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Logistics company Hermes is driving a programme of digital change while introducing innovation to support its customer-centric vision.
Chris Ashworth took over as CIO just over 15 months ago with the objective of improving the company’s large portfolio of legacy core infrastructure and software as the first step in the change programme.
According to Ashworth, Hermes is a business that has substantial peaks of activity every day. These are then compounded by the typical rush of periods such as Christmas, and the IT estate he found was not coping properly with the business demand.
“In our industry, [demand] spikes are immense, plus there is the element of loading the volumes onto cars and vans and delivering them – leaving us with a very small window of time to cope with those processes,” Ashworth tells Computer Weekly.
“When scaling legacy infrastructures, you’ve got that habit to be as big as the ‘peakiest’ hour of your ‘peakiest’ day, which makes it a big and expensive challenge. So we are driving a proper digital transformation and moving to consumption-based infrastructure.”
This year, as part of the foundation work required to modernise the company’s IT, Hermes is embarking on a major cloud migration project.
About half of all its core systems have already been replatformed for the cloud and all applications will be transferred from a physical infrastructure the company has in Germany into Amazon Web Services (AWS).
“We are driving a proper digital transformation and moving to consumption-based infrastructure”
Chris Ashworth, Hermes
The project will see Hermes move away from batch processing into real-time, application programming interface (API)-driven interfaces, with 80-90% of the migration to be completed by September – before the start of Hermes’s peak season. The company is also trying to change its data model.
“We are changing our data model so we can look at the customers, the clients, the couriers and the locations in my network to start introducing digital services, all based on a different way of handling information,” says Ashworth.
“The core transformation work to get us on a really scalable, consumption-based platform is crucial because it is at the heart of what we are trying to do and allows us to scale into the future,” says, adding that the logistics market has seen a growth rate of 5% while Hermes has been expanding by 15% year on year.
As part of its plan to move into the cloud, Hermes is also replacing its current Oracle database with an SAP Hana cloud-based reporting suite with the aim of improving insight into the entire organisation, from couriers to customers.
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“Our traditional data model is very parcel-centric,” says Ashworth. “To look at a client’s history, I would have to understand all their different parcels, and look at it on a parcel-by-parcel basis. We fundamentally got back and looked at our data models and realised that is not how we want to interact with our clients.
“We want to understand the value of our clients, how our couriers work, the addresses we deliver to. So we have broken down our data model and identified 14 different data marks, and we are going to build a real-time view off the back of our data warehousing tools. This is so that we can look at our data in different ways and provide offerings to our clients based on that insight.
“We are looking to use rich data to give the customer the best interaction we can. And then, if anything goes wrong in the service provision, I want to manage that proactively and then, through our omni-channel platform, reach out and advise them about that, so we not ruining their day, but offering ways to fix it.”
Although the replacement of Oracle with SAP is likely to be complete by September, it is also possible that Hermes will have to run some legacy Oracle systems before the end of the roll-out into early 2019.
In addition to the infrastructure refresh, Ashworth’s 180-strong team is busy on various customer-facing initiatives, one of them being the introduction and ongoing improvements to its omni-channel setup. There are other projects related to this workstream, such as the introduction of a new mobile app.
The app is an improvement on the previous iteration, which offered only basic functionality, such as parcel tracking. A beta web version will be released this month and the app release will follow by early May, with the aim of simplifying the process of sending, tracking and returning parcels.
With the mobile app, customers will also be able to generate a QR code that will enable parcel label printing at one of Hermes’s shops. Thinking of customers who might not have access to a printer, the company is rolling out self-service printers across its network of more than 4,000 shops this year.
As well as customer-focused innovations, the innovation cluster within the company’s IT department is growing – from five people last year to 10 in 2018 – as are the initiatives emanating from it, such as robots for pickups in partnership with Starship.
“We used a very small geography in [London] Greenwich, so we are just talking to Starship now and trying to find how to open that up to deliveries and take that into Milton Keynes, because it is a really good geography to try all this out,” says Ashworth.
Other experiments geared at the “courier of the future” include Google Glass experiments and investigating Amazon technology with smart locks to allow safe deliveries.
“We are going to look into drones this year,” says Ashworth. “We are also looking at robots and we might look at a crowdsourced model in metropolitan regions. But we need to appreciate that it’s not going to be one size fits all – an urban approach is going to be very different to that used in a rural area.”
The IT department at Hermes is extremely busy because it has an average of eight months to make improvements and release new functionality before the freeze for the peak periods.
“Our change in year one was geared towards getting ready for peak,” says Ashworth. “Just as you can’t be half-pregnant, you can’t be half-scalable for peak. You have to support all this volume, so our agenda was quite ambitious.
“I sit on the executive board and I am driving the change agenda on their behalf. They want change to be driven and our teams and programmes are empowered to make the difference.”
However, resourcing is one of the main challenges cited by Ashworth when it comes to driving all these initiatives.
“When you recruit people, they come to you and say they want to drive strategic change, but when it comes to doing it, they are shocked because it’s really hard work,” he says. “We are always trying to hit a deadline.
“Because we are a successful business that is growing, our offices are crammed and the change is relentless and you have to be at the coalface, so it’s really difficult getting people with the energy and the capability to do that.”
Despite the challenges, Ashworth expects that in a year’s time, his legacy datacentres will be a thing of the past and the firm’s network will be scaled up further. The team will have completed the new data warehousing strategy, with most of the new data models in place. And the digital programme is expected to have achieved a few more milestones.
“We still have a hell of a lot to do, but in a year we should have a really nice, probably industry-leading digital programme, leveraging our investment in big data to drive customer-centricity even further with our clients, retailers and their clients, the end recipients of the millions of parcels we deliver each year,” he says.