Q&A – Royal Mail
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One of the Royal Mail's biggest challenges has been aligning IT costs with revenue
The UK postal service operator is undergoing radical change, but its IT systems are trapped in the past. Chief technology architect Stuart Curley tells Information Age how it plans to overcome this predicament
Royal Mail, the UK’s largest postal service operator, has arguably seen greater upheaval during the past ten to 15 years than in any other stretch of its 500-year history.
Some of this has been driven by technology. The advent of email, for example, has brought about a decline in the volume of letters sent in the UK, while online shopping has increased the volume of parcels. But the Royal Mail has also undergone significant organisational change. Most drastically, in 2006 the government’s postal regulator broke the monopoly it had enjoyed for 350 years, putting its services under competitive pressure practically overnight.
The past decade has also seen a number of industrial disputes between the Royal Mail and its workforce, many of which have culminated in strike action. These have often followed cost-cutting and modernisation drives, in spite of which Royal Mail has struggled to turn a profit. In its most recent financial year, the company made a £191 million loss on revenues of £3.2 billion.
As Stuart Curley, Royal Mail’s chief technology architect, explains here, the organisation’s ability to react to this upheaval has been hindered by its IT infrastructure, which he says was designed for the unchanging conditions that the organisation enjoyed before its monopoly was taken away.
Royal Mail’s situation is an extreme example of a common malaise. The events of the past 18 months have called on businesses to reshape their operating models, but many have found themselves to be constrained by the enterprise IT systems they developed at such great expense.
Curley sees a solution in cloud computing, which will allow Royal Mail to procure IT ‘on demand’, and so match IT expenditure to revenue more closely. Until now, IT spending plans have typically only been recalibrated according to changing revenue patterns once every five years.
Today, Royal Mail is undergoing a strategic reappraisal of its entire IT infrastructure, and Curley expects much of it to move onto the cloud. That has begun already with a project to replace the company’s Lotus Notes desktop applications with Microsoft’s BPOS online productivity tool suite. But he is critical of IT services suppliers, who he believes are dragging their heels on the move to cloud computing as it threatens their existing business.
Information Age - How would you describe Royal Mail’s IT profile today?
Stuart Curley - We’ve got a highly customised IT landscape, which is inflexible and expensive to manage. It was designed for the time of the Royal Mail’s universal service obligation, not the commercial world which demands flexibility and fast pace of change. That means that for us to be able to offer new products and services to our customers, it costs a fortune and takes a long time for us to make changes to those systems.
As a business we are undergoing a period of transformation, but IT is potentially becoming a serious barrier to that business transformation.
What causes this inflexibility?
It’s partly the age of the technology, but it’s also the fact that a lot of these applications have been heavily customised.
For example, we’ve got a lot of SAP in our landscape – far too many instances of SAP, and they are massively customised. We’ve spent too much time thinking about how the Royal Mail is special; we need to move to standard core processes.
How are you addressing this challenge?
One of our strategic programmes concerns significantly reducing complexity. That means we are hacking through the IT landscape and standardising on some core platforms. We are in the process of standardising on a core ERP and CRM platform, we are completely transforming our e-business platform, and we are transforming our communications platform.
Online desktop applications
You are preparing to move from a Lotus Notes desktop environment to a Microsoft BPOS implementation. What has motivated that move?
There are a few motivations for this. One is cost: we needed to refresh our desktop apps, but the cost of staying with Notes was prohibitive. Also, we were using [Microsoft’s document-sharing software] SharePoint already, so it made a lot more sense to go down the Microsoft route.
The cloud nature of the project takes away all the headache of a technology refresh, because it is all done for us.
When are you planning to make the switch?
The actual migration from Notes starts on 1 April, and we’re planning to migrate at least 2,000 a month over four or five months.
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