©2010 HP Confidential1©2011 HP Confidential1 OPEN DAYS 2011 HP Workshop PPP - New business models in ICT intensive public services delivery Sasha Bezuhanova Director of Public Sector Sales Central Eastern Europe, HP 11 October 2011

©2010 HP Confidential2 People (all of us) need more and higher quality public services to live better life

©2010 HP Confidential3 Government try hard to keep up But they need support from private sector morebetter funding – to provide more and better services at either the same or reduced levels of funding complexity – by implementing ICT with raising complexity and difficulty risks – and managing substantial risks in planning, building and operating complex IT programs that often result in increased costs, delays and unsatisfactory results

©2010 HP Confidential4 PPP main characteristics – Long-term contracts between a public contracting authority and a private sector company on the procurement of services – Focus on the specification of project outputs rather than project inputs in order to deliver better value for money – Payments reflect the services delivered (outcomes) – Transfer of certain project risks to the private sector (design, build, operate and/or finance) with use of private financing – Typically large projects with a significant build component - projects below a certain threshold 25 M do not justify the additional transactional cost associated to PPP

©2010 HP Confidential5©2009 HP Confidential 5 Quality and value of services to citizens and businesses PPP as a government transformation engine Practical implementation of PPP Obstacles in front of PPP in EU and possible solutions Workshop Topics

©2010 HP Confidential6 Quality of services to citizens and businesses – High quality public services – delivered with efficiency – by trusted institutions – in the pursuit of improved socioeconomic outcomes for everyone

©2010 HP Confidential7 Technology innovation Efficiency of IT Quality of services Technology capabilities Best practices Lower initial and ongoing costs Cost transparency Flexible cost base (e.g. usage-based pricing) IT contracts for outputs and outcomes Three main reasons for public sector to transform

©2010 HP Confidential8 Fiscal pressures drive the need to adopt disruptive solutionsc Disruptive Technologies Disruptive Procurement Disruptive Business Models Role-based computing (thin/thick client) Cloud infrastructure Buying outcomes/outputs Pay-per-use Joint-procurement Shared services Outsourcing Participative services

©2010 HP Confidential9 Business Outcomes Risk and profit sharing Business Outputs Business process outsourcing IT Outcomes (usage-based) IT services IT Outputs IT outsourcing IT Inputs Systems and components IT integration Evolution of IT in the public administration – HP view

©2010 HP Confidential10 IT service as an utility / Business process as a service No upfront investment, OPEX, predictable pricing – can bring positive cash flow at the start Service levels dynamically adjusted to business priorities Professional management: High quality, industry standards, Compliance, Security and Business continuity Suppliers can take full care of Staffing & Capacity risks, Technology risks, upgrades and renewals and other operational risks Financial risk and benefits sharing as an option Benefits for the public sector clients

©2010 HP Confidential11 Classical PPP IT intensive public service Government cloud ICT PPP engagement models Large construction or other public infrastructures (e.g. highways, hospitals, schools, environment) Concession of an IT intensive business process (e.g. claim processing, revenue/tax collection, ID/cards issuance/processing) HP business process outsourcing – direct participation in PPP Building and operating government cloud and providing cloud services to the government and the public HP jointly with governments exploring new business models around PPP HP typically as a subcontractor for the IT component (IT outsourcing - not direct participant in PPP)

©2010 HP Confidential12©2011 HP Confidential12 HP experiences with ITO, BPO and PPP

©2010 HP Confidential13 HP Public Sector BPO/PPP credentials Claim processing Fraud waste and abuse services HP has provided support services to Medicare and Medicaid clients for 44 years, handling 35 percent of all Medicare and Medicaid claims in the United States and processing 2.4 billion healthcare transactions annually, including 1 billion in healthcare claims British Columbia Ministry of Small Business and Revenue Ontario Tourism Bank of Canada Revenue collection Call centre and document fulfilment Retail Debt Operations HR transactions Electronic benefit payment Electronic payment card Security Management & document management Electronic data exchange with employers & cheque processing Procurement services Service Personnel and Veterans Agency Post Office Transport for London Department for Work and Pensions Her Majestys Revenue & Customs Various departments Support c. 20 US State and Federal Government agencies

©2010 HP Confidential14 Challenge The government wanted to reduce the administrative burden on citizens Approximately 55 percent of Belgiums 10 million citizens are Flemish and reside in Flanders, the nations northern Dutch-speaking region. Yet, regardless of where one lives, Belgium affords every child the birthright of government subsidization to support and strengthen the family unit. Whether they are infants or young adults bound for college, children are entitled to benefits as long as the correct paperwork is filed on their behalf. However, with 75 disparate agencies and departments in the Flemish administration, purchasing a bus pass or applying for child benefits often required submitting the same information to multiple agencies at multiple times. Challenge The government wanted to reduce the administrative burden on citizens Approximately 55 percent of Belgiums 10 million citizens are Flemish and reside in Flanders, the nations northern Dutch-speaking region. Yet, regardless of where one lives, Belgium affords every child the birthright of government subsidization to support and strengthen the family unit. Whether they are infants or young adults bound for college, children are entitled to benefits as long as the correct paperwork is filed on their behalf. However, with 75 disparate agencies and departments in the Flemish administration, purchasing a bus pass or applying for child benefits often required submitting the same information to multiple agencies at multiple times. SOA Platform for Flemish government MAGDA Solution A team of 20 HP specialists contributed to the service-oriented architecture (SOA) project. They are part of a consortium, managing up to 100 simultaneous projects on any given day at the Flemish Government. After an initial assessment, HP started working on the core solution, a state-of-the-art, inter-agency data exchange platform known as Maximum Data Sharing Between Administrations and Agencies (MAGDA). MAGDA is supported by HP SOA, which provides one common Web services platform for the Flemish governments 75 agencies and departments Solution A team of 20 HP specialists contributed to the service-oriented architecture (SOA) project. They are part of a consortium, managing up to 100 simultaneous projects on any given day at the Flemish Government. After an initial assessment, HP started working on the core solution, a state-of-the-art, inter-agency data exchange platform known as Maximum Data Sharing Between Administrations and Agencies (MAGDA). MAGDA is supported by HP SOA, which provides one common Web services platform for the Flemish governments 75 agencies and departments Benefits With data centralized and stored in one place, all communications with citizens are focused and deliberate, minimizing correspondence and duplicate requests for information. Citizens simply have to enter personal data once and can expect their information to be consistent, up-to-date and complete across all of the agencies with which they interact. Benefits With data centralized and stored in one place, all communications with citizens are focused and deliberate, minimizing correspondence and duplicate requests for information. Citizens simply have to enter personal data once and can expect their information to be consistent, up-to-date and complete across all of the agencies with which they interact.

©2010 HP Confidential15 Scope Service Personnel and Veterans Agency - 1,400 fewer posts and £100m savings p.a. HP provides payroll, pensions and HR administration services. Across all three branches of the armed forces, during wartime, HP replaced 250+ bespoke HR systems with a single COTS application, giving a better service to end users whilst saving £100m a year and eliminating 1,400 posts Method Shared Responsibility Partnership aligned to business interests. Supplier added risk sharing arrangement, performance incentives & dispute resolution mechanism. Choosing the right partner Understand each others business. Client chose partner with cultural fit, proven track record in integrating IT solutions and administrative processes. Effective Business Change Dedicated, tripartite team Supplier, Client and Union Client let go Consolidation & harmonisation of systems. Three forces embraced tri-service working practices, supported by a new compensation & pay system. Streamlined, modernised, standardised Modernised, refreshed IT infrastructure Gradual phase-out of legacy systems as new enterprise-wide personnel administration system rolled out Management Information Considerable potential to produce management information leading to more informed decision-making

©2010 HP Confidential16 Transport for London The Business Issue – There are more than 3 billion journeys on Londons bus and tube network each year. – Transport for London (TfL) set out on a mammoth mission to reduce fraud and queues in its Underground stations, expand its ticket offerings and improve the reliability and availability of ticketing machines. For its bus operations, TfL wanted to replace outmoded ticketing equipment, improve revenue tracking and reduce cash handling – EDS, now HP has connected all of the networks upgraded devices, giving TFL access to consistent network wide journey and sales data. – We are responsible for the distribution and quality control of the smartcards as well as the marketing program and the recruitment and performance of the agent sales network across London, now 4000 strong – In 1998, lost ticketing revenue amounted to £43 million, or 3.7 percept of total revenue, by the end of 1999, once stations had been gated, it had dropped to 2 percept. – The system allows faster passenger movement so theres less congestion at busy times – We have issued more than 6 million cards – Customers consistently report how pleased they are with the smartcard scheme and the convenience it provides Transport for London decided to replace its life-expired ticketing equipment on its bus and Underground network with an integrated ticketing and revenue system. It chose the EDS (now HP) consortium Logo HP approach The Results

©2010 HP Confidential17 Canada British Columbia - Ministry of Finance – Need to increase revenue collection but at the same time lack of funding to modernise systems and services – MoF outsourced collection of overdue receivables and payment processing to HP – HP developed potential to perform collection for more than 40 government revenue sources – HP designed, built and implemented Revenue Management System to automate account, bill pay and collect functions – HP and MoF are on track to net benefits of ~$500 M over 12 years – Customer service metrics have all improved – The HP model allows investment in technology to be shared across different programmes and enables multiple debts to be collected from the same debtor BUSINESS GOALSOLUTIONBENEFITS Revenue Collection Province of British Columbia Ministry of Finance

©2010 HP Confidential18 Chalanges and recommendations – Outsourcing of a well defined functionalities or processes where SLAs can be precisely described helps significantly reduce pricing and delivery risks on both sides ( Due diligence process ) – Sourcing is a skill that governments need to develop over time – The benefits of outsourcing contracts can be best reaped on longer term contracts -> long term partnerships (vs. vendor lock-in) – Outsourcing in the public sector has specific complexities (compliance, on-shore, data protection, performance measures etc.) – but these can be overcome What to watch when examining sourcing options for governments

©2010 HP Confidential19 Toward Citizen–centric Government – Long term ICT Strategy with focus on public value – Holistic approach in combination with quick tangible results Process optimization – Reduced costs and increased efficiency trough Process optimization – Shared services and Cloud as a transformation engine – is the Company in ITO/BPO ready to engage and share the risk and help transformation

©2010 HP Confidential20©2009 HP Confidential 20 Speakers

©2010 HP Confidential21 Speakers Sasha Bezuhanova HP Director of Public Sector Sales, Central Eastern Europe Geert Mareels Flemish Government e-government Manager Paul Timmers European Commission Director - ICT addressing Societal Challenges (Information Society & Media Directorate General) Dinand Tinholt Capgemini, Vice President, Global EU Lead. Project Director of SPOCS (Simple Procedures Online for Cross- Border Services) Francesco Totaro EIB Advisor to the European PPP Expertise Centre

©2010 HP Confidential22 Geert Mareels Flemish Government e-government Manager eGovernment transformation drivers Quality public services trough information technology Present status of eGovernment in Flemish Government Practical ICT implementation models Partnership with private sector towards efficiency and quality

©2010 HP Confidential23 Paul Timmers European Commission Director - ICT addressing Societal Challenges (Information Society & Media Directorate General) Quality public services trough PPP EU PPP programs and policies in ICT Practical partnering models Communication EU-to-regions and regions-to-EU EU driven ICT projects and deployment in regions

©2010 HP Confidential24 Dinand Tinholt Capgemini, Vice President, Global EU Lead. Project Director of SPOCS (Simple Procedures Online for Cross- Border Services) Present status of SPOCS project Current issues and challenges in implementation Legal, administrative and technology overview PPP implementation models in evaluation

©2010 HP Confidential25 Francesco Totaro EIB Advisor to the European PPP Expertise Centre State need to own and control tangible and intangible assets and staff required to deliver a service State need to exercise and control the process of delivering public service Transfer of risks from the state to the and external provider, which risks can be managed by business and what new risks do new models bring Constraints and caveats in introducing new public service financing models Examples and best practices of establishing balance between public sector and ICT industry

©2010 HP Confidential26©2009 HP Confidential 26 End