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Transforming Singapore Post through modern technology

When Singapore Post realised it had to change its business model to survive, it appointed its first CIO to front the technology transformation

When Ramesh Narayanaswamy became CIO at Singapore Post in 2012, like postal services worldwide, the company faced ruin unless it could transform itself. But today, after changing into an e-commerce logistics specialist covering Southeast Asia, the future looks bright.

Singapore Post has 60 branches across Singapore and has provided postal services to the city-state for almost 200 years, but a few years ago the organisation faced a choice if it wanted to survive much longer.

With less demand for postal services in the digital age, Narayanaswamy said the organisation had to make a decision about its future direction.

“Singapore Post was not going to survive for long [as it was]. It needed a new business model and, like postal services everywhere, had two choices – it could become a bank or an e-commerce company,” he said.

Singapore Post chose the latter, partly because if it wanted to grow, it had to expand into other countries. “Singapore is very small, so we need to grow internationally,” said Narayanaswamy, who has a background in sectors including retail banking, payments, logistics and e-commerce.

The organisation had significant legacy IT that needed to be replaced if it was to move forward with its plan. With legacy mainframes, basic point of sale technology and electronic data interchange, technology transformation was a business imperative. “The technology was very basic when I came,” said Narayanaswamy.

However, modern technology is now underpinning everything the company does and the CIO role is critical. The company is moving to modern technology with platform-based services, analytics, social media and security technologies at the forefront of everything it does.

Narayanaswamy said he is the first person to hold the position of CIO at Singapore Post, which is an indication of the company’s realisation that IT and the business are inseparable.

“There are not that many CIO positions in Singapore,” added Narayanaswamy. He is IT head across the company’s entire business, covering traditional mail, warehouse, logistics and transport management, e-commerce and e-fulfilment and retail.

EzyCommerce service grows

Singapore Post is now an e-commerce logistics company. Through what it calls ezyCommerce, Singapore Post provides brands with an end-to-end e-commerce logistics service in Southeast Asia, which the customer organisation brands itself.

The company provides the website and online ordering technology right through to storing products in warehouses and delivering them to customers. For example, when a consumer in South Asia buys Adidas online, they are interfacing with Singapore Post from start to finish. 

Canon Singapore is the latest company to take up the service. Singapore Post built and is supporting its first official web store, Canon eShop.

Singapore telecommunications company Singtel and Chinese e-commerce giant Alibaba have large stakes in Singapore Post, which was listed on the Singapore stock exchange in 2003.

The company’s international expansion is ongoing. It recently launched ezyCommerce in Australia and is implementing it in other territories, such as Hong Kong.

Importance of IT to business

Despite the new business model, the organisation is still regulated as a post office. It has service obligations as a post office, with 99% of deliveries in Singapore having to be made on day one and 100% on day two.

“We get fined by the government if we fail to do this,” said Narayanaswamy.

The company currently has annual revenues of S$944m, compared with S$518m in 2012, and has made a profit of S$150m. The post office side of its operation accounts for 60% of revenue, compared with 85% a couple of years ago.

The critical importance of IT to the company is clear in the increasing number of employees that fall inside IT. When Narayanaswamy joined in 2012, there were around 100 IT staff, almost all in Singapore. Now there are 160 in Singapore, 150 in a captive centre in India and another 100 or so working in Singapore but employed by a supplier.

The captive centre in India handles all of Singapore Post’s mobile developments. A recent example of a development is the launch of a track and trace app on Android for couriers, as well as a service where parcels are delivered to a postal locker, which customers can open using their mobile phones where the locker recognises and links to the phone and a code is typed on the phone to open the door.

In a report in September 2015, Accenture said delivery companies must change if they are to share in a global sector that will grow by 9% annually to more than $343bn by 2020.

“As postal organisations around the world continue to face revenue challenges created by dramatically reduced mail volumes, focusing on competitive parcel delivery products, services and supply chains will help close the revenue gap,” said Accenture.

Singapore Post chairman Lim Ho Kee recently said: “[We have] made significant investments in technology, which is one vital pillar of our customer service infrastructure. We know that we must have the necessary technology capabilities in this digital age.”

Offshore skills

A major challenge in achieving this is having the right skills in place. In Singapore there is heavy demand for IT, and companies such as Singapore Post have developed offshoring strategies to give them access to skills.

Peter Schumacher, CEO at businesses advisory The Value Leadership Group, which specialises in supporting businesses building offshore services delivery, said companies in Singapore have found that many CIOs view offshoring as an imperative.

“The labour market in Singapore is comparatively small and extremely tight with a 2% unemployment rate and wages continuing to rise – they rose by 10-15% in 2015. Without IT/BPO [business process outsourcing] offshoring to India and other locations, most large users of IT services would face major IT and business challenges,” said Schumacher.

“Offshoring will continue to expand and become more strategic. India is the dominant offshoring location and is expected to gain more strength,” he added.

He said that while CIOs in Singapore have some of the same complaints around behavioural issues about offshoring as other regions, they are generally more comfortable using offshore-based delivery models for innovative work.

“This thinking differs from that in many corporations in Europe and the US, where cost reduction is still the main objective,” he said.

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