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BACS migration - who cares?

You will if you don't get paid

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Analysis There are over 30,000 organisations in the UK who depend on a direct connection to BACS for making electronic payments, with many more accessing BACS through a bureau provider. According to a study just completed by Quocirca, about 90 per cent of these use BACS to get salary payments into their employees' bank accounts at the end of every month, with half of them also dependent on BACS to pay their suppliers.

The actual network itself that runs all of this is BACSTEL, which is owned and operated by a consortium of financial institutions known as VOCA. BACSTEL has been running for years and is now quite long in the tooth so, not surprisingly, VOCA decided a while ago that it needed to modernise it to deliver better security, reliability, manageability and performance, both for itself and its customers.

The new all-IP based version of BACTEL, creatively named BACSTEL-IP, is now fully up and running in parallel with the old BACSTEL system. As at January 2005, our research indicated that six per cent of "direct submitters", i.e. those whose systems connect directly to BACS, had migrated across to the new network, with a further 19 per cent having migrations in progress.

Why are these numbers relevant?

Well, because VOCA has declared that the old BACSTEL network will be switched off at the end of 2005 and the message to those who have not migrated by this point will be "Tough!".

Now you could argue that this is an unfair position for VOCA to take, but it has to be said that it and the BACS supplier community as a whole, which includes the banks and solution providers who deliver the systems that hook organisations up, have been telling people for a long time now that this is coming. Indeed 95 per cent of those we spoke with in the research are aware of the need to migrate.

The fact that only a quarter tell us they have acted is therefore a bit worrying, especially considering that migration typically depends on resource being available from solution providers such as Bottomline Technologies, Albany and InterSoftware, and that there is a finite limit on the amount of resource to go round. The danger is, that too many will leave it to the last minute then find that they cannot secure the migration support they need at the time they need it.

Of course there are a lot of good intentions out there with many saying they will be getting onto it in the coming months, but migration costs money and what we are told about budget allocation doesn’t tally with those intentions. When someone tells you they will be migrating within three months but later says they have not yet allocated the budget, we have to have to figure that at least a proportion of these fall into the "wishful thinkers" category.

Having said this, it tends to be the Bean Counters in charge of managing BACS systems. In about 45 per cent of cases, it is the Financial Controller or Accounts Payable Manager with the Financial Director taking direct charge in another quarter of cases. We could therefore speculate that they would be quite relaxed about finding a budget pot to dip into at the right time.

But Bean Counters in charge of what is essentially an IT system migration process?

If you are reading this and are a little spooked by that concept and want to make sure that your first salary payment of 2006 actual makes it into your bank account, you might want to consider wandering up to Accounts and nonchalantly asking a few questions.

Register readers can request a free copy of the report "BACSTEL-IP – Steady Progress or Wishful Thinking" here.

Copyright © 2005,

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