The Post Office has signed an agreement to invest in software infrastructure services to automate its entire Internet operations in a bid to gear up for increased competition in the postal marketplace.
The deal, signed last Tuesday, will see the Post Office using a set of infrastructure software services developed by US software company Loudcloud as the backbone of its Web site. Under terms of the agreement, Loudcloud will take over the running of the Post Office's hardware, software and Web infrastructure on an outsourced basis for an initial two-year period.
Paul Kelsall, IS director at the Post Office's e-enterprise unit, said the decision to outsource was not based on cutting costs but driven by a desire to keep up with the increasingly high level of service expected by customers.
"The Post Office wants to be a key player in the e-world in both business-to-consumer and business-to-business [markets], and the expectations that business and consumers put on you are higher and higher. That is quite demanding for us and we needed some help achieving that," he said.
With increasing levels of competition in the marketplace, meeting customer demands was of paramount importance, Kelsall said. "Meeting our customers' expectations in an ever-changing and competitive market is key. Competition is being introduced into the postal market which will drive service levels higher and we want to step up to that. It is about keeping a 24/7 operation running and meeting customers' expectations," Kelsall said. "Time to market is also very important to us," he added.
Kelsall said the agreement was signed as part of a major infrastructure project, a big component of which was the construction of an integration broker to connect its back-office and Siebel-based front-office systems with the Internet. Both the integration project and the Internet infrastructure roll-out are due to be delivered in two months' time, he said.
Tim Howes, co-founder and chief technology officer at Loudcloud, said more and more companies were realising that running the software infrastructure for their Web operations was not core to their business. This was being driven by a lack of in-house resources and by economic factors, he said. "A lot of people are concerned about cost, but even without the economic factors, as the pace of change accelerates, companies create the need to focus on things that move them ahead of the market."
Scott Smith, director of Internet strategies, Europe, at US analyst the Yankee Group, said the deal would allow the Post Office to take its eyes off the maintenance of its Internet infrastructure. "It gives them support and lets them move away from the time-consuming and expensive process of running the infrastructure and frees them to concentrate on evolving the business rather than the technology.
"If you want to be competitive, you have to be the one that answers the call fastest, so by letting Loudcloud take over the operational environment and management of the systems and network components, the Post Office can concentrate on serving the customer," Smith said.
Although the Post Office could have managed this in-house, it would have had to spend several million pounds just to reinvent the wheel, he said. "It is a case of 'why should I clean the house when I can hire a maid?'"
The agreement is the first UK contract signed by Loudcloud, which was set up by Netscape founder Marc Andreessen. Financial terms of the deal were not disclosed.