In our 2020/21 Business Plan we made a commitment to extend our planning horizon to a three-year period, recognising that many of the initiatives we are engaged in will be delivered over multiple years. With almost four years’ experience in the non-household market, feedback from members has been that they would value greater visibility of our forward plans and cost trajectory. This is the first of what will be a rolling three-year business plan, updated each year, and it aims to clearly set out our priorities for the next three years and provide greater clarity on our deliverables and their associated costs.
We have built our plan in two parts, both of which continue to focus on making it ‘easier to do business’ in the market:
Core service delivery – 2021/22
Supporting the delivery of ‘business as usual’ core services, in line with both our code obligations and wider member expectations. Our core service delivery plan is focused on consistent, high quality delivery at an efficient cost.
Improvement programmes – three-year plan to 2023/24
Our longer-term delivery roadmap that sets out how we will advance the market through our strategic priorities, building on and evolving our plan for 2020/21.
Core service delivery – building on progress from 2020/21 and driving further efficiency
During 2019/20, we developed the Market Services Framework which set out our revised core services as well as related key performance indicators (KPI’s) which were published for the first time in our 2019/20 Annual Report.
During 2020/21 we started reporting on our performance against these KPI’s each quarter with strong and consistent performance for the year to date, against both our service delivery and the progress of our 2020/21 business plan commitments. At the same time, we have developed the capacity and capability of our team allowing us to respond quickly to additional challenges in the market presented by COVID-19. Our core services are being delivered at a cost below our original budget, allowing us to reinvest some of these savings into accelerating work on our Bilateral Transactions Programme.
Our plan for 2021/22 builds on this momentum – with a continued focus on reliable, consistent and high-quality service delivery. Our costs for core service delivery are tracked separately from our improvement programmes, enabling us to focus on reducing the cost of our like-for-like services.
These costs have been subject to a series of deep dive reviews both with the senior leadership team, MOSL’s Board and the industry Panel. Our 2020/21 budget shows a reduction in core costs from the budgeted level in 2020/21 – reflecting efficiencies delivered in 2020/21 and further efficiencies through 2021/22.
In building our plan we have considered the scope of the services we provide in the context of trading party needs and priorities. Our plan includes additional resource to improve our core cybersecurity capabilities as part of a wider improvement plan in this area. It also includes additional cost to increase the range of support services to market groups such as the Retailer Wholesaler Group (RWG), reflecting our role in facilitating wider market improvement and collaboration.
Longer term improvement programmes – delivering on our strategic priorities
During 2020, MOSL published its strategic architecture, including our new purpose and vision statements and our four strategic priorities, setting out the role we can play in facilitating a successful market for our members and their customers.
Our purpose: “Advancing simple and effective water markets to unlock value and choice for customers”
Our vision: “Using our collective expertise and independent insight to deliver the best customer outcomes”
Service Excellence – Simple and effective services that are easy to access
Data Insight – Evidence based decisions, driving value for customers
Market Improvement – A successful market that is continually improving
Organisational Capability – A high performing team set up to deliver change
This approach was developed through workshops with colleagues, as well as conversations and discussions with our stakeholders, to document the corporate strategy landscape, considering the internal and external factors that may impact on the delivery of our three-year strategy.
In building our plan, we have developed a range of improvement programmes that will enable us to deliver on our strategic priorities throughout the duration of the three-year plan.
Our plan is the blueprint to deliver on these priorities, for the benefit of customers and for the market as a whole. It complements the priorities of the Panel, recognising that the Panel workstreams will largely be delivered by MOSL, and also encompasses the Market Performance Operating Plan (MPOP). We will continue to drive market improvements, including to data quality and performance, building on the work completed to date through the MPOP, with the MPOP fully aligned to, and an integral part of the ongoing plan.
Development and evolution of the plan
This final business plan is the result of an extensive consultation exercise with our members and stakeholders. As a result of the consultation feedback we have adjusted the final plan, with key changes including a clear articulation of a new gated investment appraisal and tracking process (below). All spend on our improvement programmes will be subject to this process, to allow us to better track the benefits and articulate the value of each project. We have also accelerated some limited activity on our Data Insight programme, allowing more activity in year one (2021/22) of the plan. We have enabled this by moving £100k of our planned spend forward to year one (2021/22) from year three (2023/24). This will not impact Market Operator (MO) charges as this spend will be funded by the additional surplus now expected for 2020/21. This change was in response to a number of members who stated that this activity should be the “foundation” of other improvement work.
Taking onboard feedback that the plan and its phasing must also be flexible, our plan will continue to evolve, as internal and external circumstances change, and in line with the priorities of our members.
Year one of the plan (2021/22) includes our budget for costs and Market Operator (MO) charges, together with our service delivery plan (core services and improvement programmes). This part of our business plan will be subject to member approval at the General Meeting on 25 February 2021.
For years two and three (2022/23 and 2023/24), we have outlined our longer-term improvement programme, including scope of work, benefits and cost. This provides a clear line of sight (and cost trajectory) on our longer term integrated programme, whilst retaining flexibility to respond to changing priorities and the economic climate as our three-year plan rolls forward each year. The year two and three element of our plan is indicative – whilst we will seek feedback from our members on the phasing of our longer-term plans, including the prioritisation of the improvement programmes, we will not be seeking formal approval for activities outlined in years two and three at the General Meeting.
New gated investment appraisal and tracking process
In 2021/22 we will introduce a new ‘gated’ investment approval process which will monitor and track benefits. This will cover all work under our improvement programmes, as well as other projects funded as part of our core service delivery, where these projects involve a material level of change, spend or cross-business impact.
The process will cover four stages with a gated review at the start of each - including initiation, planning, execution and closure. The aim of this new process will be to ensure that programmes and change projects are co-ordinated across MOSL. The process will ensure that they complement each other and that resource is appropriately prioritised; that they are supported by an appropriate business case which demonstrates strong value for money; they are tracked through to delivery to ensure that risks are managed and key milestones are met; they are subject to ‘change control’ on scope and cost through appropriate review and governance; and are required to track delivery of benefits and undergo post implementation lessons learnt.
The new process will be in place for April 2021. We will provide updates on how it functions as part of our regular quarterly reporting.
Along with the introduction of our new gated approval process, in 2020/21 we made a number of changes to how we report progress against the delivery of our business plan. We have increased the level of information we provide, the frequency, and the transparency, with an assessment of progress, risks and mitigation.
Our quarterly reporting covers two areas:
Key Performance Indicator (KPI) reporting - tracking performance in delivery of our core services – using an established set of KPI’s which were first published in our 2019/20 Annual Report
Business plan commitments – setting out progress made, an assessment of whether we are on track, risks to delivery and how we are mitigating these risks.
We will continue to use this reporting framework to evidence delivery of our three-year business plan.
Benefits from our plan – core services
The delivery of our core services enables the continued functioning of the market, meeting our Code obligations but also the wider core expectations from our members.
We will continue to track performance of these core services using our KPI's and report against these on a quarterly basis. We will also evolve our KPI’s over time to ensure that they continue to measure the quality of our core services and align to member expectations. We will also seek feedback directly from members through our annual Trading Party Survey.
Benefits from our plan – improvement programmes
Our plan includes improvement programmes to drive longer term advancement of the market and benefits for our members. We will provide an update each quarter on progress made in each of these improvement programmes incorporating both the delivery of key milestones and related benefits, as monitored through our new gated investment appraisal and tracking process.
The three-year duration of this plan and phasing of some of the programmes into years two and three, will mean that some benefits will take longer to materialise than others. Where a benefit delivery for a programme is phased beyond year one of the plan, we will continue to track and report on milestone delivery in order to demonstrate progress or highlight specific risks or issues.
We will apply the following framework to each benefit in order to validate its outcome and track delivery using our new gated investment appraisal and tracking process:
MOSL Benefit Validation Framework
What is the benefit?
What are the verifiable differences that will be noticeable pre and post implementation?
Where will this benefit arise? Is the accountability and responsibility for delivery and change clear and agreed?
How and when will the achievement of the benefit be measured? What KPI's can be used to track progress/delivery?
Has a clear and measurable sign-off criterion been agreed?
Further detail on how we have applied this framework will be provided in our quarterly reporting.