensure capability to Ease of assessment
and a commercial complete roles is clearly defined Increased productivity
approach
Implement a performance related pay and
Retention and engagement
management process
Review T&C’s in line with the industry norms and
T&C’s updated
new legislation
Policies updated
Review policies in line with changing legislation
Pension changes - Work with Trustees and union Pension scheme(s) that are
to revise and protect pension schemes by reducing affordable and sustainable
future liabilities for the future
iompost.com 8
4.5 Defend the core business
• The Post Office has established and maintained a highly compliant operation with good governance as required
by a public entity dealing with corporate and personal customers’ data
• The Post Office must continue to invest to maintain its reputation and to protect its customer base
OBJECTIVE ACTION OUTCOME
• Use technology, data GDPR compliant - Create and maintain
and new ways of an effective customer and employee data Target date May 2018
working to improve management system
service, working
Create and maintain an effective records
conditions and service Ease of use / record
management system to aid FOI and efficient
affordability retention
document management
• Continue to be
customer value Enhance Cyber security in line with industry
Threats mitigated
focused, secure and standards
compliant Equality Act compliant - Implement changes to
Target date 2019
ensure the business is compliant
Maintain and develop compatible, fit for purpose • Improved functionality
IT systems network, infrastructure and software • User feedback
in line with business requirements, including; • Compatibility
an accounting system upgrade, new customer
• Efficiencies through
relationship management software and improved
automation and
reporting
reduced support effort
4.6 Diversify selectively and grow profitably
• Shared service functions must be commercially focused, aligned to the profit and loss making division needs
OBJECTIVE ACTION OUTCOME
• Develop current Targeted admin savings and support for growth. • Services protected
and new profitable Ensure shared service functions are commercially in line with demand,
products and services focused, working with General Managers to creating savings
provide leaner more cost effective services, and efficiencies
including identifying, evaluating and delivering new to support new
products and services to market revenue generating
opportunities
iompost.com 9
5. Mails Division
5.1 Overview • 1 mail centre, including letter and parcel delivery
offices for IM1 to 4 postcodes
• Our Mails division exists to supply a postal service • We have 3 separate delivery offices serving the
to the Isle of Man. It has a protected right to deliver Northern, Southern and Western areas of the
mail up to £7.50 in postage to any address on the Island in Ballasalla, Peel and Ramsey
Island under the terms of the Post Office Act 1993.
It has no reserved rights for items costing more • 257 weekday collections from post boxes
than this and is thus in competition with other • 46 weekday collections from Post Offices
parcel carriers
• 282 weekday collections from businesses
• The main types of mail include letters, large letters • 40,000 items posted per day
and magazine packets, parcels, items requiring
• >27 million total mail items last year
scanned or signed proof of delivery and items over
30 kilograms known as heavy and large some of • 103 vans and trucks from Ford Connects to
which require two-man delivery Mercedes 7.5 tonnes and fork lifts, including 6
electric vehicles
• Mail generated by sales on Island is either for local
delivery or forwarding for UK or worldwide delivery.
The bulk of mail items delivered on Island comes
from the UK and beyond
5.3 Reasons for change
• Our contract with Royal Mail Group accounts for
• We dispatch our collected mail each Monday to 90% of inbound traffic thus represents a dominant
Friday evening to East Midlands Airport to connect strategic partner risk
with the Royal Mail Group (RMG) network on the
shared cost flight from Ronaldsway. That plane also
Proportion of Inbound Mail Traffic by Carrier
brings mail from the UK each Tuesday to Saturday
morning. This service facilitates next day delivery for
priority items in both directions. We also operate
bespoke air-borne courier services from and to the
UK
• Sea containers are used for the excess from the
flight and for other work for us to deliver from Yodel
and Hays DX. Sea containers arrive every day and
are processed on the day of arrival except Sundays
and Bank Holidays
5.2 Dimensions
• 198 Full Time Equivalent (FTE) postal staff
• 3 engineers
• 172 union members
• 12 managers
• 1 administration officer
• 6 days out of 7 we deliver and collect mail
• 52,000 letters and parcels delivered every day
• 40,000 home deliveries
iompost.com 10Letter mail;
• There has been a sustained decline in traditional letter mail, the average reduction of 7% over the last 3 years
Royal Mail Inbound Letter & Large Letter Volume / Weight / Revenue
0.0%
Letter & Large
-5.0%
Letter Volume
%+-
-10.0%
% Variance
-15.0% Letter & Large
Letter Weight
-20.0% %+-
-25.0% Letter & Large
Letter Revenue
-30.0% %+-
-35.0%
2013/14 2014/15 2015/16 2016/17 2017/18
• Our exclusive privilege (reserved area) for letter delivery is not large enough to sustain postage at the current
pricing levels
• The volume decline was tempered slightly by an increase in direct mailing and regulatory mailings for PPI and
FATCA. These mailings will reduce as the on island finance sector retracts and such projects are completed
• Inbound large letters are becoming lighter, volumes held up last year with a better negotiated price per item with
Royal Mail Group creating more revenue
• The cost of a first class stamp price is the lowest in the British Isles. The price is not financially sustainable at the
current levels. (See graph below)
70
60
63p 65p 65p
59p
50
49p 47p 47p
40
42p Local
only
30
20 UK &
other
10 islands
0
Jersey Post Isle of Man Guernsey Royal Mail
iompost.com 11Parcels;
• While parcel volume and revenues have continued to grow, pricing power and profitability are declining, fast and
free delivery is a competitive differentiator for online retailers. Competition for the last mile is fierce
Total Parcel Items Volume / Revenue
60.0%
50.0%
40.0%
Parcels
Volume %+-
% Variance
30.0%
20.0%
Parcels
10.0% Revenue %+-
0.0%
-10.0%
2013/14 2014/15 2015/16 2016/17 2017/18
• Average volume growth of 7% pa over the last four years (2% last year), better price per item negotiated in 2015
creating more revenue with Royal Mail Group
• 3% average revenue growth in Royal Mail Group
• The impact of unlicensed operators on the Island has a detrimental effect on IOMPO’s revenue each year. As it
stands, the Post Office Act does not provide protection against such operators and therefore amends to tighten
up the legislation in this area are required, which can then be enforced with support from IOMPO’s sponsoring
department (Department for Enterprise)
• Hermes is part of the so-called gig economy where self-employed drivers are paid per ‘gig’ for delivering packets
and parcels. They are reinventing last mile delivery and the competitive landscape. They are nimble and asset light
- subject to current scrutiny in respect of employment law. The table below evidences that our parcel market
share is reducing year-on-year with Hermes seeing sustained growth year-on-year
Sample Size IOMPO HERMES OTHER
2015 260 72% 16% 12%
2016 697 65% 21% 13%
2017 429 63% 23% 15%
• Scrutiny of our below average volume increases suggest that some online retailers exclude IOM postcodes on
the basis of misconceptions regarding taxation and delivery. We are working with UK distribution partners to
reassure their large online retail customers in this regard, recent successes include Argos, Zara and Asda
• With an increase in inbound e-commerce the scope for handling non-required returned parcels is a real
revenue opportunity, but one for which IOMPO will face stiff competition from other parcels companies
iompost.com 12Ways of working
• The ways we utilise our resources (employees, technology, vehicles and premises) have not developed as quickly
as technology and customer preferences
% of Costs by Category
3% 2%
5%
4%
7% Staff Costs
Royal Mail Group Delivery Cost
Conveyance (Aircraft & Ferry Costs)
Plant and Machinery
56%
Accommodation
Vehicles
23%
Other
71% OF OUR MAILS DIVISION OPERATING COSTS ARE CURRENTLY FIXED
• As a privatised entity Royal Mail Group are working hard to transform their business to protect their position in
the UK market and to increase profits for their shareholders. A small change by Royal Mail Group can lead to
substantial change in our costs and revenue. Our as-is includes a provision for a reduction in Royal Mail Group
recharges
5.4 Work together
• We must continue to use technology and data to help evolve our working practices to meet the demands of a
modern business
OBJECTIVE ACTION OUTCOME
• To develop a modern Continue to work closely with Royal Mail • Services protected
engaged and to sustain affordable Island services. Where in line with demand,
flexible workforce, stakeholder aims diverge, we will work together to creating savings
attracting, developing establish an acceptable outcome and efficiencies
and rewarding to support new
performance revenue generating
opportunities
• Continue to develop
and maintain Modernise Mail Operations - Review and
strong stakeholder modernise collection and delivery service
relationships operations, ensuring key resources are optimised in
• Live our values, line with volume trends through the effective use
promoting innovation of improved technology and working methods
and a commercial
approach
iompost.com 135.5 Defend the core business
• We must continue to adapt our services and pricing in line with reducing letter volumes, increasing parcel
volumes and increasing service costs
OBJECTIVE ACTION OUTCOME
• Sustained community Review our 6-day letter delivery service in line • Services protected
services in the areas with reducing customer demand (average -7% in line with demand,
of the retail network per annum) but maintain a 6-day delivery service creating savings
and universal services for parcels and other time sensitive items and efficiencies
obligation to support new
Letter pricing strategy - review on/off Island revenue generating
• Use technology, data
costs and risks in line with commercial and opportunities
and new ways of
working to improve residential customer needs • Environmental gains
service, working through the reduction
conditions and service Continuous improvements in carbon miles
affordability • Reduce post box collection frequencies where
• Continue to be demand for service is not viable
customer value
• Trial employee pay per item for delivery of
focused, secure and
parcels and Saturday specific deliveries
compliant
• Enhance the experience for the receiving
Island customer by increasing the amount of
useful delivery information available to them
and by making it easier for them to receive
parcels and items requiring Proof of Delivery
on the first delivery attempt. In doing so we
expect more off-Island suppliers to use us for
their deliveries and returns, raising revenue
Improve fleet efficiency - Continuously review
and revise size and composition of the vehicle
fleet to meet our changing requirements, reduce
maintenance costs, eliminate unnecessary
journeys, replace diesel with electric vehicles
where there is demonstrable benefit and aim to
cost effectively reduce time that vehicles are not
being used
iompost.com 145.6 Diversify selectively and grow profitably
• We must continue to grow the number of customers for which we provide services in line with e-commerce and
IMS postage sales growth. With an increase in e-commerce inbound there is an opportunity to ensure IOM Post
Office is the carrier of choice for returns
• Subject to a cost benefit appraisal and fair competition, we see an opportunity to use our trusted post people to
win complementary services that will benefit from our unrivalled access to the local community
OBJECTIVE ACTION OUTCOME
• Understand customer New last mile parcel deliveries - We will continue to • Increase in
and market needs and compete for and win parcel delivery contracts based on profitable sales
priorities quality and price of service
• Improved
• Develop current UK postage growth through IMS - Support for IMS customer
and new profitable product related UK sales postage satisfaction as a
products and services result of greater
Postage growth through new online retailers - online retailer
Continue working directly and indirectly (through UK choice/services
carriers) to successfully attract UK online retailers to provided
deliver to the IOM, winning collection and conveyance
contracts for ‘unwanted returns’
New complementary services - Identify and implement
other profitable services subject to customer demand
iompost.com 156. Retail Division Post Office locations
Andreas PO
Jurby PO
Post Office
Kiosk
6.1 Overview Sulby PO Ramsey PO
Ballaugh PO
Kirk Michael PO
• The network is loss making, 2016/17 recorded a
net loss of £1.5m Laxey PO
Peel PO
St Johns PO
• The network is made up of largely externally owned Kirk Onchan PO
Foxdale PO Union Mills PO
and operated businesses that operate other retail Royal Avenue PO
PO HQ
services and benefit from the footfall Post Office
Douglas Counters
transactions generate. SDO
• Anagh Coar
Ballasalla PO • Crosby Terrace
Port Erin PO • Governors Hill
• The Post Office pay commissions on transactions Port St Mary PO
Castletown PO
• Pulrose
• Strand Street
and fixed community support payments (£750k) to • Willaston
• Windsor Road
the network. The Post Office costs include office
fittings, IT equipment and connectivity costs 6.3 Reasons for change
• The network supports three main categories of • IOM Post Office currently has the highest number
transactions; post, banking services (on behalf of of Post Offices per head of population, anywhere in
local and UK banks) and Government services the United Kingdom
• The diverse nature of products and services is Average number of people per Post Office
largely limited to simple transactions to ensure
viability 8,000
6,000 Average
• The division includes vehicle and driving licencing number
4,000 of people
services provided on behalf of the Department of per Post
2,000
Infrastructure (DOI) through the network and a Office
dedicated IOMPO team who provide commercial 0
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• The MiCard service was implemented in 2016 in
partnership with Treasury’s Social Security Division. • We anticipate the rate of decline in transactions
It has been a great success. It fits well with our will continue to increase as digital changes the
trusted brand and is helping to sustain footfall way retail services are provided through multiple
across the network while generating a new digital channels; internet self-service portals, phone,
revenue stream applications etc are growing with face-to-face
transactions reducing - average 7% reduction per
annum over the last 3 years
6.2 Dimensions
Existing services transaction
• Currently 27 Sub Post Offices, 3 internal operating
volume forecast by 2021/22
from Post Office locations, 24 independently owned
and managed offices Vehicle Licences -100%
• 12 Kiosks Dog Licences -100%
Government Rent Payments -100%
• 7 FTE specific to the Department of Infrastructure
(DOI) vehicle licencing administration support Postal Orders -100%
Government cheques -95%
• The broader Customer Services team support
products and services across the business divisions Non Government transactions -50%
(Manx Telecom, Manx Gas)
Banking -15%
MiCard (Social security payments) -11%
Mails -8%
Forex +25%
iompost.com 16• While we continue to seek out opportunities, online and through the network, it is clear that this will not
materially slow the decline in face-to-face transactions
• Experience indicates that funding levels would need to be maintained to make the current retail network
financially viable in the face of falling volumes, thus increasing losses if an alternative strategy cannot be agreed
• A natural reduction of the network as Sub Post Masters resign or retire will not protect the provision of services
in the community
• The current customer pricing structure is complex and inconsistent having evolved over time
Comparison of transaction volumes to transaction revenues excluding mails 2016/2017
13% 9%
26% 8% 30%
Gov Payments - Licensing
Gov Payments - MiCard
Gov Payments - Other 14%
Forex
6% 29%
Non Government Payment
1% Banking Agency
10%
25% 29%
VOLUMES REVENUES
• If the DoI ceases their contracts for agency arrangements with IOMPO for vehicle and driving licences as
anticipated, this will reduce the IOMPO annual revenue by over £550k per annum based on current revenue
levels, and the independent network sub postmasters income by 12% to 51% per annum.
iompost.com 176.4 Work together
• We must work together with all key stakeholders to find ways to reasonably protect services at an affordable cost
OBJECTIVE ACTION OUTCOME
• To develop a modern engaged Transform the network. Consult with all key • Services
and flexible workforce, attracting, stakeholders on the future of retail face-to- protected in line
developing and rewarding face transactions to determine the future with demand,
performance operating model and roadmap of change to creating savings
protect the service provision and efficiencies
• Continue to develop and maintain
to support
strong stakeholder relationships
new revenue
• Live our values, promoting Reduction in Department of Infrastructure generating
innovation and a commercial services. Work with the Department of opportunities
approach. Infrastructure and other key stakeholders
• Clarity for Post
to manage the decline in line with the
Office Network
Department of Infrastructure strategy
and employees
impacted
6.5 Defend the core business
• Tightening of regulation has led to material overheads in providing services
• Financial analysis indicates that some contracts may not be profitable
• We must seek to drive through efficiencies in back office services to optimise financial returns
OBJECTIVE ACTION OUTCOME
• Sustained community services in Review contracts in respect of 3rd party • Profitable services
the areas of the retail network services provided in line with increasing protected
and universal services obligation operating costs
• Improved cost and
• Use technology, data and new sustained quality
ways of working to improve of products and
service, working conditions and Continuous improvements including services
service affordability exploring the insourcing of the cashier
• Continue to be customer value function, more online servicing and
focused, secure and compliant improved customer enquiry and compliant
management
iompost.com 186.6 Diversify selectively and grow profitably
• We believe our current MiCard service has the potential to be developed as a convenient way for residents
to certify their identity and digitally maintain their personal details through the IOMPO portal; asserting their
personal data to access Government services, creating a new revenue stream for IOMPO that is not dependent
on the physical Sub Post Office network. It could be the strategic solution to replacing the 18+ Government
related cards currently in use
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• Travel cards n
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• Resident parking
• Car parking
• Air/f
erry identification
• The network is well positioned to provide simple third party transactions as the viability of branch face-to-face
services continues to decline
OBJECTIVE ACTION OUTCOME
• Understand customer and market Expand the use of MiCard. Continue • Increase in
needs and priorities to work with Government to identify profitable sales
• Develop current and new opportunities to extend and develop the
profitable products and services use of MiCard for other services
• Develop digital solutions and Extend counter services. Work with the
services to protect and grow our public and private sector to develop and
customers support new e-commerce and financial
service opportunities through the retail
network
iompost.com 197. Integrated Mailing Solutions (IMS)
7.1 Overview 7.3 Reasons for change
• IMS was created 20 over years ago to provide • As the Island’s business profile has diversified, and
added value services and to protect and generate our traditional customers seek more convenient
postal revenues and cost-effective ways to communicate with their
clients, our market is changing
• We are the only ISO 27001 accredited data
handling specialist providing secure mailing • To stay relevant and meet our customers’ needs, we
production in the IOM and Channel Isles. Coupled need to provide a convenient mix of traditional and
with IOMPO having one of the lowest first class digital communication solutions
postage rates in Europe, our offering is unique
• We need to find new markets and customers
• We use local suppliers whenever possible, spending
£310k throughout 16/17 Trends in the local financial sector since 2010
• IMS is fundamental to sustaining postage revenues.
During 16/17 mail produced by IMS accounted for
31% of all the mail generated in the Isle of Man 2010
34 Class 1
Net outbound postage sales 16/17 Banking
Licenses
IMS - Production
44%
31% decline
Mails & Retail
52%
17% 2017
19 Class 1
IMS - Franking
Banking
Licenses
7.2 Dimensions • With our expanding physical and digital products
and services well matched to support the
• Team of 27 FTEs skilled & general roles across two
digitisation of documents, GDPR and secure data
sites
handling, we see an opportunity to expand our
customer base both locally and in the UK focusing
• In the last 2 years - £480k investment in printing,
on small to medium enterprises
finishing and insertion equipment to enhance
capacity, capability of Print / Finishing / Fulfilment /
Scanning
• Only mailing house in IOM/Jersey/Guernsey that is:
• ISO 27001 / ISO 9001 certified
• Complaint with BS 10008 / PCI DSS
iompost.com 207.4 Work together
• IMS work is volatile leading to peaks and troughs in demand for a fixed headcount
• There is an opportunity to work more closely with Government to use our products and services in the delivery
of the Programme for Government/SAVE initiative
• We must continue to invest in sales and marketing to deliver our commercial targets
OBJECTIVE ACTION OUTCOME
• To develop a modern engaged Modernise the operation - Review the structure • Employee
and flexible workforce, and source of resource to ensure a flexible cost satisfaction
attracting, developing and effective operating model in line with fluctuating
• Improved cost and
rewarding performance demands (IMS and Stamps & Coins production)
sustained quality
• Continue to develop and of products and
maintain strong stakeholder services
relationships
Protect/Increase IOM Government customers • Increase in
• Live our values, promoting - Strengthen existing Government and local profitable sales
innovation and a commercial corporate relationships to protect and increase
approach IOMPO sales/deliver efficiencies within
Government
7.5 Defend the core business
• Need to continuously improve quality and price to remain competitive. There is potential to make use of industry
tools to aid workflow and customer management
OBJECTIVE ACTION OUTCOME
• Use technology, data and new Continuous improvement - Reduce • Improved
ways of working to improve administration costs and improve the customer customer
service, working conditions experience by investing in tools and techniques experience
and service affordability that automate manual processes to remain
• Improved cost and
competitive
• Continue to be customer sustained quality
value focused, secure and of products and
compliant services
7.6 Diversify selectively and grow profitably
• We must continue to build our e-solution products to enable sending and receipt of documents digitally, helping
to win new customers and revenue, and to retain customers who might otherwise go to competitors
OBJECTIVE ACTION OUTCOME
• Understand customer and Increase UK Sales - Leveraging our marketing • Increase in
market needs and priorities research, develop a sales capability to sell our profitable sales
products and services into the UK
• Develop current and new
profitable products and Increase IOM Sales - Leverage our experience
services and contacts to upsell to existing customers and
• Develop digital solutions and increase new customers
services to protect and grow Extend our digital solutions - Through virtual
our customer office, accounts payable and other products and
services that add value to our customers
iompost.com 218. Stamps & Coins
8.1 Overview 8.3 Reasons for change
• Isle of Man Stamps and Coins issued their first • Our philately customer base has reduced by an
stamp on the 5th July 1973 average of 8% year-on-year over the last 3 years
• Our stamp issues are recognised worldwide for • Revenues have largely been maintained through a
relevance to the Island’s heritage, culture or combination of price increases and sales of specific
subjects which people hold in high esteem (royal issues to special interest groups
anniversaries) and we have received many accolades
and awards • The proliferation of new issues is limiting the
attraction to new collectors; existing collectors
• We produce 16 stamp issues per year, consisting of are reducing with age and their level of disposable
mint sets, first day covers and presentation packs, income
additional products are created where there is a
commercial opportunity • We must seek to stem the reduction in regular
collectors while attracting new collectors by making
• We sell to individual collectors and to wholesale, our product more collectible whilst minimising our
competing with other philatelic bureaus and costs to help keep our stamps affordable at the right
collectible sellers and resellers margin
• Coin collectables are marketed and sold depending • Our global stamp sales have been compromised
upon the Treasury issue programme and allocation by old stamps making their way back into the
allowance postal system through wholesalers. Changing the
legislation will allow us to champion more sales
% Revenue by product type through the wholesale network
• We must utilise technology to optimise sales
ensuring our products are easily accessible online
with efficient back office systems and processes
• Following recent changes in coin administration
we are no longer seen as the preferred re-seller
by Treasury. Embedding the new relationships and
ways of working with Tower Mint and Westminster
has led to issues with supply and pricing that have
in turn led to reputational damage and loss of
credibility with our existing collector base. These
8.2 Dimensions issues are now being formally addressed to ensure
confidence in the relationship and processes going
• Team of 10 FTE is supplemented by casuals, home forward
industry and IMS when required. 50% of the staff
have more than 20 years’ experience
• Current customer profile:
UK - 82.3%, Europe - 8.8%, North America - 6.2%,
Asia - 1.4%, Oceania - 1.16%,
South America - 0.1%, Africa -0.04%
iompost.com 228.4 Work together
To ensure our operation supports falling regular collectors and more volatile new product and services.
OBJECTIVE ACTION OUTCOME
• To develop modern engaged Modernise the operation - Review the structure • Employee
and flexible workforce, and source of resource to ensure a flexible cost satisfaction
attracting, developing and effective operating model (leveraging appropriate
• Improved cost and
rewarding performance external and internal resource, e.g. IMS
sustained quality
production, customer services etc) in line with
• Continue to develop and of products and
fluctuating demands (falling regular collectors,
maintain strong stakeholder services
new products)
relationships
• Live our values, promoting Coin and bank note sales - Work with Treasury, • Increase in
innovation and a commercial Tower Mint and Westminster to ensure we profitable sales
approach receive adequate coin and note allocations that
we can market competitively
8.5 Defend the core business
Seek to continuously improve the way we engage and deliver services to our customers.
OBJECTIVE ACTION OUTCOME
• Use technology, data and new Production limits - Increase collectability by • Improved
ways of working to improve including more limited editions that retain customer
service, working conditions collector interest and generate production experience
and service affordability efficiencies
• Improved cost and
• Continue to be customer Continuous improvement - Reduce sustained quality
value focused, secure and administration costs and improve the customer of products and
compliant experience by investing in automation and services
customer management tools and techniques to
remain competitive
8.6 Diversify selectively and grow profitably
Seek to use our skills and experience to deliver enhanced products and services, upselling to existing customers.
OBJECTIVE ACTION OUTCOME
• Understand customer and Increase international sales - of both new and • Increase in
market needs and priorities old stamp issues and through bulk trade sales to profitable sales
existing / new wholesalers allowing for discount
• Develop current and new
/ import duties, subject to changing the Post
profitable products and
Office Act
services
• Develop digital solutions and Grow personalised Corporate postage
services to protect and grow Use our stamp archive - to create and market
our customer non philatelic products for bespoke gift giving
both for corporates and individuals
iompost.com 23“Working together to protect the
core business, growing profitably and
diversifying selectively to the benefit
of the Manx economy.”
Printed by Isle of Man Post Office
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