Atos wins £1.5bn deal to build the digital future of UK pension fund Nest
The pension sector is perhaps one of the most competitive and challenging markets in the IT Services space. With processes that haven’t changed in years, and a strict regulatory environment, coupled with the need to keep costs low for their members, IT services firms often have a tough time demonstrating the worth of their solutions and services. However, while core processes may not change, there is increasing demand from enterprises in the space to find partners that can transform the end-to-end customer experience – albeit within a commercial structure that ensures the strategic focus on cost management remains at the centre of the engagement.
To this end in 2021, Nest – a UK government founded pension scheme – finished a long procurement process announcing Atos as its next scheme administrator. A role that will see the firm take centre stage on designing, transforming, and running services that meet Nest's digital ambitions.
The deal is one of the largest wins in the IT Services space to date and is pegged to last ten years with the opportunity to extend for five years, and a further three years to exit.
The Nest pension service is a flagship part of the UK government’s pension reform – The Pensions Act 2008 - which set about bolstering national private pension pots through automatic enrolment for employees and mandatory employer participation. Over the last decade, the firm has been moving through an aggressive growth phase, building a cost-effective and easy to use proposition that services more than 870,000 employers and more than 9.8 million members across the UK.
Now, Nest is embarking on the next phase of its development, which will focus on making the most of advances in technology and data analytics to deliver personalised and tailored services to employees who contribute to the scheme.
To this end, Nest highlighted key success factors for prospective bidders, including;
- The ability to improve customer outcomes with a specific emphasis on employees (those who contribute to the scheme) while also boosting the experience of employers and the ecosystem at large, such as accountants who administer pension pots.
- A plan for digitalising the business from the front to back office, alongside a top to bottom replatforming exercise to build agility into the business
- Cultural alignment, a particularly important criteria given the length of the deal, Nest emphasised the need for a partner that understands what they want to achieve and do.
- Risk management and security, as a regulated business, risk management and compliance are central to Nest' business, and so any partner selected needed to bring clear capabilities in this space.
- Commercial sustainability, the pension sector is particularly cost-conscious in the UK, and while transformation and improvement are central to the programme, so is the ability to deliver in a commercially sustainable way.
Atos participated in a lengthy procurement process which ultimately started at the end of 2017.
Perhaps rather unusually for the sector, a large section of the process involved bidders showing Nest how their services and solutions would meet their critical success factors - rather than the traditional retrospective view in which bidders provide evidence for past successes. According to Atos, this process enabled them to evangelise their strength in transformation by design and demonstrate a passion for customer experience improvements. All packaged within a clearly defined transformation process.
The firm also pegged the success on its ability to align well with Nest’s culture. Alongside committing to a consistent approach throughout the procurement process that will see key talent remain in post to help design and run services.
Over the next two years, Atos will work to design and build the future digital platform needed to power Nest's strategy, running alongside existing services from TCS, with a seamless switch over to Atos' platforms planned for the first half of 2023.
Tapping into its system integrator heritage, Atos also plans to bring best-in-breed solutions from its partner network to drive the transformation journey. Including Microsoft Azure for the cloud foundation, Pega for automation, and Sapiens to provide the core system of record. The delivery of the service will be driven out of Atos’ Centre of Excellence in Edinburgh.
This win is a significant show of faith from the pension sector. The Nest deal represents the second major win over the past two years for Adrian Gregory’s Financial services team and his deal-maker – Chris Darlington; The Aegon deal provided in many ways the strong foundations needed for this latest win. Over the past year, Atos has worked to evolve its core BPO and ITO offerings in the market, in lockstep with the firm's new strategy, which places verticalized delivery capability at the centre of their go-to-market strategy. This, combined with the broader globalisation of the firm's financial services business means Atos is now aiming for deals on a global level.