The Postal Services Act 2011 shook up the Crown legacy setup of Royal Mail and its subsidiary the Post Office. The Post Office became independent of the Royal Mail in April 2012 and, as with all corporate divorces in the digital age, managing the separation of IT estate topped the agenda.
However, for a retailer offering everything from stamps to mortgages at a single point of sale, with owned outlets as well as franchise agreements, and a claim to fame of having a service counter within three miles of 99.7% of the population, the Post Office’s task was a shade more difficult than most.
Stewardship of change management and corporate expectations fell to one former Royal Mail employee: Lesley Sewell, CIO of the Post Office.
“Since technology supports the whole brand in more ways than one, I am leading one of the biggest changes in IT estate and processes that could befall any of my peers. Furthermore, our business itself is undergoing an inexorable change in the digital age. My primary task is one of keeping the Post Office relevant.
“A retail CIO develops click-and-collect customer modules; my team also has to work on drop-and-go solutions, especially as e-commerce is seen as the driver of growth in parcel deliveries,” Sewell explains.
Conjuring up an IT platform for a portfolio of more than 11,500 branches, including 350 directly managed Crown Post Offices, is underway. The type of products on sale, from phone cards to savings accounts, travel money to stamps, adds another dimension to consider.
The CIO’s answer for process streamlining is the Post Office’s Common Digital Platform, which is aimed at transforming a multichannel business into the heralded ‘Omni-channel’ trader. This deployment will be the big ticket project for the remainder of 2014.
“We’re in the middle of the first concept via Agile methodology; conjuring up the main conduit for all of our sub-channels,” says Sewell. The move is intertwined with the replacement of legacy systems.
“The change agenda is not linear for us. The entry point might well be process efficiencies and a modern Post Office, but reaching there not only entails working up a new digital platform and our recent rationalisation of helpdesks, but also hardware issues.
“I can’t chuck legacy IT in an instant. So while we’re trialling usage of tablets at branches, we’re also upgrading service-counter hardware,” Sewell continues.
Then there’s the inevitable IT estate separation with Royal Mail, which the CIO says is on track for a conclusion within the next 12 months.
“Some of our technology is presently aligned to Royal Mail and as part of the separation plans we have had to take all of it, bring that into the Post Office, and attune or change it to meet our needs. It’s also why, despite being enthusiastic about BYOD, we do not have a corporate policy on it for the moment.”
Sewell, plus five senior IT executives directly reporting to her, are scouting around for inspiration amidst the corporate divorce.
“Although we are a retail business like no other, we do keep an eye on what other retailers doing. At industry events, I fit in with government sector CIOs and peers from retail and finance alike. I feel as though I am an IT industry executive that’s all three rolled into one,” she says.
Feedback is directly passed on to the Post Office’s Executive Committee, of which Sewell is a member.
“As a CIO in a customer-facing organisation such as ours, I can’t build IT for IT’s sake – customers drive the slant and pace of change in the direction of how technology is evolving. It’s natural to worry about devising plans at the present stage of the business cycle, only for them to go from nascent to dormant within a few years. It’s why we’re on our toes,” explains Sewell.
Replacing legacy tech
Sewell reveals that the Post Office conducts frequent ‘innovation sessions’ with its biggest IT vendors.
“Working closely with our commercial teams, I throw up our parameters and corporate objectives at the vendors and challenge them to help us with platforms aimed at achieving our goals.”
Not all has been plain sailing, though. Horizon, the legacy branch IT system, provided by Fujitsu, came under fire last year over alleged electronic accounting anomalies. This resulted in legal tussles with sub-postmasters who claimed to have been wrongly accused of fraud.
While the Post Office found no “system-wide problems” with the software, training issues were flagged up. Putting the matter behind, Sewell has embarked on transition away from the legacy estate and a fresh procurement drive to boot.
The contract’s headline valuation is worth between £168- and £480m for the first seven years, and up to £636m including an optional three-year extension. However, Sewell cautions against “per annum” spending assumptions.
“The overall initiative is transformation-driven with wider corporate objectives, not some rigid spending plan of 10 instalments. A large element is of course re-procurement of services we are already paying for.”
Sewell adds that some objectives had already been met. “For instance, we started the rollout of our contactless payments system in the Q2 2012. Today, with over 30,000 terminals installed, we have the largest network of contactless payment terminals in Europe.”
Another pet project is self-service kiosks, and the Post Office CIO says the march to “Generation II” kit is well underway under a wider £70m capital allocation. Over 50 are in use at 22 crown branches, and the entire crown network will receive the kiosks by the end of the 2014-15 financial year, excluding branches put up for franchise agreements.
“The Post Office caters to everyone from pensioners who prefer using serviced counters, to eBayers with an enthusiasm for self-service. We have a strong sense of community and, in line with our social purpose, we have to be digitally inclusive, too.
“I take inspiration from my teenage sons, who in their 30s and 40s will expect a different Post Office from what we have today. There is a wider acknowledgement that IT will enable the transition.”
Expectations of SMEs are also evolving with e-commerce. “Their path often begins with an online sale and ends with a dispatch via the Post Office. A third of all British SMEs are our clients. We cannot afford to ignore their expectations and the ‘Drop and Go’ platform is a key demand.”
Then there is the data security paradigm. “While we secure our own data, what’s collected for financial products – provided by Bank of Ireland – is not housed on our servers. So at the point of sale it’s passed on via secure data transfer to third parties. We do regular data handling and security audits – it’s a sign of times.”
Sewell, a former Northern Rock executive, says the early part of her career was about building things. “So the pace of change at the Post Office suits me.
I also identify better with the demands and pressures on my IT colleagues.”
She also reckons IT chiefs’ relationship with their boards is evolving and the change is top-down.
“Go back a few decades, and CIOs answered to CFOs who took the message to the board. Fast-forward to the turn of the millennium, and CIOs started reporting directly to a management committee and, in many cases, to the board in incremental numbers.
“I spend the majority of my time with our CEO, CFO and commercial director. Both the public and private sectors recognise the need to give their CIOs a seat at the table. IT has long graduated from being a ‘spend’ for the business to central to core operations. I expect my peers’ voices to get louder.”