How Hermes broke through a bottlenecked IT system
Running a shipping business in the UK doesn’t come without its share of challenges. For some companies, razor-thin profit margins and tight competition can prove to be deal-breakers.
Seeing the challenges that Hermes was facing in the UK, Chris Ashworth, the shipping firm’s CIO told CIO.com that he knew the company needed to innovate in order to drive a healthy profit margin and remain relevant to an increasingly demanding customer-base.
He began transforming the company’s IT infrastructure and moving it gradually from its parent company Germany to the UK. It was by doing this that he noticed the company could have raked in more profit by just spending a little extra to provide better digital services for their customers.
One of the big players
Hermes is no stranger to the UK market. Just last year, the company shipped 10 percent of all parcels in the country, second only to Royal Mail (36 percent) according to the Pitney Bowes Shipping Index.
A huge bulk of their shipping contracts come from online resellers and the high street, plus around 4,500 contracts from small retailers and individuals around the country.
On average, the company delivers 355 million parcels every year for 80 percent of the UK’s top 100 retailers, such as NEXT, ASOS, BooHoo and John Lewis, to name just a few.
But despite that success, Hermes was still feeling the pressure from Amazon, which shipped seven percent of UK’s parcel in the same year. Taking on the global e-commerce-cum-shipping giant wasn’t going to be an easy task.
The issue holding back Hermes’ potential was a bottlenecked IT system. It was maxed out to the point that tasks were being run in batches and some tasks couldn’t be completed on time.
With its German parents about to close its data center, Hermes’ first move was to move operations into the cloud.
Cloud infrastructure was provided by none other than their rival, Amazon. But, with most of Hermes’ vendors using AWS, this made dealings with partners much more straightforward.
Three years on, and Hermes has moved at least half of its systems into the cloud. It now owns 14 operational data stores for various purposes, including one that provides a single view of Hermes’ customers from their rebuilt data model.
“Now I can understand all [customers] interactions with [Hermes]. I can understand whether you’ve sent one parcel or a thousand parcels, whether you’ve had issues in the past,” Ashworth said.
The new data model developed also allowed Hermes to offer value-add services, including parcel diversion, and a GPS-enabled smartphone app for couriers.
These services allow Hermes to charge just a few pennies more for each delivery, ultimately freeing the company from the traditional hub-and-spoke delivery structure.
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Ashworth’s steps helped Hermes explore new ways of working efficiently and with agility. A Print-in-Store service, for example, was launched within five days of being conceptualized, allowing customers to print routing labels in-store using their phones.
Much of Ashworth’s focus in on improving the customer journey. “All that kind of thinking you do for customer experience, we’re now applying to virtually every IT project we do.
“I’m probably having to think more as a CIO now about product, product specification, product development, how to sell a product than I’ve ever done before.” he said.