With three “long, incredibly stressful” years of his career now behind him, Steve Grigg, chief operating officer of the UK Automated Clearing House (ACH) Voca, can finally breathe a sigh of relief.
Following an “all or nothing” go-live date on 10 July 2006, the company has successfully completed one of the biggest European IT projects ever attempted: the £100 million overhaul of the core technology platform that sits at the heart of the UK’s inter-bank payments infrastructure. And Grigg does not suggest it was easy.
As a backbone of the country’s economy, Voca, which is owned by 12 UK banks, processes 5.5 billion transactions a year, including 90% of all UK salary transfers, 70% of all UK household bills and the majority of state benefits and pensions. For the past 30 years, the organisation, formerly known as BACS, has been widely viewed as a utility service, and, as such, forms a key part of the government-defined Critical National Infrastructure.
But the wider potential for the BACS system loomed into sight around 2003 with the proposed liberalisation of the European electronic payments market. Starting in January 2008 and backed by the European Commission, the Single Euro Payments Area (SEPA) will provide companies, consumers and banks with cross-border payments facilities as smooth and cheap as domestic transfers.
With the prospect of playing a major role in that new environment, Voca – which changed its name from BACS in 2004 after being made a fully commercial entity – embarked on a complete overhaul of its systems. Faced with a project of such scale and economic importance, Grigg’s apprehension was understandable. “If it had failed,” he observes frankly, “I would have been on the News at Ten, out of a job and probably wouldn’t have been able to work in this industry again.”
Given the required scale and functionality, Voca’s aging mainframe system and related applications were not going to cut it, Grigg explains. “We were running on an infrastructure that was 10 to 15 years old. It was a monolithic platform whereby any change would involve substantial risk because of the regression testing involved.” If a problem occurred, Grigg continues, whether “reports, referrals, or the engine itself, all parts of the service would be affected.”
In view of the shifting European landscape, Grigg and his team determined that a new flexible architecture, with de-coupled components, would be critical to Voca’s future success. “We set about building an infrastructure that was mod-ular, so that we could break any component out – be it the payments engine, the messaging engine or the exception management. We also decided to use a modern infrastructure – rather than go for a huge single mainframe box – and we decided to use technologies that are only now becoming widely accepted,” Grigg explains.
Working with advisory house Gartner, Grigg selected a Sun platform, Oracle databases, and the WebLogic service-oriented architecture technologies from BEA, as the chief components of the technology stack. In addition, Voca drew on IT staff from Perot Systems – both onshore and offshore – to augment the in-house development team.
Such choices were made with great consideration. “You have to pick your partners very carefully,” he warns – an issue that had been firmly underlined during the early stages of Grigg’s career at Voca, he explains. “I joined Voca in 2003, and at that time tough choices had to be made surrounding incumbent and future systems integrators. As a result, virtually the whole of my first year at Voca was spent negotiating with a systems integrator to ask them to leave – it just wasn’t going to work, their skillset wasn’t aligned to the task.”
But the problems created by this faltering relationship proved something of an inspiration to Grigg. “Because the outgoing systems integrator made a lot of noise around the technology stack – that it wouldn’t work and that the Voca team wasn’t capable – I set out to prove to our shareholders and the board that we could do it,” he says. “So I asked for a small sum of money – it was in the millions but it was relatively small – to prove to them that within a six to nine month window the technology itself would work, and that I could come back with a plan that guaranteed success and cost for the whole project.”
Blood on the walls
Operating a strict governance model, whereby Voca adopted a “fully collaborative partnership” with its suppliers, Grigg was able to achieve his goal on time – but it required some “blood on the wall” sessions, he adds, in which all “egos were left at the door.” Self-congratulation and mutual back-slapping was also kept to a minimum, he continues. “When we had checkpoint meetings we never talked about what we’d achieved, we talked about what we hadn’t achieved and why. It was an honest way of running a programme.”
In May 2005, Grigg and his team presented to the Voca board the fully operational future payments engine – one of the largest J2EE business applications in the world – which they had set out to prove the system could process 100 million payment transactions in just four hours. As Grigg explains, he calculated that this quantity would represent the ‘worst case scenario’.
“By the end of 2007 we will be ap-proaching the 100 million transactions mark a day. So we chose that number because I wanted to prove that we could be out [of service] all day, bring the engine back at midnight, and still be able to process the entire industry’s volume within four hours.” As it happened, they managed 165 million transactions.
With the technology now proved, Grigg was able to secure the rest of the funding necessary to implement the second part of the project – the task of building and implementing the platform’s 40 separate project components. On time, and on budget, Grigg and his team migrated Voca’s massive user base across on the ‘Big Bang’ deadline of 8 July last year. “With most IT projects you have the luxury of phasing customers or end users in, but because of the settlement requirements this was a case of all turning up on Monday morning, holding hands and switching over,” he recalls.
Without missing a beat, the UK’s payments infrastructure was transformed into a highly flexible, multi-currency, message type-agnostic, multi-scheme processing platform, which can support a choice of settlement options, IP based-submission channels, a variety of interfaces and a range of value-added services. In short, Voca is fully geared up for the onset of SEPA, its eyes fixed firmly on that far bigger prize.
With the new technology infrastructure, Grigg has already been able to augment the engine for the European market with relative ease and speed. “This technology allows us to do that because of the service-oriented architecture that we use. We have loosely coupled components that work well with each other and it means that we can change one component and know that, in contrast to the system we replaced, we do not need to worry about breaking some other part of the technology stack”.
The modern mantra of ‘quicker to market and cheaper’ is now Voca’s to realise, putting it in strong position to lead the European payments arena as SEPA forces the consolidation of domestic clearing throughout Europe and drives banks to outsource clearing operations. “We’re looking to bring the benefits of what we have done to a far wider customer base and advance the entire payment proposition,” Grigg concludes.
• The ambitions of Voca were underscored in early March with news that it would merge with cash machine and automated payments giant LINK Interchange Network to create VocaLINK. The combined company will be a leader in payments processing in Europe with a forecast volume of over 8 billion transactions this year.
The two companies are already working together successfully to build the infrastructure behind the UK’s Faster Payments initiative that will deliver real-time payments to the UK market by the end of the year. As well as providing accelerate domestic and cross-border payments, the new group also plans to use its combined network of partners across the financial, telecommunications, retail and public sectors to offer en-hanced online and mobile services.