Special Feature
Part of a ZDNet Special Feature: Tech Budgets 2019: A CXO's Guide

How investing in IT helps to deliver the goods

Tech is a key differentiator for Hermes, which is looking at cloud, big data and future innovation, says the logistics company's CIO Chris Ashworth.

Parcel delivery firm Hermes processes at least 1.2 million packages a day; at peak times like Christmas, that figure can exceed two million.

Special Feature

Special report: Tech Budgets 2019: A CXO's Guide (free PDF)

This ebook, based on the latest ZDNet/TechRepublic special feature, explores how decision makers will get the maximum benefit from their IT dollars.

Read More

"Technology is the biggest differentiator in our industry," says the company's CIO Chris Ashworth. "We deliver parcels for major retailers. Our services potentially affect the customer journey as much as the work undertaken by our retail clients. They want to know that, if they're going to put their trust in us, that we're going to protect their reputation. That's the journey we're on."

But it's a journey that is not without risks.

"In business, there's nothing like a performance peak in logistics -- if you've got two million parcels in your network and you can't clear them, there's another two million about to join tomorrow. When it starts to go wrong in logistics, it really goes wrong," says Ashworth, who says that IT investment is key to creating a competitive advantage.

Spending on technology to build solid foundations

Ashworth joined Hermes in August 2016. An experienced IT leader who'd previously worked for Genting Casinos and Yodel XL, he was attracted to Hermes by the enthusiasm of the executive team and the opportunity to use technology to drive business transformation. While the opportunity for change was great, Ashworth also encountered some challenges.

"It was a legacy business," he says. "They'd established a great business model and they were very competitive, but the technology wasn't keeping up. It was a big transformation job and they wanted to change at pace. I love that kind of challenge -- and there was a strong remit for the CIO, with significant financial backing."

Ashworth received a strong indicator of the challenge he faced just eight weeks after joining Hermes. The firm's IT systems fell over at peak time. Ashworth had to decide which process -- courier payment, parcel tracking or parcel delivery -- was going to be stalled temporarily to keep the business running.

"We had to take tracking, in terms of management information, away for about three weeks and it was only because of the strength of our relationship with our clients that they stuck with us," he says. "It was both challenging and liberating for me as CIO. I knew what I had to do to transform the business."

Ashworth has received key backing from the executive team. His focus so far has been two-fold: big data and the cloud. The firm's new data model is based around the implementation of a data lake that holds all operational information. Ashworth is using a consumption-based cloud architecture for cost and flexibility reasons.

"As cloud matures, horizontal scaling is key for a business like ours. A consumption-based infrastructure in a spikey business means we can ramp IT resources up or down on demand. Becoming fully digitised has been a significant journey -- and we don't finish that journey for another 12 months," he says.

Ashworth says progress thus far represents a great foundation. About 70 percent of business processes are now in the cloud and all major system information is held in the data lake. Hermes is also starting to build operational data stores in SAP Hana across this lake. These integrated data stores will help the firm to create a single view of the customer.

Investing in innovative services

While technology can help Ashworth ensure high-performance activities and smooth business operations, he does not invest in technology for the sake of it. As a commercially-minded CIO, Ashworth only uses technology when the business case is clear.

"My work isn't about finding a sexy bit of kit and wondering what I can do with it. I'm always looking at a business problem first and thinking about how I can address that through technology."

Timing is crucial, too. Ashworth has about a six-month window to innovate and deliver change projects. The business is in lockdown between October and the end of January, which is peak season in terms of deliveries. Deadlines for the financial year mean budgets are not signed off until the start of April. Once a decision is made, Ashworth and his team must move quickly.

Ashworth is eager to attract new talent to the firm. Hermes' development efforts are currently directed towards customer experience. The firm's Digital Futures programme aims to create great parcel diversion and tracking processes for its retail clients and their customers.

Developments include a pay and print in-store service. This service allows customers who are sending or returning a parcel to receive a QR code through their devices. When they visit one of the firm's 4,500 drop-off points, customers can show the code and receive a return label automatically from a shop assistant.

SEE: Digital transformation: A CXO's guide (ZDNet special report) | Download the report as a PDF (TechRepublic)

The Digital Futures programme also stretches to work in the contact centre, where Hermes is implementing web bot technology. These bots provide an automated response to initial questions posed by customers during an online enquiry. The approach should provide quick answers to queries, helping improve the speed and reliability of service levels.

Ashworth keeps an eye on further innovation -- and Hermes, rather than avoiding change, embraces risk. "If it's something crazy, we try and bring it closer; we've got an innovation team that has its own budget but which reports into me," he says. "We don't constrain them and we try and bring services through to the business via that approach."

The innovation team, for example, developed the print and pay service. This service moved from an idea to a working prototype in five days. The team also created Hermes Play, which allows retail clients to create personalised labels, such as birthday messages, for customers.

Hermes also taps into external entrepreneurship. The firm ran a partnership with Starship Technologies last year, which allowed the firm to collect parcels through self-driving robots in Southwark, London. "We collected live parcels via that system -- less than 100, but it was a trial," says Ashworth.

"It was a tight test environment and the process wasn't embedded in our core proposition. We wanted to see how it might run and to test the demand from customers. They liked the service. I think there will be a place for robots, but we're still at an early stage. There's going to be further innovation in the final mile of delivery -- and I just have to make sure I have the foundations in place to make sure we can innovate rapidly."

RECENT AND RELATED COVERAGE

Mergers and acquisitions: Five ways tech can smooth the way
CIO Strategies: The tech team has a key role in making sure M&A plans go smoothly. Here are some pointers.

Laptops, hybrids, smartphones and tablets: Picking the right mix for productivity
CIO Strategies: Making the right hardware choices is vital for morale and efficiency.

Digital transformation: Getting beyond the hype
Improving the results for your business will involve more than just technology.

Why 71% of organizations will spend more on data in the next five years (TechRepublic)
Data is critical for the future of the enterprise, and a new report from MicroStrategy reveals how organizations are using it in their digital transformation strategies.

eBay Authenticate launches, with focus on luxe handbags (CNET)
The online marketplace tries to bag more luxury sales with the new program.

Want to discover the next big thing in tech? Then stop saying 'no' to everything
CIO Strategies: How to turn creative thinking into a competitive advantage.