The future perfect switch to BACS

Businesses that make the switch to BACSTEL-IP will benefit from a more secure system that is not only cheaper but faster, writes Bob Tarzey

Deadlines, though they seem to loom ominously, are often put into place for the benefit of those they affect. One such deadline comes at the end of 2005, with the introduction of BACSTEL-IP and the switching off of its predecessor, BACSTEL. The move is aimed at improving the way banks and businesses work together.

The Banks Automated Clearing System (BACS) is a service used by UK businesses for clearing payments between businesses and their customers, suppliers and staff. BACS is most widely used by businesses for payroll and accounts payable. The service is either provided direct from a BACSTEL-IP solution provider, or indirect via a bureau service.

Players in the BACSTEL-IP value chain are working hard to ensure their customers are aware of the need to make the switch. There is also an opportunity for UK systems and networking resellers because this requirement has some prerequisites. While there is little performance overhead from the new software, upgrades may be required to a customer’s computing and IP network environment.

There are two main options for connecting to BACSTEL-IP. It can either be accessed over the public internet, where performance will be dependent on the number of other users, or a dedicated connection to an extranet service can be set up. Customers need to decide whether their existing connection is going to be sufficient, or whether they should be upgrading or supplementing it.

BACSTEL-IP provides a new motivation for businesses to invest in their internal IP networking capability. BACSTEL-IP is not going to increase the volume of IP traffic enough to justify a major infrastructure upgrade in its own right, but it is a good reason to review it again and consider other applications that could benefit from an improved internal IP capability. These include voice over IP, integrated call centres and hosted applications. Examples include CRM, email and online backups.

The majority of businesses that use BACS know about the deadline. For many, 31 December 2005 still seems a long way off, but those that are not taking action could find themselves in trouble if they do not start soon. Recent research by Quocirca showed that as of February 2005 only a quarter of affected businesses had begun or completed the migration.

For some it is because they are not aware of the deadline, but for most the tardiness is simply a lack of time and resources, even if they have made budget available. The cost of making the migration itself is expected to be between £5,000 and £50,000 depending on the business size, but this needs the infrastructure to be ready for the switch to IP-based payments.
There are a number of benefits for businesses once they have made the move to the new system. The interfaces are more user-friendly, making payments will be cheaper and faster, and the new system is more secure.

For imaginative resellers the BACSTEL-IP switch is a good opportunity to check their customers’ understanding of the changes they need make, their ability to put these in place and to conduct a review of their IP enablement. This could lead to a proposal for action which has value to the customer well beyond BACSTEL-IP itself, but which offers a compelling deadline for the customer to take action.

The full report on BACSTEL-IP, available free to CRN readers, is at www.quocirca.com/report_bacstel.htm.

Bob Tarzey is service director at Quocirca.
(01753) 855 794
www.quocirca.com

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