Royal Mail has lifted the wraps on how it plans to spend up to
£1.2bn on IT-related projects over the next three to four years as
it fights growing competition from rival delivery services.
Robin Dargue, the group's chief information officer and
technical director, told Computer Weekly that a robust IT and
logistics infrastructure will allow the company to develop new
markets. "Adding IT content to products and services increases
their value," he says.
The crux of Royal Mail is its capacity to deliver the right item
to the right person, Dargue says. "Increasingly, the timing of the
delivery is important to winning new business."
This is particularly so in addressing the opportunities offered
by the
burgeoning online retail sector, which is worth £4.5bn and is
set to grow to £28bn by 2011, according to research firm
IMRG.
Royal Mail is supplying up to 25,000 Intermec wireless handheld
terminals to delivery staff to record customers' confirmation of
the delivery of packages.
It is also installing mail sorting equipment, mobile handsets,
delivery vehicles and online systems so that staff and customers
will be able to track and trace each item in the system.
Dargue says "flats" - A4 magazines, catalogues and brochures -
make up about one in six items of the typical daily mail bag. Royal
Mail is installing high-speed sorting machines from
Solystic to handle flats at
its Langley plant near Heathrow.
It has also ordered upgrades from
Siemens for
integrated mail processors (IMPs), and replacements from Solystic
for automated mail sorters. By March 2008 it had replaced the
codemark printers that print machine-readable instructions on mail
to speed sorting. So far, it has upgraded 21 IMPs.
This summer Royal Mail will take delivery of the first of 400
Solystic walk-sequencing machines under a two-year deployment
programme. These units sort mail into sequence along delivery
routes and pre-fill postal delivery bags. This almost eliminates
hand-sorting by staff.
Royal Mail handles more than 80 million items a year, and
delivers to 28 million addresses nationwide. It is investigating
new delivery vehicles, including powered bicycles, to make
deliveries more efficient.
Dargue is about to appoint a chief information security officer,
a position he regards as crucial to the business in future. One
possibility is to use its 11,500 post offices to deliver national
identity cards.
Royal Mail hopes these improvements will give it an unequalled
logistics system that it can offer to customers in central and
local government as well as business.
Dargue says Royal Mail is under pressure because its universal
service licence obliges it to provide "last mile" delivery to every
address in the country.
However, 17 other firms compete in Royal Mail's most lucrative
market, direct mail.
"They can collect pre-sorted bulk mail from a single point, take
it to our depots and rely on us to deliver it to the customer,"
Dargue says. "They don't carry the overhead of last mile delivery."
That overhead includes 30,000 vehicles, 33,000 bicycles and 200,000
staff.
These are some of 10 to 20 major IT projects that Royal Mail has
on the go, says Dargue. "If these were all delivered without the
whole being greater than the parts, I would be disappointed," he
says. "Royal Mail has for the first time an IT strategy that not
only integrates with the business stategy, it is the business
stategy."
Royal Mail's IT
Royal Mail relies largely on external suppliers such as
CSC,
Fujitsu,
Lockheed
Martin and
Siemens to deliver the IT systems that underpin its operations
and services. Royal Mail retains control of key elements, such as
product development and security. The project management system
Royal Mail uses is an in-house development. Suppliers are all ITIL
and/or Prince2 users.
How Royal Mail is using IT to offer innovative
services
- Royal Mail's
Smilers service allows online consumers to upload pictures of
themselves (or their families or pets) and order sheets to create
personalised first class stamps.
- The company has formed an alliance with
Sony DADC. This allows
companies to send content-rich and interactive CDs which meet an
individual's specific needs and interests, and to identify it with
a unique code. Customers then use the code to track how people use
the information on the disc.
- Another alliance, with
Brand
Sense, lets customers incorporate scdents and tastes with
digital media and packaging, pictures and sounds, into mailshots to
boost response rates.
- Royal Mail is also working with
Vialuna, a marketing
consultancy, to combine direct mail and online media such as
personalised URLs and micro-websites. Integrating the two media can
boost customer spending in response to mailshots by 25%, Royal Mail
found.