White Paper Postal

White Paper

A Question of Survival: How Postal &

Courier Express Parcel Companies

are Transforming their Business

Models

• Challenges of Postal & CEP Companies

• A Selection of Innovative Solutions to meet these

Challenges

March 2012

White Paper Postal & Courier Express Parcel Companies March 2012

© PAC 2011 www.pac-online.com

Table of Contents

1. Introduction........................................................................................................................4

2. Executive Summary ..........................................................................................................4

3. State of the Postal & CEP Industry..................................................................................5

4. Major Common Challenges and Trends in the Postal and CEP Industry ....................6

4.1. Market Liberalization .................................................................................................................6

4.2. Technological Change...............................................................................................................7

4.3. Changing Consumer Behavior ..................................................................................................7

4.4. Compliance With Regulations ...................................................................................................8

4.5. IT Challenges ............................................................................................................................9

5. Responses to Challenges: Diversification and Innovation.........................................10

5.1. Business Diversification ..........................................................................................................10

5.2. Save Costs – Raise Efficiency.................................................................................................14

5.3. Reorganization of Business Processes...................................................................................14

5.4. Sustainability ...........................................................................................................................15

5.5. Diversification vs. Core Business ............................................................................................16

6. DPD – Success Story ......................................................................................................17

7. Conclusion.......................................................................................................................19

8. About SAP........................................................................................................................20

http://www.pac-online.com

White Paper Postal & Courier Express Parcel Companies March 2012


Table of Figures

Fig. 1: Major business challenges for postal and CEP companies impacting the business model..........................................................................................................................6

Fig. 2: Contribution of postal services, parcel services and banking to the overall revenue of La Poste in 2003 (inner circle) and 2010....................................................................7

Fig. 3: Highly secured end-to-end shipping process .............................................................9 Fig. 4: Classification of selected postal and CEP suppliers ................................................10 Fig. 5: How strongly are these challenges influencing your current business? (answers from

interviews conducted with big postal and CEP companies) .....................................15


White Paper Postal & CEP Sector March 2012


1. INTRODUCTION

The purpose of this white paper is to point out the main challenges of postal and

CEP suppliers and what kind of capabilities companies require to stay

competitive in this rapidly changing market. PAC conducted a number of

interviews with business decision makers from Strategy & Innovation, Marketing,

Pricing and Financial departments as well as IT managers in order to obtain the

whole spectrum of the changing requirements and market drivers influencing the

organization, processes, and finally IT systems. Numerous examples will provide

you with insights into how diversified the market and its services already are and

what impact this has on the internal processes of companies in this sector.

The graphs presented in this white paper provide you with the most important

trends. However, they do not fulfill statistical investigation rules, they rather

provide a deep insight into the challenges and resulting business models/

services.

2. EXECUTIVE SUMMARY

The challenge which the postal sector is facing is that competition is increasing

through market liberalization. At the same time markets and competitors are

becoming more international and long-standing business models have come

under pressure from new digital opportunities. Postal service providers are

therefore obliged to actively adapt to change, as their traditional mail business

has been declining for many years.

The CEP market is a rather fast growing sector, profiting from the ongoing

increase in international trade. In addition, the online retailers gaining ground are

generating further growth in the national and international parcel segment.

Competition is intensifying and thus there is a need to enhance and change

business models, by creating new services. This shift is pushed and enabled by

the use of modern technology.

In this white paper you will find a number of examples describing the

diversification process in this rapidly changing industry and some

recommendations on how to expand the business portfolio. The paper is

complemented by a case study of DPD GeoPost (Deutschland) GmbH, a

company that managed to streamline its applications for changing business

needs.

4




3. STATE OF THE POSTAL & CEP INDUSTRY

Postal institutions are part of a regionʼs capital infrastructure and transportation

networks. The companies have an intermediary role and effect the exchange of

goods, information and money between consumers and companies as well as

social communication.

Courier Express Parcel (CEP) services mostly operate distinctly from traditional

postal services, providing a higher level of speed and reliability. The main tasks

of courier services are the seamless and efficient coordination of collection,

transportation and delivery of all kinds of items. They have explored and

developed a niche for urgent exchange of physical communications, making it

into a billion-dollar global business.

Postal and CEP services are part of the fabric of peopleʼs daily lives. Even in the

digital and electronic age, postal and CEP remain the most accessible means of

communication, parcel and message delivery available. Since the mid-1990s, a

wide variety of influencing factors have caused postal services to re-think their

role in the communications market. Impacts such as direct and indirect

competition, the privatization of postal services, especially in industrialized

countries combined with the separation of operator and regulator roles, customer

demand for better and more reliable products, as well as the emergence of new

communication technologies, have forced postal services to change their

operational and financial strategies in order to remain competitive.

In an increasingly liberalized market, postal and CEP services have become

more vulnerable. At the same time, opportunities have arisen to exploit new

markets by taking advantage of technological advances.

5




4. MAJOR COMMON CHALLENGES AND TRENDS IN THE POSTAL AND CEP INDUSTRY

4.1. Market Liberalization

The European Union, for instance, will have completely deregulated the postal

sector by 2013. In this liberalized market, the main challenge for the legislator

and postal companies is to create the preconditions that will make it possible to

continuously guarantee high-quality, self-financing basic postal and logistics

services.

In recent years postal companies worldwide have been forced into reforms by

the emergence of the private sector as a dominant force in the transportation

and communications sector. In addition, lobbying groups composed of private

couriers claimed that a level playing field was needed, and thus actively pushed

the reduction of the postal monopoly.

The most important point confirmed by all interviewees is that an open postal

and CEP market leads to more players in the market and cut-throat competition,

and thus forces the players to meet the rapidly changing buying behavior of their

customers, reduce costs and drive innovation at the same time. The increase in

HR costs, which is the case in many countries, can hardly be offset by pricing

measures.

Fig. 1: Major business challenges for postal and CEP companies impacting the business model

6

Market Liberalization!

Changing Customer

Expectations!

Lower Margins!

Compliance Regulations!

Technological Change!

Cost Cutting Issues!

Globalized Markets!

Sustainability!

Business Model

Innovation!

© PAC 2012!




4.2. Technological Change

Rapid technological change has enabled a huge variety of new services through

all kinds of channels. Some harbingers have created new services, which forces

the whole industry to be innovative as well and make use of these new solutions.

Mobile technology has made it possible to handle any kind of service from

mobile devices. The creation of digital signatures makes it possible to handle

and authorize all kinds of mail online. With the USPS (United States Postal

Service) for example, the customer can personalize and buy stamps online and

via mobile devices. Not least of all, consumer habits have forced postal and CEP

companies to change their business models and diversify their offers.

4.3. Changing Consumer Behavior

Customer demand for simple solutions is further increasing. There is also a

growing focus on traditional values, such as quality, reliability and security, not

least through compliance regulations. The “digital natives” are increasingly

influencing business models, communication channels and the service level

agreements of postal and CEP services offerings. For some time now, changing

customer needs have increasingly challenged many postal services. This is

particularly evident in the decline in over-the-counter business. From 2006 to

2010, USPSʼ overall mail volume dropped by 20 percent, from 213 billion pieces

of mail to 170 billion1. The following graph shows the change in the business of

La Poste Group in France from 2003 to 2010.

Source: La Poste

Fig. 2: Contribution of postal services, parcel services and banking to the overall revenue of La Poste in 2003 (inner circle) and 2010

1 Source: USPS

7

58.9%!18.1%!

23.0%! 52.1%!

23.0%!

24.9%!

Revenue 2003:!€18bn!

Postal Services!Parcel Services!Bank!

Revenue 2010:!€20.9bn!

“We cannot just sell stamps.”

“Lawmakers should grant this agency greater flexibility to target new revenue streams and also control operating costs”

Jack Potter, United States Postmaster General




Traditional physical postal and payment transaction services in many areas are

subject to pressure from new electronic alternatives, such as email, text

messaging, e-banking/mobile banking and social media. The digitalization of our

everyday lives is being driven by the exponential development of technology,

such as processor and memory capacity, bandwidth, wireless communications

and mobile devices. This is leading to increased efficiency and a steady

reduction in the threshold for replacing physical data media.

The diversification of the market and new technologies enable new services to

be offered to customers. In order to stay competitive, it is necessary to integrate

services in bundles, which is a further move to diversification. The bundling of

services results in a requirement to optimize the pricing and rating of services;

pricing must be as flexible as possible to meet customer expectations and

business goals. Some services also include partners that deliver content or

services; sophisticated revenue sharing models are necessary to ensure

payment of partner commissions and royalties.

In addition, billing and invoicing processes must be optimized to manage the

transaction volume resulting from the introduction of new services and bundles.

Enterprise customers need an immediate response within 24 hours to requests

for quotes, and expect highly personalized services.

4.4. Compliance With Regulations

Another challenge is the interplay between competition and the basic service, i.e.

the need to fulfill not only the requirement of the legislator and the government to

provide a basic nationwide service, but also international compliance standards.

After 9/11, postal and CEP providers are no longer allowed to deliver items to all

countries in the world. Moreover, every item sent must be traceable. A parcel is

initially checked by cross-checking with terrorist lists. Then the freight will be

picked up at the supplierʼs site (only indoor) and every single step is checked

and documented via scan. Track and trace requires modern technology solutions

and, in the best case, scanning of various different items from different suppliers

can be done from only one device. The billing of the service takes place after

parcel delivery.

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Fig. 3: Highly secured end-to-end shipping process

4.5. IT Challenges

Many postal and CEP suppliers have a highly heterogeneous IT landscape, with

multiple solutions from different IT suppliers, combined with homegrown IT

solutions. In addition, many companies have decentralized IT systems or are in

the process of centralizing the solutions. Compliance to regulations needs to be

reflected in business applications. With the rapid evolution of products and

services, IT needs to support their introduction to the market and most

importantly support all kinds of customer-oriented processes.

A customer-centric approach implies the use of CRM solutions, which especially

in the postal and CEP industry need to integrate all marketing/sales channels.

CRM solutions can be leveraged to help offer the most appropriate quotes and

pricing for each customer. Finally, effective billing/charging and revenue and

expense management solutions as well as partner financial management need

to be in place and integrated into the ERP systems. In order to be able to

perform seamless billing, an integrated end-to-end solution is required including

pre-paid and post-paid charging models. Many billing applications have been

built in-house so far and require modifications or even replacement in order to

support new business models and help maintain competitive advantage in the

long term.

9 Receiver!

Hub!Shipments!

Sender: Company / Private

Customer!

Send to the receiver!

Only in-house pick-up and scanning at customerʼs site!

scanning!

scanning!

Send to the hub!

scanning!

Only after the final delivery and last scanning the bill will be processed.!

scanning!

Security check of the

parcel!




5. RESPONSES TO CHALLENGES: DIVERSIFICATION AND INNOVATION

5.1. Business Diversification

Postal operators are diversifying in two ways – by products and services or

geographically. Many players add new services to their core business or even

innovate their core business services by using new technologies. Postal

operators can be classified according to their chosen mix of diversified services

(financial, CEP, government services, mobile services, direct marketing, etc).

Fig. 4: Classification of selected postal and CEP suppliers

CEP

Competition is becoming more intense in the national and international CEP

market, leading to growing pressure on prices. Business customers are

especially sensitive to prices, but continue to expect a high level of quality. The

parcel sector continues to evolve in a very competitive environment. Posts in

many countries have seen their domestic and international parcel volumes grow

for over a decade, in particular thanks to quality-of-service improvements and

eCommerce developments. In the European Union (25 states) the number of

domestically sent parcels increased by 43% from 2000 to 2010. Private

operators own a large share of this market. Standardization of parcel sizes and

weights has resulted in higher volumes.

The CEP market as a whole has huge growth potential, which will be enhanced

by the increase in cross-border commerce. AT Kearney, for instance, expects an

10

Classification Deutsche Post /DHL

Poste Italiane La Poste Austrian

PostSwiss Post TNT DPD

Mail 27% 18% 52% 59% 32% 56% 8%

Parcels 21% 5% 23% 24% 7% 41% 75%

Logistics & Freight 27% - - 10% 5% - 10%

Telecommunication - 1% - - - - -

Postal Financial Services * 74% 25% - 27% - -

Online Services < 1% 1% - - - - -

Others 25% 1% < 1% 7% 29% 3% 7%

International Business 68% n.a. n.a. 31% 14% 32% 24%

* Deutsche Postbank generated about 15% Deutsche Post's revenue before it was sold to Deutsche Bank © PAC 2012




annual increase of the CEP market in Europe by 4%2. Other industry analysts

forecast a CEP CAGR (compound annual growth rate) from 2005 to 2015 in Asia

of 15%. The challenge for CEP companies is to convert customersʼ global

procurement requirements into new, profitable value-added business models.

TNT, a global express, logistics and mail services company, was able to respond

to the need for flexibility by diversifying and proposing new services, such as the

transport and exchange of hard disks. The company also provides an on-site

repair service for computers with the delivery of spare parts at the same time.

The partner engineer is instructed by TNT and goes to the customerʼs site,

repairs the computer and returns e.g. the hard disk. Another example is the pick-

up of a flat-screen television, its transportation to the company where it is

repaired and the subsequent redelivery to the customer. The partnerʼs share of

service revenue needs to be calculated in the pricing/charging of the service and

finally payment needs to be made to the partner. Depending on the customerʼs

requirements and priorities, the pricing model is different. Some customers want

prices to be calculated by total time, some want to have travel costs calculated

by distance, other services are charged at a flat rate including any hardware

parts. These highly complex processes require a flexible pricing/rating and

charging model, in order to fulfill a multiplicity of pricing models.

TNT has developed a further value-added service in order to create another

revenue stream, which is called the “Clinical Express” service for doctors and

laboratories: For instance, blood samples must be shipped nationally and

internationally at a certain temperature level in a strict and highly secure

timeframe. This service is of high value and can thus help finance other service

developments. The service can be booked online, via e-mail or SMS, is

traceable at any time and guarantees delivery on time. Included is the parcel kit,

which guarantees the stable conditions required by blood. This service

represents an add-on business, in a high-value segment and needs to be

integrated in the whole pricing/billing structure.

Financial Services

Many postal companies have set up financial services in the last two decades, in

order to diversify their business models. The French Banque Postale for

example generated revenues of about 5 billion Euros in 2010 and contributed

over 25% to the revenue of La Poste Group. The bank has approximately 10,000

branch outlets in France.

However, the financial crisis has had a marked impact on the financial sector in

recent years. The continuing high level of customer demand for financial

2 Belgium, Germany, France, UK, Ireland, Italy, Netherlands, Poland, Russia, Spain, Sweden, Switzerland, and Turkey

11




services provided by postal companies in spite of the crisis is a clear sign of the

considerable trust that postal financial institutions enjoy.

In Switzerland, PostFinance is doing everything it can to retain this trust. The

company plans to exploit the market and cost potential on both sides of the

balance sheet in order to further strengthen Swiss Postʼs most profitable pillar of

income. Swiss Post intends to continue focusing on fundamental customer

needs in retail finance and specifically aims to expand its business activities

within the specified framework. The Swiss PostFinance offers a (pre-paid)

method of payment. With a PostFinance account, the retailersʼ customers pay for

their purchases directly from their computer or mobile phone. In addition, the

company offers customers an e-bill. This solution allows the customer to send

invoices electronically to private and business customers, without any media

discontinuity and without incurring printing and postage costs.

These are only two examples of diversified service offerings of postal financial

services. Existing IT solutions have frequently been homegrown so far and the

implementation of processes to reflect new pricing and billing models have

resulted in high maintenance costs.

Communications market

Private as well as business customers are increasingly using electronic media to

communicate. This has resulted in a long-term drop in traditional mail volumes,

particularly letters, and declining demand for conventional post office services.

For instance, La Poste has estimated a decline in revenue from traditional mail

of 30% by the year 20153. The industry is experiencing growing pressure on

margins and a need for pricing flexibility, and must thus develop new services to

retain customers.

In order to compensate for the declining volumes in traditional mail, German

Post offers the E-Postbrief, which is an online postal service where everyone

can send secured letters via e-mail. The customer needs to register online and

afterwards identify himself at a Deutsche Post retail outlet with a passport or

identity card. After successful registration the user can send letters online, but

these can also be transferred to the recipient in a printed version in case the

recipient has not yet signed for the E-Postbrief. This service is also offered for

registered letters. The launch of this new service has required changes to the

pricing model, especially for the bigger B2B customers. Volume discounts must

be calculated differently, a different price is applied if letters are sent online or

offline. Through a gateway connection large customers can negotiate loyalty

discounts for high volumes.

3 Source: Le Monde, 24/05/11

12




Another example is Poste Italiane. The company has become a mobile virtual

network operator (MVNO) through its PosteMobile solution and has enriched its

service portfolio by providing a new access channel to its services, such as bill

payments, telegrams or micropayments. The services include pre-paid and post-

paid voice, Internet, M-banking (mobile banking) or gaming and M-commerce

(mobile commerce) solutions. The new sales channels will increase the volume

of transactions handled in the pricing, billing and financial management systems.

La Poste has also created a new revenue stream in the telecom business lately.

The company has decided to develop its La Poste Mobile offering (as the 10th

MVNO on the SFR network). To this end, a joint venture majority-owned by La

Poste was created in 2011. The companyʼs differentiator is to create simple pre-

paid and post-paid rate plans in the mobile business. Instead of developing its

own service delivery platform, the group created a joint venture with Debitel.

Media services / content services

Media services complete the portfolio of some postal suppliers, such as the

Swiss Post. With a holistic approach to media management, Swiss Post helps its

customers implement communications across all channels efficiently,

consistently and on time.

The advantage is consequent cost savings across all communication channels

with media management.

Swiss Post analyzes the customersʼ processes and communications in order to

develop new media concepts for production management and purchasing

processes of physical and electronic marketing materials. This means in detail:

§ Identification of potential cost savings based on cost, process and product

analysis,

§ Optimization of processes and products throughout the customer

communication,

§ Pre-press and pre-media services, such as typesetting and layout design,

§ Professional purchasing and vendor management for the adoption of holistic

procurement of promotional material,

§ Coordination of communications campaigns across multiple channels,

§ Permanent supplier evaluation and performance monitoring.

The media management offering enables visibility and security with individually

agreed service level agreements. Swiss Post needs to integrate this offer into

the overall pricing and billing process to the customers.

The La Poste group offers direct marketing and electronic archiving services to

small and medium-sized businesses with its Maileva offering.

13

“Like all postal services, we are seeking to leverage the potential value of the postal network.”

Jean-Paul Bailly, CEO of the La Poste group




5.2. Save Costs – Raise Efficiency

As mentioned above, driving out operational costs is a necessity, due to market

liberalization and to the number of new market entrants. Customers demand

lower costs while expecting improved quality of service.

This leads to further investments in services and communication platforms like

the “Post Manager” of Austrian Post. This investment has enabled Austrian Post

to compensate the declining revenues in traditional mail business. Austrian Post

collects all the invoice data of a customer, be it from telephone, television or

Internet providers, on one platform and thus makes it easier for the customer to

pay bills from a single platform and compare prices with other suppliers.

Customers can archive their sensitive documents on the Austrian Post platform,

accessible via official legal digital signature. This makes the whole process less

cost-intensive and thus Austrian Post can remain competitive in the long term.

Especially when it comes to higher volumes, the pricing structure of such

services needs to meet customer expectations and enable offers to be

personalized for each customer.

5.3. Reorganization of Business Processes

New services, sales channels or partner networks require new business and

logistics processes that need to be permanently streamlined in order to work as

efficiently as possible. Poste Italiane for instance has implemented a new

logistics platform and also integrated its partner UPS into the supply chain. This

way the company has been able to ensure real-time monitoring of every single

item/service within its logistics chain from order entry, processing, sorting to last-

mile delivery. The company is now able to provide full reporting to end

customers and finally initiate the billing process as the services are fulfilled.

Especially when it comes to handling all customer interactions from pricing,

delivery, billing to customer care, an integrated approach is necessary to ensure

a 360° view of the customer within the organization. Systems and processes are

required which can easily streamline complex pricing, rating, charging and billing

processes. Organizations need to be prepared to process high volumes of

micro-transactions associated with payment for these diversified services.

14

“Enhancing our service offering and including partners is as important as delivering highly secure services to our customers.”

Mag. Mirjam Teicht, Austrian Post

“Poste Italiane has tremendously changed towards a multi-services company during the last decade. Our ICT systems had to cope with this rapid change.”

Stephano Sappinos, Poste Italiane




Fig. 5: How strongly are these challenges influencing your current business? (answers from interviews conducted with big postal and CEP companies)

5.4. Sustainability

Postal companies also need to identify opportunities to continue their efforts to

promote sustainability by acting in an environmentally friendly and socially

responsible manner. Many postal and CEP organizations are convinced that, in

the future, successful companies will increasingly be those that are tangibly and

quantifiably committed to society and the environment.

GoGreen, DHLʼs program for environmental protection is part of Deutsche Post

DHLʼs corporate strategy. The company committed to improving the CO2

efficiency of its own operations and those of its transportation subcontractors by

30% by 2020, compared to a 2007 baseline. In 2010, DHL started piloting

86 electric vehicles to set logistics standards and reduce their dependency on

fossil fuels.

The main goals are to achieve transparency of the environmental impact, with a

focus on the carbon footprint. Furthermore, the company aims to generate value

by offering green solutions to customers. DHL wants to demonstrate leadership

in fostering green technologies by mobilizing employees in strengthening their

environmental knowledge and helping them engage in environmental protection.

Swiss Post also reduced emissions in 2010 and 2011 through the rail transport

of mail and the use of hybrid postal cars as part of its sustainability initiative.

DPDʼs “Total Zero” program for instance is a carbon neutrality commitment that

will be made available to its customers in its five major markets from July 2012.

15

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Market Liberalization New Competitors

Changing Buying Behavior

Declining Prices and Margins

Technological Innovation

Cost-Saving Issues

New Territories

Reorganization

Compliance Regulations

New Business Models/ Partner Networks

very strong strong weak very weak © PAC 2012




This way, DPD will ensure that every parcel sent via its network will be carbon

neutral with no extra costs to its customers.

5.5. Diversification vs. Core Business

Especially in the postal and CEP industries, which are still in the process of

liberalization, one of the main questions is whether a company should diversify

or stick to its core business. Diversification can take the form of new services

and new markets or geographic expansion.

For a purely public postal company facing weakening traditional mail services,

the choice seems to be clear, yet the question remains which way to go. And for

an already diversified company there is still the question of consolidation or

further expansion.

Generally there are four dimensions that need to be considered when thinking

about expanding the business:

§ Market size: How large is the market for value-added services such as the

pick-up of a TV, its transportation to the repair service and its delivery back

to the customer?

§ Market growth: What are the expected growth rates in this market in the

next 5 to 10 years? Reflecting market risks, such as further regulations,

market shift (print à online). Customer buying behavior.

§ Market penetration: How many other players are already active in this

market? Is it rather a niche market or a highly competitive area, with

declining prices and low margins?

§ Capability: Does the company have the capacity, such as market

knowledge, personnel, technological know-how and, finally, the financial

stability to enter a new market? Is there a (stable/potential) partnership in

order to make this kind of investment?

For each new market segment the whole picture needs to be drawn before

taking a decision. If, for instance, a company intends to enter the German CEP

market it needs to be aware of the following parameters. The market is

comparatively mature, shows growth rates above GDP. But market penetration

is very high and thus the company would need massive capacity or very good

partnerships in order to enter this market.

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6. DPD – SUCCESS STORY

About DPD

With the shipment of 2.5 million parcels a day DPD is a leading international

provider of parcel and express services. The company has the most efficient

road network in Europe and delivers to 230 countries worldwide. Customers can

choose services from an extensive product range of national and international

parcel and express services for business and home deliveries. A workforce of

24,000 and 18,000 vehicles operate at more than 800 locations. The majority

shareholder in DPD with 83.32% shareholding is the GeoPost Group, a wholly-

owned subsidiary of French Groupe La Poste. With a consolidated turnover of

3,440 billion Euros in the year 2010, GeoPost is currently Europe's second-

largest provider of express parcel services.

DPDʼs business and IT challenges

In order to stay competitive, the company has had to deal with some challenges:

First of all, the German business unit DPD GeoPost (Deutschland) GmbH has

about 45 subsidiaries, many of them handling their own IT, as well as

pricing/charging and billing systems. This led to inefficient and cost-intensive

business processes besides a largely decentralized and thus cost-intensive IT

landscape. Moreover, it was difficult to set up and maintain common compliance

regulations with all subsidiaries.

Customer data were redundant or inconsistent and resulting in inefficient, partly

manual handling of the order-to-cash process.

At the same time DPD was (and still is) launching innovative new services to

fulfill the needs of the dynamic online markets. These services and their revenue

stream need to be integrated in the existing pricing, billing and finally accounting

systems.

DPDʼs solution

In order to obtain maximum ROI from the investment, DPD created a

comprehensive project plan for implementation, testing, and roll-out. The new

system was rolled out to a few subsidiaries at a time to keep the risk of business

disruption to a minimum. As the centralization of the processes caused a

restructuring of staff, efficient change management was needed.

In order to achieve potential savings and efficiency increase, DPD replaced its

homegrown billing application by standard software. Through the integration and

adaptation of SAP software, DPD has standardized and automated its order-to-

cash processes.

Using the SAP ERP application as its integrated solution base, DPD centralized

45 software instances and databases into a single software solution. Replacing

17




DPDʼs proprietary billing application with the SAP for Telecommunications

solution was quite unusual but effective. Telecommunication companies use the

same services-oriented basis for billing as DPD. So, the solution was perfect,

with SAP Consulting customizing and enhancing the industrial solution portfolio

to the specific shipping needs of DPD.

DPD now relies on process integration within its finance and accounting activities

as well as on integration with other areas, such as marketing & sales, as well as

on pricing and billing. The sophisticated authorization concept allows the

accounting team to execute any task from any subsidiary and the company has

gained new flexibility in process reengineering.

Operational benefits

The increase of revenue generated through improved processes and new IT

systems was estimated at approximately 0.25%-0.5% as a result of centralizing

data management and improving data quality. The new systems provide

significantly higher data quality and transparency by introducing fully automated

data flows. In addition, the improved business analytics enable reporting across

subsidiaries and finally the possibility to detect further possibilities for

improvement.

There are indeed positive effects of more satisfied customers using the e-billing

services. Benefits actually concern many parts of the DPD organization and

finally lead to better service to customers.

Cost reduction

A flexible IT foundation has been created, which supports future business

challenges and organizational and logistical changes. Harmonized data, a

reduced number of applications and automated processes also lead to lower IT

costs, among others gained through centralizing several software instances and

databases into one integrated solution.

DPD managed to save about 0.2% in terms of total revenue by automating the

billing process and reducing the IT infrastructure costs. Manual corrections of

data inconsistencies are no longer necessary.

18

“Integrated and standardized business processes generate greater value while lowering costs at the same time.”

Martin Bäcker, DPD GeoPost (Deutschland)

GmbH




7. CONCLUSION

As demonstrated above, the postal and CEP industries are among the fastest

changing sectors in the world. Market drivers lead to diversification, fundamental

changes in service offerings and pricing, which require new models to ensure

survival.

Successful postal and CEP companies are diversifying their business and

adopting customer-centric strategies that enable their organizations to have a

360° view of the customer across all channels. As they change their business

models and introduce diversified services including online and on-demand

services, their existing legacy applications are frequently too inflexible to support

the rapid introduction of innovative services.

As they streamline their operations and roll out new service offerings, postal and

CEP companies should consider adopting flexible pricing, billing and revenue

management solutions which can easily be integrated into their existing

applications portfolio.

Further technological change and the increase in the use of Internet technology

will further push this transition phase in the postal and CEP industries. New

investments in innovative solutions supporting these changes are a key success

factor of companies in order to stay competitive and survive.

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8. ABOUT SAP

Optimize resources and logistics for streamlined operations with SAP Solutions for Postal Services

SAP can help postal services organizations provide comprehensive customer

service and tightly coupled logistical processes – resulting in reduced costs,

increased productivity, and streamlined operations. Our software can help you

tighten and fine-tune processes across various lines of business so you can

deliver a higher level of customer service.

SAP Next Generation Billing provides a centralized rating platform for mail, and

Courier, Parcels and Express Services (CEP). The platform, which consists of

applications for convergent charging, convergent invoicing, and customer

financial management, enables you to streamline your consume-to-cash

process. Combined, these applications form a sophisticated next-generation

billing platform, enabling mail and CEP companies to efficiently manage

payments, collections and accounting – optimizing financial care for large

volumes of customers and transactions and scale with their business.

Complex revenue sharing with both up- and downstream partners can be easily

managed while deploying elements within existing IT software landscapes –

adding value where it is needed most and providing companies with the reliability

and efficiency they need to manage billing and real-time payments across a

diverse matrix scenario.

The IT department is empowered to react faster and to fully support marketing

requirements taking new services to market faster due to its integrated support

of the complete customer financial lifecycle, out-of-the-box integration, support

for third-party invoicing and automated receivables management processes.

SAP offers an integrated, end-to-end rating, charging and billing platform from

customer enrolment with multi-channel CRM, pricing and offer management to

service delivery and payment of services delivered.

On the logistics side, SAP Transportation Management (TM) can help reduce

transportation costs, and improve flexibility and efficiency. SAP TM supports

integrated storage, fulfillment, and transportation processes with no data

redundancy and reduced integration risk. The traceability and visibility of orders,

shipments, items, and CEP processes are in the same environment.

Especially diversified postal organizations can take advantage of SAPʼs

experience and solutions across 25 industries ranging from Banking, Insurance,

and Telecommunications to Retail.

As market leader in enterprise application software, SAP (NYSE: SAP) helps

companies of all sizes and industries run better. From back office to boardroom,

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warehouse to storefront, desktop to mobile device – SAP empowers people and

organizations to work together more efficiently and use business insight more

effectively to stay ahead of the competition. SAP applications and services

enable more than 176,000 customers (includes customers from the acquisition of

Sybase) to operate profitably, adapt continuously, and grow sustainably.

For more information, visit http://www1.sap.com/software/next-generation-

billing.epx

Twitter: @SAP_NextGenBill

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http://www1.sap.com/software/next-generation-billing.epx




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ABOUT PIERRE AUDOIN CONSULTANTS From strategy to execution, PAC delivers focused and objective responses to the growth challenges of Information and Communication Technology (ICT) players. Founded in 1976, PAC is a privately held research & consulting firm for the software and ICT services market. PAC helps ICT vendors to optimize their strategies by providing quantitative and qualitative market analysis as well as operational and strategic consulting. We advise CIOs and financial investors in evaluating ICT vendors and solutions and support their investment decisions. Public institutions and organizations also rely on our key analyses to develop and shape their ICT policies. For more information, please visit www.pac-online.com.

CONTACT Author: Martin Barnreiter Principal Consultant +49 (0)89 23 23 68-19 Email: [email protected] Published by: Pierre Audoin Consultants (PAC) GmbH Holzstrasse 26 80469 Munich, Germany Tel: +49 (0) 89 232 368-0 Fax: +49 (0) 89 719 62-65 Email: [email protected]

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